2024-003 – Cash Management Approval Federal Programs – Research and Development Cluster (Assistance Listing No. 98.001) Federal Agencies - U.S. Agency for International Development Federal Award Year – July 1, 2023 to June 30, 2024 Compliance Requirement – Cash Management Criteria Requirement: Non-federal entities must minimize the time elapsing between the transfer of funds from the US Treasury or pass-through entity and disbursement by the non-federal entity for direct program or project costs and the proportionate share of allowable indirect costs, whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means (2 CFR section 200.305(b)). The reimbursement payment method is the preferred payment method if (a) the non-federal entity cannot the meet the requirements in 2 CFR section 200.305(b)(1) for advance payment, (b) the federal awarding agency sets a specific condition for use of the reimbursement or (c) if requested by the non-federal entity (2 CFR sections 200.305(b)(3) and 200.208). The reimbursement payment method also may be used on a federal award for construction or for other construction activity as specified in 2 CFR section 200.305(b)(3). Condition Found: For two out of thirty-one samples, the institution did not maintain appropriate documentation to evidence the approval of the drawdown request. This resulted in an ineffective control over the review and approval of cash drawdowns. Cause and Possible Asserted Effect: The grants department had turnover in the current year, which resulted in inconsistent documentation of approvals. Therefore, the institution’s control to review and approve cash drawdowns did not operate consistently to ensure requests for reimbursement were properly approved and evidence of the review was maintained. Identification of Questioned Costs: There are no questioned costs associated with this finding. Sampling: The sample was not intended to be and was not a statistically valid sample. Identification of Repeat Finding: This finding is not a repeat of a finding in the immediately prior year Recommendation: Our recommendation is for management to reinforce and train those individuals in the compliance control ownership role to ensure controls are operating as designed in order to prevent, or detect and correct noncompliance on a timely basis. Specifically, strengthening its processes and documentation requirements around the review and approval of cash drawdown requests. This will help ensure that controls are functioning as intended, thereby preventing or promptly identifying and rectifying instances of noncompliance. Views of Responsible Officials: Management agrees with the findings and recommendations. Through the merger with Old Dominion University, additional controls have been adopted around the processes and controls around the accuracy of the review and approval of cash drawdown requests.
2024-017 The Housing Finance Commission did not have adequate internal controls over reporting requirements for the Homeowner Assistance Fund program. Assistance Listing Number and Title: 21.026 COVID-19 Homeowner Assistance Fund Federal Grantor Name: U.S. Department of the Treasury Federal Award/Contract Number: None Pass-through Entity Name: None Pass-through Award/Contract Number: None Applicable Compliance Component: Reporting Known Questioned Cost Amount: None Prior Year Audit Finding: Yes, Finding 2023-025 Background The American Rescue Plan Act of 2021 provided $9.96 billion to the Homeowner Assistance Fund (HAF) program. The U.S. Department of the Treasury provides funds directly to states, U.S. territories and Indian tribes to assist eligible homeowners experiencing financial hardship due to the COVID-19 pandemic. Program funds can be used to prevent mortgage delinquencies and defaults, foreclosures, loss of utilities or home energy services, and homeowner displacement. The law prioritizes funds for homeowners who have experienced hardships, leveraging local and national income indicators to maximize the program’s impact. The Housing Finance Commission administers the HAF program in Washington. In fiscal year 2024, the Commission spent about $70.8 million in HAF funds. The Commission implemented a pilot program before launching the main HAF program. The Commission contracted with a contractor to help implement the main HAF program and maintain participant data. The Commission is required to submit an annual performance report that provides an overview of its intended and actual uses of funding to-date for the pilot and main HAF programs. The federal grantor identified two key lines items on the report that contained critical information: 1. Socially Disadvantaged Individuals (SDIs) – Quantifiable Objective Criteria: Participants are providing not less than 60% of funds to homeowners with income less than 100% area median income (AMI) or 100% of U.S. median income. 2. AMI – Quantifiable Objective Criteria: Participants target homeowners that are classified as SDI and 100% AMI or less. The HAF Plan, approved by the federal grantor, outlines the budget allocations, goals and types of assistance for the Washington HAF program. The HAF reporting portal automatically populates each section of the annual report template with information from this plan. The Commission is required to submit a narrative on the status of each section. Commission staff use participant data provided by the contractor to complete the report template. Once completed, the preparer submits the report in the HAF reporting portal without management review. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. In prior audits, we reported the Commission did not have adequate internal controls over and did not comply with reporting requirements. The prior finding number was 2023-025. Description of Condition The Commission did not have adequate internal controls over reporting requirements for the HAF program. The contractor only provided summary-level data to the Commission at the time of reporting. As a result, Commission staff did not have detailed supporting documentation to review to verify that the total amounts in the contractor’s reports were complete and accurate. Additionally, the Commission did not have documented evidence to support that management reviewed the annual report before submission. We consider these internal control deficiencies to be a material weakness. Cause of Condition The Commission did not require the contractor to submit detailed support for the total numbers provided for reporting to ensure all categories were included. Additionally, the Commission did not ensure adequate management review of the report before submission. Effect of Condition Without establishing adequate internal controls, which should include reviewing the reports and the detailed supporting documentation to ensure the correct data is reported, management cannot ensure that the reports are complete and accurate. Recommendations We recommend the Commission: • Establish effective internal controls to ensure the reports are accurate and complete • Ensure that management performs and documents an adequate review of the supporting documentation before submitting reports to the grantor Commission’s Response The Commission concurs with this finding. The Commission has implemented a system of controls and management review to ensure that data reported to the federal grantor is complete and accurate. The auditor’s recommendations came after the FY 23 Annual Report was filed and will be reflected in the upcoming FY24 Annual Report. The new process has been used in the quarterly reporting. Auditor’s Remarks We thank the Commission for its cooperation and assistance throughout the audit. We will review the status of the Commission's corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 CFR Part 200, Uniform Guidance, section 328, Financial reporting, states: (a) The Federal agency must require only OMB-approved government-wide data elements on recipient financial reports. At the time of publication, this consists of the Federal Financial Report (SF-425); however, this also applies to any future OMB-approved government-wide data elements available from the OMB-designated standards lead. (b) The Federal agency or pass-through entity must collect financial reports no less than annually. The Federal agency or pass-through entity may not collect financial reports more frequently than quarterly unless a specific condition has been implemented in accordance with § 200.208. To the extent practicable, the Federal agency or pass-through entity should collect financial reports in coordination with performance reports. (c) The recipient or subrecipient must submit financial reports as required by the Federal award. Reports submitted annually by the recipient or subrecipient must be due no later than 90 calendar days after the reporting period. Reports submitted quarterly or semiannually must be due no later than 30 calendar days after the reporting period. (d) The final financial report submitted by the recipient must be due no later than 120 calendar days after the conclusion of the period of performance. A subrecipient must submit a final financial report to a pass-through entity no later than 90 calendar days after the conclusion of the period of performance. See also § 200.344. The Federal agency or pass-through entity may extend the due date for any financial report with justification from the recipient or subrecipient. Title 2 CFR Part 200, Uniform Guidance, section 516, Audit findings, establishes reporting requirements for audit findings. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. The U.S. Department of the Treasury’s Homeowner Assistance Fund: Guidance on Participant Compliance and Reporting Responsibilities, states, in part: Programmatic Information Requirements HAF participants are required to submit an Annual Performance Report on an annual basis and demonstrate the impact of the HAF-financed programs. Reports should include data related to program outputs and outcomes against the stated objectives of the HAF participant’s HAF Grant Plan. Performance Goals HAF participants initially submitted performance goals on the use of HAF awarded funds in their approved Grantee Plan. Each one of the performance goals should have identified how the HAF participant will address homeowner needs and should have been disaggregated by key characteristics such as mortgage type, racial and ethnic demographics, and/or geographic areas, as appropriate. HAF participants will be required to provide a status update and quantitative measures, if applicable, on each of their initial performance goals set forth in their Grantee Plan. Please note, HAF participants will not have the ability to alter their original performance goals noted in their Grantee Plan nor add additional performance goals in the Annual Report. Methods for Targeting and HAF Funding HAF participants were asked in their original Grantee Plan to describe how the HAF participant will effectively target HAF award funds to (1) homeowners with incomes equal to or less than 100% of the area median income or equal to or less than 100% of the median income for the United States, whichever is greater; and (2) socially disadvantaged individuals. The description included the HAF participant’s targeting strategies. HAF participants will be required to provide an update on their targeting methods and if they have appropriately executed targeting methods according to their original Grantee Plan.
Criteria: Per 34 CFR 685.300(b)(5), to participate in the Direct Loan Program, a school must, on a monthly basis, reconcile institutional records with Direct Loan funds received from the Secretary and Direct Loan disbursement records submitted to, and accepted by, the Secretary. Condition/context: Direct Loan reconciliations were not completed for six months of the fiscal year - the months of January 2024 through June 2024. Additionally, support for Direct Loan reconciliations that had been completed was not maintained during the year. Cause: During the transition of Student Financial Aid Directors during the year, there was an issue in which the SAIG was unavailable to the Financial Aid Director due to previous access at another institution. Effect: If the College fails to comply with the terms and conditions of a Federal award, the Federal awarding agency may impose additional conditions, as described in 2 CFR 200.208, or implement other remedies for noncompliance, as described in 2 CFR 200.339. Additionally, if not completed on a regular basis, the school is at risk of not meeting disbursement reporting and excess cash deadlines. Questioned costs: None. Identification as a repeat finding: No. Recommendation: The College should develop, implement, and maintain a process to complete monthly Direct Loan reconciliations that includes process and procedures in place to complete monthly reconciliations when the main point of contact or access to SAIG and COD is not available. Additionally, the College should develop procedures and requirements to maintain monthly Direct Loan reconciliations and associated support. Views of responsible officials: Management concurs with the finding. See Exhibit I for the corrective action plan.
Criteria: Per 34 CFR 668.173 (b), an institution returns unearned Title IV program funds timely if the funds are transferred no later than 45 days after the institution determines that the student withdrew. Condition/context: Of the 12 students selected for testing, one student’s unearned aid was not returned to the U.S. Department of Education within 45 days of the date the institution determined that the student withdrew. Cause: The College did not have a process in place to monitor and review official and unofficial withdrawals and ensure that a return of Title IV funds calculation had been performed for all withdrawn students and that unearned Title IV aid was returned to the U.S. Department of Education timely. Effect: If the College fails to comply with the terms and conditions of a Federal award, the Federal awarding agency may impose additional conditions, as described in 2 CFR 200.208, or implement other remedies for noncompliance, as described in 2 CFR 200.339. Questioned costs: None. Identification as a repeat finding: No. Recommendation: The College should develop, implement, and maintain a system to review students for withdrawal on a timely and consistent basis in order to properly determine withdrawal dates and return unearned Title IV aid in a timely manner. Views of responsible officials: Management concurs with the finding. See Exhibit I for the corrective action plan.
Criteria: Per 34 CFR 690.83, an institution shall submit, in accordance with deadline dates established by the Secretary, through publication in the Federal Register, other reports and information the Secretary requires in connection with the funds advanced to it and shall comply with the procedures the Secretary finds necessary to ensure that the reports are correct. Additionally, per 34 CFR 685.309, upon receipt of an enrollment report from the Secretary, a school must update all information included in the report and return the report to the Secretary (i) in the manner and format prescribed by the Secretary, and (ii) within the timeframe prescribed by the Secretary. Condition/context: Of the 16 students selected for testing: • Two students’ withdrawn status was not reported to NSLDS. • Three students were not reported to NSLDS with an accurate withdrawal date. • One student’s program length was improperly reported as 2.5 years rather than two years. Cause: The Student Financial Aid Office and Records and Registration do not have controls in place to ensure the proper and timely reporting of student status changes. Effect: If the College fails to comply with the terms and conditions of a Federal award, the Federal awarding agency may impose additional conditions, as described in 2 CFR 200.208, or implement other remedies for noncompliance, as described in 2 CFR 200.339. Additionally, the improper reporting of student status changes could impact students’ repayment status and/or maximum eligibility period. Questioned costs: None. Identification as a repeat finding: Yes - see finding 2023-003. Recommendation: The Student Financial Aid Office and Records and Registration should implement controls to ensure the proper, accurate, and timely reporting of student status changes and all related pertinent information. Views of responsible officials and planned correction actions: Management concurs with the finding. See Exhibit I.
Criteria: Per 34 CFR 690.83, an institution shall submit, in accordance with deadline dates established by the Secretary, through publication in the Federal Register, other reports and information the Secretary requires and shall comply with the procedures the Secretary finds necessary to ensure that the reports are correct. Per the Federal Student Aid Handbook, schools must submit Pell disbursement records to the Common Origination and Disbursement (COD) system no later than 15 days after making the disbursements or becoming aware of the need to adjust a previously reported disbursement. Condition/context: Of the 25 students selected for Pell reporting testing, 19 students’ disbursement records were reported to the COD system greater than 15 days after the actual disbursement. Cause: During the transition of Financial Aid Directors, an error occurred in the assignment of the Primary Destination Point Administrator that resulted in an inability to import and export from Colleague to Student Aid Internet Gateway (SAIG) for COD and National Student Loan Data System (NSLDS) reporting. During this time, the College was unable to export disbursement information in a timely manner, which caused a delay in the COD processing of disbursement records. Effect: If the College fails to comply with the terms and conditions of a Federal award, the Federal awarding agency may impose additional conditions, as described in 2 CFR 200.208, or implement other remedies for noncompliance, as described in 2 CFR 200.339. Additionally, failure to submit disbursement records within the required time frame may result in a rejection of all or part of the reported disbursement, an audit or program review finding, or possible fines or other penalties. Questioned costs: None. Identification as a repeat finding: No. Recommendation: The College should develop, implement, and maintain a thorough control system that provides for the timely reporting of disbursement records to the COD system. Views of responsible officials: Management concurs with the finding. See Exhibit I for the corrective action plan.
Criteria: Per 34 CFR 690.83, an institution shall submit, in accordance with deadline dates established by the Secretary, through publication in the Federal Register, other reports and information the Secretary requires in connection with the funds advanced to it and shall comply with the procedures the Secretary finds necessary to ensure that the reports are correct. Additionally, per 34 CFR 685.309, upon receipt of an enrollment report from the Secretary, a school must update all information included in the report and return the report to the Secretary (i) in the manner and format prescribed by the Secretary, and (ii) within the timeframe prescribed by the Secretary. Condition/context: Of the 16 students selected for testing: • Two students’ withdrawn status was not reported to NSLDS. • Three students were not reported to NSLDS with an accurate withdrawal date. • One student’s program length was improperly reported as 2.5 years rather than two years. Cause: The Student Financial Aid Office and Records and Registration do not have controls in place to ensure the proper and timely reporting of student status changes. Effect: If the College fails to comply with the terms and conditions of a Federal award, the Federal awarding agency may impose additional conditions, as described in 2 CFR 200.208, or implement other remedies for noncompliance, as described in 2 CFR 200.339. Additionally, the improper reporting of student status changes could impact students’ repayment status and/or maximum eligibility period. Questioned costs: None. Identification as a repeat finding: Yes - see finding 2023-003. Recommendation: The Student Financial Aid Office and Records and Registration should implement controls to ensure the proper, accurate, and timely reporting of student status changes and all related pertinent information. Views of responsible officials and planned correction actions: Management concurs with the finding. See Exhibit I.
Criteria: Per 34 CFR 675.19(b)(3) and 676.19(b)(3), each year an institution shall submit a Fiscal Operations Report plus other information the Secretary requires. The institution shall insure that the information reported is accurate and shall submit it on the form and at the time specified by the Secretary. Per the Fiscal Operations Report for 2022-23 and Application to Participate for 2024-25 Instructions for Part II (Application) Section E, the tuition and fees revenue entered must only be for those students reported in Section D. Condition/context: Tuition and fees for the award year July 1, 2022 to June 30, 2023 reported under Part II (Application) Section E of the Fiscal Operations Report and Application to Participate (FISAP) was incorrectly reported as $68,880,369. The correct amount was $6,880,369. Cause: Human error. Effect: If Western Wyoming Community College (the College) fails to comply with the terms and conditions of a Federal award, the Federal awarding agency may impose additional conditions, as described in 2 CFR 200.208, or implement other remedies for noncompliance, as described in 2 CFR 200.339. Additionally, incorrect reporting in the FISAP may result in incorrect award calculations by the U.S. Department of Education. The school may be required to return funds to which it is not entitled. Questioned costs: None. Identification as a repeat finding: No. Recommendation: The College should develop, implement, and maintain a thorough system of review of the FISAP to ensure that accurate information is reported. Views of responsible officials: Management concurs with the finding. See Exhibit I for the corrective action plan.
Criteria: Per 34 CFR 675.19(b)(3) and 676.19(b)(3), each year an institution shall submit a Fiscal Operations Report plus other information the Secretary requires. The institution shall insure that the information reported is accurate and shall submit it on the form and at the time specified by the Secretary. Per the Fiscal Operations Report for 2022-23 and Application to Participate for 2024-25 Instructions for Part II (Application) Section E, the tuition and fees revenue entered must only be for those students reported in Section D. Condition/context: Tuition and fees for the award year July 1, 2022 to June 30, 2023 reported under Part II (Application) Section E of the Fiscal Operations Report and Application to Participate (FISAP) was incorrectly reported as $68,880,369. The correct amount was $6,880,369. Cause: Human error. Effect: If Western Wyoming Community College (the College) fails to comply with the terms and conditions of a Federal award, the Federal awarding agency may impose additional conditions, as described in 2 CFR 200.208, or implement other remedies for noncompliance, as described in 2 CFR 200.339. Additionally, incorrect reporting in the FISAP may result in incorrect award calculations by the U.S. Department of Education. The school may be required to return funds to which it is not entitled. Questioned costs: None. Identification as a repeat finding: No. Recommendation: The College should develop, implement, and maintain a thorough system of review of the FISAP to ensure that accurate information is reported. Views of responsible officials: Management concurs with the finding. See Exhibit I for the corrective action plan.
2 CFR section 200.208(c) states “Additional Federal award conditions may include items such as the following: (1) Requiring payments as reimbursements rather than advance payments.” During our audit we noted two checks were written and recorded in the accounting software but held until work was complete. These were claimed on expenditure reports as of June 30, 2024, however the checks were still being held on August 5, 2024. This resulted in the District essentially receiving advanced payment on this grant which was not permitted. Based on our testing of the bank reconciliation we are confident there were 2 held checks out of hundreds of checks for the year. In May and June alone there were over 50 checks charged to the grant, so it appears to be an isolated incident related to this project.
2024-004: Student Financial Assistance Cluster - Special Tests and Provisions: Disbursements to, or on Behalf of, Students (Significant Deficiency) Assistance Listing Numbers/Titles: #84.007, Federal Supplemental Educational Opportunity Grants; #84.033, Federal Work-Study Program; #84.063, Federal Pell Grant Program; and #84.268, Federal Direct Student Loans Federal Agency Name: U.S. Department of Education Award Number: N/A Award Year: July 1, 2023 - June 30, 2024 Criteria: Per 34 CFR 668.165(a)(1), before an institution disburses Title IV funds for any award year, the institution must notify a student of the amount of funds that the student or his or her parent can expect to receive under each Title IV program, and how and when those funds will be disbursed. Condition/context: The College’s award notifications do not include when the funds will be disbursed. As such, this information was not included in the files of all 25 students selected for testing. Cause: The College believed that it was compliant by sending notifications on the day of disbursement. Effect: If the College fails to comply with the terms and conditions of a Federal award, the Federal awarding agency may impose additional conditions, as described in 2 CFR 200.208, or implement other remedies for noncompliance, as described in 2 CFR 200.339. Questioned costs: None. Identification as a repeat finding: No. Recommendation: The College should include the disbursement date in award notifications or refer to the academic calendar (which includes disbursement dates) in all award notifications. Views of responsible officials and planned corrective actions: Management concurs with the finding. See Exhibit I.
2024-005: Student Financial Assistance Cluster - Special Tests and Provisions: Enrollment Reporting (Significant Deficiency) Assistance Listing Numbers/Titles: #84.063, Federal Pell Grant Program; and #84.268, Federal Direct Student Loans Federal Agency Name: U.S. Department of Education Award Number: N/A Award Year: July 1, 2023 - June 30, 2024 Criteria: Per 34 CFR 690.83, an institution shall submit, in accordance with deadline dates established by the Secretary, through publication in the Federal Register, other reports and information the Secretary requires in connection with the funds advanced to it and shall comply with the procedures the Secretary finds necessary to ensure that the reports are correct. Additionally, per 34 CFR 685.309, upon receipt of an enrollment report from the Secretary, a school must update all information included in the report and return the report to the Secretary (i) in the manner and format prescribed by the Secretary, and (ii) within the timeframe prescribed by the Secretary. Condition/context: Of the 24 students selected for testing: • Seven students’ withdrawn status was not reported to the National Student Loan Data System (NSLDS). • Eight students were not reported to NSLDS with an accurate withdrawal date. • Eight students’ statuses were not reported timely to NSLDS. Cause: The College was following institutional policy, which was not compliant with 34 CFR 690.83 or 34 CFR 685.309. Effect: If the College fails to comply with the terms and conditions of a Federal award, the Federal awarding agency may impose additional conditions, as described in 2 CFR 200.208, or implement other remedies for noncompliance, as described in 2 CFR 200.339. Additionally, improper reporting of student status changes could impact students’ interest subsidy, repayment status, and/or maximum eligibility period. Questioned costs: None. Identification as a repeat finding: No. Recommendation: The College should implement controls to ensure the proper, accurate, and timely reporting of student status changes and all related pertinent information. Views of responsible officials and planned corrective actions: Management concurs with the finding. See Exhibit I.
2024-004: Student Financial Assistance Cluster - Special Tests and Provisions: Disbursements to, or on Behalf of, Students (Significant Deficiency) Assistance Listing Numbers/Titles: #84.007, Federal Supplemental Educational Opportunity Grants; #84.033, Federal Work-Study Program; #84.063, Federal Pell Grant Program; and #84.268, Federal Direct Student Loans Federal Agency Name: U.S. Department of Education Award Number: N/A Award Year: July 1, 2023 - June 30, 2024 Criteria: Per 34 CFR 668.165(a)(1), before an institution disburses Title IV funds for any award year, the institution must notify a student of the amount of funds that the student or his or her parent can expect to receive under each Title IV program, and how and when those funds will be disbursed. Condition/context: The College’s award notifications do not include when the funds will be disbursed. As such, this information was not included in the files of all 25 students selected for testing. Cause: The College believed that it was compliant by sending notifications on the day of disbursement. Effect: If the College fails to comply with the terms and conditions of a Federal award, the Federal awarding agency may impose additional conditions, as described in 2 CFR 200.208, or implement other remedies for noncompliance, as described in 2 CFR 200.339. Questioned costs: None. Identification as a repeat finding: No. Recommendation: The College should include the disbursement date in award notifications or refer to the academic calendar (which includes disbursement dates) in all award notifications. Views of responsible officials and planned corrective actions: Management concurs with the finding. See Exhibit I.
2024-005: Student Financial Assistance Cluster - Special Tests and Provisions: Enrollment Reporting (Significant Deficiency) Assistance Listing Numbers/Titles: #84.063, Federal Pell Grant Program; and #84.268, Federal Direct Student Loans Federal Agency Name: U.S. Department of Education Award Number: N/A Award Year: July 1, 2023 - June 30, 2024 Criteria: Per 34 CFR 690.83, an institution shall submit, in accordance with deadline dates established by the Secretary, through publication in the Federal Register, other reports and information the Secretary requires in connection with the funds advanced to it and shall comply with the procedures the Secretary finds necessary to ensure that the reports are correct. Additionally, per 34 CFR 685.309, upon receipt of an enrollment report from the Secretary, a school must update all information included in the report and return the report to the Secretary (i) in the manner and format prescribed by the Secretary, and (ii) within the timeframe prescribed by the Secretary. Condition/context: Of the 24 students selected for testing: • Seven students’ withdrawn status was not reported to the National Student Loan Data System (NSLDS). • Eight students were not reported to NSLDS with an accurate withdrawal date. • Eight students’ statuses were not reported timely to NSLDS. Cause: The College was following institutional policy, which was not compliant with 34 CFR 690.83 or 34 CFR 685.309. Effect: If the College fails to comply with the terms and conditions of a Federal award, the Federal awarding agency may impose additional conditions, as described in 2 CFR 200.208, or implement other remedies for noncompliance, as described in 2 CFR 200.339. Additionally, improper reporting of student status changes could impact students’ interest subsidy, repayment status, and/or maximum eligibility period. Questioned costs: None. Identification as a repeat finding: No. Recommendation: The College should implement controls to ensure the proper, accurate, and timely reporting of student status changes and all related pertinent information. Views of responsible officials and planned corrective actions: Management concurs with the finding. See Exhibit I.
2024-003: Student Financial Assistance Cluster - Reporting (Significant Deficiency) Assistance Listing Numbers/Titles: #84.007, Federal Supplemental Educational Opportunity Grants; and #84.033, Federal Work-Study Program Federal Agency Name: U.S. Department of Education Award Number: N/A Award Year: July 1, 2023 - June 30, 2024 Criteria: Per 34 CFR 675.19(b)(3) and 676.19(b)(3), each year, an institution shall submit a Fiscal Operations Report plus other information the Secretary requires. The institution shall ensure that the information reported is accurate and shall submit it on the form and at the time specified by the Secretary. Condition/context: The College was unable to provide documentation that supported the information reported in Part II, Section D, Line 7(a) and Part II, Section E, Line 22. Cause: The College does not have controls in place to retain all documentation utilized in preparation of the Fiscal Operations Report and Application to Participate (FISAP). Effect: If the College fails to comply with the terms and conditions of a Federal award, the Federal awarding agency may impose additional conditions, as described in 2 CFR 200.208, or implement other remedies for noncompliance, as described in 2 CFR 200.339. Additionally, incorrect reporting in the FISAP may result in incorrect award calculations by the Department of Education. The school may be required to return funds to which it is not entitled. Questioned costs: None. Identification as a repeat finding: No. Recommendation: The College should implement controls to ensure that all reports, queries, etc. utilized in the preparation of the FISAP are retained. Views of responsible officials and planned corrective actions: Management concurs with the finding. See Exhibit I.
2024-004: Student Financial Assistance Cluster - Special Tests and Provisions: Disbursements to, or on Behalf of, Students (Significant Deficiency) Assistance Listing Numbers/Titles: #84.007, Federal Supplemental Educational Opportunity Grants; #84.033, Federal Work-Study Program; #84.063, Federal Pell Grant Program; and #84.268, Federal Direct Student Loans Federal Agency Name: U.S. Department of Education Award Number: N/A Award Year: July 1, 2023 - June 30, 2024 Criteria: Per 34 CFR 668.165(a)(1), before an institution disburses Title IV funds for any award year, the institution must notify a student of the amount of funds that the student or his or her parent can expect to receive under each Title IV program, and how and when those funds will be disbursed. Condition/context: The College’s award notifications do not include when the funds will be disbursed. As such, this information was not included in the files of all 25 students selected for testing. Cause: The College believed that it was compliant by sending notifications on the day of disbursement. Effect: If the College fails to comply with the terms and conditions of a Federal award, the Federal awarding agency may impose additional conditions, as described in 2 CFR 200.208, or implement other remedies for noncompliance, as described in 2 CFR 200.339. Questioned costs: None. Identification as a repeat finding: No. Recommendation: The College should include the disbursement date in award notifications or refer to the academic calendar (which includes disbursement dates) in all award notifications. Views of responsible officials and planned corrective actions: Management concurs with the finding. See Exhibit I.
2024-003: Student Financial Assistance Cluster - Reporting (Significant Deficiency) Assistance Listing Numbers/Titles: #84.007, Federal Supplemental Educational Opportunity Grants; and #84.033, Federal Work-Study Program Federal Agency Name: U.S. Department of Education Award Number: N/A Award Year: July 1, 2023 - June 30, 2024 Criteria: Per 34 CFR 675.19(b)(3) and 676.19(b)(3), each year, an institution shall submit a Fiscal Operations Report plus other information the Secretary requires. The institution shall ensure that the information reported is accurate and shall submit it on the form and at the time specified by the Secretary. Condition/context: The College was unable to provide documentation that supported the information reported in Part II, Section D, Line 7(a) and Part II, Section E, Line 22. Cause: The College does not have controls in place to retain all documentation utilized in preparation of the Fiscal Operations Report and Application to Participate (FISAP). Effect: If the College fails to comply with the terms and conditions of a Federal award, the Federal awarding agency may impose additional conditions, as described in 2 CFR 200.208, or implement other remedies for noncompliance, as described in 2 CFR 200.339. Additionally, incorrect reporting in the FISAP may result in incorrect award calculations by the Department of Education. The school may be required to return funds to which it is not entitled. Questioned costs: None. Identification as a repeat finding: No. Recommendation: The College should implement controls to ensure that all reports, queries, etc. utilized in the preparation of the FISAP are retained. Views of responsible officials and planned corrective actions: Management concurs with the finding. See Exhibit I.
2024-004: Student Financial Assistance Cluster - Special Tests and Provisions: Disbursements to, or on Behalf of, Students (Significant Deficiency) Assistance Listing Numbers/Titles: #84.007, Federal Supplemental Educational Opportunity Grants; #84.033, Federal Work-Study Program; #84.063, Federal Pell Grant Program; and #84.268, Federal Direct Student Loans Federal Agency Name: U.S. Department of Education Award Number: N/A Award Year: July 1, 2023 - June 30, 2024 Criteria: Per 34 CFR 668.165(a)(1), before an institution disburses Title IV funds for any award year, the institution must notify a student of the amount of funds that the student or his or her parent can expect to receive under each Title IV program, and how and when those funds will be disbursed. Condition/context: The College’s award notifications do not include when the funds will be disbursed. As such, this information was not included in the files of all 25 students selected for testing. Cause: The College believed that it was compliant by sending notifications on the day of disbursement. Effect: If the College fails to comply with the terms and conditions of a Federal award, the Federal awarding agency may impose additional conditions, as described in 2 CFR 200.208, or implement other remedies for noncompliance, as described in 2 CFR 200.339. Questioned costs: None. Identification as a repeat finding: No. Recommendation: The College should include the disbursement date in award notifications or refer to the academic calendar (which includes disbursement dates) in all award notifications. Views of responsible officials and planned corrective actions: Management concurs with the finding. See Exhibit I.
Finding Number: 2024-001 Federal Program: YouthBuild Grants Federal Award Identification Number and Year: YB-38198-22-60-A-39, 2024 Assistance Listing Number (ALN): 17.274 Federal Awarding Agency: U.S. Department of Labor Compliance Requirement: Reporting – Quarterly Financial Reports Pass-through Entity: N/A Repeat Finding: No Significant Deficiency and Noncompliance – Timely Submission of Quarterly Financial Reports Criteria: 2 C.F.R. § 200.328 Financial Reporting states, in part, the Federal agency or pass-through entity must collect financial reports no less than annually. The Federal agency or pass-through entity may not collect financial reports more frequently than quarterly unless a specific condition has been implemented in accordance with § 200.208. To the extent practicable, the Federal agency or pass-through entity should collect financial reports in coordination with performance reports. The recipient must submit financial reports as required by the Federal award. In the YouthBuild Grant Condition of Award, U.S. Department of Labor, Section 12 Administrative Requirements, Part L, Reports, Section A, Quarterly Financial Reports, all ETA grant award recipients are required to report financial data on the ETA-9130 Financial Report. ETA-9130 reports are due no later than 45 calendar days after the end of each specified reporting quarter. Condition: The School did not submit the quarter ending December 31, 2023 ETA-9130 Quarterly Financial Report until February 20, 2024, six days after the deadline of February 14, 2024. Questioned Costs: None. Identification of How Questioned Costs Were Computed: N/A Context: Auditor reviewed the ETA-9130 Quarterly Financial Report for period ending December 31, 2023 via submission through the U.S. Department of Labor’s Payment Management System, and noted the School did not submit the report until February 20, 2024, which was six days after the deadline of February 14, 2024. Cause and Effect: The School did not have procedures in place to review and submit the ETA-9130 Quarterly Financial Report timely. As a result, the School filed the Quarter Ending December 31, 2023 ETA-9130 Quarterly Financial Report after the required due date. Recommendation: We recommend that the School implement a process to ensure that future Quarterly Financial Reports are filed by the required due date. Views of Responsible Officials and Corrective Action Plan: See Corrective Action Plan.
FINDING 2024-004 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Program: Special Education Grants to States Assistance Listings Number: 84.027 Federal Award Number and Year (or Other Identifying Number): 22611-048-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Other Matters Condition and Context The School Corporation is a member of the Ripley-Ohio-Dearborn Special Education Cooperative (Cooperative). During fiscal year 2022-2023, the Cooperative operated the special education programs and spent the federal money for earmarked expenditures on behalf of four of the six member schools. As the grant agreements were between the Indiana Department of Education (IDOE) and the member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure nonpublic school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for the 22611-048-PN01 grant award could not be verified for the individual member schools. The nonpublic school share funds for the participating member schools were allocated based on the yearly budget for certified staff instead of time charged to the nonpublic schools. These allocations were the amounts reported to the IDOE. As such, we were unable to identify which expenditures were for each school in order to verify the minimum amount per the grant award was expended and properly reported to the IDOE as required. The lack of internal controls and noncompliance was isolated to the 22611-048-PN01 grant award in 2022-2023. INDIANA STATE BOARD OF ACCOUNTS 20 JAC-CEN-DEL COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . . (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause A proper system of internal controls was not designed by management of the School Corporation to ensure time worked by certified staff for nonpublic schools was properly identified. Internal controls in place did not identify that an improper method was used to identify expenditures for nonpublic students with disabilities. Effect Without the proper implementation of an effectively designed system of internal controls, the School Corporation was unable to ensure that the proportionate share required to be expended for nonpublic students was met. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 21 JAC-CEN-DEL COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure nonpublic proportionate share funds are appropriately allocated to the member school based on expenses charged directly on behalf of the member school. Supporting documentation for these expenses should be retained for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-003 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 22611-043-PN01, 22611-043-ARP, 22619-043-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Significant Deficiency, Other Matters Condition and Context The School Corporation is a member of the Northwest Indiana Special Education Cooperative (Cooperative). During fiscal year 2022-2023, the Cooperative operated the special education program and spent the federal money on behalf of all its members. As the grant agreement was between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. INDIANA STATE BOARD OF ACCOUNTS 19 HANOVER COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure nonpublic school expenditures were appropriately identified and reported. The non-public expenditures spent did not meet the earmarking requirements for grant award numbers 22611-043-PN01, 22611-043-ARP, and 22619-043-ARP prior to September 2022. From the beginning of the grant awards until September 2022, total grant expenditures were posted as expended. The nonpublic proportionate share expenditures were determined by applying a percentage to the nonpublic school budgeted expenditures. Beginning in September 2022, the Cooperative began tracking expenditures by member school for the nonpublic services. As such, we were unable to identify if the minimum amount per the grant award was expended and properly reported to the IDOE from the beginning of the grant awards through September 2022, as required. The lack of internal controls and noncompliance was isolated to 22611-043-PN01, 2611-043-ARP, and 22619-043-ARP grant awards. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." INDIANA STATE BOARD OF ACCOUNTS 20 HANOVER COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause Through inquiry of the Cooperative management, they were unaware of the requirements to track nonpublic proportionate share expenditures directly for each member school. While the Cooperative did implement new processes and procedures to ensure expenditures were tracked by member schools starting in September 2022, most of the grant awards had been allocated to the member schools based on a percentage of the budget. Effect Without the proper implementation of an effectively designed system of internal controls, the School Corporation was unable to ensure the Cooperative compliance with earmarking requirements and the Cooperative was unable to track expenditures for nonpublic services for each member school. Consequently, the amounts requested for reimbursement were not supported by actual expenditures, but rather a percentage based on the budget per member school. Because of this, expenditures were not accurately reported to the oversight agency. Questioned Costs There were no questioned costs identified. Recommendation Management of the School Corporation should develop written policies and procedures which would require tracking of actual nonpublic proportionate share expenditures by member school by the Cooperative. Documentation should be maintained to show how these expenditures are being tracked to ensure compliance with the earmarking requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-003 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 22611-043-PN01, 22611-043-ARP, 22619-043-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Significant Deficiency, Other Matters Condition and Context The School Corporation is a member of the Northwest Indiana Special Education Cooperative (Cooperative). During fiscal year 2022-2023, the Cooperative operated the special education program and spent the federal money on behalf of all its members. As the grant agreement was between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. INDIANA STATE BOARD OF ACCOUNTS 19 HANOVER COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure nonpublic school expenditures were appropriately identified and reported. The non-public expenditures spent did not meet the earmarking requirements for grant award numbers 22611-043-PN01, 22611-043-ARP, and 22619-043-ARP prior to September 2022. From the beginning of the grant awards until September 2022, total grant expenditures were posted as expended. The nonpublic proportionate share expenditures were determined by applying a percentage to the nonpublic school budgeted expenditures. Beginning in September 2022, the Cooperative began tracking expenditures by member school for the nonpublic services. As such, we were unable to identify if the minimum amount per the grant award was expended and properly reported to the IDOE from the beginning of the grant awards through September 2022, as required. The lack of internal controls and noncompliance was isolated to 22611-043-PN01, 2611-043-ARP, and 22619-043-ARP grant awards. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." INDIANA STATE BOARD OF ACCOUNTS 20 HANOVER COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause Through inquiry of the Cooperative management, they were unaware of the requirements to track nonpublic proportionate share expenditures directly for each member school. While the Cooperative did implement new processes and procedures to ensure expenditures were tracked by member schools starting in September 2022, most of the grant awards had been allocated to the member schools based on a percentage of the budget. Effect Without the proper implementation of an effectively designed system of internal controls, the School Corporation was unable to ensure the Cooperative compliance with earmarking requirements and the Cooperative was unable to track expenditures for nonpublic services for each member school. Consequently, the amounts requested for reimbursement were not supported by actual expenditures, but rather a percentage based on the budget per member school. Because of this, expenditures were not accurately reported to the oversight agency. Questioned Costs There were no questioned costs identified. Recommendation Management of the School Corporation should develop written policies and procedures which would require tracking of actual nonpublic proportionate share expenditures by member school by the Cooperative. Documentation should be maintained to show how these expenditures are being tracked to ensure compliance with the earmarking requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-003 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 22611-043-PN01, 22611-043-ARP, 22619-043-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Significant Deficiency, Other Matters Condition and Context The School Corporation is a member of the Northwest Indiana Special Education Cooperative (Cooperative). During fiscal year 2022-2023, the Cooperative operated the special education program and spent the federal money on behalf of all its members. As the grant agreement was between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. INDIANA STATE BOARD OF ACCOUNTS 19 HANOVER COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure nonpublic school expenditures were appropriately identified and reported. The non-public expenditures spent did not meet the earmarking requirements for grant award numbers 22611-043-PN01, 22611-043-ARP, and 22619-043-ARP prior to September 2022. From the beginning of the grant awards until September 2022, total grant expenditures were posted as expended. The nonpublic proportionate share expenditures were determined by applying a percentage to the nonpublic school budgeted expenditures. Beginning in September 2022, the Cooperative began tracking expenditures by member school for the nonpublic services. As such, we were unable to identify if the minimum amount per the grant award was expended and properly reported to the IDOE from the beginning of the grant awards through September 2022, as required. The lack of internal controls and noncompliance was isolated to 22611-043-PN01, 2611-043-ARP, and 22619-043-ARP grant awards. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." INDIANA STATE BOARD OF ACCOUNTS 20 HANOVER COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause Through inquiry of the Cooperative management, they were unaware of the requirements to track nonpublic proportionate share expenditures directly for each member school. While the Cooperative did implement new processes and procedures to ensure expenditures were tracked by member schools starting in September 2022, most of the grant awards had been allocated to the member schools based on a percentage of the budget. Effect Without the proper implementation of an effectively designed system of internal controls, the School Corporation was unable to ensure the Cooperative compliance with earmarking requirements and the Cooperative was unable to track expenditures for nonpublic services for each member school. Consequently, the amounts requested for reimbursement were not supported by actual expenditures, but rather a percentage based on the budget per member school. Because of this, expenditures were not accurately reported to the oversight agency. Questioned Costs There were no questioned costs identified. Recommendation Management of the School Corporation should develop written policies and procedures which would require tracking of actual nonpublic proportionate share expenditures by member school by the Cooperative. Documentation should be maintained to show how these expenditures are being tracked to ensure compliance with the earmarking requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-003 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 22611-043-PN01, 22611-043-ARP, 22619-043-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Significant Deficiency, Other Matters Condition and Context The School Corporation is a member of the Northwest Indiana Special Education Cooperative (Cooperative). During fiscal year 2022-2023, the Cooperative operated the special education program and spent the federal money on behalf of all its members. As the grant agreement was between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. INDIANA STATE BOARD OF ACCOUNTS 19 HANOVER COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure nonpublic school expenditures were appropriately identified and reported. The non-public expenditures spent did not meet the earmarking requirements for grant award numbers 22611-043-PN01, 22611-043-ARP, and 22619-043-ARP prior to September 2022. From the beginning of the grant awards until September 2022, total grant expenditures were posted as expended. The nonpublic proportionate share expenditures were determined by applying a percentage to the nonpublic school budgeted expenditures. Beginning in September 2022, the Cooperative began tracking expenditures by member school for the nonpublic services. As such, we were unable to identify if the minimum amount per the grant award was expended and properly reported to the IDOE from the beginning of the grant awards through September 2022, as required. The lack of internal controls and noncompliance was isolated to 22611-043-PN01, 2611-043-ARP, and 22619-043-ARP grant awards. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." INDIANA STATE BOARD OF ACCOUNTS 20 HANOVER COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause Through inquiry of the Cooperative management, they were unaware of the requirements to track nonpublic proportionate share expenditures directly for each member school. While the Cooperative did implement new processes and procedures to ensure expenditures were tracked by member schools starting in September 2022, most of the grant awards had been allocated to the member schools based on a percentage of the budget. Effect Without the proper implementation of an effectively designed system of internal controls, the School Corporation was unable to ensure the Cooperative compliance with earmarking requirements and the Cooperative was unable to track expenditures for nonpublic services for each member school. Consequently, the amounts requested for reimbursement were not supported by actual expenditures, but rather a percentage based on the budget per member school. Because of this, expenditures were not accurately reported to the oversight agency. Questioned Costs There were no questioned costs identified. Recommendation Management of the School Corporation should develop written policies and procedures which would require tracking of actual nonpublic proportionate share expenditures by member school by the Cooperative. Documentation should be maintained to show how these expenditures are being tracked to ensure compliance with the earmarking requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-003 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 22611-043-PN01, 22611-043-ARP, 22619-043-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Significant Deficiency, Other Matters Condition and Context The School Corporation is a member of the Northwest Indiana Special Education Cooperative (Cooperative). During fiscal year 2022-2023, the Cooperative operated the special education program and spent the federal money on behalf of all its members. As the grant agreement was between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. INDIANA STATE BOARD OF ACCOUNTS 19 HANOVER COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure nonpublic school expenditures were appropriately identified and reported. The non-public expenditures spent did not meet the earmarking requirements for grant award numbers 22611-043-PN01, 22611-043-ARP, and 22619-043-ARP prior to September 2022. From the beginning of the grant awards until September 2022, total grant expenditures were posted as expended. The nonpublic proportionate share expenditures were determined by applying a percentage to the nonpublic school budgeted expenditures. Beginning in September 2022, the Cooperative began tracking expenditures by member school for the nonpublic services. As such, we were unable to identify if the minimum amount per the grant award was expended and properly reported to the IDOE from the beginning of the grant awards through September 2022, as required. The lack of internal controls and noncompliance was isolated to 22611-043-PN01, 2611-043-ARP, and 22619-043-ARP grant awards. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." INDIANA STATE BOARD OF ACCOUNTS 20 HANOVER COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause Through inquiry of the Cooperative management, they were unaware of the requirements to track nonpublic proportionate share expenditures directly for each member school. While the Cooperative did implement new processes and procedures to ensure expenditures were tracked by member schools starting in September 2022, most of the grant awards had been allocated to the member schools based on a percentage of the budget. Effect Without the proper implementation of an effectively designed system of internal controls, the School Corporation was unable to ensure the Cooperative compliance with earmarking requirements and the Cooperative was unable to track expenditures for nonpublic services for each member school. Consequently, the amounts requested for reimbursement were not supported by actual expenditures, but rather a percentage based on the budget per member school. Because of this, expenditures were not accurately reported to the oversight agency. Questioned Costs There were no questioned costs identified. Recommendation Management of the School Corporation should develop written policies and procedures which would require tracking of actual nonpublic proportionate share expenditures by member school by the Cooperative. Documentation should be maintained to show how these expenditures are being tracked to ensure compliance with the earmarking requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-003 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 22611-043-PN01, 22611-043-ARP, 22619-043-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Significant Deficiency, Other Matters Condition and Context The School Corporation is a member of the Northwest Indiana Special Education Cooperative (Cooperative). During fiscal year 2022-2023, the Cooperative operated the special education program and spent the federal money on behalf of all its members. As the grant agreement was between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. INDIANA STATE BOARD OF ACCOUNTS 19 HANOVER COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure nonpublic school expenditures were appropriately identified and reported. The non-public expenditures spent did not meet the earmarking requirements for grant award numbers 22611-043-PN01, 22611-043-ARP, and 22619-043-ARP prior to September 2022. From the beginning of the grant awards until September 2022, total grant expenditures were posted as expended. The nonpublic proportionate share expenditures were determined by applying a percentage to the nonpublic school budgeted expenditures. Beginning in September 2022, the Cooperative began tracking expenditures by member school for the nonpublic services. As such, we were unable to identify if the minimum amount per the grant award was expended and properly reported to the IDOE from the beginning of the grant awards through September 2022, as required. The lack of internal controls and noncompliance was isolated to 22611-043-PN01, 2611-043-ARP, and 22619-043-ARP grant awards. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." INDIANA STATE BOARD OF ACCOUNTS 20 HANOVER COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause Through inquiry of the Cooperative management, they were unaware of the requirements to track nonpublic proportionate share expenditures directly for each member school. While the Cooperative did implement new processes and procedures to ensure expenditures were tracked by member schools starting in September 2022, most of the grant awards had been allocated to the member schools based on a percentage of the budget. Effect Without the proper implementation of an effectively designed system of internal controls, the School Corporation was unable to ensure the Cooperative compliance with earmarking requirements and the Cooperative was unable to track expenditures for nonpublic services for each member school. Consequently, the amounts requested for reimbursement were not supported by actual expenditures, but rather a percentage based on the budget per member school. Because of this, expenditures were not accurately reported to the oversight agency. Questioned Costs There were no questioned costs identified. Recommendation Management of the School Corporation should develop written policies and procedures which would require tracking of actual nonpublic proportionate share expenditures by member school by the Cooperative. Documentation should be maintained to show how these expenditures are being tracked to ensure compliance with the earmarking requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-004 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Program: Special Education Grants to States Assistance Listings Number: 84.027 Federal Award Number and Year (or Other Identifying Number): 22611-053-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Significant Deficiency, Other Matters Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-003. Condition and Context The School Corporation is a member of the South La Porte County Special Education (Cooperative). During fiscal year 2022-2023, the Cooperative operated the special education program and spent the federal money on behalf of all its members. As the grant agreement was between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure nonpublic school expenditures were appropriately identified and reported. INDIANA STATE BOARD OF ACCOUNTS 22 NEW PRAIRIE UNITED SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Due to the timing of the Cooperative's corrective action, the nonpublic expenditures spent did not meet the earmarking requirements for the grant award number 22611-053-PN01. From the beginning of the grant awards until March 2023, total grant expenditures were posted as expended. The nonpublic proportionate share expenditures were determined by applying a percentage to the nonpublic school budgeted expenditures. Beginning in March 2023, the Cooperative began tracking expenditures by member school for the nonpublic services. As such, we were unable to identify if the minimum amount per the grant award was expended and properly reported to the IDOE from the beginning of the grant awards through March 2023, as required. The lack of internal controls and noncompliance was isolated to the 22611-053-PN01 grant award. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause Through management inquiry, they were unaware of the requirements to track nonpublic proportionate share expenditures directly for each member school. While the Cooperative did implement new processes and procedures to ensure expenditures were tracked by member schools starting in March 2023, most of the grant award had been allocated to the member schools based on a percentage of the budget. INDIANA STATE BOARD OF ACCOUNTS 23 NEW PRAIRIE UNITED SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls, the Cooperative was unable to track expenditures for nonpublic services for each member school. Consequently, the amounts requested for reimbursement were not supported by actual expenditures, but rather a percentage based on the budget per member school. Because of this, expenditures were not accurately reported to the oversight agency. Questioned Costs There were no questioned costs identified. Recommendation Management of the Cooperative should develop written policies and procedures which would require tracking of actual nonpublic proportionate share expenditures by member schools. Documentation should be maintained to show how these expenditures are being tracked to ensure compliance with the earmarking requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-004 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Program: Special Education Grants to States Assistance Listings Number: 84.027 Federal Award Number and Year (or Other Identifying Number): 22611-053-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Significant Deficiency, Other Matters Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-003. Condition and Context The School Corporation is a member of the South La Porte County Special Education (Cooperative). During fiscal year 2022-2023, the Cooperative operated the special education program and spent the federal money on behalf of all its members. As the grant agreement was between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure nonpublic school expenditures were appropriately identified and reported. INDIANA STATE BOARD OF ACCOUNTS 22 NEW PRAIRIE UNITED SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Due to the timing of the Cooperative's corrective action, the nonpublic expenditures spent did not meet the earmarking requirements for the grant award number 22611-053-PN01. From the beginning of the grant awards until March 2023, total grant expenditures were posted as expended. The nonpublic proportionate share expenditures were determined by applying a percentage to the nonpublic school budgeted expenditures. Beginning in March 2023, the Cooperative began tracking expenditures by member school for the nonpublic services. As such, we were unable to identify if the minimum amount per the grant award was expended and properly reported to the IDOE from the beginning of the grant awards through March 2023, as required. The lack of internal controls and noncompliance was isolated to the 22611-053-PN01 grant award. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause Through management inquiry, they were unaware of the requirements to track nonpublic proportionate share expenditures directly for each member school. While the Cooperative did implement new processes and procedures to ensure expenditures were tracked by member schools starting in March 2023, most of the grant award had been allocated to the member schools based on a percentage of the budget. INDIANA STATE BOARD OF ACCOUNTS 23 NEW PRAIRIE UNITED SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls, the Cooperative was unable to track expenditures for nonpublic services for each member school. Consequently, the amounts requested for reimbursement were not supported by actual expenditures, but rather a percentage based on the budget per member school. Because of this, expenditures were not accurately reported to the oversight agency. Questioned Costs There were no questioned costs identified. Recommendation Management of the Cooperative should develop written policies and procedures which would require tracking of actual nonpublic proportionate share expenditures by member schools. Documentation should be maintained to show how these expenditures are being tracked to ensure compliance with the earmarking requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-003 Subject: Special Education Cluster (IDEA) -Earmarking Federal Agency: Department of Education Federal Program: COVID-19 - Special Education Preschool Grants Assistance Listings Number: 84.173X Federal Award Number and Year (or Other Identifying Number): 22619-130-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number is 2022-002 Condition and Context An effective internal control system was not designed, nor implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Matching, Level of Effort, Earmarking compliance requirement. Proportionate share is an amount of funds that must be expended on special education/related services for parentally placed private school and homeschooled students. The amount to be spent is automatically calculated within each grant application. The School Corporation had not designed, nor implemented, policies and procedures to ensure that the required level of expenditures for non-public students was met for each grant. The Non-Public Proportionate Share expenditures for the 22619-130-ARP grant were not spent in full, and the School Corporation did not file a waiver which if approved would have allowed the funds to be moved and spent under the regular Part B special education scope. The lack of internal controls and noncompliance were isolated to the 22619-130-ARP grant award. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause Management had not designed nor implemented a system of internal controls that would have ensured compliance with the grant agreement and the Matching, Level of Effort, Earmarking compliance requirement. The business office was not included in nonpublic meetings to know that open funds are not being clearly communicated with the nonpublic schools. Effect The failure to establish an effective system of internal controls enabled noncompliance to go undetected. The parentally placed private school and homeschooled students could be deprived of this funding. Noncompliance with the grant agreement and the Matching, Level of Effort, Earmarking compliance requirement could result in the loss of future funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the grant agreement and the Matching, Level of Effort, Earmarking compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-003 Subject: Special Education Cluster (IDEA) -Earmarking Federal Agency: Department of Education Federal Program: COVID-19 - Special Education Preschool Grants Assistance Listings Number: 84.173X Federal Award Number and Year (or Other Identifying Number): 22619-130-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number is 2022-002 Condition and Context An effective internal control system was not designed, nor implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Matching, Level of Effort, Earmarking compliance requirement. Proportionate share is an amount of funds that must be expended on special education/related services for parentally placed private school and homeschooled students. The amount to be spent is automatically calculated within each grant application. The School Corporation had not designed, nor implemented, policies and procedures to ensure that the required level of expenditures for non-public students was met for each grant. The Non-Public Proportionate Share expenditures for the 22619-130-ARP grant were not spent in full, and the School Corporation did not file a waiver which if approved would have allowed the funds to be moved and spent under the regular Part B special education scope. The lack of internal controls and noncompliance were isolated to the 22619-130-ARP grant award. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause Management had not designed nor implemented a system of internal controls that would have ensured compliance with the grant agreement and the Matching, Level of Effort, Earmarking compliance requirement. The business office was not included in nonpublic meetings to know that open funds are not being clearly communicated with the nonpublic schools. Effect The failure to establish an effective system of internal controls enabled noncompliance to go undetected. The parentally placed private school and homeschooled students could be deprived of this funding. Noncompliance with the grant agreement and the Matching, Level of Effort, Earmarking compliance requirement could result in the loss of future funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the grant agreement and the Matching, Level of Effort, Earmarking compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-003 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): H027A190084 / 22611-037-PN01, H027A200084 / 21611-037-PN01, H173A210104 / 22619-037-PN01, H173A220104 / 23619-037-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 19 SCHOOL CITY OF MISHAWAKA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context An effective internal control system was not designed or implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Earmarking compliance requirement. The School Corporation is to ensure the same proportionate share amount of services is expended for students with disabilities in nonpublic schools as they do for students with disabilities in the public school system. The School Corporation did not have adequate policies or procedures in place to ensure that employees properly documented time worked split between public and non-public students. The School Corporation maintained time and effort logs documenting all employees who worked exclusively on the Special Education Program utilizing a semiannual certification. Employees who worked with both nonpublic and public students were included on the semiannual certifications, but the School Corporation did not maintain documentation supporting how much time was spent working specifically with nonpublic students. Due to this, we were not able to determine if the School Corporation met the earmarking requirement for the grants noted. The lack of internal controls and noncompliance was isolated to employees that spent time working with both public and nonpublic students within the grants noted above by identifying number. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." INDIANA STATE BOARD OF ACCOUNTS 20 SCHOOL CITY OF MISHAWAKA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause Through management inquiry, they were unaware of the requirements to track nonpublic proportionate share expenditures directly for each employe based on actual time spent on nonpublic education. Effect The amounts requested for reimbursement were not supported by actual expenditures, but rather by a percentage per employee. Therefore, we were not able to determine if the unit was in compliance with the earmarking requirements. Noncompliance with the grant agreement and the compliance requirement could result in the repayment of federal funds. Questioned Costs There were no questioned costs identified. Recommendation Management of the School Corporation should develop written policies and procedures which would require tracking of actual nonpublic proportionate share expenditures by employee. Documentation should be maintained to show how these expenditures are being tracked to ensure compliance with the earmarking requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-003 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): H027A190084 / 22611-037-PN01, H027A200084 / 21611-037-PN01, H173A210104 / 22619-037-PN01, H173A220104 / 23619-037-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 19 SCHOOL CITY OF MISHAWAKA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context An effective internal control system was not designed or implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Earmarking compliance requirement. The School Corporation is to ensure the same proportionate share amount of services is expended for students with disabilities in nonpublic schools as they do for students with disabilities in the public school system. The School Corporation did not have adequate policies or procedures in place to ensure that employees properly documented time worked split between public and non-public students. The School Corporation maintained time and effort logs documenting all employees who worked exclusively on the Special Education Program utilizing a semiannual certification. Employees who worked with both nonpublic and public students were included on the semiannual certifications, but the School Corporation did not maintain documentation supporting how much time was spent working specifically with nonpublic students. Due to this, we were not able to determine if the School Corporation met the earmarking requirement for the grants noted. The lack of internal controls and noncompliance was isolated to employees that spent time working with both public and nonpublic students within the grants noted above by identifying number. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." INDIANA STATE BOARD OF ACCOUNTS 20 SCHOOL CITY OF MISHAWAKA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause Through management inquiry, they were unaware of the requirements to track nonpublic proportionate share expenditures directly for each employe based on actual time spent on nonpublic education. Effect The amounts requested for reimbursement were not supported by actual expenditures, but rather by a percentage per employee. Therefore, we were not able to determine if the unit was in compliance with the earmarking requirements. Noncompliance with the grant agreement and the compliance requirement could result in the repayment of federal funds. Questioned Costs There were no questioned costs identified. Recommendation Management of the School Corporation should develop written policies and procedures which would require tracking of actual nonpublic proportionate share expenditures by employee. Documentation should be maintained to show how these expenditures are being tracked to ensure compliance with the earmarking requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-003 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): H027A190084 / 22611-037-PN01, H027A200084 / 21611-037-PN01, H173A210104 / 22619-037-PN01, H173A220104 / 23619-037-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 19 SCHOOL CITY OF MISHAWAKA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context An effective internal control system was not designed or implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Earmarking compliance requirement. The School Corporation is to ensure the same proportionate share amount of services is expended for students with disabilities in nonpublic schools as they do for students with disabilities in the public school system. The School Corporation did not have adequate policies or procedures in place to ensure that employees properly documented time worked split between public and non-public students. The School Corporation maintained time and effort logs documenting all employees who worked exclusively on the Special Education Program utilizing a semiannual certification. Employees who worked with both nonpublic and public students were included on the semiannual certifications, but the School Corporation did not maintain documentation supporting how much time was spent working specifically with nonpublic students. Due to this, we were not able to determine if the School Corporation met the earmarking requirement for the grants noted. The lack of internal controls and noncompliance was isolated to employees that spent time working with both public and nonpublic students within the grants noted above by identifying number. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." INDIANA STATE BOARD OF ACCOUNTS 20 SCHOOL CITY OF MISHAWAKA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause Through management inquiry, they were unaware of the requirements to track nonpublic proportionate share expenditures directly for each employe based on actual time spent on nonpublic education. Effect The amounts requested for reimbursement were not supported by actual expenditures, but rather by a percentage per employee. Therefore, we were not able to determine if the unit was in compliance with the earmarking requirements. Noncompliance with the grant agreement and the compliance requirement could result in the repayment of federal funds. Questioned Costs There were no questioned costs identified. Recommendation Management of the School Corporation should develop written policies and procedures which would require tracking of actual nonpublic proportionate share expenditures by employee. Documentation should be maintained to show how these expenditures are being tracked to ensure compliance with the earmarking requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-003 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): H027A190084 / 22611-037-PN01, H027A200084 / 21611-037-PN01, H173A210104 / 22619-037-PN01, H173A220104 / 23619-037-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 19 SCHOOL CITY OF MISHAWAKA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context An effective internal control system was not designed or implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Earmarking compliance requirement. The School Corporation is to ensure the same proportionate share amount of services is expended for students with disabilities in nonpublic schools as they do for students with disabilities in the public school system. The School Corporation did not have adequate policies or procedures in place to ensure that employees properly documented time worked split between public and non-public students. The School Corporation maintained time and effort logs documenting all employees who worked exclusively on the Special Education Program utilizing a semiannual certification. Employees who worked with both nonpublic and public students were included on the semiannual certifications, but the School Corporation did not maintain documentation supporting how much time was spent working specifically with nonpublic students. Due to this, we were not able to determine if the School Corporation met the earmarking requirement for the grants noted. The lack of internal controls and noncompliance was isolated to employees that spent time working with both public and nonpublic students within the grants noted above by identifying number. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." INDIANA STATE BOARD OF ACCOUNTS 20 SCHOOL CITY OF MISHAWAKA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause Through management inquiry, they were unaware of the requirements to track nonpublic proportionate share expenditures directly for each employe based on actual time spent on nonpublic education. Effect The amounts requested for reimbursement were not supported by actual expenditures, but rather by a percentage per employee. Therefore, we were not able to determine if the unit was in compliance with the earmarking requirements. Noncompliance with the grant agreement and the compliance requirement could result in the repayment of federal funds. Questioned Costs There were no questioned costs identified. Recommendation Management of the School Corporation should develop written policies and procedures which would require tracking of actual nonpublic proportionate share expenditures by employee. Documentation should be maintained to show how these expenditures are being tracked to ensure compliance with the earmarking requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-005 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States Assistance Listings Number: 84.027 Federal Award Numbers and Years (or Other Identifying Numbers): 22611-046-PN01, 22611-046-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 23 METROPOLITAN SCHOOL DISTRICT OF BOONE TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The School Corporation is a member of the Porter County Education Services (Cooperative). During fiscal year 2023-2024, the Cooperative operated the special education program and spent the federal money on behalf of all its members. As the grant agreement was between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure nonpublic school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for the 22611-046-PN01 and 22611-046-ARP grant awards could not be verified for the individual member schools. Total grant expenditures were posted as expended. The nonpublic proportionate share expenditures were determined by applying a percentage to the nonpublic school budgeted expenditures. As such, we were unable to identify if the minimum amount per the grant award was expended and properly reported to the IDOE as required. The lack of internal controls and noncompliance was isolated to the 22611-046-PN01 and 22611-046-ARP grant awards. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." INDIANA STATE BOARD OF ACCOUNTS 24 METROPOLITAN SCHOOL DISTRICT OF BOONE TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause Through inquiry of the Cooperative management, they were unaware of the requirements to track nonpublic proportionate share expenditures directly for each member school. While the Cooperative did implement new processes and procedures to ensure expenditures were tracked by member schools starting in July 2022, all of the grant awards had been allocated to the member schools based on a percentage of the budget. Effect Without the proper implementation of an effectively designed system of internal controls, the School Corporation was unable to ensure the Cooperative compliance with earmarking requirements and the Cooperative was unable to track expenditures for nonpublic services for each member school. Consequently, the amounts requested for reimbursement were not supported by actual expenditures, but rather a percentage based on the budget per member school. Because of this, expenditures were not accurately reported to the oversight agency. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure nonpublic proportionate share funds are appropriately allocated to the member school based on expenditures charged directly on behalf of the member school. Supporting documentation for these expenditures should be retained for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-005 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States Assistance Listings Number: 84.027 Federal Award Numbers and Years (or Other Identifying Numbers): 22611-046-PN01, 22611-046-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 23 METROPOLITAN SCHOOL DISTRICT OF BOONE TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The School Corporation is a member of the Porter County Education Services (Cooperative). During fiscal year 2023-2024, the Cooperative operated the special education program and spent the federal money on behalf of all its members. As the grant agreement was between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure nonpublic school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for the 22611-046-PN01 and 22611-046-ARP grant awards could not be verified for the individual member schools. Total grant expenditures were posted as expended. The nonpublic proportionate share expenditures were determined by applying a percentage to the nonpublic school budgeted expenditures. As such, we were unable to identify if the minimum amount per the grant award was expended and properly reported to the IDOE as required. The lack of internal controls and noncompliance was isolated to the 22611-046-PN01 and 22611-046-ARP grant awards. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." INDIANA STATE BOARD OF ACCOUNTS 24 METROPOLITAN SCHOOL DISTRICT OF BOONE TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause Through inquiry of the Cooperative management, they were unaware of the requirements to track nonpublic proportionate share expenditures directly for each member school. While the Cooperative did implement new processes and procedures to ensure expenditures were tracked by member schools starting in July 2022, all of the grant awards had been allocated to the member schools based on a percentage of the budget. Effect Without the proper implementation of an effectively designed system of internal controls, the School Corporation was unable to ensure the Cooperative compliance with earmarking requirements and the Cooperative was unable to track expenditures for nonpublic services for each member school. Consequently, the amounts requested for reimbursement were not supported by actual expenditures, but rather a percentage based on the budget per member school. Because of this, expenditures were not accurately reported to the oversight agency. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure nonpublic proportionate share funds are appropriately allocated to the member school based on expenditures charged directly on behalf of the member school. Supporting documentation for these expenditures should be retained for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-005 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States Assistance Listings Number: 84.027 Federal Award Numbers and Years (or Other Identifying Numbers): 22611-046-PN01, 22611-046-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 23 METROPOLITAN SCHOOL DISTRICT OF BOONE TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The School Corporation is a member of the Porter County Education Services (Cooperative). During fiscal year 2023-2024, the Cooperative operated the special education program and spent the federal money on behalf of all its members. As the grant agreement was between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure nonpublic school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for the 22611-046-PN01 and 22611-046-ARP grant awards could not be verified for the individual member schools. Total grant expenditures were posted as expended. The nonpublic proportionate share expenditures were determined by applying a percentage to the nonpublic school budgeted expenditures. As such, we were unable to identify if the minimum amount per the grant award was expended and properly reported to the IDOE as required. The lack of internal controls and noncompliance was isolated to the 22611-046-PN01 and 22611-046-ARP grant awards. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." INDIANA STATE BOARD OF ACCOUNTS 24 METROPOLITAN SCHOOL DISTRICT OF BOONE TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause Through inquiry of the Cooperative management, they were unaware of the requirements to track nonpublic proportionate share expenditures directly for each member school. While the Cooperative did implement new processes and procedures to ensure expenditures were tracked by member schools starting in July 2022, all of the grant awards had been allocated to the member schools based on a percentage of the budget. Effect Without the proper implementation of an effectively designed system of internal controls, the School Corporation was unable to ensure the Cooperative compliance with earmarking requirements and the Cooperative was unable to track expenditures for nonpublic services for each member school. Consequently, the amounts requested for reimbursement were not supported by actual expenditures, but rather a percentage based on the budget per member school. Because of this, expenditures were not accurately reported to the oversight agency. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure nonpublic proportionate share funds are appropriately allocated to the member school based on expenditures charged directly on behalf of the member school. Supporting documentation for these expenditures should be retained for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-005 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States Assistance Listings Number: 84.027 Federal Award Numbers and Years (or Other Identifying Numbers): 22611-046-PN01, 22611-046-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 23 METROPOLITAN SCHOOL DISTRICT OF BOONE TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The School Corporation is a member of the Porter County Education Services (Cooperative). During fiscal year 2023-2024, the Cooperative operated the special education program and spent the federal money on behalf of all its members. As the grant agreement was between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure nonpublic school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for the 22611-046-PN01 and 22611-046-ARP grant awards could not be verified for the individual member schools. Total grant expenditures were posted as expended. The nonpublic proportionate share expenditures were determined by applying a percentage to the nonpublic school budgeted expenditures. As such, we were unable to identify if the minimum amount per the grant award was expended and properly reported to the IDOE as required. The lack of internal controls and noncompliance was isolated to the 22611-046-PN01 and 22611-046-ARP grant awards. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." INDIANA STATE BOARD OF ACCOUNTS 24 METROPOLITAN SCHOOL DISTRICT OF BOONE TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause Through inquiry of the Cooperative management, they were unaware of the requirements to track nonpublic proportionate share expenditures directly for each member school. While the Cooperative did implement new processes and procedures to ensure expenditures were tracked by member schools starting in July 2022, all of the grant awards had been allocated to the member schools based on a percentage of the budget. Effect Without the proper implementation of an effectively designed system of internal controls, the School Corporation was unable to ensure the Cooperative compliance with earmarking requirements and the Cooperative was unable to track expenditures for nonpublic services for each member school. Consequently, the amounts requested for reimbursement were not supported by actual expenditures, but rather a percentage based on the budget per member school. Because of this, expenditures were not accurately reported to the oversight agency. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure nonpublic proportionate share funds are appropriately allocated to the member school based on expenditures charged directly on behalf of the member school. Supporting documentation for these expenditures should be retained for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Various Agencies Finding 2024 ¬– 015: ALN 10.565, 10.568, 10.569 – Food Distribution Cluster ALN 15.252 – Abandoned Mine Land Reclamation (AMLR) ALN 21.027 – COVID 19 – Coronavirus State and Local Fiscal Recovery Funds ALN 84.425C – COVID 19 – Education Stabilization Fund – GEER Fund ALN 84.425D – COVID 19 – Education Stabilization Fund – ESSER Fund ALN 84.425R – COVID 19 – Education Stabilization Fund – CRRSA EANS Program ALN 84.425U – COVID 19 – Education Stabilization Fund – ARP ESSER ALN 84.425V – COVID 19 – Education Stabilization Fund – ARP EANS Program ALN 84.425W – COVID 19 – Education Stabilization Fund – ARP ESSER HCY ALN 93.044, 93.045, 93.053 – Aging Cluster (including COVID-19) ALN 93.558 – Temporary Assistance for Needy Families ALN 93.667 – Social Services Block Grant A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2023-024) Federal Grant Number(s) and Year(s): 228PA100I1003 (6/13/2022 – 6/30/2025), 231PA445Q2204 (10/01/2022 – 9/30/2023), 231PA825Y8005 (10/01/2022 – 9/30/2023), 231PA825Y8105 (10/01/2022 – 9/30/2023), 241PA825Y8005 (10/01/2023 – 9/30/2024), 241PA825Y8105 (10/01/2023 – 9/30/2024), S18AF20004 (11/01/2017 – 10/31/2025), S19AF20004 (12/01/2018 – 11/30/2025), S21AF10015 (1/01/2021 – 12/31/2023), S22AF00017 (1/01/2022 – 12/31/2024), S23AF00002 (11/01/2022 – 10/31/2027), TN75GJE1S7G3 (3/03/2021 – 12/31/2024), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021– 9/30/2024), S425D210028 (1/05/2021 – 9/30/2024), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2024), S425V210037 (11/16/2021 – 9/30/2024), S425C210013 (3/13/2020 – 9/30/2024), 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD (10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 2401PAOACM (10/01/2023 – 9/30/2025), 2401PAOAHD (10/01/2023 – 9/30/2025), 2401PAOANS (10/01/2023 – 9/30/2025), 2401PAOASS (10/01/2023 – 9/30/2025), 2101PATANF (10/01/2020 – 9/30/2021), 2201PATANF (10/01/2021 – 9/30/2022), 2301PATANF (10/01/2022 – 9/30/2023), 2401PATANF (10/01/2023 – 9/30/2024), 2301PASOSR (10/01/2022 – 9/30/2024), 2401PASOSR (10/01/2023 – 9/30/2025), 2301PATANF (10/01/2022 – 9/30/2024), 2401PATANF (10/01/2023 – 9/30/2025) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters for Abandoned Mine Land Reclamation (AMLR), Temporary Assistance for Needy Families, Coronavirus State and Local Fiscal Recovery Funds, and Social Services Block Grant Material Weakness in Internal Control over Compliance, Material Noncompliance for Food Distribution Cluster, Education Stabilization Fund, and Aging Cluster Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Acceptance date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance Finding 2024 ¬– 015: (continued) audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2024 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2023 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2024. We also evaluated the Commonwealth’s review of 45 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2024 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 17.6 months to over 18 months after the FAC Acceptance date for two out of two audit reports with findings. There was also a delay in PDOA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 8.7 months to over 16 months after the FAC Acceptance date for four out of four audit reports with findings. • Department of Education (PDE): The time period for making a management decision on findings was approximately 7.8 months to over 12 months after the FAC Acceptance date for seven out of 22 audit reports with findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 11.6 months to over 12 months after the FAC Acceptance date for two out of two audit reports with findings. Our testing disclosed for the two late audit reports, DEP made management decisions timely. However, DEP did not notify the subrecipients of the management decisions within the required six month time period after the audit reports FAC Acceptance date. • Department of Human Services (DHS): The time period for making a management decision on findings was approximately 7.2 months after the FAC Acceptance date for one out of two audit reports with findings. Our testing disclosed for the one late audit report DHS made a management decision timely. However, DHS did not notify the subrecipient of the management decision within the required six month time period after the audit reports FAC Acceptance date. Criteria: 2 CFR §200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: Finding 2024 ¬– 015: (continued) (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR §200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR §200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR §200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. 2 CFR §200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. Finding 2024 ¬– 015: (continued) (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Finding 2024 ¬– 015: (continued) Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (6) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, and untimely review of the SEFA or alternate procedures be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. Finding 2024 ¬– 015: (continued) DHS Response: DHS agrees that there was an exception where human error caused a management decision on one single audit report to be issued untimely; in this instance, the decision itself was made timely but was not communicated in a timely manner. DHS disagrees that an isolated incident due to human error signifies a weakness in internal controls. This was not a systemic issue and therefore should not have been considered a significant deficiency in internal controls, and DHS should not have been included in this finding. Auditors’ Conclusion: The agency responses from PDOA, PDA, PDE, and DEP indicate agreement with the finding. DHS agrees that an error occurred resulting in untimely submission of one management decision, DHS disagrees that the error represents a significant deficiency. We acknowledge the error occurred due to an oversight and is not a systemic error, however, the error resulted in noncompliance with one of two audit reports that required timely management decisions. We will evaluate corrective action in the subsequent audit. The finding remains as stated. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2024 ¬– 015: ALN 10.565, 10.568, 10.569 – Food Distribution Cluster ALN 15.252 – Abandoned Mine Land Reclamation (AMLR) ALN 21.027 – COVID 19 – Coronavirus State and Local Fiscal Recovery Funds ALN 84.425C – COVID 19 – Education Stabilization Fund – GEER Fund ALN 84.425D – COVID 19 – Education Stabilization Fund – ESSER Fund ALN 84.425R – COVID 19 – Education Stabilization Fund – CRRSA EANS Program ALN 84.425U – COVID 19 – Education Stabilization Fund – ARP ESSER ALN 84.425V – COVID 19 – Education Stabilization Fund – ARP EANS Program ALN 84.425W – COVID 19 – Education Stabilization Fund – ARP ESSER HCY ALN 93.044, 93.045, 93.053 – Aging Cluster (including COVID-19) ALN 93.558 – Temporary Assistance for Needy Families ALN 93.667 – Social Services Block Grant A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2023-024) Federal Grant Number(s) and Year(s): 228PA100I1003 (6/13/2022 – 6/30/2025), 231PA445Q2204 (10/01/2022 – 9/30/2023), 231PA825Y8005 (10/01/2022 – 9/30/2023), 231PA825Y8105 (10/01/2022 – 9/30/2023), 241PA825Y8005 (10/01/2023 – 9/30/2024), 241PA825Y8105 (10/01/2023 – 9/30/2024), S18AF20004 (11/01/2017 – 10/31/2025), S19AF20004 (12/01/2018 – 11/30/2025), S21AF10015 (1/01/2021 – 12/31/2023), S22AF00017 (1/01/2022 – 12/31/2024), S23AF00002 (11/01/2022 – 10/31/2027), TN75GJE1S7G3 (3/03/2021 – 12/31/2024), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021– 9/30/2024), S425D210028 (1/05/2021 – 9/30/2024), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2024), S425V210037 (11/16/2021 – 9/30/2024), S425C210013 (3/13/2020 – 9/30/2024), 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD (10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 2401PAOACM (10/01/2023 – 9/30/2025), 2401PAOAHD (10/01/2023 – 9/30/2025), 2401PAOANS (10/01/2023 – 9/30/2025), 2401PAOASS (10/01/2023 – 9/30/2025), 2101PATANF (10/01/2020 – 9/30/2021), 2201PATANF (10/01/2021 – 9/30/2022), 2301PATANF (10/01/2022 – 9/30/2023), 2401PATANF (10/01/2023 – 9/30/2024), 2301PASOSR (10/01/2022 – 9/30/2024), 2401PASOSR (10/01/2023 – 9/30/2025), 2301PATANF (10/01/2022 – 9/30/2024), 2401PATANF (10/01/2023 – 9/30/2025) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters for Abandoned Mine Land Reclamation (AMLR), Temporary Assistance for Needy Families, Coronavirus State and Local Fiscal Recovery Funds, and Social Services Block Grant Material Weakness in Internal Control over Compliance, Material Noncompliance for Food Distribution Cluster, Education Stabilization Fund, and Aging Cluster Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Acceptance date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance Finding 2024 ¬– 015: (continued) audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2024 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2023 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2024. We also evaluated the Commonwealth’s review of 45 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2024 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 17.6 months to over 18 months after the FAC Acceptance date for two out of two audit reports with findings. There was also a delay in PDOA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 8.7 months to over 16 months after the FAC Acceptance date for four out of four audit reports with findings. • Department of Education (PDE): The time period for making a management decision on findings was approximately 7.8 months to over 12 months after the FAC Acceptance date for seven out of 22 audit reports with findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 11.6 months to over 12 months after the FAC Acceptance date for two out of two audit reports with findings. Our testing disclosed for the two late audit reports, DEP made management decisions timely. However, DEP did not notify the subrecipients of the management decisions within the required six month time period after the audit reports FAC Acceptance date. • Department of Human Services (DHS): The time period for making a management decision on findings was approximately 7.2 months after the FAC Acceptance date for one out of two audit reports with findings. Our testing disclosed for the one late audit report DHS made a management decision timely. However, DHS did not notify the subrecipient of the management decision within the required six month time period after the audit reports FAC Acceptance date. Criteria: 2 CFR §200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: Finding 2024 ¬– 015: (continued) (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR §200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR §200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR §200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. 2 CFR §200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. Finding 2024 ¬– 015: (continued) (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Finding 2024 ¬– 015: (continued) Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (6) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, and untimely review of the SEFA or alternate procedures be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. Finding 2024 ¬– 015: (continued) DHS Response: DHS agrees that there was an exception where human error caused a management decision on one single audit report to be issued untimely; in this instance, the decision itself was made timely but was not communicated in a timely manner. DHS disagrees that an isolated incident due to human error signifies a weakness in internal controls. This was not a systemic issue and therefore should not have been considered a significant deficiency in internal controls, and DHS should not have been included in this finding. Auditors’ Conclusion: The agency responses from PDOA, PDA, PDE, and DEP indicate agreement with the finding. DHS agrees that an error occurred resulting in untimely submission of one management decision, DHS disagrees that the error represents a significant deficiency. We acknowledge the error occurred due to an oversight and is not a systemic error, however, the error resulted in noncompliance with one of two audit reports that required timely management decisions. We will evaluate corrective action in the subsequent audit. The finding remains as stated. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2024 ¬– 015: ALN 10.565, 10.568, 10.569 – Food Distribution Cluster ALN 15.252 – Abandoned Mine Land Reclamation (AMLR) ALN 21.027 – COVID 19 – Coronavirus State and Local Fiscal Recovery Funds ALN 84.425C – COVID 19 – Education Stabilization Fund – GEER Fund ALN 84.425D – COVID 19 – Education Stabilization Fund – ESSER Fund ALN 84.425R – COVID 19 – Education Stabilization Fund – CRRSA EANS Program ALN 84.425U – COVID 19 – Education Stabilization Fund – ARP ESSER ALN 84.425V – COVID 19 – Education Stabilization Fund – ARP EANS Program ALN 84.425W – COVID 19 – Education Stabilization Fund – ARP ESSER HCY ALN 93.044, 93.045, 93.053 – Aging Cluster (including COVID-19) ALN 93.558 – Temporary Assistance for Needy Families ALN 93.667 – Social Services Block Grant A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2023-024) Federal Grant Number(s) and Year(s): 228PA100I1003 (6/13/2022 – 6/30/2025), 231PA445Q2204 (10/01/2022 – 9/30/2023), 231PA825Y8005 (10/01/2022 – 9/30/2023), 231PA825Y8105 (10/01/2022 – 9/30/2023), 241PA825Y8005 (10/01/2023 – 9/30/2024), 241PA825Y8105 (10/01/2023 – 9/30/2024), S18AF20004 (11/01/2017 – 10/31/2025), S19AF20004 (12/01/2018 – 11/30/2025), S21AF10015 (1/01/2021 – 12/31/2023), S22AF00017 (1/01/2022 – 12/31/2024), S23AF00002 (11/01/2022 – 10/31/2027), TN75GJE1S7G3 (3/03/2021 – 12/31/2024), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021– 9/30/2024), S425D210028 (1/05/2021 – 9/30/2024), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2024), S425V210037 (11/16/2021 – 9/30/2024), S425C210013 (3/13/2020 – 9/30/2024), 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD (10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 2401PAOACM (10/01/2023 – 9/30/2025), 2401PAOAHD (10/01/2023 – 9/30/2025), 2401PAOANS (10/01/2023 – 9/30/2025), 2401PAOASS (10/01/2023 – 9/30/2025), 2101PATANF (10/01/2020 – 9/30/2021), 2201PATANF (10/01/2021 – 9/30/2022), 2301PATANF (10/01/2022 – 9/30/2023), 2401PATANF (10/01/2023 – 9/30/2024), 2301PASOSR (10/01/2022 – 9/30/2024), 2401PASOSR (10/01/2023 – 9/30/2025), 2301PATANF (10/01/2022 – 9/30/2024), 2401PATANF (10/01/2023 – 9/30/2025) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters for Abandoned Mine Land Reclamation (AMLR), Temporary Assistance for Needy Families, Coronavirus State and Local Fiscal Recovery Funds, and Social Services Block Grant Material Weakness in Internal Control over Compliance, Material Noncompliance for Food Distribution Cluster, Education Stabilization Fund, and Aging Cluster Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Acceptance date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance Finding 2024 ¬– 015: (continued) audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2024 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2023 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2024. We also evaluated the Commonwealth’s review of 45 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2024 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 17.6 months to over 18 months after the FAC Acceptance date for two out of two audit reports with findings. There was also a delay in PDOA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 8.7 months to over 16 months after the FAC Acceptance date for four out of four audit reports with findings. • Department of Education (PDE): The time period for making a management decision on findings was approximately 7.8 months to over 12 months after the FAC Acceptance date for seven out of 22 audit reports with findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 11.6 months to over 12 months after the FAC Acceptance date for two out of two audit reports with findings. Our testing disclosed for the two late audit reports, DEP made management decisions timely. However, DEP did not notify the subrecipients of the management decisions within the required six month time period after the audit reports FAC Acceptance date. • Department of Human Services (DHS): The time period for making a management decision on findings was approximately 7.2 months after the FAC Acceptance date for one out of two audit reports with findings. Our testing disclosed for the one late audit report DHS made a management decision timely. However, DHS did not notify the subrecipient of the management decision within the required six month time period after the audit reports FAC Acceptance date. Criteria: 2 CFR §200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: Finding 2024 ¬– 015: (continued) (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR §200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR §200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR §200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. 2 CFR §200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. Finding 2024 ¬– 015: (continued) (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Finding 2024 ¬– 015: (continued) Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (6) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, and untimely review of the SEFA or alternate procedures be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. Finding 2024 ¬– 015: (continued) DHS Response: DHS agrees that there was an exception where human error caused a management decision on one single audit report to be issued untimely; in this instance, the decision itself was made timely but was not communicated in a timely manner. DHS disagrees that an isolated incident due to human error signifies a weakness in internal controls. This was not a systemic issue and therefore should not have been considered a significant deficiency in internal controls, and DHS should not have been included in this finding. Auditors’ Conclusion: The agency responses from PDOA, PDA, PDE, and DEP indicate agreement with the finding. DHS agrees that an error occurred resulting in untimely submission of one management decision, DHS disagrees that the error represents a significant deficiency. We acknowledge the error occurred due to an oversight and is not a systemic error, however, the error resulted in noncompliance with one of two audit reports that required timely management decisions. We will evaluate corrective action in the subsequent audit. The finding remains as stated. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2024 ¬– 015: ALN 10.565, 10.568, 10.569 – Food Distribution Cluster ALN 15.252 – Abandoned Mine Land Reclamation (AMLR) ALN 21.027 – COVID 19 – Coronavirus State and Local Fiscal Recovery Funds ALN 84.425C – COVID 19 – Education Stabilization Fund – GEER Fund ALN 84.425D – COVID 19 – Education Stabilization Fund – ESSER Fund ALN 84.425R – COVID 19 – Education Stabilization Fund – CRRSA EANS Program ALN 84.425U – COVID 19 – Education Stabilization Fund – ARP ESSER ALN 84.425V – COVID 19 – Education Stabilization Fund – ARP EANS Program ALN 84.425W – COVID 19 – Education Stabilization Fund – ARP ESSER HCY ALN 93.044, 93.045, 93.053 – Aging Cluster (including COVID-19) ALN 93.558 – Temporary Assistance for Needy Families ALN 93.667 – Social Services Block Grant A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2023-024) Federal Grant Number(s) and Year(s): 228PA100I1003 (6/13/2022 – 6/30/2025), 231PA445Q2204 (10/01/2022 – 9/30/2023), 231PA825Y8005 (10/01/2022 – 9/30/2023), 231PA825Y8105 (10/01/2022 – 9/30/2023), 241PA825Y8005 (10/01/2023 – 9/30/2024), 241PA825Y8105 (10/01/2023 – 9/30/2024), S18AF20004 (11/01/2017 – 10/31/2025), S19AF20004 (12/01/2018 – 11/30/2025), S21AF10015 (1/01/2021 – 12/31/2023), S22AF00017 (1/01/2022 – 12/31/2024), S23AF00002 (11/01/2022 – 10/31/2027), TN75GJE1S7G3 (3/03/2021 – 12/31/2024), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021– 9/30/2024), S425D210028 (1/05/2021 – 9/30/2024), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2024), S425V210037 (11/16/2021 – 9/30/2024), S425C210013 (3/13/2020 – 9/30/2024), 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD (10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 2401PAOACM (10/01/2023 – 9/30/2025), 2401PAOAHD (10/01/2023 – 9/30/2025), 2401PAOANS (10/01/2023 – 9/30/2025), 2401PAOASS (10/01/2023 – 9/30/2025), 2101PATANF (10/01/2020 – 9/30/2021), 2201PATANF (10/01/2021 – 9/30/2022), 2301PATANF (10/01/2022 – 9/30/2023), 2401PATANF (10/01/2023 – 9/30/2024), 2301PASOSR (10/01/2022 – 9/30/2024), 2401PASOSR (10/01/2023 – 9/30/2025), 2301PATANF (10/01/2022 – 9/30/2024), 2401PATANF (10/01/2023 – 9/30/2025) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters for Abandoned Mine Land Reclamation (AMLR), Temporary Assistance for Needy Families, Coronavirus State and Local Fiscal Recovery Funds, and Social Services Block Grant Material Weakness in Internal Control over Compliance, Material Noncompliance for Food Distribution Cluster, Education Stabilization Fund, and Aging Cluster Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Acceptance date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance Finding 2024 ¬– 015: (continued) audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2024 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2023 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2024. We also evaluated the Commonwealth’s review of 45 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2024 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 17.6 months to over 18 months after the FAC Acceptance date for two out of two audit reports with findings. There was also a delay in PDOA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 8.7 months to over 16 months after the FAC Acceptance date for four out of four audit reports with findings. • Department of Education (PDE): The time period for making a management decision on findings was approximately 7.8 months to over 12 months after the FAC Acceptance date for seven out of 22 audit reports with findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 11.6 months to over 12 months after the FAC Acceptance date for two out of two audit reports with findings. Our testing disclosed for the two late audit reports, DEP made management decisions timely. However, DEP did not notify the subrecipients of the management decisions within the required six month time period after the audit reports FAC Acceptance date. • Department of Human Services (DHS): The time period for making a management decision on findings was approximately 7.2 months after the FAC Acceptance date for one out of two audit reports with findings. Our testing disclosed for the one late audit report DHS made a management decision timely. However, DHS did not notify the subrecipient of the management decision within the required six month time period after the audit reports FAC Acceptance date. Criteria: 2 CFR §200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: Finding 2024 ¬– 015: (continued) (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR §200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR §200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR §200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. 2 CFR §200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. Finding 2024 ¬– 015: (continued) (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Finding 2024 ¬– 015: (continued) Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (6) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, and untimely review of the SEFA or alternate procedures be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. Finding 2024 ¬– 015: (continued) DHS Response: DHS agrees that there was an exception where human error caused a management decision on one single audit report to be issued untimely; in this instance, the decision itself was made timely but was not communicated in a timely manner. DHS disagrees that an isolated incident due to human error signifies a weakness in internal controls. This was not a systemic issue and therefore should not have been considered a significant deficiency in internal controls, and DHS should not have been included in this finding. Auditors’ Conclusion: The agency responses from PDOA, PDA, PDE, and DEP indicate agreement with the finding. DHS agrees that an error occurred resulting in untimely submission of one management decision, DHS disagrees that the error represents a significant deficiency. We acknowledge the error occurred due to an oversight and is not a systemic error, however, the error resulted in noncompliance with one of two audit reports that required timely management decisions. We will evaluate corrective action in the subsequent audit. The finding remains as stated. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2024 ¬– 015: ALN 10.565, 10.568, 10.569 – Food Distribution Cluster ALN 15.252 – Abandoned Mine Land Reclamation (AMLR) ALN 21.027 – COVID 19 – Coronavirus State and Local Fiscal Recovery Funds ALN 84.425C – COVID 19 – Education Stabilization Fund – GEER Fund ALN 84.425D – COVID 19 – Education Stabilization Fund – ESSER Fund ALN 84.425R – COVID 19 – Education Stabilization Fund – CRRSA EANS Program ALN 84.425U – COVID 19 – Education Stabilization Fund – ARP ESSER ALN 84.425V – COVID 19 – Education Stabilization Fund – ARP EANS Program ALN 84.425W – COVID 19 – Education Stabilization Fund – ARP ESSER HCY ALN 93.044, 93.045, 93.053 – Aging Cluster (including COVID-19) ALN 93.558 – Temporary Assistance for Needy Families ALN 93.667 – Social Services Block Grant A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2023-024) Federal Grant Number(s) and Year(s): 228PA100I1003 (6/13/2022 – 6/30/2025), 231PA445Q2204 (10/01/2022 – 9/30/2023), 231PA825Y8005 (10/01/2022 – 9/30/2023), 231PA825Y8105 (10/01/2022 – 9/30/2023), 241PA825Y8005 (10/01/2023 – 9/30/2024), 241PA825Y8105 (10/01/2023 – 9/30/2024), S18AF20004 (11/01/2017 – 10/31/2025), S19AF20004 (12/01/2018 – 11/30/2025), S21AF10015 (1/01/2021 – 12/31/2023), S22AF00017 (1/01/2022 – 12/31/2024), S23AF00002 (11/01/2022 – 10/31/2027), TN75GJE1S7G3 (3/03/2021 – 12/31/2024), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021– 9/30/2024), S425D210028 (1/05/2021 – 9/30/2024), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2024), S425V210037 (11/16/2021 – 9/30/2024), S425C210013 (3/13/2020 – 9/30/2024), 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD (10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 2401PAOACM (10/01/2023 – 9/30/2025), 2401PAOAHD (10/01/2023 – 9/30/2025), 2401PAOANS (10/01/2023 – 9/30/2025), 2401PAOASS (10/01/2023 – 9/30/2025), 2101PATANF (10/01/2020 – 9/30/2021), 2201PATANF (10/01/2021 – 9/30/2022), 2301PATANF (10/01/2022 – 9/30/2023), 2401PATANF (10/01/2023 – 9/30/2024), 2301PASOSR (10/01/2022 – 9/30/2024), 2401PASOSR (10/01/2023 – 9/30/2025), 2301PATANF (10/01/2022 – 9/30/2024), 2401PATANF (10/01/2023 – 9/30/2025) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters for Abandoned Mine Land Reclamation (AMLR), Temporary Assistance for Needy Families, Coronavirus State and Local Fiscal Recovery Funds, and Social Services Block Grant Material Weakness in Internal Control over Compliance, Material Noncompliance for Food Distribution Cluster, Education Stabilization Fund, and Aging Cluster Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Acceptance date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance Finding 2024 ¬– 015: (continued) audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2024 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2023 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2024. We also evaluated the Commonwealth’s review of 45 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2024 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 17.6 months to over 18 months after the FAC Acceptance date for two out of two audit reports with findings. There was also a delay in PDOA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 8.7 months to over 16 months after the FAC Acceptance date for four out of four audit reports with findings. • Department of Education (PDE): The time period for making a management decision on findings was approximately 7.8 months to over 12 months after the FAC Acceptance date for seven out of 22 audit reports with findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 11.6 months to over 12 months after the FAC Acceptance date for two out of two audit reports with findings. Our testing disclosed for the two late audit reports, DEP made management decisions timely. However, DEP did not notify the subrecipients of the management decisions within the required six month time period after the audit reports FAC Acceptance date. • Department of Human Services (DHS): The time period for making a management decision on findings was approximately 7.2 months after the FAC Acceptance date for one out of two audit reports with findings. Our testing disclosed for the one late audit report DHS made a management decision timely. However, DHS did not notify the subrecipient of the management decision within the required six month time period after the audit reports FAC Acceptance date. Criteria: 2 CFR §200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: Finding 2024 ¬– 015: (continued) (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR §200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR §200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR §200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. 2 CFR §200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. Finding 2024 ¬– 015: (continued) (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Finding 2024 ¬– 015: (continued) Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (6) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, and untimely review of the SEFA or alternate procedures be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. Finding 2024 ¬– 015: (continued) DHS Response: DHS agrees that there was an exception where human error caused a management decision on one single audit report to be issued untimely; in this instance, the decision itself was made timely but was not communicated in a timely manner. DHS disagrees that an isolated incident due to human error signifies a weakness in internal controls. This was not a systemic issue and therefore should not have been considered a significant deficiency in internal controls, and DHS should not have been included in this finding. Auditors’ Conclusion: The agency responses from PDOA, PDA, PDE, and DEP indicate agreement with the finding. DHS agrees that an error occurred resulting in untimely submission of one management decision, DHS disagrees that the error represents a significant deficiency. We acknowledge the error occurred due to an oversight and is not a systemic error, however, the error resulted in noncompliance with one of two audit reports that required timely management decisions. We will evaluate corrective action in the subsequent audit. The finding remains as stated. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2024 ¬– 015: ALN 10.565, 10.568, 10.569 – Food Distribution Cluster ALN 15.252 – Abandoned Mine Land Reclamation (AMLR) ALN 21.027 – COVID 19 – Coronavirus State and Local Fiscal Recovery Funds ALN 84.425C – COVID 19 – Education Stabilization Fund – GEER Fund ALN 84.425D – COVID 19 – Education Stabilization Fund – ESSER Fund ALN 84.425R – COVID 19 – Education Stabilization Fund – CRRSA EANS Program ALN 84.425U – COVID 19 – Education Stabilization Fund – ARP ESSER ALN 84.425V – COVID 19 – Education Stabilization Fund – ARP EANS Program ALN 84.425W – COVID 19 – Education Stabilization Fund – ARP ESSER HCY ALN 93.044, 93.045, 93.053 – Aging Cluster (including COVID-19) ALN 93.558 – Temporary Assistance for Needy Families ALN 93.667 – Social Services Block Grant A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2023-024) Federal Grant Number(s) and Year(s): 228PA100I1003 (6/13/2022 – 6/30/2025), 231PA445Q2204 (10/01/2022 – 9/30/2023), 231PA825Y8005 (10/01/2022 – 9/30/2023), 231PA825Y8105 (10/01/2022 – 9/30/2023), 241PA825Y8005 (10/01/2023 – 9/30/2024), 241PA825Y8105 (10/01/2023 – 9/30/2024), S18AF20004 (11/01/2017 – 10/31/2025), S19AF20004 (12/01/2018 – 11/30/2025), S21AF10015 (1/01/2021 – 12/31/2023), S22AF00017 (1/01/2022 – 12/31/2024), S23AF00002 (11/01/2022 – 10/31/2027), TN75GJE1S7G3 (3/03/2021 – 12/31/2024), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021– 9/30/2024), S425D210028 (1/05/2021 – 9/30/2024), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2024), S425V210037 (11/16/2021 – 9/30/2024), S425C210013 (3/13/2020 – 9/30/2024), 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD (10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 2401PAOACM (10/01/2023 – 9/30/2025), 2401PAOAHD (10/01/2023 – 9/30/2025), 2401PAOANS (10/01/2023 – 9/30/2025), 2401PAOASS (10/01/2023 – 9/30/2025), 2101PATANF (10/01/2020 – 9/30/2021), 2201PATANF (10/01/2021 – 9/30/2022), 2301PATANF (10/01/2022 – 9/30/2023), 2401PATANF (10/01/2023 – 9/30/2024), 2301PASOSR (10/01/2022 – 9/30/2024), 2401PASOSR (10/01/2023 – 9/30/2025), 2301PATANF (10/01/2022 – 9/30/2024), 2401PATANF (10/01/2023 – 9/30/2025) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters for Abandoned Mine Land Reclamation (AMLR), Temporary Assistance for Needy Families, Coronavirus State and Local Fiscal Recovery Funds, and Social Services Block Grant Material Weakness in Internal Control over Compliance, Material Noncompliance for Food Distribution Cluster, Education Stabilization Fund, and Aging Cluster Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Acceptance date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance Finding 2024 ¬– 015: (continued) audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2024 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2023 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2024. We also evaluated the Commonwealth’s review of 45 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2024 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 17.6 months to over 18 months after the FAC Acceptance date for two out of two audit reports with findings. There was also a delay in PDOA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 8.7 months to over 16 months after the FAC Acceptance date for four out of four audit reports with findings. • Department of Education (PDE): The time period for making a management decision on findings was approximately 7.8 months to over 12 months after the FAC Acceptance date for seven out of 22 audit reports with findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 11.6 months to over 12 months after the FAC Acceptance date for two out of two audit reports with findings. Our testing disclosed for the two late audit reports, DEP made management decisions timely. However, DEP did not notify the subrecipients of the management decisions within the required six month time period after the audit reports FAC Acceptance date. • Department of Human Services (DHS): The time period for making a management decision on findings was approximately 7.2 months after the FAC Acceptance date for one out of two audit reports with findings. Our testing disclosed for the one late audit report DHS made a management decision timely. However, DHS did not notify the subrecipient of the management decision within the required six month time period after the audit reports FAC Acceptance date. Criteria: 2 CFR §200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: Finding 2024 ¬– 015: (continued) (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR §200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR §200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR §200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. 2 CFR §200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. Finding 2024 ¬– 015: (continued) (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Finding 2024 ¬– 015: (continued) Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (6) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, and untimely review of the SEFA or alternate procedures be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. Finding 2024 ¬– 015: (continued) DHS Response: DHS agrees that there was an exception where human error caused a management decision on one single audit report to be issued untimely; in this instance, the decision itself was made timely but was not communicated in a timely manner. DHS disagrees that an isolated incident due to human error signifies a weakness in internal controls. This was not a systemic issue and therefore should not have been considered a significant deficiency in internal controls, and DHS should not have been included in this finding. Auditors’ Conclusion: The agency responses from PDOA, PDA, PDE, and DEP indicate agreement with the finding. DHS agrees that an error occurred resulting in untimely submission of one management decision, DHS disagrees that the error represents a significant deficiency. We acknowledge the error occurred due to an oversight and is not a systemic error, however, the error resulted in noncompliance with one of two audit reports that required timely management decisions. We will evaluate corrective action in the subsequent audit. The finding remains as stated. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2024 ¬– 015: ALN 10.565, 10.568, 10.569 – Food Distribution Cluster ALN 15.252 – Abandoned Mine Land Reclamation (AMLR) ALN 21.027 – COVID 19 – Coronavirus State and Local Fiscal Recovery Funds ALN 84.425C – COVID 19 – Education Stabilization Fund – GEER Fund ALN 84.425D – COVID 19 – Education Stabilization Fund – ESSER Fund ALN 84.425R – COVID 19 – Education Stabilization Fund – CRRSA EANS Program ALN 84.425U – COVID 19 – Education Stabilization Fund – ARP ESSER ALN 84.425V – COVID 19 – Education Stabilization Fund – ARP EANS Program ALN 84.425W – COVID 19 – Education Stabilization Fund – ARP ESSER HCY ALN 93.044, 93.045, 93.053 – Aging Cluster (including COVID-19) ALN 93.558 – Temporary Assistance for Needy Families ALN 93.667 – Social Services Block Grant A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2023-024) Federal Grant Number(s) and Year(s): 228PA100I1003 (6/13/2022 – 6/30/2025), 231PA445Q2204 (10/01/2022 – 9/30/2023), 231PA825Y8005 (10/01/2022 – 9/30/2023), 231PA825Y8105 (10/01/2022 – 9/30/2023), 241PA825Y8005 (10/01/2023 – 9/30/2024), 241PA825Y8105 (10/01/2023 – 9/30/2024), S18AF20004 (11/01/2017 – 10/31/2025), S19AF20004 (12/01/2018 – 11/30/2025), S21AF10015 (1/01/2021 – 12/31/2023), S22AF00017 (1/01/2022 – 12/31/2024), S23AF00002 (11/01/2022 – 10/31/2027), TN75GJE1S7G3 (3/03/2021 – 12/31/2024), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021– 9/30/2024), S425D210028 (1/05/2021 – 9/30/2024), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2024), S425V210037 (11/16/2021 – 9/30/2024), S425C210013 (3/13/2020 – 9/30/2024), 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD (10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 2401PAOACM (10/01/2023 – 9/30/2025), 2401PAOAHD (10/01/2023 – 9/30/2025), 2401PAOANS (10/01/2023 – 9/30/2025), 2401PAOASS (10/01/2023 – 9/30/2025), 2101PATANF (10/01/2020 – 9/30/2021), 2201PATANF (10/01/2021 – 9/30/2022), 2301PATANF (10/01/2022 – 9/30/2023), 2401PATANF (10/01/2023 – 9/30/2024), 2301PASOSR (10/01/2022 – 9/30/2024), 2401PASOSR (10/01/2023 – 9/30/2025), 2301PATANF (10/01/2022 – 9/30/2024), 2401PATANF (10/01/2023 – 9/30/2025) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters for Abandoned Mine Land Reclamation (AMLR), Temporary Assistance for Needy Families, Coronavirus State and Local Fiscal Recovery Funds, and Social Services Block Grant Material Weakness in Internal Control over Compliance, Material Noncompliance for Food Distribution Cluster, Education Stabilization Fund, and Aging Cluster Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Acceptance date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance Finding 2024 ¬– 015: (continued) audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2024 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2023 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2024. We also evaluated the Commonwealth’s review of 45 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2024 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 17.6 months to over 18 months after the FAC Acceptance date for two out of two audit reports with findings. There was also a delay in PDOA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 8.7 months to over 16 months after the FAC Acceptance date for four out of four audit reports with findings. • Department of Education (PDE): The time period for making a management decision on findings was approximately 7.8 months to over 12 months after the FAC Acceptance date for seven out of 22 audit reports with findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 11.6 months to over 12 months after the FAC Acceptance date for two out of two audit reports with findings. Our testing disclosed for the two late audit reports, DEP made management decisions timely. However, DEP did not notify the subrecipients of the management decisions within the required six month time period after the audit reports FAC Acceptance date. • Department of Human Services (DHS): The time period for making a management decision on findings was approximately 7.2 months after the FAC Acceptance date for one out of two audit reports with findings. Our testing disclosed for the one late audit report DHS made a management decision timely. However, DHS did not notify the subrecipient of the management decision within the required six month time period after the audit reports FAC Acceptance date. Criteria: 2 CFR §200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: Finding 2024 ¬– 015: (continued) (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR §200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR §200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR §200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. 2 CFR §200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. Finding 2024 ¬– 015: (continued) (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Finding 2024 ¬– 015: (continued) Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (6) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, and untimely review of the SEFA or alternate procedures be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. Finding 2024 ¬– 015: (continued) DHS Response: DHS agrees that there was an exception where human error caused a management decision on one single audit report to be issued untimely; in this instance, the decision itself was made timely but was not communicated in a timely manner. DHS disagrees that an isolated incident due to human error signifies a weakness in internal controls. This was not a systemic issue and therefore should not have been considered a significant deficiency in internal controls, and DHS should not have been included in this finding. Auditors’ Conclusion: The agency responses from PDOA, PDA, PDE, and DEP indicate agreement with the finding. DHS agrees that an error occurred resulting in untimely submission of one management decision, DHS disagrees that the error represents a significant deficiency. We acknowledge the error occurred due to an oversight and is not a systemic error, however, the error resulted in noncompliance with one of two audit reports that required timely management decisions. We will evaluate corrective action in the subsequent audit. The finding remains as stated. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2024 ¬– 015: ALN 10.565, 10.568, 10.569 – Food Distribution Cluster ALN 15.252 – Abandoned Mine Land Reclamation (AMLR) ALN 21.027 – COVID 19 – Coronavirus State and Local Fiscal Recovery Funds ALN 84.425C – COVID 19 – Education Stabilization Fund – GEER Fund ALN 84.425D – COVID 19 – Education Stabilization Fund – ESSER Fund ALN 84.425R – COVID 19 – Education Stabilization Fund – CRRSA EANS Program ALN 84.425U – COVID 19 – Education Stabilization Fund – ARP ESSER ALN 84.425V – COVID 19 – Education Stabilization Fund – ARP EANS Program ALN 84.425W – COVID 19 – Education Stabilization Fund – ARP ESSER HCY ALN 93.044, 93.045, 93.053 – Aging Cluster (including COVID-19) ALN 93.558 – Temporary Assistance for Needy Families ALN 93.667 – Social Services Block Grant A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2023-024) Federal Grant Number(s) and Year(s): 228PA100I1003 (6/13/2022 – 6/30/2025), 231PA445Q2204 (10/01/2022 – 9/30/2023), 231PA825Y8005 (10/01/2022 – 9/30/2023), 231PA825Y8105 (10/01/2022 – 9/30/2023), 241PA825Y8005 (10/01/2023 – 9/30/2024), 241PA825Y8105 (10/01/2023 – 9/30/2024), S18AF20004 (11/01/2017 – 10/31/2025), S19AF20004 (12/01/2018 – 11/30/2025), S21AF10015 (1/01/2021 – 12/31/2023), S22AF00017 (1/01/2022 – 12/31/2024), S23AF00002 (11/01/2022 – 10/31/2027), TN75GJE1S7G3 (3/03/2021 – 12/31/2024), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021– 9/30/2024), S425D210028 (1/05/2021 – 9/30/2024), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2024), S425V210037 (11/16/2021 – 9/30/2024), S425C210013 (3/13/2020 – 9/30/2024), 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD (10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 2401PAOACM (10/01/2023 – 9/30/2025), 2401PAOAHD (10/01/2023 – 9/30/2025), 2401PAOANS (10/01/2023 – 9/30/2025), 2401PAOASS (10/01/2023 – 9/30/2025), 2101PATANF (10/01/2020 – 9/30/2021), 2201PATANF (10/01/2021 – 9/30/2022), 2301PATANF (10/01/2022 – 9/30/2023), 2401PATANF (10/01/2023 – 9/30/2024), 2301PASOSR (10/01/2022 – 9/30/2024), 2401PASOSR (10/01/2023 – 9/30/2025), 2301PATANF (10/01/2022 – 9/30/2024), 2401PATANF (10/01/2023 – 9/30/2025) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters for Abandoned Mine Land Reclamation (AMLR), Temporary Assistance for Needy Families, Coronavirus State and Local Fiscal Recovery Funds, and Social Services Block Grant Material Weakness in Internal Control over Compliance, Material Noncompliance for Food Distribution Cluster, Education Stabilization Fund, and Aging Cluster Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Acceptance date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance Finding 2024 ¬– 015: (continued) audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2024 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2023 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2024. We also evaluated the Commonwealth’s review of 45 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2024 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 17.6 months to over 18 months after the FAC Acceptance date for two out of two audit reports with findings. There was also a delay in PDOA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 8.7 months to over 16 months after the FAC Acceptance date for four out of four audit reports with findings. • Department of Education (PDE): The time period for making a management decision on findings was approximately 7.8 months to over 12 months after the FAC Acceptance date for seven out of 22 audit reports with findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 11.6 months to over 12 months after the FAC Acceptance date for two out of two audit reports with findings. Our testing disclosed for the two late audit reports, DEP made management decisions timely. However, DEP did not notify the subrecipients of the management decisions within the required six month time period after the audit reports FAC Acceptance date. • Department of Human Services (DHS): The time period for making a management decision on findings was approximately 7.2 months after the FAC Acceptance date for one out of two audit reports with findings. Our testing disclosed for the one late audit report DHS made a management decision timely. However, DHS did not notify the subrecipient of the management decision within the required six month time period after the audit reports FAC Acceptance date. Criteria: 2 CFR §200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: Finding 2024 ¬– 015: (continued) (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR §200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR §200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR §200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. 2 CFR §200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. Finding 2024 ¬– 015: (continued) (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Finding 2024 ¬– 015: (continued) Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (6) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, and untimely review of the SEFA or alternate procedures be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. Finding 2024 ¬– 015: (continued) DHS Response: DHS agrees that there was an exception where human error caused a management decision on one single audit report to be issued untimely; in this instance, the decision itself was made timely but was not communicated in a timely manner. DHS disagrees that an isolated incident due to human error signifies a weakness in internal controls. This was not a systemic issue and therefore should not have been considered a significant deficiency in internal controls, and DHS should not have been included in this finding. Auditors’ Conclusion: The agency responses from PDOA, PDA, PDE, and DEP indicate agreement with the finding. DHS agrees that an error occurred resulting in untimely submission of one management decision, DHS disagrees that the error represents a significant deficiency. We acknowledge the error occurred due to an oversight and is not a systemic error, however, the error resulted in noncompliance with one of two audit reports that required timely management decisions. We will evaluate corrective action in the subsequent audit. The finding remains as stated. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2024 ¬– 015: ALN 10.565, 10.568, 10.569 – Food Distribution Cluster ALN 15.252 – Abandoned Mine Land Reclamation (AMLR) ALN 21.027 – COVID 19 – Coronavirus State and Local Fiscal Recovery Funds ALN 84.425C – COVID 19 – Education Stabilization Fund – GEER Fund ALN 84.425D – COVID 19 – Education Stabilization Fund – ESSER Fund ALN 84.425R – COVID 19 – Education Stabilization Fund – CRRSA EANS Program ALN 84.425U – COVID 19 – Education Stabilization Fund – ARP ESSER ALN 84.425V – COVID 19 – Education Stabilization Fund – ARP EANS Program ALN 84.425W – COVID 19 – Education Stabilization Fund – ARP ESSER HCY ALN 93.044, 93.045, 93.053 – Aging Cluster (including COVID-19) ALN 93.558 – Temporary Assistance for Needy Families ALN 93.667 – Social Services Block Grant A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2023-024) Federal Grant Number(s) and Year(s): 228PA100I1003 (6/13/2022 – 6/30/2025), 231PA445Q2204 (10/01/2022 – 9/30/2023), 231PA825Y8005 (10/01/2022 – 9/30/2023), 231PA825Y8105 (10/01/2022 – 9/30/2023), 241PA825Y8005 (10/01/2023 – 9/30/2024), 241PA825Y8105 (10/01/2023 – 9/30/2024), S18AF20004 (11/01/2017 – 10/31/2025), S19AF20004 (12/01/2018 – 11/30/2025), S21AF10015 (1/01/2021 – 12/31/2023), S22AF00017 (1/01/2022 – 12/31/2024), S23AF00002 (11/01/2022 – 10/31/2027), TN75GJE1S7G3 (3/03/2021 – 12/31/2024), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021– 9/30/2024), S425D210028 (1/05/2021 – 9/30/2024), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2024), S425V210037 (11/16/2021 – 9/30/2024), S425C210013 (3/13/2020 – 9/30/2024), 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD (10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 2401PAOACM (10/01/2023 – 9/30/2025), 2401PAOAHD (10/01/2023 – 9/30/2025), 2401PAOANS (10/01/2023 – 9/30/2025), 2401PAOASS (10/01/2023 – 9/30/2025), 2101PATANF (10/01/2020 – 9/30/2021), 2201PATANF (10/01/2021 – 9/30/2022), 2301PATANF (10/01/2022 – 9/30/2023), 2401PATANF (10/01/2023 – 9/30/2024), 2301PASOSR (10/01/2022 – 9/30/2024), 2401PASOSR (10/01/2023 – 9/30/2025), 2301PATANF (10/01/2022 – 9/30/2024), 2401PATANF (10/01/2023 – 9/30/2025) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters for Abandoned Mine Land Reclamation (AMLR), Temporary Assistance for Needy Families, Coronavirus State and Local Fiscal Recovery Funds, and Social Services Block Grant Material Weakness in Internal Control over Compliance, Material Noncompliance for Food Distribution Cluster, Education Stabilization Fund, and Aging Cluster Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Acceptance date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance Finding 2024 ¬– 015: (continued) audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2024 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2023 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2024. We also evaluated the Commonwealth’s review of 45 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2024 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 17.6 months to over 18 months after the FAC Acceptance date for two out of two audit reports with findings. There was also a delay in PDOA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 8.7 months to over 16 months after the FAC Acceptance date for four out of four audit reports with findings. • Department of Education (PDE): The time period for making a management decision on findings was approximately 7.8 months to over 12 months after the FAC Acceptance date for seven out of 22 audit reports with findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 11.6 months to over 12 months after the FAC Acceptance date for two out of two audit reports with findings. Our testing disclosed for the two late audit reports, DEP made management decisions timely. However, DEP did not notify the subrecipients of the management decisions within the required six month time period after the audit reports FAC Acceptance date. • Department of Human Services (DHS): The time period for making a management decision on findings was approximately 7.2 months after the FAC Acceptance date for one out of two audit reports with findings. Our testing disclosed for the one late audit report DHS made a management decision timely. However, DHS did not notify the subrecipient of the management decision within the required six month time period after the audit reports FAC Acceptance date. Criteria: 2 CFR §200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: Finding 2024 ¬– 015: (continued) (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR §200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR §200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR §200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. 2 CFR §200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. Finding 2024 ¬– 015: (continued) (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Finding 2024 ¬– 015: (continued) Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (6) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, and untimely review of the SEFA or alternate procedures be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. Finding 2024 ¬– 015: (continued) DHS Response: DHS agrees that there was an exception where human error caused a management decision on one single audit report to be issued untimely; in this instance, the decision itself was made timely but was not communicated in a timely manner. DHS disagrees that an isolated incident due to human error signifies a weakness in internal controls. This was not a systemic issue and therefore should not have been considered a significant deficiency in internal controls, and DHS should not have been included in this finding. Auditors’ Conclusion: The agency responses from PDOA, PDA, PDE, and DEP indicate agreement with the finding. DHS agrees that an error occurred resulting in untimely submission of one management decision, DHS disagrees that the error represents a significant deficiency. We acknowledge the error occurred due to an oversight and is not a systemic error, however, the error resulted in noncompliance with one of two audit reports that required timely management decisions. We will evaluate corrective action in the subsequent audit. The finding remains as stated. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2024 ¬– 015: ALN 10.565, 10.568, 10.569 – Food Distribution Cluster ALN 15.252 – Abandoned Mine Land Reclamation (AMLR) ALN 21.027 – COVID 19 – Coronavirus State and Local Fiscal Recovery Funds ALN 84.425C – COVID 19 – Education Stabilization Fund – GEER Fund ALN 84.425D – COVID 19 – Education Stabilization Fund – ESSER Fund ALN 84.425R – COVID 19 – Education Stabilization Fund – CRRSA EANS Program ALN 84.425U – COVID 19 – Education Stabilization Fund – ARP ESSER ALN 84.425V – COVID 19 – Education Stabilization Fund – ARP EANS Program ALN 84.425W – COVID 19 – Education Stabilization Fund – ARP ESSER HCY ALN 93.044, 93.045, 93.053 – Aging Cluster (including COVID-19) ALN 93.558 – Temporary Assistance for Needy Families ALN 93.667 – Social Services Block Grant A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2023-024) Federal Grant Number(s) and Year(s): 228PA100I1003 (6/13/2022 – 6/30/2025), 231PA445Q2204 (10/01/2022 – 9/30/2023), 231PA825Y8005 (10/01/2022 – 9/30/2023), 231PA825Y8105 (10/01/2022 – 9/30/2023), 241PA825Y8005 (10/01/2023 – 9/30/2024), 241PA825Y8105 (10/01/2023 – 9/30/2024), S18AF20004 (11/01/2017 – 10/31/2025), S19AF20004 (12/01/2018 – 11/30/2025), S21AF10015 (1/01/2021 – 12/31/2023), S22AF00017 (1/01/2022 – 12/31/2024), S23AF00002 (11/01/2022 – 10/31/2027), TN75GJE1S7G3 (3/03/2021 – 12/31/2024), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021– 9/30/2024), S425D210028 (1/05/2021 – 9/30/2024), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2024), S425V210037 (11/16/2021 – 9/30/2024), S425C210013 (3/13/2020 – 9/30/2024), 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD (10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 2401PAOACM (10/01/2023 – 9/30/2025), 2401PAOAHD (10/01/2023 – 9/30/2025), 2401PAOANS (10/01/2023 – 9/30/2025), 2401PAOASS (10/01/2023 – 9/30/2025), 2101PATANF (10/01/2020 – 9/30/2021), 2201PATANF (10/01/2021 – 9/30/2022), 2301PATANF (10/01/2022 – 9/30/2023), 2401PATANF (10/01/2023 – 9/30/2024), 2301PASOSR (10/01/2022 – 9/30/2024), 2401PASOSR (10/01/2023 – 9/30/2025), 2301PATANF (10/01/2022 – 9/30/2024), 2401PATANF (10/01/2023 – 9/30/2025) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters for Abandoned Mine Land Reclamation (AMLR), Temporary Assistance for Needy Families, Coronavirus State and Local Fiscal Recovery Funds, and Social Services Block Grant Material Weakness in Internal Control over Compliance, Material Noncompliance for Food Distribution Cluster, Education Stabilization Fund, and Aging Cluster Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Acceptance date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance Finding 2024 ¬– 015: (continued) audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2024 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2023 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2024. We also evaluated the Commonwealth’s review of 45 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2024 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 17.6 months to over 18 months after the FAC Acceptance date for two out of two audit reports with findings. There was also a delay in PDOA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 8.7 months to over 16 months after the FAC Acceptance date for four out of four audit reports with findings. • Department of Education (PDE): The time period for making a management decision on findings was approximately 7.8 months to over 12 months after the FAC Acceptance date for seven out of 22 audit reports with findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 11.6 months to over 12 months after the FAC Acceptance date for two out of two audit reports with findings. Our testing disclosed for the two late audit reports, DEP made management decisions timely. However, DEP did not notify the subrecipients of the management decisions within the required six month time period after the audit reports FAC Acceptance date. • Department of Human Services (DHS): The time period for making a management decision on findings was approximately 7.2 months after the FAC Acceptance date for one out of two audit reports with findings. Our testing disclosed for the one late audit report DHS made a management decision timely. However, DHS did not notify the subrecipient of the management decision within the required six month time period after the audit reports FAC Acceptance date. Criteria: 2 CFR §200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: Finding 2024 ¬– 015: (continued) (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR §200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR §200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR §200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. 2 CFR §200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. Finding 2024 ¬– 015: (continued) (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Finding 2024 ¬– 015: (continued) Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (6) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, and untimely review of the SEFA or alternate procedures be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. Finding 2024 ¬– 015: (continued) DHS Response: DHS agrees that there was an exception where human error caused a management decision on one single audit report to be issued untimely; in this instance, the decision itself was made timely but was not communicated in a timely manner. DHS disagrees that an isolated incident due to human error signifies a weakness in internal controls. This was not a systemic issue and therefore should not have been considered a significant deficiency in internal controls, and DHS should not have been included in this finding. Auditors’ Conclusion: The agency responses from PDOA, PDA, PDE, and DEP indicate agreement with the finding. DHS agrees that an error occurred resulting in untimely submission of one management decision, DHS disagrees that the error represents a significant deficiency. We acknowledge the error occurred due to an oversight and is not a systemic error, however, the error resulted in noncompliance with one of two audit reports that required timely management decisions. We will evaluate corrective action in the subsequent audit. The finding remains as stated. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2024 ¬– 015: ALN 10.565, 10.568, 10.569 – Food Distribution Cluster ALN 15.252 – Abandoned Mine Land Reclamation (AMLR) ALN 21.027 – COVID 19 – Coronavirus State and Local Fiscal Recovery Funds ALN 84.425C – COVID 19 – Education Stabilization Fund – GEER Fund ALN 84.425D – COVID 19 – Education Stabilization Fund – ESSER Fund ALN 84.425R – COVID 19 – Education Stabilization Fund – CRRSA EANS Program ALN 84.425U – COVID 19 – Education Stabilization Fund – ARP ESSER ALN 84.425V – COVID 19 – Education Stabilization Fund – ARP EANS Program ALN 84.425W – COVID 19 – Education Stabilization Fund – ARP ESSER HCY ALN 93.044, 93.045, 93.053 – Aging Cluster (including COVID-19) ALN 93.558 – Temporary Assistance for Needy Families ALN 93.667 – Social Services Block Grant A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2023-024) Federal Grant Number(s) and Year(s): 228PA100I1003 (6/13/2022 – 6/30/2025), 231PA445Q2204 (10/01/2022 – 9/30/2023), 231PA825Y8005 (10/01/2022 – 9/30/2023), 231PA825Y8105 (10/01/2022 – 9/30/2023), 241PA825Y8005 (10/01/2023 – 9/30/2024), 241PA825Y8105 (10/01/2023 – 9/30/2024), S18AF20004 (11/01/2017 – 10/31/2025), S19AF20004 (12/01/2018 – 11/30/2025), S21AF10015 (1/01/2021 – 12/31/2023), S22AF00017 (1/01/2022 – 12/31/2024), S23AF00002 (11/01/2022 – 10/31/2027), TN75GJE1S7G3 (3/03/2021 – 12/31/2024), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021– 9/30/2024), S425D210028 (1/05/2021 – 9/30/2024), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2024), S425V210037 (11/16/2021 – 9/30/2024), S425C210013 (3/13/2020 – 9/30/2024), 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD (10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 2401PAOACM (10/01/2023 – 9/30/2025), 2401PAOAHD (10/01/2023 – 9/30/2025), 2401PAOANS (10/01/2023 – 9/30/2025), 2401PAOASS (10/01/2023 – 9/30/2025), 2101PATANF (10/01/2020 – 9/30/2021), 2201PATANF (10/01/2021 – 9/30/2022), 2301PATANF (10/01/2022 – 9/30/2023), 2401PATANF (10/01/2023 – 9/30/2024), 2301PASOSR (10/01/2022 – 9/30/2024), 2401PASOSR (10/01/2023 – 9/30/2025), 2301PATANF (10/01/2022 – 9/30/2024), 2401PATANF (10/01/2023 – 9/30/2025) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters for Abandoned Mine Land Reclamation (AMLR), Temporary Assistance for Needy Families, Coronavirus State and Local Fiscal Recovery Funds, and Social Services Block Grant Material Weakness in Internal Control over Compliance, Material Noncompliance for Food Distribution Cluster, Education Stabilization Fund, and Aging Cluster Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Acceptance date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance Finding 2024 ¬– 015: (continued) audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2024 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2023 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2024. We also evaluated the Commonwealth’s review of 45 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2024 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 17.6 months to over 18 months after the FAC Acceptance date for two out of two audit reports with findings. There was also a delay in PDOA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 8.7 months to over 16 months after the FAC Acceptance date for four out of four audit reports with findings. • Department of Education (PDE): The time period for making a management decision on findings was approximately 7.8 months to over 12 months after the FAC Acceptance date for seven out of 22 audit reports with findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 11.6 months to over 12 months after the FAC Acceptance date for two out of two audit reports with findings. Our testing disclosed for the two late audit reports, DEP made management decisions timely. However, DEP did not notify the subrecipients of the management decisions within the required six month time period after the audit reports FAC Acceptance date. • Department of Human Services (DHS): The time period for making a management decision on findings was approximately 7.2 months after the FAC Acceptance date for one out of two audit reports with findings. Our testing disclosed for the one late audit report DHS made a management decision timely. However, DHS did not notify the subrecipient of the management decision within the required six month time period after the audit reports FAC Acceptance date. Criteria: 2 CFR §200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: Finding 2024 ¬– 015: (continued) (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR §200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR §200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR §200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. 2 CFR §200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. Finding 2024 ¬– 015: (continued) (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Finding 2024 ¬– 015: (continued) Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (6) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, and untimely review of the SEFA or alternate procedures be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. Finding 2024 ¬– 015: (continued) DHS Response: DHS agrees that there was an exception where human error caused a management decision on one single audit report to be issued untimely; in this instance, the decision itself was made timely but was not communicated in a timely manner. DHS disagrees that an isolated incident due to human error signifies a weakness in internal controls. This was not a systemic issue and therefore should not have been considered a significant deficiency in internal controls, and DHS should not have been included in this finding. Auditors’ Conclusion: The agency responses from PDOA, PDA, PDE, and DEP indicate agreement with the finding. DHS agrees that an error occurred resulting in untimely submission of one management decision, DHS disagrees that the error represents a significant deficiency. We acknowledge the error occurred due to an oversight and is not a systemic error, however, the error resulted in noncompliance with one of two audit reports that required timely management decisions. We will evaluate corrective action in the subsequent audit. The finding remains as stated. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2024 ¬– 015: ALN 10.565, 10.568, 10.569 – Food Distribution Cluster ALN 15.252 – Abandoned Mine Land Reclamation (AMLR) ALN 21.027 – COVID 19 – Coronavirus State and Local Fiscal Recovery Funds ALN 84.425C – COVID 19 – Education Stabilization Fund – GEER Fund ALN 84.425D – COVID 19 – Education Stabilization Fund – ESSER Fund ALN 84.425R – COVID 19 – Education Stabilization Fund – CRRSA EANS Program ALN 84.425U – COVID 19 – Education Stabilization Fund – ARP ESSER ALN 84.425V – COVID 19 – Education Stabilization Fund – ARP EANS Program ALN 84.425W – COVID 19 – Education Stabilization Fund – ARP ESSER HCY ALN 93.044, 93.045, 93.053 – Aging Cluster (including COVID-19) ALN 93.558 – Temporary Assistance for Needy Families ALN 93.667 – Social Services Block Grant A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2023-024) Federal Grant Number(s) and Year(s): 228PA100I1003 (6/13/2022 – 6/30/2025), 231PA445Q2204 (10/01/2022 – 9/30/2023), 231PA825Y8005 (10/01/2022 – 9/30/2023), 231PA825Y8105 (10/01/2022 – 9/30/2023), 241PA825Y8005 (10/01/2023 – 9/30/2024), 241PA825Y8105 (10/01/2023 – 9/30/2024), S18AF20004 (11/01/2017 – 10/31/2025), S19AF20004 (12/01/2018 – 11/30/2025), S21AF10015 (1/01/2021 – 12/31/2023), S22AF00017 (1/01/2022 – 12/31/2024), S23AF00002 (11/01/2022 – 10/31/2027), TN75GJE1S7G3 (3/03/2021 – 12/31/2024), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021– 9/30/2024), S425D210028 (1/05/2021 – 9/30/2024), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2024), S425V210037 (11/16/2021 – 9/30/2024), S425C210013 (3/13/2020 – 9/30/2024), 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD (10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 2401PAOACM (10/01/2023 – 9/30/2025), 2401PAOAHD (10/01/2023 – 9/30/2025), 2401PAOANS (10/01/2023 – 9/30/2025), 2401PAOASS (10/01/2023 – 9/30/2025), 2101PATANF (10/01/2020 – 9/30/2021), 2201PATANF (10/01/2021 – 9/30/2022), 2301PATANF (10/01/2022 – 9/30/2023), 2401PATANF (10/01/2023 – 9/30/2024), 2301PASOSR (10/01/2022 – 9/30/2024), 2401PASOSR (10/01/2023 – 9/30/2025), 2301PATANF (10/01/2022 – 9/30/2024), 2401PATANF (10/01/2023 – 9/30/2025) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters for Abandoned Mine Land Reclamation (AMLR), Temporary Assistance for Needy Families, Coronavirus State and Local Fiscal Recovery Funds, and Social Services Block Grant Material Weakness in Internal Control over Compliance, Material Noncompliance for Food Distribution Cluster, Education Stabilization Fund, and Aging Cluster Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Acceptance date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance Finding 2024 ¬– 015: (continued) audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2024 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2023 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2024. We also evaluated the Commonwealth’s review of 45 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2024 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 17.6 months to over 18 months after the FAC Acceptance date for two out of two audit reports with findings. There was also a delay in PDOA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 8.7 months to over 16 months after the FAC Acceptance date for four out of four audit reports with findings. • Department of Education (PDE): The time period for making a management decision on findings was approximately 7.8 months to over 12 months after the FAC Acceptance date for seven out of 22 audit reports with findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 11.6 months to over 12 months after the FAC Acceptance date for two out of two audit reports with findings. Our testing disclosed for the two late audit reports, DEP made management decisions timely. However, DEP did not notify the subrecipients of the management decisions within the required six month time period after the audit reports FAC Acceptance date. • Department of Human Services (DHS): The time period for making a management decision on findings was approximately 7.2 months after the FAC Acceptance date for one out of two audit reports with findings. Our testing disclosed for the one late audit report DHS made a management decision timely. However, DHS did not notify the subrecipient of the management decision within the required six month time period after the audit reports FAC Acceptance date. Criteria: 2 CFR §200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: Finding 2024 ¬– 015: (continued) (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR §200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR §200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR §200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. 2 CFR §200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. Finding 2024 ¬– 015: (continued) (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Finding 2024 ¬– 015: (continued) Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (6) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, and untimely review of the SEFA or alternate procedures be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. Finding 2024 ¬– 015: (continued) DHS Response: DHS agrees that there was an exception where human error caused a management decision on one single audit report to be issued untimely; in this instance, the decision itself was made timely but was not communicated in a timely manner. DHS disagrees that an isolated incident due to human error signifies a weakness in internal controls. This was not a systemic issue and therefore should not have been considered a significant deficiency in internal controls, and DHS should not have been included in this finding. Auditors’ Conclusion: The agency responses from PDOA, PDA, PDE, and DEP indicate agreement with the finding. DHS agrees that an error occurred resulting in untimely submission of one management decision, DHS disagrees that the error represents a significant deficiency. We acknowledge the error occurred due to an oversight and is not a systemic error, however, the error resulted in noncompliance with one of two audit reports that required timely management decisions. We will evaluate corrective action in the subsequent audit. The finding remains as stated. Questioned Costs: The amount of questioned costs cannot be determined.