Corrective Action Plans

Finding 1226923 (2024-038)

Material Weakness 2024

OK

Procurement, Suspension & Debarment Subrecipient Monitoring Allowable Costs / Cost Principles § 200.303 § 200.334 § 200.337 § 200.450

Finding Number 2024-038 Subject Heading (Financial) or AL no. and program name (Federal) EMERGENCY RENTAL ASSISTANCE PROGRAM (ERA) AL #21.019 Planned Corrective Action Oklahoma Office of Management and Enterprise Services (OMES) acknowledges subrecipient monitoring process lacked the strength and co...

Finding Number 2024-038 Subject Heading (Financial) or AL no. and program name (Federal) EMERGENCY RENTAL ASSISTANCE PROGRAM (ERA) AL #21.019 Planned Corrective Action Oklahoma Office of Management and Enterprise Services (OMES) acknowledges subrecipient monitoring process lacked the strength and consistency to ensure subrecipients established and maintained effective internal control. OMES acknowledges that OMES did not implement the proper internal controls and oversight of the ERA Program during FY2024. However, OMES has taken steps to correct these findings and follow the recommendations set forth by SAI in these findings. Beginning with FY2025, OMES has taken the following measures: • OMES disagrees that they had sufficient and timely notice to make full corrective actions prior to this FY2024 audit for the following reasons: the FY2021 State auditor & Inspector (SAI) audit was released four days prior to the beginning of FY2024, the FY2022 SAI audit was released near the end of FY2025, and the FY2023 audit was released in FY2026; therefore, OMES could not take corrective action prior to the FY2024 audit began. At the beginning of FY2025, OMES began corrective measures as noted in SAI’s Condition and Context in this finding. • OMES acknowledges OMES subrecipient monitoring process lacked the strength and consistency to ensure subrecipients established and maintained effective internal control. However, OMES has taken steps to correct these findings and follow the recommendations set forth by SAI as noted in SAI’s Condition and Context in this finding. Beginning with FY2025, OMES has taken the following measures:  Oversight and management of the ERA program has been transferred to the OMES Grant Management Office (OMES-GMO) which has staff with several years of grant experience. OMES-GMO has recently hired additional staff, and the two staff members dedicated to the management of the ERA program have 20+ years of combined federal grant specific experience.  OMES ensured that the subrecipient agreement included all the required terms under the ERA Program and that the agreement does not expire, OMES-GMO and the Communities of Foundation of Oklahoma (CFO) executed an updated Subrecipient Grant Agreement Amendment that details the responsibilities of OMES to monitor CFO and the duties and processes that CFO must follow in regard to ERA Program, including detailed cash management policies.  OMES-GMO required the return of the remaining ERA2 Program funds from CFO to ensure proper oversight and review of ERA expenditures is performed.  OMES-GMO has in place a multi-level system of internal controls for grant management and oversight that includes routine monitoring, desk review, and site visits for all projects and associated project/administrative expenditures to ensure allowability, accuracy, and assist in the detection of fraud. For example, OMES-GMO’s process for disbursing funds to a subrecipient requires a written request from the subrecipient with supporting documentation, then OMES-GMO assigns a staff lead and secondary grant analyst to perform a primary and secondary review for compliance and to require additional supporting documentation if needed to approve the request. Once those reviews are completed and approved by the OMES-GMO staff, the Director of the OMES-GMO must approve the request before it is sent to the OMES Finance Division, who will then verify the calculated amount(s) before completing the disbursement to the subrecipient. These internal controls and policies have been implemented for the management and oversight of the ERA Program and provide a multilayer review that will prevent fraud and risk factors applicable to the ERA program. Additionally, the OMES-GMO staff assigned to the ERA program have the training and knowledge to ensure compliance with the Federal grant requirements.  Depending on the level of risk, OMES-GMO conducts monthly, bi-weekly or weekly meetings with each subrecipient to monitor the progress of projects and address any issues or changes that might impact the project. For the ERA Program, OMESGMO conducted bi-weekly monitoring meetings with CFO and reviewed documentation provided by CFO to ensure all ERA projects were eligible under the ERA guidelines and that CFO exercised the proper oversight over their subrecipients and spending. Anticipated Completion Date Completed Responsible Contact Person Brandy Manek

View Audit 409119

Finding 1226922 (2024-024)

Material Weakness 2024

Oklahoma Water Resources Board

OK

Allowable Costs / Cost Principles Subrecipient Monitoring § 200.303 § 200.334 § 200.337 § 200.403 § 200.430

Finding Number 2024-024 Subject Heading (Financial) or AL no. and program name (Federal) EMERGENCY RENTAL ASSISTANCE PROGRAM (ERA) AL #21.019 Planned Corrective Action Oklahoma Office of Management and Enterprise Services (OMES) acknowledges subrecipient monitoring process lacked the strength and co...

Finding Number 2024-024 Subject Heading (Financial) or AL no. and program name (Federal) EMERGENCY RENTAL ASSISTANCE PROGRAM (ERA) AL #21.019 Planned Corrective Action Oklahoma Office of Management and Enterprise Services (OMES) acknowledges subrecipient monitoring process lacked the strength and consistency to ensure subrecipients established and maintained effective internal control. OMES acknowledges that OMES did not implement the proper internal controls and oversight of the ERA Program during FY2024. However, OMES has taken steps to correct these findings and follow the recommendations set forth by SAI in these findings. Beginning with FY2025, OMES has taken the following measures: • OMES disagrees that they had sufficient and timely notice to make full corrective actions prior to this FY2024 audit for the following reasons: the FY2021 State auditor & Inspector (SAI) audit was released four days prior to the beginning of FY2024, the FY2022 SAI audit was released near the end of FY2025, and the FY2023 audit was released in FY2026; therefore, OMES could not take corrective action prior to the FY2024 audit began. At the beginning of FY2025, OMES began corrective measures as noted in SAI’s Condition and Context in this finding. • OMES acknowledges OMES subrecipient monitoring process lacked the strength and consistency to ensure subrecipients established and maintained effective internal control. However, OMES has taken steps to correct these findings and follow the recommendations set forth by SAI as noted in SAI’s Condition and Context in this finding. Beginning with FY2025, OMES has taken the following measures:  Oversight and management of the ERA program has been transferred to the OMES Grant Management Office (OMES-GMO) which has staff with several years of grant experience. OMES-GMO has recently hired additional staff, and the two staff members dedicated to the management of the ERA program have 20+ years of combined federal grant specific experience.  OMES ensured that the subrecipient agreement included all the required terms under the ERA Program and that the agreement does not expire, OMES-GMO and the Communities of Foundation of Oklahoma (CFO) executed an updated Subrecipient Grant Agreement Amendment that details the responsibilities of OMES to monitor CFO and the duties and processes that CFO must follow in regard to ERA Program, including detailed cash management policies.  OMES-GMO required the return of the remaining ERA2 Program funds from CFO to ensure proper oversight and review of ERA expenditures is performed.  OMES-GMO has in place a multi-level system of internal controls for grant management and oversight that includes routine monitoring, desk review, and site visits for all projects and associated project/administrative expenditures to ensure allowability, accuracy, and assist in the detection of fraud. For example, OMES-GMO’s process for disbursing funds to a subrecipient requires a written request from the subrecipient with supporting documentation, then OMES-GMO assigns a staff lead and secondary grant analyst to perform a primary and secondary review for compliance and to require additional supporting documentation if needed to approve the request. Once those reviews are completed and approved by the OMES-GMO staff, the Director of the OMES-GMO must approve the request before it is sent to the OMES Finance Division, who will then verify the calculated amount(s) before completing the disbursement to the subrecipient. These internal controls and policies have been implemented for the management and oversight of the ERA Program and provide a multilayer review that will prevent fraud and risk factors applicable to the ERA program. Additionally, the OMES-GMO staff assigned to the ERA program have the training and knowledge to ensure compliance with the Federal grant requirements.  Depending on the level of risk, OMES-GMO conducts monthly, bi-weekly or weekly meetings with each subrecipient to monitor the progress of projects and address any issues or changes that might impact the project. For the ERA Program, OMESGMO conducted bi-weekly monitoring meetings with CFO and reviewed documentation provided by CFO to ensure all ERA projects were eligible under the ERA guidelines and that CFO exercised the proper oversight over their subrecipients and spending. Anticipated Completion Date Completed Responsible Contact Person Brandy Manek

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Finding 1226921 (2024-020)

Material Weakness 2024

Oklahoma Water Resources Board

OK

Reporting Subrecipient Monitoring Internal Control / Segregation of Duties § 200.303 § 200.502 § 200.510

Finding Number 2024-020 Subject Heading (Financial) or AL no. and program name (Federal) EMERGENCY RENTAL ASSISTANCE PROGRAM (ERA) AL #21.019 Planned Corrective Action Oklahoma Office of Management and Enterprise Services (OMES) acknowledges they did not implement the proper internal controls and ov...

Finding Number 2024-020 Subject Heading (Financial) or AL no. and program name (Federal) EMERGENCY RENTAL ASSISTANCE PROGRAM (ERA) AL #21.019 Planned Corrective Action Oklahoma Office of Management and Enterprise Services (OMES) acknowledges they did not implement the proper internal controls and oversight of the ERA Program during FY2024. However, OMES has taken steps to correct these findings and has followed the recommendations set forth by SAI as evidenced in the Recommendation section of this finding. Beginning with FY2025, OMES has taken the following measures:  Oversight and management of the ERA program has been transferred to the OMES Grant Management Office (OMES-GMO) which has staff with several years of grant experience. OMES-GMO has recently hired additional staff, and the two staff members dedicated to the management of the ERA program have 20+ years of combined federal grant specific experience.  OMES ensured that the subrecipient agreement included all the required terms under the ERA Program and that the agreement does not expire, OMES-GMO and the Communities of Foundation of Oklahoma (CFO) executed an updated Subrecipient Grant Agreement Amendment that details the responsibilities of OMES to monitor CFO and the duties and processes that CFO must follow in regard to ERA Program, including detailed cash management policies.  OMES-GMO required the return of the remaining ERA2 Program funds from CFO to ensure proper oversight and review of ERA expenditures is performed.  OMES-GMO has in place a multi-level system of internal controls for grant management and oversight that includes routine monitoring, desk review, and site visits for all projects and associated project/administrative expenditures to ensure allowability, accuracy, and assist in the detection of fraud. For example, OMES-GMO’s process for disbursing funds to a subrecipient requires a written request from the subrecipient with supporting documentation, then OMES-GMO assigns a staff lead and secondary grant analyst to perform a primary and secondary review for compliance and to require additional supporting documentation if needed to approve the request. Once those reviews are completed and approved by the OMES-GMO staff, the Director of the OMES-GMO must approve the request before it is sent to the OMES Finance Division, who will then verify the calculated amount(s) before completing the disbursement to the subrecipient. These internal controls and policies have been implemented for the management and oversight of the ERA Program and provide a multilayer review that will prevent fraud and risk factors applicable to the ERA program. Additionally, the OMES-GMO staff assigned to the ERA program have the training and knowledge to ensure compliance with the Federal grant requirements. Depending on the level of risk, OMES-GMO conducts monthly, bi-weekly or weekly meetings with each subrecipient to monitor the progress of projects and address any issues or changes that might impact the project. For the ERA Program, OMES-GMO conducted bi-weekly monitoring meetings with CFO and reviewed documentation provided by CFO to ensure all ERA projects were eligible under the ERA guidelines and that CFO exercised the proper oversight over their subrecipients and spending. Anticipated Completion Date Completed Responsible Contact Person Brandy Manek

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Finding 1226920 (2024-014)

Material Weakness 2024

Oklahoma Water Resources Board

OK

Subrecipient Monitoring Allowable Costs / Cost Principles Reporting § 200.303 § 200.331 § 200.332 § 200.334 § 200.337

Finding Number 2024-014 Subject Heading (Financial) or AL no. and program name (Federal) EMERGENCY RENTAL ASSISTANCE PROGRAM (ERA) AL #21.019 Planned Corrective Action Oklahoma Office of Management and Enterprise Services (OMES) partially concurs with these findings. • OMES disagrees that they had s...

Finding Number 2024-014 Subject Heading (Financial) or AL no. and program name (Federal) EMERGENCY RENTAL ASSISTANCE PROGRAM (ERA) AL #21.019 Planned Corrective Action Oklahoma Office of Management and Enterprise Services (OMES) partially concurs with these findings. • OMES disagrees that they had sufficient and timely notice to make full corrective actions prior to this FY2024 audit for the following reasons: the FY2021 State auditor & Inspector (SAI) audit was released four days prior to the beginning of FY2024, the FY2022 SAI audit was released near the end of FY2025, and the FY2023 audit was released in FY2026; therefore, OMES could not take corrective action prior to the FY2024 audit began. At the beginning of FY2025, OMES began corrective measures as noted in SAI’s Condition and Context in this finding. • OMES acknowledges OMES subrecipient monitoring process lacked the strength and consistency to ensure subrecipients established and maintained effective internal control. However, OMES has taken steps to correct these findings and follow the recommendations set forth by SAI as noted in SAI’s Condition and Context in this finding. Beginning with FY2025, OMES has taken the following measures:  Oversight and management of the ERA program has been transferred to the OMES Grant Management Office (OMES-GMO) which has staff with several years of grant experience. OMES-GMO has recently hired additional staff, and the two staff members dedicated to the management of the ERA program have 20+ years of combined federal grant specific experience.  OMES ensured that the subrecipient agreement included all the required terms under the ERA Program and that the agreement does not expire, OMES-GMO and the Communities of Foundation of Oklahoma (CFO) executed an updated Subrecipient Grant Agreement Amendment that details the responsibilities of OMES to monitor CFO and the duties and processes that CFO must follow in regard to ERA Program, including detailed cash management policies.  OMES-GMO required the return of the remaining ERA2 Program funds from CFO to ensure proper oversight and review of ERA expenditures is performed.  OMES-GMO has in place a multi-level system of internal controls for grant management and oversight that includes routine monitoring, desk review, and site visits for all projects and associated project/administrative expenditures to ensure allowability, accuracy, and assist in the detection of fraud. For example, OMES-GMO’s process for disbursing funds to a subrecipient requires a written request from the subrecipient with supporting documentation, then OMES-GMO assigns a staff lead and secondary grant analyst to perform a primary and secondary review for compliance and to require additional supporting documentation if needed to approve the request. Once those reviews are completed and approved by the OMES-GMO staff, the Director of the OMES-GMO must approve the request before it is sent to the OMES Finance Division, who will then verify the calculated amount(s) before completing the disbursement to the subrecipient. These internal controls and policies have been implemented for the management and oversight of the ERA Program and provide a multilayer review that will prevent fraud and risk factors applicable to the ERA program. Additionally, the OMES-GMO staff assigned to the ERA program have the training and knowledge to ensure compliance with the Federal grant requirements.  Depending on the level of risk, OMES-GMO conducts monthly, bi-weekly or weekly meetings with each subrecipient to monitor the progress of projects and address any issues or changes that might impact the project. For the ERA Program, OMESGMO conducted bi-weekly monitoring meetings with CFO and reviewed documentation provided by CFO to ensure all ERA projects were eligible under the ERA guidelines and that CFO exercised the proper oversight over their subrecipients and spending. Anticipated Completion Date Completed Responsible Contact Person Brandy Manek

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Finding 1226919 (2024-098)

Material Weakness 2024

Oklahoma Water Resources Board

OK

Allowable Costs / Cost Principles § 200.403 § 200.431

Finding Number 2024-098 Subject Heading (Financial) or AL no. and program name (Federal) 97.036 – Disaster Grants – Public Assistance Planned Corrective Action Management has discussed this issue with ABS, and ABS is aware of the agency's expectation that all required Pathfinder correction entries, ...

Finding Number 2024-098 Subject Heading (Financial) or AL no. and program name (Federal) 97.036 – Disaster Grants – Public Assistance Planned Corrective Action Management has discussed this issue with ABS, and ABS is aware of the agency's expectation that all required Pathfinder correction entries, including both regular and supplemental payroll transactions, be processed as part of the correction process. Going forward, the agency will coordinate with ABS and perform periodic verification that both regular and supplemental payroll corrections have been included. The agency will also work with ABS to address any identified omissions to help ensure that only allowable employer retirement contributions are charged to federal awards. Anticipated Completion Date 1/31/2027 Responsible Contact Person Brianna Thomas

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Finding 1226918 (2024-096)

Material Weakness 2024

Oklahoma Water Resources Board

OK

Procurement, Suspension & Debarment § 200.317 § 200.327 § 200.404

Finding Number 2024-096 Subject Heading (Financial) or AL no. and program name (Federal) ALN: Multiple Federal Program name: Multiple Planned Corrective Action The Office of Management and Enterprise Services (OMES), Central Purchasing Division, respectfully submits this response regarding the use o...

Finding Number 2024-096 Subject Heading (Financial) or AL no. and program name (Federal) ALN: Multiple Federal Program name: Multiple Planned Corrective Action The Office of Management and Enterprise Services (OMES), Central Purchasing Division, respectfully submits this response regarding the use of federal funds in connection with statewide contracts established through the Rolling Request for Proposal (RFP) pilot program. Since the audit period, OMES has implemented significant enhancements to its statewide contracting processes to further strengthen documentation, oversight, and compliance with both state procurement law and Uniform Guidance. These enhancements also address the recommendations identified in this finding. Compliance with Uniform Guidance (2 CFR Part 200) OMES affirms that procurements conducted under the Rolling RFP pilot program were performed in accordance with applicable provisions of Uniform Guidance and the Oklahoma Central Purchasing Act, including but not limited to 2 CFR §§ 200.317, 200.318, and 200.404. Pursuant to 2 CFR §200.317, OMES follows the same procurement policies and procedures for federal funds as are used for non-federal funds. The Rolling RFP model did not eliminate competitive procurement. Rather, it modified the timing of vendor qualification by allowing qualified vendors to compete for inclusion on the statewide contract throughout the open solicitation period while agencies continued to conduct project specific Statements of Work under those contracts. Consistent with 2 CFR §200.318(a), OMES maintains oversight to ensure that procurements are conducted in a manner providing full and open competition, and that contractors perform in accordance with the terms, conditions, and specifications of their contracts. The Rolling RFP model increased vendor participation and competition by allowing qualified suppliers to submit responses on a continuous basis, thereby expanding the competitive pool available to agencies. Further, in accordance with 2 CFR §200.404, OMES ensures that costs are reasonable by requiring evaluation of pricing at both the contract award level and the transaction level. Vendors are vetted through a formal evaluation process, and Statements of Work (SOWs) are developed with agency and subject matter expert involvement to confirm that pricing reflects what a prudent person would incur under similar circumstances. Vendor pricing remained subject to procurement review, agency evaluation, statement-of-work negotiations, market comparisons, procurement approval processes, and applicable fair and reasonable price determinations required under state procurement law and Uniform Guidance. Additionally, OMES Central Purchasing operates under formalized internal procedures, including its Framework Agreement Creation Standard Operating Procedure, which explicitly requires adherence to Uniform Guidance. The SOP mandates vendor vetting, competitive evaluation, including the contract clauses required by 2 CFR §200.327 and Appendix II to Part 200, and documented evaluation methodologies to ensure transparency, consistency, and compliance in all framework (statewide) agreements. In addition, OMES has adopted the first-ever Oklahoma Procurement Manual, which establishes standardized statewide guidance for procurement planning, contract administration, federal grant compliance, documentation standards, and competition requirements. The manual reinforces Uniform Guidance requirements and provides agencies with consistent statewide procurement procedures for acquisitions involving both state and federal funds. Program Structure and Administrative Considerations The Rolling RFP pilot program functioned as a framework agreement structure, wherein suppliers were pre-qualified through a competitive solicitation process and agencies subsequently issued project-specific Statements of Work. This approach was designed to align with allowable procurement methods under Uniform Guidance. OMES recognizes, however, that the continuous open nature of the solicitation created administrative challenges and increased complexity in maintaining consistent documentation and oversight as vendor participation scaled. Documentation and Administrative Enhancements Although the pilot program did not have a standalone written procedure specific to Rolling RFPs during the audit period, it operated under existing procurement statutes, standardized solicitation procedures, evaluation documentation, internal operating procedures, and statewide contract templates. Documentation practices have since been further standardized and consolidated. While the program operated under existing procurement statutes, solicitation procedures, evaluation documentation, and internal operating practices, OMES has since implemented additional written procedures, standardized documentation requirements, and centralized guidance to improve consistency, transparency, and ease of audit review. These enhancements strengthen an already competitive procurement process by providing more comprehensive documentation of procurement decisions and contract administration. Program Closeout Following a comprehensive review, the State Purchasing Director formally determined that the Rolling RFP pilot program would be closed effective July 1, 2024. All resulting contracts have transitioned to standard statewide contract structures, which incorporate defined solicitation periods and controlled opportunities for vendor participation through supplemental solicitations. Because the pilot program has been discontinued and replaced with traditional statewide contracting methods, legislative recommendations regarding continuation of the pilot are no longer necessary. Remedial Actions Aligned to Uniform Guidance In response to audit observations and in furtherance of compliance with Uniform Guidance, OMES is implementing the following corrective actions: 1. Enhanced Competition at the Transaction Level (2 CFR §200.319) For all service-based procurements utilizing statewide contracts, agencies will be required to conduct a documented second level of competition (e.g., multiple quotes, mini-bids, or competitive SOW processes) to ensure full and open competition at the task/order level. 2. Structured Re-Competition of Vendor Pools OMES will replace continuously open solicitations with time-bound supplemental RFPs, ensuring periodic recompetition and maintaining a manageable and auditable procurement environment. 3. Strengthened Cost Analysis and Documentation (2 CFR §200.324) OMES will reinforce requirements for price analysis and cost reasonableness determinations at both the contract and transaction levels, with enhanced documentation standards to support audit review. 4. Formalized Policies and Procedures (2 CFR §200.318(a)) OMES Central Purchasing is dedicated to documenting all procurement processes, particularly those impacting purchases using federal funds. This includes comprehensive SOPs, required contract attachments (including federal terms), and standardized evaluation and recordkeeping practices. Specifically, we have created SOPs for pilot programs and for statewide contracts generally. While comprehensive written procedures specific to the Rolling RFP pilot program had not yet been consolidated into a standalone procedure during the audit period, the program operated under existing procurement statutes, statewide solicitation procedures, evaluation documentation, internal operating procedures, and standardized contract documents. OMES has also implemented standardized procurement templates and required federal contract attachments that incorporate the clauses required under 2 CFR §200.327 and Appendix II to Part 200. These standardized documents promote consistent compliance across procurements utilizing federal funds. 5. Statewide Procurement Manual OMES has recently released the first-ever Oklahoma Procurement Manual, which provides statewide guidance to agencies and includes a dedicated section on federal grant compliance. The manual reinforces Uniform Guidance requirements, including competition, cost reasonableness, and documentation standards. 6. Ongoing Oversight and Training OMES will continue to provide training, procurement memoranda, and guidance to agencies to ensure consistent understanding and application of federal requirements, while reinforcing that subrecipients are responsible for compliance with the specific terms of their federal awards. Anticipated Completion Date Sine Die Responsible Contact Person Amanda Otis, State Purchasing Director for the State of Oklahoma

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Finding 1226917 (2024-094)

Material Weakness 2024

Oklahoma Water Resources Board

OK

Reporting Subrecipient Monitoring Matching / Level of Effort / Earmarking § 200.303 § 200.414 § 200.502 § 200.510

Finding Number 2024-094 Subject Heading (Financial) or AL no. and program name (Federal) 97.036 – Disaster Grants – Public Assistance Planned Corrective Action To address this finding, OEM will strengthen its review procedures for the SEFA by implementing a documented review process to verify the ac...

Finding Number 2024-094 Subject Heading (Financial) or AL no. and program name (Federal) 97.036 – Disaster Grants – Public Assistance Planned Corrective Action To address this finding, OEM will strengthen its review procedures for the SEFA by implementing a documented review process to verify the accuracy and completeness of information provided by ABS. OEM will coordinate with ABS to obtain and retain sufficient supporting documentation for amounts reported on the SEFA and will work with ABS to resolve any discrepancies identified during the review process. In addition, OEM will ensure staff responsible for reviewing the SEFA receive additional guidance and training on SEFA reporting requirements. These actions are intended to improve the accuracy and reliability of future SEFA reporting and strengthen compliance with applicable federal requirements. Anticipated Completion Date SFY26 Reporting Period Responsible Contact Person Brianna Thomas

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Finding 1226916 (2024-093)

Material Weakness 2024

Oklahoma Water Resources Board

OK

Subrecipient Monitoring § 200.303 § 200.332 § 200.344

Finding Number 2024-093 Subject Heading (Financial) or AL no. and program name (Federal) 97.036 – Disaster Grants – Public Assistance Planned Corrective Action Management acknowledges risk assessments were not performed in SFY24. Going forward, OEM will conduct risk assessments that are an annual re...

Finding Number 2024-093 Subject Heading (Financial) or AL no. and program name (Federal) 97.036 – Disaster Grants – Public Assistance Planned Corrective Action Management acknowledges risk assessments were not performed in SFY24. Going forward, OEM will conduct risk assessments that are an annual review for all open projects and a monthly review for any new applicants. They will involve feedback from both the subrecipient and OEM’s data and is completed in EMGrants. Anyone has the ability to see the applicant risk rating on the applicant homepage in the system. While there was a grant wide extension for period of performance, management acknowledges the applicants identified by SAI did not request time extensions for their specific project and therefore, did not meet period of performance requirements. OEM will implement procedures to ensure applicants meet period of performance deadlines and have proper time extensions documented when required. Anticipated Completion Date 6/30/2025 9/27/2026 Responsible Contact Person Abby Anderson Sofia Checketts

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Finding 1226910 (2024-084)

Material Weakness 2024

Oklahoma Water Resources Board

OK

Eligibility Internal Control / Segregation of Duties Subrecipient Monitoring

Finding Number 2024-084 Subject Heading (Financial) or AL no. and program name (Federal) 93.778 Medicaid Cluster Planned Corrective Action OKDHS agrees with the finding and recommendation. The agency recognizes that the volume of GI DX discrepancy messages, combined with limited automated triage cap...

Finding Number 2024-084 Subject Heading (Financial) or AL no. and program name (Federal) 93.778 Medicaid Cluster Planned Corrective Action OKDHS agrees with the finding and recommendation. The agency recognizes that the volume of GI DX discrepancy messages, combined with limited automated triage capabilities, contributed to delays in resolving exceptions within the required 45-calendar-day timeframe. As noted by the auditors, the existing process relied heavily on manual review and did not provide sufficient management oversight tools to effectively monitor aging discrepancies and ensure timely resolution. Corrective Action Planned: OKDHS has initiated a multi-faceted corrective action plan designed to improve the timeliness, consistency, and accountability of GI DX exception resolution. As part of this effort, OKDHS is developing an automated prescreening process for National New Hire (NNH), State New Hire (SNH), and Oklahoma Wage (OWG) discrepancy messages. The automated process is intended to evaluate discrepancies against established policy criteria and reduce the number of non-actionable matches requiring manual review. Discrepancies identified as requiring staff review will be routed to eligibility staff with standardized documentation and processing guida nee. Additionally, OKDHS is developing formal procedures governing the review, monitoring, and resolution of GIDX discrepancies. These procedures will def me staff responsibilities, supervisory oversight expectations, escalation requirements, and management use of exception monitoring reports to support timely resolution of discrepancies. Management reporting and monitoring controls are also being enhanced to improve visibility into outstanding discrepancies and aging trends. Supervisors and program management will utilize exception reporting to monitor workloads, identify training opportunities, and promote accountability for timely processing. OKDHS will also provide training and implementation guidance to staff and supervisors regarding revised workflows, discrepancy resolution requirements, documentation standards, and management monitoring expectations. The agency anticipates implementation of the planned enhancements beginning in October 2026, with continued monitoring and refinement following deployment to ensure the corrective actions effectively address the underlying control deficiencies identified in the finding. OHCA MEMBER AUDIT Auditor Response: Member Audit began receiving Medicaid files monthly in September of 2023. Files are continuing to be received from DHS each month. Audits are completed monthly and will continue indefinitely. Any discrepancies are discussed with OKDHS to determine the cause and remedy put in place to ensure any failed jobs were resolved. Anticipated Completion Date October 2026 Responsible Contact Person OKDHS Contact: Kayla Urtz, Director of Internal Audit OHCA Contact: Tana Parrott, Director of Member Audits

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Finding 1226910 (2024-084)

Material Weakness 2024

Oklahoma Water Resources Board

OK

Eligibility Internal Control / Segregation of Duties Subrecipient Monitoring

Finding Number 2024-084 Subject Heading (Financial) or AL no. and program name (Federal) 93.778 - Medicaid Planned Corrective Action OKDHS agrees with the finding and recommendation. The agency recognizes that the volume of GI DX discrepancy messages, combined with limited automated triage capabilit...

Finding Number 2024-084 Subject Heading (Financial) or AL no. and program name (Federal) 93.778 - Medicaid Planned Corrective Action OKDHS agrees with the finding and recommendation. The agency recognizes that the volume of GI DX discrepancy messages, combined with limited automated triage capabilities, contributed to delays in resolving exceptions within the required 45-calendar-day timeframe. As noted by the auditors, the existing process relied heavily on manual review and did not provide sufficient management oversight tools to effectively monitor aging discrepancies and ensure timely resolution. OKDHS has initiated a muti-faceted corrective action plan designed to improve the timeliness, consistency, and accountability of G1DX exception resolution. As part of this effort, OKDHS is developing an automated pre-screening process for National New Hire (NNH), State New Hire (SNH), and Oklahoma Wage (OWG) discrepancy messages. The automated process is intended to evaluate discrepancies against established policy criteria and reduce the number of non-actionable matches requiring manual review. Discrepancies identified as requiring staff review will be routed to eligibility staff with standardized documentation and processing guidance. Additionally, OKDHS is developing formal procedures governing the review, monitoring, and resolution of GIDX discrepancies. These procedures will define staff responsibilities, supervisory oversight expectations, escalation requirements, and management use of exception monitoring reports to support the timely resolution of discrepancies. Management reporting and monitoring controls are also being enhanced to improve visibility into outstanding discrepancies and aging trends. Supervisors and program management will utilize exception reporting to monitor workloads, identify training opportunities, and promote accountability for timely processing. OKDHS will also provide training and implementation guidance to staff and supervisors regarding revised workflows, discrepancy resolution requirements, documentation standards, and management monitoring expectations. The agency anticipates implementation of the planned enhancements beginning in October 2026, with continued monitoring and refinement following deployment to ensure the corrective actions effectively address the underlying control deficiencies identified in the finding. Anticipated Completion Date 10/5/26 and OHCA will continue monitoring through SFY2025 Responsible Contact Person Kayla Urtz and Tana Parrott, OHCA

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Finding 1226909 (2024-042)

Material Weakness 2024

Oklahoma Water Resources Board

OK

Reporting § 200.510

Finding Number 2024-042 Subject Heading (Financial) or AL no. and program name (Federal) 93.778 Medicaid Cluster Planned Corrective Action Management acknowledges the variances identified in the Medicaid, CHIP (COVID), and CHIP 64.21 federal expenditure amounts reported in GAAP Package Z. Upon revie...

Finding Number 2024-042 Subject Heading (Financial) or AL no. and program name (Federal) 93.778 Medicaid Cluster Planned Corrective Action Management acknowledges the variances identified in the Medicaid, CHIP (COVID), and CHIP 64.21 federal expenditure amounts reported in GAAP Package Z. Upon review, the discrepancies were determined to result from formula reference errors, missed carry-forward updates, and omitted adjustments within internal reporting worksheets. These issues were limited to the preparation of the financial schedules and did not affect underlying program expenditures, eligibility determinations, or federal claiming. Management has corrected all affected worksheets, updated the formula references, and ensured that all required adjustments— including administrative expenditures, Soon-to-be-Sooners updates, and 64.21 Line 4 collections—are accurately reflected in the revised totals. All impacted quarters have been updated accordingly. To strengthen controls and prevent recurrence, management has implemented a formal quarter-end reconciliation checklist, enhanced review procedures, and instituted secondary reviewer sign-off for all federal expenditure schedules. Worksheet dependencies and adjustment requirements are being developed in a federal reporting procedures manual that should be complete in October 2026. With the team now fully staffed, management is able to reinforce these procedures and improve the consistency and quality of the review and approval process. Management believes these corrective actions fully address the causes of the variances and will support accurate, complete, and reliable reporting in future periods. Anticipated Completion Date December 31, 2026 Responsible Contact Person Calvin Cole, OHCA Director Financial Accountability & Compliance, Susan Crooke, OHCA Senior Director Accountability & Compliance

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Finding 1226908 (2024-006)

Material Weakness 2024

Oklahoma Water Resources Board

OK

Questioned Costs Special Tests & Provisions Subrecipient Monitoring

Finding Number 2024-006 Subject Heading (Financial) or AL no. and program name (Federal) 93.778 Medicaid Cluster Planned Corrective Action Per recommendation from the State Auditor & Inspector listed above. The Oklahoma Health Care Authority (OHCA) will continue to implement the Corrective Action Pl...

Finding Number 2024-006 Subject Heading (Financial) or AL no. and program name (Federal) 93.778 Medicaid Cluster Planned Corrective Action Per recommendation from the State Auditor & Inspector listed above. The Oklahoma Health Care Authority (OHCA) will continue to implement the Corrective Action Plan processes which include collaborating with the Medicaid Fraud Control Unit at the Oklahoma Attorney General’s office quarterly to track the status of closed cases, obtaining sufficient supporting documentation, and timely report and refund identified overpayments on the CMS-64. Anticipated Completion Date Review at end of State Fiscal Year (SFY) 2025 Responsible Contact Person Kristin Edwards OHCA Senior Director of Program and Integrity

View Audit 409119

Finding 1226907 (2024-005)

Material Weakness 2024

Oklahoma Water Resources Board

OK

Allowable Costs / Cost Principles Eligibility HUD Housing Programs

Finding Number 2024-005 Subject Heading (Financial) or AL no. and program name (Federal) 93.767 Children’s Health Insurance Program 93.778 Medicaid Cluster Planned Corrective Action OKDHS Response: We are using Azure DevOps to track the work related to the findings for the mentioned issues. The work...

Finding Number 2024-005 Subject Heading (Financial) or AL no. and program name (Federal) 93.767 Children’s Health Insurance Program 93.778 Medicaid Cluster Planned Corrective Action OKDHS Response: We are using Azure DevOps to track the work related to the findings for the mentioned issues. The work is being completed under User Story 455612 - PS2 | AFS | Notices | Update Medical Notices Language for CMS Audit Finding Corrective Action (2024-005). To ensure all required notice language updates are implemented accurately and consistently, OKDHS is currently utilizing an Azure DevOps tracking tool to conduct a thorough discovery and analysis of all aspects of this issue. Our primary focus is identifying every notice and process that may be impacted by this change. OHCA Response: Additional post-CAP audits will be conducted by Member Audits upon notification from OHS all corrective measures have been implemented, should occur after August 1, 2026. Anticipated Completion Date August 1, 2026 Responsible Contact Person Chris Dees, Eligibility and Coverage Services Technical Director; April Anonsen, Deputy State Medicaid Director; Aubrey McDonald, OKDHS Medicaid Program Administrator; Tana Parrott, OHCA Director of Member Audits; Kristin Edwards OHCA Senior Director of Program & Accountability

View Audit 409119

Finding 1226879 (2024-010)

Material Weakness 2024

Oklahoma Water Resources Board

OK

Allowable Costs / Cost Principles

Finding Number 2024-010 Subject Heading (Financial) or AL no. and program name (Federal) 93.767 Children’s Health Insurance Program Planned Corrective Action OHCA remains committed to using established control processes and procedures to ensure medical claims are managed accurately and efficiently. ...

Finding Number 2024-010 Subject Heading (Financial) or AL no. and program name (Federal) 93.767 Children’s Health Insurance Program Planned Corrective Action OHCA remains committed to using established control processes and procedures to ensure medical claims are managed accurately and efficiently. Processes such as Provider Training, annual Payment Accuracy Measurement (PAM) project, medical reviews, data analytic processes, external CMS-UPIC CE and FFS audits, prior authorizations, system edits, continuously updating OHCA’s system with National Correct Coding Initiative (NCCI), and on a 3-year cycle the Federal Payment Error Rate Measurement (PERM) project. Anticipate the question costs of $1,996 will be reported in full by end of SFY2026 Q4 Below addresses each identified challenge from above and potential remedies to assist in mitigation in the future: One claim was unsupported by medical records. To address the finding associated with the claim containing unsupported medical records, the agency will return the federal share for SFY 2026, Quarter 4 associated with PI case number 2026E00013. The agency elected not to issue an error letter to the provider at this time because the provider is currently undergoing other reviews, and we do not want to jeopardize those processes. This type of error continues to be monitored by the PI team through PAM reviews and clinical provider audit reviews. When findings occur, those reviews will issue error letters, which also serve as provider education. One claim was for an evaluation that lacked supporting documentation for the start/stop time. Policy: OAC 317:30-3-15-units based on time – The finding related to one claim involved an evaluation that lacked supporting documentation for the start and stop time. A provider education letter addressing this issue was sent on 5/19/2026 under PI case number 2026E00014. The case will be forwarded to Finance and included in the quarterly reporting once all provider deadlines related to appeal rights have passed. The provider education letter informed the provider of the error—specifically, the absence of documented beginning and end times in the medical record. This type of error continues to be monitored by the PI team through PAM reviews and clinical provider audit reviews. When findings occur, those reviews will issue error letters, which also serve as provider education. One claim was for services performed by a provider not contracted as a Medicaid provider. To address the finding associated with the claim containing unsupported medical records, the agency will return the federal share for SFY 2026, Quarter 4 associated with PI case number 2026E00013. The agency elected not to issue an error letter to the provider at this time because the provider is currently undergoing other reviews, and we do not want to jeopardize those processes. This type of error continues to be monitored by the PI team through PAM reviews and clinical provider audit reviews. When findings occur, those reviews will issue error letters, which also serve as provider education. One claim had a payment error totaling $1,100, of which $850 ($1,100 x the applicable Federal Medical Assistance Percentage (FMAP) rate (77.27% for QE 6/30/24) is the federal questioned costs. To address the finding associated with the Single Contract Agreement (SCA) expenditure: Finance was notified and corrected the expenditure on 7/21/2025 for one day totaling $1,100 and is in PI case number 2026E00015. Two claims had documentation errors. One claim had a progress note in the medical records that was not signed by the rendering provider. The second was a DRG claim that billed for a beginning date of service that was prior to the doctor’s admission order. None of these claims resulted in an underpayment or overpayment. & One claim had a documentation error. The dates of service were entered incorrectly, resulting in 16 days instead of the correct 15 days. This claim did not result in an underpayment or overpayment. These types of deficiencies continue to be monitored by the PI team through PAM reviews and clinical provider audit reviews. Anticipated Completion Date September 30, 2026 Responsible Contact Person Kristin Edwards, OHCA Senior Director of Program Integrity and Accountability, James Keethler, OHCA Director Data Analytics & Payment Accuracy

View Audit 409119

Finding 1226868 (2024-071)

Material Weakness 2024

Oklahoma Water Resources Board

OK

Reporting

Finding Number 2024-071 Subject Heading (Financial) or AL no. and program name (Federal) 93.667 – SSBG Planned Corrective Action OKDHS agrees with the finding and recommendation. OKDHS will strengthen its internal controls by implementing a review and reconciliation process to ensure that grant draw...

Finding Number 2024-071 Subject Heading (Financial) or AL no. and program name (Federal) 93.667 – SSBG Planned Corrective Action OKDHS agrees with the finding and recommendation. OKDHS will strengthen its internal controls by implementing a review and reconciliation process to ensure that grant draw amounts requested through the Payment Management System (PMS) agree with supporting documentation prior to submission. Additionally, OKDHS will verify that expenditures reported on the Schedule of Expenditures of Federal Awards (SEFA) are accurately reconciled to supporting accounting records before the SEFA is finalized and submitted. These procedures are intended to improve the accuracy and completeness of federal financial reporting and reduce the risk of reporting discrepancies. Anticipated Completion Date N/A Responsible Contact Person Kevin Haddock & Amber Kelley

View Audit 409119

Finding 1226866 (2024-078)

Material Weakness 2024

Oklahoma Water Resources Board

OK

Reporting Allowable Costs / Cost Principles Matching / Level of Effort / Earmarking

Finding Number 2024-078 Subject Heading (Financial) or AL no. and program name (Federal) 93.658 – Foster Care Planned Corrective Action OKDHS concurs that documentation supporting the preparation, review, and reconciliation of the CB-496 report should be strengthened. OKDHS has previously directed t...

Finding Number 2024-078 Subject Heading (Financial) or AL no. and program name (Federal) 93.658 – Foster Care Planned Corrective Action OKDHS concurs that documentation supporting the preparation, review, and reconciliation of the CB-496 report should be strengthened. OKDHS has previously directed the CARE team to improve documentation of adjustments and corrections made during the financial reporting process so that changes are clearly supported and can be independently reviewed. OKDHS is currently working through its broader financial reporting and reconciliation processes to improve consistency in the preparation, documentation, review, and retention of supporting records. This work includes strengthening the documentation of adjustments and corrections and ensuring that differences between financial reports and underlying accounting or cost allocation records are clearly identified, explained, and supported. OKDHS will continue developing and implementing standardized procedures for the preparation and review of federal financial reports. The updated process will include clearer documentation requirements for adjustments and corrections, reconciliation of reported amounts to supporting financial records, and evidence of independent review prior to submission. Anticipated Completion Date 9/30/2026 Responsible Contact Person Kayla Urtz

View Audit 409119

Finding 1226865 (2024-025)

Material Weakness 2024

Oklahoma Water Resources Board

OK

Subrecipient Monitoring § 200.1 § 200.331 § 200.332 § 200.414 § 200.415

Finding Number 2024-025 Subject Heading (Financial) or AL no. and program name (Federal) 93.658 – Foster Care Planned Corrective Action Oklahoma Human Services (OKDHS) concurs with the recommendation. OKDHS has been working to centralize and strengthen its contract and subrecipient monitoring proces...

Finding Number 2024-025 Subject Heading (Financial) or AL no. and program name (Federal) 93.658 – Foster Care Planned Corrective Action Oklahoma Human Services (OKDHS) concurs with the recommendation. OKDHS has been working to centralize and strengthen its contract and subrecipient monitoring processes to improve consistency in the identification, documentation, risk assessment, and monitoring of subrecipient relationships across the agency. As part of this effort, OKDHS is updating its procedures and standardized documentation to better ensure that subawards include required federal award information, program responsibilities and deliverables are sufficiently defined, required documentation is obtained and retained, and subrecipient risk assessments and monitoring activities are completed and documented consistently. OKDHS will implement updated, centralized contract and subrecipient monitoring procedures, including standardized tools and documentation requirements designed to address the conditions identified in the finding. The updated process will clarify responsibilities for documenting subrecipient risk assessments, required federal award information, contractual requirements, deliverables, and ongoing monitoring activities. Anticipated Completion Date 9/30/2026 Responsible Contact Person Kayla Urtz

View Audit 409119

Finding 1226857 (2024-081)

Material Weakness 2024

Oklahoma Water Resources Board

OK

Eligibility Internal Control / Segregation of Duties Subrecipient Monitoring

Finding Number 2024-081 Subject Heading (Financial) or AL no. and program name (Federal) 93.575 – CCDF Cluster Planned Corrective Action OKDHS agrees with the finding and recommendation. The agency recognizes that the volume of GI DX discrepancy messages, combined with limited automated triage capab...

Finding Number 2024-081 Subject Heading (Financial) or AL no. and program name (Federal) 93.575 – CCDF Cluster Planned Corrective Action OKDHS agrees with the finding and recommendation. The agency recognizes that the volume of GI DX discrepancy messages, combined with limited automated triage capabilities, contributed to delays in resolving exceptions within the required 45-calendar-day timeframe. As noted by the auditors, the existing process relied heavily on manual review and did not provide sufficient management oversight tools to effectively monitor aging discrepancies and ensure timely resolution. OKDHS has initiated a muti-faceted corrective action plan designed to improve the timeliness, consistency, and accountability of G1DX exception resolution. As part of this effort, OKDHS is developing an automated pre-screening process for National New Hire (NNH), State New Hire (SNH), and Oklahoma Wage (OWG) discrepancy messages. The automated process is intended to evaluate discrepancies against established policy criteria and reduce the number of non-actionable matches requiring manual review. Discrepancies identified as requiring staff review will be routed to eligibility staff with standardized documentation and processing guidance. Additionally, OKDHS is developing formal procedures governing the review, monitoring, and resolution of GIDX discrepancies. These procedures will define staff responsibilities, supervisory oversight expectations, escalation requirements, and management use of exception monitoring reports to support the timely resolution of discrepancies. Management reporting and monitoring controls are also being enhanced to improve visibility into outstanding discrepancies and aging trends. Supervisors and program management will utilize exception reporting to monitor workloads, identify training opportunities, and promote accountability for timely processing. OKDHS will also provide training and implementation guidance to staff and supervisors regarding revised workflows, discrepancy resolution requirements, documentation standards, and management monitoring expectations. The agency anticipates implementation of the planned enhancements beginning in October 2026, with continued monitoring and refinement following deployment to ensure the corrective actions effectively address the underlying control deficiencies identified in the finding. Anticipated Completion Date 10/5/26 Responsible Contact Person Kayla Urtz

View Audit 409119

Finding 1226852 (2024-067)

Material Weakness 2024

Oklahoma Water Resources Board

OK

Allowable Costs / Cost Principles Questioned Costs Eligibility § 200.303

Finding Number 2024-067 Subject Heading (Financial) or AL no. and program name (Federal) 93.575 – CCDF Cluster Planned Corrective Action OKDHS agrees that additional review procedures would have strengthened controls over the Workforce Support Grant payment approval process and may have prevented th...

Finding Number 2024-067 Subject Heading (Financial) or AL no. and program name (Federal) 93.575 – CCDF Cluster Planned Corrective Action OKDHS agrees that additional review procedures would have strengthened controls over the Workforce Support Grant payment approval process and may have prevented the issuance of payments to individuals who did not meet all eligibility requirements at the time of application. The agency concurs that two Workforce Support Grant payments were issued to individuals whose employment termination dates preceded the application date. As a result, the individuals did not meet the program eligibility requirements for receipt of the workforce bonus payment. Upon identification of the issue, OKDHS reviewed the circumstances surrounding the payments and initiated appropriate corrective actions. The agency has evaluated the affected payments and will pursue recovery of funds as appropriate. OKDHS has reviewed the eligibility verification process associated with Workforce Support Grant payments and has implemented additional procedures designed to strengthen verification of employment status prior to payment approval. These procedures include enhanced review of available employment records and validation of eligibility information submitted as part of the application process. Additionally, OKDHS will continue recovery efforts related to identified ineligible payments and will monitor compliance with updated review procedures to reduce the likelihood of similar errors occurring in future provider assistance initiatives. Anticipated Completion Date N/A Responsible Contact Person Kayla Urtz

View Audit 409119

Finding 1226851 (2024-037)

Material Weakness 2024

Oklahoma Water Resources Board

OK

Allowable Costs / Cost Principles Internal Control / Segregation of Duties

Finding Number 2024-037 Subject Heading (Financial) or AL no. and program name (Federal) 93.575 – CCDF Cluster Planned Corrective Action The Oklahoma Department of Human Services (OKDHS) respectfully disagrees with this finding because the questioned costs are based on application of standard Child ...

Finding Number 2024-037 Subject Heading (Financial) or AL no. and program name (Federal) 93.575 – CCDF Cluster Planned Corrective Action The Oklahoma Department of Human Services (OKDHS) respectfully disagrees with this finding because the questioned costs are based on application of standard Child Care payment requirements rather than the temporary COVID-19 payment flexibilities that governed the program during the audit period. Oklahoma's temporary Child Care payment flexibilities were incorporated into the Oklahoma Child Care and Development Fund (CCDF) State Plan Amendments and approved by the Administration for Children and Families (ACF). Those approved provisions constituted the governing payment requirements during the public health emergency and represent the appropriate criteria against which these transactions should be evaluated. The finding acknowledges that Oklahoma's temporary COVID-19 payment flexibilities included reimbursement of part-time school-age care at the full-time reimbursement rate and that these temporary policies were incorporated into the federally approved State Plan Amendments. These temporary payment methodologies were intentionally established to stabilize child care providers during the COVID-19 public health emergency. However, despite acknowledging the existence of these federally approved flexibilities, the questioned costs are derived by applying standard program requirements rather than the temporary payment framework approved by ACF and in effect during the audit period. Accordingly, the Agency believes the transactions should be evaluated using the federally approved emergency payment requirements rather than the standard reimbursement methodology that had been temporarily modified. The Agency further notes that the costs questioned are not based on payments for services provided during the regular school day, but rather on the auditors' interpretation of how the temporary COVID-19 payment flexibilities should have been applied. Likewise, the audit does not identify deficiencies in provider eligibility determinations, approved reimbursement rates, payment calculations, or the Agency's authority to implement the temporary payment flexibilities approved by ACF. Instead, the disagreement centers on the interpretation of the temporary payment rules that governed the program during the emergency period. OKDHS recognizes that the audit identified an opportunity to strengthen detective controls over attendance patterns and absent-day payments. The Agency has continued to enhance provider guidance, supervisory review, and analytical monitoring to better identify potential payment anomalies and improve consistency in the administration of payment policies. Because the questioned costs result from application of audit criteria that do not reflect the federally approved payment framework governing the audit period, OKDHS respectfully disagrees with the condition, cause, effect, recommendation, and questioned costs identified in this finding. Although the Agency disagrees with the audit's conclusions, Child Care Services has continued to review and clarify payment guidance, reinforce policy training, and strengthen oversight procedures to support consistent administration of both temporary and permanent payment policies. This will be implemented with the upcoming child care billing system. Anticipated Completion Date In Progress Responsible Contact Person Kayla Urtz

View Audit 409119

Finding 1226850 (2024-033)

Material Weakness 2024

Oklahoma Water Resources Board

OK

Allowable Costs / Cost Principles Subrecipient Monitoring § 200.1 § 200.303 § 200.403

Finding Number 2024-033 Subject Heading (Financial) or AL no. and program name (Federal) 93.575 – CCDF Cluster Planned Corrective Action The Agency agrees that additional oversight activities could have provided greater visibility into provider use of Stabilization Payments and has incorporated less...

Finding Number 2024-033 Subject Heading (Financial) or AL no. and program name (Federal) 93.575 – CCDF Cluster Planned Corrective Action The Agency agrees that additional oversight activities could have provided greater visibility into provider use of Stabilization Payments and has incorporated lessons learned into subsequent provider assistance initiatives through enhanced monitoring, documentation expectations, and recovery procedures for confirmed noncompliance. However, OKDHS respectfully disagrees with several conclusions contained within the finding, including the characterization of questioned costs and the extrapolation of provider-specific exceptions across the broader population of Stabilization Payment recipients. The Child Care Stabilization Payment Program was established under the American Rescue Plan Act to provide emergency financial assistance intended to stabilize the child care industry during the COVID-19 public health emergency. Stabilization Payments were awarded using an approved payment methodology based upon provider eligibility, licensed capacity, and applicable STAR level. As previously communicated to the Administration for Children and Families (ACF), OKDHS does not concur with the assertion that the monitoring activities identified by SAI were required under the Stabilization Payment Program. The applicable Notice of Award specifically excluded significant portions of the traditional federal post-award administrative requirements, including most post-award requirements and the federal cost principles. Accordingly, OKDHS does not believe the Stabilization Payment Program should be evaluated using the same oversight framework applicable to traditional reimbursement or discretionary grant programs. Providers receiving Stabilization Payments were required to certify that funds would be used only for allowable purposes established by the American Rescue Plan Act and applicable program guidance and were responsible for maintaining supporting documentation for those expenditures. When information indicating potential misuse of funds is identified, OKDHS reviews the circumstances and pursues recovery actions as appropriate. While documentation obtained from providers may assist in evaluating provider compliance, the absence of documentation during the audit does not, by itself, establish that Stabilization Payments were improperly awarded or expended for unallowable purposes. OKDHS also respectfully disagrees with the treatment of unsupported expenditures as equivalent to known unallowable expenditures. Unsupported expenditures reflect circumstances in which documentation was unavailable for audit review and do not establish that funds were expended for unallowable purposes. As a result, the Agency believes the questioned costs materially overstate actual federal exposure. Finally, OKDHS does not concur that provider-specific exceptions may be extrapolated across the broader provider population. The exceptions identified by SAI reflect individual provider documentation and spending practices rather than a common agency-level eligibility, payment methodology, or processing error. Accordingly, the Agency does not believe the audit evidence supports extrapolating these exceptions to estimate program-wide questioned costs. Although the Stabilization Payment Program has concluded, OKDHS has strengthened oversight of subsequent provider assistance initiatives by enhancing monitoring procedures, documentation expectations, and recovery processes for confirmed provider noncompliance. The Agency will continue reviewing cases identified through audit activities and pursue recovery of confirmed unallowable expenditures in accordance with applicable federal requirements. Anticipated Completion Date N/A Responsible Contact Person Kayla Urtz

View Audit 409119

Finding 1226849 (2024-032)

Material Weakness 2024

Oklahoma Water Resources Board

OK

Allowable Costs / Cost Principles Equipment & Real Property Management Questioned Costs § 200.303

Finding Number 2024-032 Subject Heading (Financial) or AL no. and program name (Federal) 93.575 – CCDF Cluster Planned Corrective Action The Oklahoma Department of Human Services (OKDHS) partially concurs with this finding. The Agency agrees opportunities existed to strengthen oversight of Child Car...

Finding Number 2024-032 Subject Heading (Financial) or AL no. and program name (Federal) 93.575 – CCDF Cluster Planned Corrective Action The Oklahoma Department of Human Services (OKDHS) partially concurs with this finding. The Agency agrees opportunities existed to strengthen oversight of Child Care provider monitoring activities and has implemented corrective actions to enhance monitoring procedures, documentation, supervisory oversight, Quality Rating and Improvement System (QRIS) verification, and monitoring during non-traditional operating hours. Child Care Services has resumed full QRIS monitoring, implemented precertification visits, enhanced monitoring documentation, strengthened supervisory review, expanded staff training, and continues to refer suspected fraud or misuse of program funds to the Office of Inspector General for investigation. The Agency also recognizes the analytical techniques utilized during the audit as a valuable opportunity to strengthen its detective control environment. OKDHS is evaluating implementation of similar data analytics as part of its routine monitoring activities to better identify providers that warrant additional review. These analytics will enhance oversight by directing monitoring resources toward higher-risk providers while complementing existing licensing and investigative processes. This will become possible to implement shortly with the implementation of the new childcare invoicing system. However, the Agency respectfully disagrees with the questioned costs. The finding identifies a weakness in one component of the Agency's oversight framework but does not demonstrate that the underlying provider payments failed to satisfy applicable federal or state reimbursement requirements. Licensing monitoring is intended to evaluate compliance with health and safety requirements, while payment allowability is supported through separate controls, including child eligibility determinations, authorized rate assignments, electronic attendance records, and automated payment system edits. The audit did not identify deficiencies in these payment controls or demonstrate that providers receiving the questioned payments failed to meet the requirements governing reimbursement. The Agency also respectfully disagrees with the report's characterization of the non-traditional hours payment methodology. Non-traditional hours enhancements are payable only when established eligibility, attendance, and reimbursement requirements have been satisfied in accordance with the approved Child Care Provider Rate Schedule. Accordingly, the Agency does not believe the hypothetical examples contained in the finding accurately reflect how non-traditional hours payments are authorized or processed. While the Agency agrees that strengthening monitoring activities and expanding analytical oversight will further reduce program risk, the presence of analytical risk indicators or the absence of a monitoring visit during nontraditional hours does not, by itself, establish that otherwise supported expenditures are unsupported or unallowable. The Agency believes the audit appropriately identified opportunities to strengthen preventive and detective controls but does not believe the evidence demonstrates that the questioned costs represent improper expenditures. Anticipated Completion Date In Progress Responsible Contact Person Kayla Urtz

View Audit 409119

Finding 1226848 (2024-031)

Material Weakness 2024

Oklahoma Water Resources Board

OK

Allowable Costs / Cost Principles § 200.1 § 200.303 § 200.403

Finding Number 2024-031 Subject Heading (Financial) or AL no. and program name (Federal) 93.575 – CCDF Cluster Planned Corrective Action OKDHS agrees that certain administrative errors identified through program reviews and audit activities, including confirmed payment calculation errors, eligibilit...

Finding Number 2024-031 Subject Heading (Financial) or AL no. and program name (Federal) 93.575 – CCDF Cluster Planned Corrective Action OKDHS agrees that certain administrative errors identified through program reviews and audit activities, including confirmed payment calculation errors, eligibility determination issues, attendance verification deficiencies, and provider noncompliance, require corrective action. The Agency has initiated reviews and recovery efforts for confirmed overpayments and instances of provider noncompliance and continues to strengthen monitoring, award calculations, documentation requirements, and recovery procedures for provider assistance programs. However, OKDHS respectfully disagrees with several conclusions contained within this finding, including the characterization of questioned costs, the treatment of unsupported expenditures as unallowable expenditures, the attribution of provider actions directly to the Agency, the extrapolation methodology, and conclusions regarding the overall design and effectiveness of the Desert Grant Program. The Desert Grant Program was developed using emergency American Rescue Plan Act (ARPA) funding to rapidly increase child care capacity in underserved areas of Oklahoma within federally established obligation and liquidation deadlines. As previously communicated to the Administration for Children and Families (ACF), the applicable Notice of Award expressly excluded substantial portions of the traditional federal grant administration requirements, including most pre-award requirements, most post-award requirements, and the federal cost principles. Accordingly, OKDHS does not concur that the program should be evaluated using the same framework applicable to traditional federal grant programs or that retrospective disagreement with the program's design, funding methodology, or implementation strategy constitutes evidence of noncompliance. The Agency further does not concur with the treatment of unsupported expenditures as equivalent to unallowable expenditures. Providers receiving Desert Grant funding certified that grant funds would be used only for allowable purposes, agreed to maintain supporting documentation, and acknowledged their obligation to repay funds if they failed to comply with program requirements. While the absence of documentation during audit testing may warrant additional review, it does not independently establish that funds were expended for unallowable purposes. Likewise, the closure of a provider or other post-award business outcomes do not, by themselves, establish misuse of grant funds or Agency noncompliance. The Agency continues to evaluate these cases individually and pursue recovery when the facts demonstrate noncompliance with the terms of the award. OKDHS also respectfully disagrees with conclusions regarding the overall effectiveness or sustainability of the Desert Grant Program. The audit contains numerous observations regarding alternative funding methodologies, incremental payment structures, business planning considerations, sustainability assumptions, and other program design decisions. While these observations may identify opportunities for future program improvement, they represent differences in program design philosophy rather than evidence that the Agency failed to administer the federal award in accordance with applicable requirements. The Agency does not believe retrospective assessments regarding how the program could have been structured differently constitute a basis for questioned costs. Finally, OKDHS does not concur with the extrapolation methodology reflected in this finding. The questioned costs combine fundamentally different exception types, including confirmed administrative errors, unsupported expenditures, provider documentation deficiencies, provider closures, provider spending decisions, and observations regarding program design. These categories arise from different causes, involve different responsibilities, and require different corrective actions. Accordingly, OKDHS does not believe combining these distinct exception types into a single projected questioned cost accurately reflects actual noncompliance or federal exposure associated with the program. Although the Agency respectfully disagrees with significant portions of the finding, OKDHS has strengthened oversight of provider assistance initiatives by enhancing award calculations, documentation expectations, provider certifications, monitoring activities, analytical review procedures, and recovery processes. The Agency will continue reviewing Desert Grant awards, recovering confirmed overpayments and unallowable expenditures where appropriate, and incorporating lessons learned into future program implementation. Anticipated Completion Date On Going Responsible Contact Person Kayla Urtz

View Audit 409119

Finding 1226839 (2024-082)

Material Weakness 2024

Oklahoma Water Resources Board

OK

Eligibility Internal Control / Segregation of Duties Subrecipient Monitoring

Finding Number 2024-082 Subject Heading (Financial) or AL no. and program name (Federal) 93.568 – LIHEAP Planned Corrective Action OKDHS agrees with the finding and recommendation. The agency recognizes that the volume of GI DX discrepancy messages, combined with limited automated triage capabilitie...

Finding Number 2024-082 Subject Heading (Financial) or AL no. and program name (Federal) 93.568 – LIHEAP Planned Corrective Action OKDHS agrees with the finding and recommendation. The agency recognizes that the volume of GI DX discrepancy messages, combined with limited automated triage capabilities, contributed to delays in resolving exceptions within the required 45-calendar-day timeframe. As noted by the auditors, the existing process relied heavily on manual review and did not provide sufficient management oversight tools to effectively monitor aging discrepancies and ensure timely resolution. OKDHS has initiated a muti-faceted corrective action plan designed to improve the timeliness, consistency, and accountability of G1DX exception resolution. As part of this effort, OKDHS is developing an automated pre-screening process for National New Hire (NNH), State New Hire (SNH), and Oklahoma Wage (OWG) discrepancy messages. The automated process is intended to evaluate discrepancies against established policy criteria and reduce the number of non-actionable matches requiring manual review. Discrepancies identified as requiring staff review will be routed to eligibility staff with standardized documentation and processing guidance. Additionally, OKDHS is developing formal procedures governing the review, monitoring, and resolution of GIDX discrepancies. These procedures will define staff responsibilities, supervisory oversight expectations, escalation requirements, and management use of exception monitoring reports to support the timely resolution of discrepancies. Management reporting and monitoring controls are also being enhanced to improve visibility into outstanding discrepancies and aging trends. Supervisors and program management will utilize exception reporting to monitor workloads, identify training opportunities, and promote accountability for timely processing. OKDHS will also provide training and implementation guidance to staff and supervisors regarding revised workflows, discrepancy resolution requirements, documentation standards, and management monitoring expectations. The agency anticipates implementation of the planned enhancements beginning in October 2026, with continued monitoring and refinement following deployment to ensure the corrective actions effectively address the underlying control deficiencies identified in the finding. Anticipated Completion Date 10/5/26 Responsible Contact Person Kayla Urtz

View Audit 409119

Finding 1226838 (2024-060)

Material Weakness 2024

Oklahoma Water Resources Board

OK

Eligibility Internal Control / Segregation of Duties Questioned Costs § 200.303

Finding Number 2024-060 Subject Heading (Financial) or AL no. and program name (Federal) 93.658 - LIHEAP Planned Corrective Action OKDHS concurs that the control environment in place during the period reviewed did not provide adequate segregation of duties and allowed incompatible responsibilities t...

Finding Number 2024-060 Subject Heading (Financial) or AL no. and program name (Federal) 93.658 - LIHEAP Planned Corrective Action OKDHS concurs that the control environment in place during the period reviewed did not provide adequate segregation of duties and allowed incompatible responsibilities to be concentrated within the program area. OKDHS takes the identified fraudulent activity and associated control weaknesses seriously. The fraudulent activity involved intentional actions by a former employee who was able to exploit excessive access and insufficient segregation between program administration, vendor maintenance, and payment-related processes. Upon identification of the suspected activity, OKDHS took action to remove the employee's access, terminate employment, and refer the matter for investigation and appropriate legal action. OKDHS continues to cooperate with investigative authorities regarding the full scope of the activity. In response, OKDHS is not limiting corrective action to additional review within the existing LIHEAP process. The Agency is redesigning the underlying business processes to separate program administration from vendor registration, vendor maintenance, contracting, financial reporting, and payment processing. The corrective actions described below are intended to establish independent controls across multiple organizational functions and reduce reliance on information prepared and controlled solely within the program area. Enhanced Financial Reporting and Oversight OKDHS Finance is working to obtain more detailed, transaction-level LIHEAP information to support independent financial oversight and reconciliation. Historically, Finance relied substantially on summarized information provided by the program area. The enhanced reporting structure is intended to provide Finance with greater visibility into underlying LIHEAP transactions and improve its ability to independently reconcile, review, and analyze program expenditures. This increased access to detailed information will also support the development of exception reporting and other analytical procedures designed to identify unusual payment activity, vendor activity, or other anomalies requiring additional review. Transition of LIHEAP Payments to PeopleSoft OKDHS is working with its technical teams to transition LIHEAP payment processing to PeopleSoft. This change will integrate LIHEAP payments into the Agency's established financial system and associated financial controls rather than maintaining a separate program controlled vendor and payment process. Under the redesigned process, LIHEAP providers will be required to complete the applicable statewide vendor registration process before receiving payment. Vendor establishment and maintenance, including changes to vendor information, will therefore be subject to controls outside of the LIHEAP program area. The transition will eliminate the program area's ability to independently maintain the vendor information used to facilitate LIHEAP payments and will provide greater segregation between program eligibility and benefit authorization responsibilities and the vendor establishment and payment functions. Centralized Vendor Registration and Maintenance As part of the transition to PeopleSoft, the existing AFS vendor-maintenance process will be replaced by the statewide vendor registration and maintenance process. LIHEAP program staff will no longer independently control the establishment or maintenance of the vendor records used for payment. This change is intended to ensure that vendor creation and modification are performed through an independent process and are appropriately separated from program functions responsible for determining eligibility and authorizing benefits. Formal Provider Contracting OKDHS Procurement is working to establish contracts with LIHEAP providers. Formalizing provider relationships through the procurement and contracting process will establish additional independent review and documentation before providers participate in the program and receive payments. The contracting process will also provide a defined mechanism for establishing provider responsibilities, maintaining provider information, and addressing compliance or performance concerns. Strengthened Segregation of Duties Collectively, these changes are designed to establish segregation across the major components of the LIHEAP process: • AFS/LIHEAP program staff will remain responsible for program administration and applicable eligibility and benefit determinations; • Statewide vendor registration and financial system processes will control vendor establishment and maintenance; • Procurement will oversee the formal contracting process with participating providers; and • Finance will have increased access to detailed transaction information to support independent financial oversight, reconciliation, and analysis. This structure is intended to prevent a single employee or organizational unit from controlling the program, vendor, and payment functions necessary to initiate and conceal improper transactions. System Controls and Monitoring As the redesigned processes are implemented, OKDHS will continue to evaluate system controls, access permissions, exception reporting, and data analytics to identify unusual vendor or payment activity. The transition to centralized vendor registration, PeopleSoft payment processing, formal provider contracting, and enhanced financial reporting will provide additional opportunities for independent review and monitoring. OKDHS will also continue to cooperate with OIG and other appropriate investigative and legal authorities regarding the identified fraudulent activity and will pursue appropriate recovery and corrective actions based on the results of those proceedings. These actions represent a significant redesign of the LIHEAP control environment and are intended to address the underlying conditions that allowed the fraudulent activity to occur and remain undetected. By distributing responsibility for program administration, vendor registration and maintenance, contracting, financial oversight, and payment processing across independent functions, OKDHS is establishing a more sustainable control structure designed to reduce the risk of similar fraudulent activity in the future. Anticipated Completion Date In Progress Responsible Contact Person Kayla Urtz

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