2025 – 042. Reporting Federal Agency: Department of Health and Human Services Federal Program Title: Maternal and Child Health Services Block Grant to the States Assistance Listing: 93.994 Federal Grant ID Number: Various Pass-Through Entity: Not Applicable Award Period: Various Type of Finding: Significant deficiency in internal control over compliance, other matters Criteria: 2 CFR § 200.303(a) requires that the recipient and subrecipient establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: Discrepancies existed between the Maternal and Child Health Services Block Grant Application/Annual Report and the accounting system. Cause: The internal database the Department used to compile the report contained incomplete expenditure data causing incorrect calculations. The Department’s internal controls failed to detect that the expenditures in the internal database did not reconcile with the actual expenditures from the accounting system. Effect: Although the Department still met matching and earmarking requirements, several reported amounts of 2023 expenditures were not accurately stated within the report. Questioned Costs: None, as this finding relates to reporting requirements, rather than unallowable expenditures. Context: For the sole Maternal and Child Health Services Block Grant Application/Annual Report submitted during fiscal year 2025, the Department reported inaccurate expended fiscal year 2023 data on Form 2 including amounts related to state matching and earmarking requirements. Prior Year Single Audit Finding Number: Not applicable Recommendation: We recommend the Department strengthen procedures to ensure accurate filing of the Maternal and Child Health Services Block Grant Application/Annual Report. Views of responsible officials and planned corrective actions: See management’s response on page 209.
2025 – 043. Cash Management Federal Agency: Department of Health and Human Services Federal Program Title: Immunization Cooperative Agreements and Centers for Disease Control and Prevention Collaboration with Academia to Strengthen Public Health Assistance Listing: 93.268 and 93.967 Federal Grant ID Numbers: Various Pass-Through Entity: Not applicable Award Period: Various Type of Finding: Significant deficiency in internal control over compliance, other matters Criteria: 2 CFR § 200.303(a) requires that the recipient and subrecipient establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR § 205.11(a) requires a State and a Federal Program Agency must minimize the time elapsing between the transfer of funds from the United States Treasury and the State's payout of funds for Federal assistance program purposes, whether the transfer occurs before or after the payout of funds. Condition: Supporting documentation was not adequate to determine if federal reimbursements were properly reviewed and approved by a programmatic supervisor prior to requesting a drawdown as required by the Department’s policies and procedures. In addition, some draws were made in excess of allowable incurred expenditures. Cause: The Department failed to retain documentation demonstrating performance of a programmatic supervisory review and approval. In addition, Department controls failed to detect potential overcharging of the grant. Effect: The Department may drawdown funds in excess of eligible reimbursable expenditures. Questioned Costs: Total questioned costs could not be determined due to the Department’s methodology of calculating grant draws. Context: The following discrepancies were encountered during testing of cash management: • Five of seven Immunization Cooperative Agreements drawdowns and six of eight Centers for Disease Control and Prevention Collaboration with Academia to Strengthen Public Health drawdowns selected for testing lacked sufficient documentation to confirm whether the federal reimbursement requests had a separate and appropriate preparer and reviewer prior to requesting a drawdown. • In addition, each respective program had one tested drawdown where the requested grant reimbursement amount was greater than the eligible costs recorded in the accounting system. Prior Year Single Audit Finding Number: Not applicable Recommendation: We recommend the Department strengthen its controls to ensure that drawdowns are reviewed appropriately and that drawdowns are reconciled to grant expenditures prior to the submission of the reimbursement request to prevent overdrawing the grant. Views of responsible officials and planned corrective actions: See management’s response on page 210.
2025 – 044. Special Tests and Provisions Federal Agency: Department of Health and Human Services Federal Program Title: Immunization Cooperative Agreements Assistance Listing: 93.268 Federal Grant ID Number: Various Pass-Through Entity: Not Applicable Award Period: Various Type of Finding: Significant deficiency in internal control over compliance Criteria: The Office of Management and Budget’s (OMB) 2025 Compliance Supplement states that effective control and accountability must be maintained for all vaccines under the Vaccines for Children (VFC) program. Vaccines must be adequately safeguarded and used solely for authorized purposes in accordance with guidance set forth in 42 USC 1396s. To comply with this requirement, the Department’s Vaccines for Children Operation Guide requires that all completed VFC compliance site visits be reviewed by the VFC coordinator, immunization program manager, or a designee. 2 CFR § 200.303(a) requires that the recipient and subrecipient establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: The Department did not perform a review and approval of a VFC compliance site visit in accordance with its policies. Cause: Due to staffing turnover, there were delays in reviewing compliance visits. Effect: In the absence of a compliance visit review, providers could have unresolved issues that could affect the quality and quantity of vaccines provided to VFC recipients. Questioned Costs: None, as this finding relates to an untimely approval of a compliance site visit, rather than unallowable expenditures. Context: For sixty providers selected for testing, one compliance site visit did not have approval completed by the VFC Coordinator, Immunization Program Manager, or a designee. Prior Year Single Audit Finding Number: Not applicable Recommendation: We recommend the Department ensure compliance visits are reviewed in accordance with Department policy. Views of responsible officials and planned corrective actions: See management’s response on page 211. Auditor’s Conclusion: The compliance site visit where we noted the untimely review was performed on June 6, 2025. Although the Department had been tracking and monitoring the site visit, it was not reviewed or approved by the VFC-Coordinator or their designee as of our audit fieldwork in early February of 2026. Based on our audit inquiries, the documentation relating to the provider’s compliance site visit was updated, which enabled the site visit to be approved a few days later. We understand there were difficulties with staffing turnover, but in instances of prolonged vacancies, there should be policies to help reduce the timing between when site visits are conducted and when they can be reviewed.
2025 – 045. Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Agency: Department of Health and Human Services Federal Program Title: Centers for Disease Control and Prevention Collaboration with Academia to Strengthen Public Health Assistance Listing: 93.967 Federal Grant ID Number: NE11OE000041 Pass-Through Entity: Not Applicable Award Period: December 1, 2023, through November 30, 2025 Type of Finding: Significant deficiency in internal control over compliance Criteria: 2 CFR § 200.303(a) requires that the recipient and subrecipient establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms of conditions of the federal award. Condition: The Department did not maintain appropriate documentation supporting the review and approval over one journal entry. Cause: The Department failed to retain documentation demonstrating performance of a supervisory review and approval. Effect: Without a proper supervisory review, there is an increased risk that the Department could allocate unallowable costs to the grant. Questioned Costs: None, as the issue is only related to the review of the entry and not unallowable expenditures. Context: For one of seventy transactions selected for testing, supporting documentation was not adequate to demonstrate that a proper review and approval by a programmatic supervisor occurred on the journal entry form. Prior Year Single Audit Finding Number: Not applicable Recommendation: We recommend the Department strengthen controls to ensure that documentation is maintained to support that costs charged to the grant were properly reviewed and approved for allowability. Views of responsible officials and planned corrective actions: See management’s response on page 212.
2025 – 046. Suspension and Debarment Federal Agency: Department of Health and Human Services Federal Program Titles: Centers for Disease Control and Prevention Collaboration with Academia to Strengthen Public Health and Epidemiology and Laboratory Capacity for Infectious Disease (ELC) Assistance Listings: 93.967 and 93.323 Federal Grant ID Number: Various Pass-Through Entity: Not Applicable Award Period: Various. Type of Finding: Significant deficiency in internal control over compliance, other matters. Criteria: 2 CFR § 180.300 requires that when a non-federal entity enters into a covered transaction (contracts for goods and services that are expected to equal or exceed $25,000, as well as all subawards to subrecipients, irrespective of award amount) with an entity at a lower tier, the non-Federal entity must verify that the entity is not suspended or debarred or otherwise excluded from participating in the transaction. The regulation lists several permitted methods for verification, including checking the System for Award Management (SAM.gov) Exclusions maintained by the United States General Services Administration. Criteria: 2 CFR § 200.303(a) requires that the recipient and subrecipient establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms of conditions of the federal award. Condition: Compliance with suspension and debarment regulations could not be confirmed for one vendor contract. Cause: The Department was unable to locate the documentation demonstrating that they checked the SAM.gov Exclusions for that vendor. Effect: The Department’s compliance with federal suspension and debarment requirements was not supported by adequate documentation. Questioned Costs: None, as the finding is related to insufficient verification documentation rather than unallowable expenditures. Context: The Department verifies suspension and debarment through checking SAM.gov Exclusions. For one out of six vendors tested, the Department was unable to provide support that they checked the SAM.gov Exclusions. Suspension and debarment is performed on an agencywide basis for all grant programs. In the fiscal year 2024 Single Audit, there was a similar finding for the Epidemiology and Laboratory Capacity for Infectious Disease (Assistance Listing Number 93.323) program. The Department stated on its Summary Schedule of Prior Year Audit Findings that this issue was “Fully Corrected” with Previously Reported Corrective Action Implemented”. Due to this issue repeating for fiscal year 2025, the issue has not been fully corrected. Prior Year Single Audit Finding Number: 2024-032 for Epidemiology and Laboratory Capacity for Infectious Disease (ELC) (Assistance Listing Number 93.323). Recommendation: We recommend the Department consistently adhere to its procedures including maintaining the SAM.gov Exclusions check for all applicable vendors. Views of responsible officials and planned corrective actions: See management’s response on page 212.
2025 – 047. Equipment and Real Property Management Federal Agency: Department of Health and Human Services Federal Program Title: Public Health Emergency Preparedness and Public Health Emergency Response: Cooperative Agreement for Emergency Response: Public Health Crisis Response Assistance Listing: 93.069 and 93.354 Federal Grant ID Number: Various Pass-Through Entity: Not applicable Award Period: Various Type of Finding: Significant deficiency in internal control over compliance, other matters Criteria: 2 CFR § 200.303 requires that the recipient and subrecipient establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations and the terms and conditions of the federal award. 2 CFR § 200.313(d)(1) requires property records include a description of the property, a serial number or another identification number, the source of funding for the property (including the Federal Award Identification Number (FAIN)), the title holder, the acquisition date, the cost of the property, the percentage of the Federal agency contribution towards the original purchase, the location, use, and condition of the property, and any disposition data including the date of disposal and sale price of the property. Condition: The Department was not in compliance with several equipment and real property requirements. Cause: The Department’s processes did not ensure that assets transferred during the transition from the Department of Health and Environmental Control (DHEC) to the Department of Public Health (DPH) were properly associated with the applicable federal funding source or grant information within the asset management system. Effect: Incomplete property records increase the risk that equipment purchased with federal funds may not be properly tracked, monitored, or reported in accordance with federal regulations. Questioned Costs: None, as this finding relates to equipment record keeping, rather than unallowable expenditures. Context: During follow-up procedures related to equipment and real property management, the Department provided an asset history listing for review. However, the listing did not clearly identify assets purchased with federal funds. Additionally, assets transferred from DHEC to DPH in the South Carolina Enterprise Information System (SCEIS) were not associated with a federal funding source or specific grant. As a result, the Department was unable to demonstrate that equipment purchased with federal funds was being tracked in accordance with federal requirements. In addition, since assets were not listed under federal grants, we were unable to obtain a population to test whether assets bought with federal grants were accounted for in the Department’s annual physical inventory. This is a repeat finding from the fiscal year 2023 Single Audit. The Office stated on its Summary Schedule of Prior Year Audit Findings that this issue was “Fully Corrected with Previously Reported Corrective Action Implemented”. Due to this issue repeating for fiscal year 2023, this issue has not been fully corrected. Prior Year Single Audit Report Finding Number: 2023-026 Recommendation: We recommend the Department strengthen procedures to ensure equipment purchased with federal funds is properly tracked and associated with the applicable federal funding source within the asset management system and property records should include all elements required by federal regulations. Views of responsible officials and planned corrective actions: See management’s response on page 213.
WIC Special Supplemental Nutrition Program for Women, Infants, and Children—Service Organization Controls Background: The U.S. Department of Agriculture provides funding to DHS for the WIC program. This program provides funds to assist states in providing benefits to purchase specified supplemental foods to low-income pregnant, breastfeeding, and postpartum women, infants, and children up to age 5 who have been determined to be at nutritional risk. To administer the WIC program, DHS contracts with local agencies that are responsible for assessing nutritional risks, determining eligibility, and entering the participant information into the Real-time Online Statewide Information Environment (ROSIE) system, which is maintained by the State. ROSIE includes information on the participant and the benefits authorized. Each eligible participant receives an electronic benefits transfer (EBT) card to purchase supplemental foods at authorized WIC vendors. Each participant and WIC vendor can access account data using a portal application that retrieves information from ROSIE and the EBT system. In addition to the local WIC agencies, DHS contracts with three providers that support the information technology (IT) systems used for administering the WIC program, including ROSIE, the participant and vendor portals, and the EBT system. First, DHS contracts with a support provider that is responsible for supporting ROSIE and the participant and vendor portals. The support provider provides system access to approved users, makes approved updates to the system, and provides help-desk functions for these systems. Second, because ROSIE and the participant and vendor portals are stored on servers in a cloud data-hosting environment not managed by the support provider, DHS contracts with a cloud provider that is responsible for maintaining and securing the servers that host these systems. Third, DHS contracts with an EBT provider that is responsible for providing the EBT cards issued to participants and maintaining a separate EBT system that is used in settling food purchases with vendors, providing information to DHS related to purchases, and maintaining accurate EBT card balances. Criteria: Under 2 CFR 200.303, DHS is responsible for establishing and maintaining effective internal control to provide reasonable assurance that federal awards are managed in compliance with federal statutes, regulations, and the award terms and conditions. Effective internal controls should include monitoring and assessing the controls for contractors that are responsible for maintaining and securing an IT system that is used to comply with federal requirements. Because these contractors are relied on for the confidentiality, integrity and availability of data related to eligibility determinations and benefits, effective internal controls at these contractors are critical. Weaknesses in a contractor’s internal controls could increase the risk of noncompliance with federal requirements. Assurances related to the internal controls of a contractor could be gained through a service organization controls audit report, which includes a report on the effectiveness of the service organization’s internal controls by an independent auditor. These reports also include complementary user entity controls that can be used to determine the controls that should be in place by the agency using the contractor. Alternatively, if a contractor does not obtain a service organization controls audit report, the agency using a contractor should ensure it has assessed the relevant internal controls of the contractor and that the contractor has implemented procedures to ensure the confidentiality, integrity, and availability of data maintained by the contractor. Condition: DHS did not sufficiently consider the controls in place for all three contractors—the support provider, the cloud provider, and the EBT provider—that maintain the IT systems used in administering the WIC program. For instance, DHS had no documentation of a review being completed of the service organization controls audit report for the cloud provider, including a review of identified weaknesses or an assessment of the identified complementary user entity controls related to ROSIE or the participant and vendor portal systems maintained by this contractor. Although a review of the available service organization controls audit reports for the EBT provider was completed by a separate division within DHS, the results of this review were not considered by WIC program staff and the assessment of the complementary user entity controls did not consider the IT systems used in administering the WIC program. Context: We discussed with DHS the different contractors involved in managing ROSIE and the participant and vendor portal systems used in administering the WIC program, as well as the contractor used in providing the EBT cards and managing the EBT system. We discussed the procedures in place to monitor the activities of these contractors. We requested and obtained from DHS the available service organization controls audit reports related to the cloud provider for the period ended September 30, 2024. We also obtained from DHS the service organization controls audit reports related to the EBT provider for the period ended September 30, 2024, and September 30, 2025. We reviewed these reports and discussed with DHS the procedures for obtaining and reviewing these reports, including an assessment of complementary user entity controls. Questioned Costs: None. Effect: DHS and the federal government cannot be assured that controls are in place and effective related to the IT systems used in determining eligibility, determining appropriate benefits, and accurately maintaining EBT card information for WIC participants. Cause: Management of the IT systems used in providing benefits to eligible WIC participants, including ROSIE, the participant and vendor portal systems, and the EBT system, is complex and requires coordination between DHS, the support provider, the cloud provider, and the EBT provider. DHS does not have sufficient procedures in place to ensure it is adequately monitoring and documenting its oversight for these contractors, which provide support and security for the IT systems used in administering the WIC program. DHS indicated that turnover in the position that had been responsible for oversight of the support providers in FY 2024-25 may have affected its monitoring and oversight. In 2022, at the time DHS entered into the contract with the support provider, DHS obtained an assessment completed by the support provider that detailed security processes and the support provider’s responsibilities related to the cloud provider. DHS staff indicated that this security assessment had not been updated because there have been limited changes to the IT environment. Further, the cloud provider was procured through a statewide contract, and DHS staff indicated that the Department of Administration (DOA) would be responsible for reviewing the service organization controls audit report. However, DOA does not maintain the IT systems used in administering the WIC program, and DHS is responsible for reviewing the service organization controls audit report and the complementary user entity controls needed to ensure the confidentiality, integrity, and availability of data related to WIC eligibility determinations and WIC benefits. Although DHS centrally obtains the service organization controls audit reports for the EBT provider annually, the review did not address the IT systems used in administering the WIC program. It is expected that DHS would work with the support provider to complete its review. For instance, to provide assurance that controls continue to be in place, DHS may choose to request a security assessment similar to the one that had been performed in a prior year. Further, DHS may need to work with the support provider in assessing the service organization controls audit reports for the cloud provider and the EBT provider to consider the effect on the IT systems used in administering the WIC program, determine which complementary user entity controls are relevant, and determine whether adequate controls are in place. DHS should complete this assessment and document the results on an annual basis. Recommendation: We recommend the Wisconsin Department of Health Services: -develop and document procedures to complete an annual assessment of the controls in place by each contractor that provides support and security for an IT system used in administering the WIC Special Supplemental Nutrition Program for Women, Infants, and Children program, including the support provider, the cloud provider, and the EBT provider; -obtain annually available service organization controls audit reports and perform an annual review that includes an assessment of the identified internal control deficiencies and a determination of whether the relevant complementary user entity controls are implemented; and -prepare and maintain documentation of its annual review and assessment. Finding 2025-303: WIC Special Supplemental Nutrition Program for Women, Infants, and Children—Service Organization Controls WIC Special Supplemental Nutrition Program for Women, Infants, and Children (Assistance Listing number 10.557) Award Numbers Award Years 202424WI00642 2024 202525WI00642 2025 202524WI00642 2025 Questioned Costs: None Type of Finding: Significant Deficiency Response from the Wisconsin Department of Health Services: The Wisconsin Department of Health Services agrees with the audit finding and recommendations.
Airport Improvement Program, Infrastructure Investment and Jobs Act Programs, and COVID-19 Airports Programs—Financial Reporting Background: The U.S. Department of Transportation Federal Aviation Administration (FAA) provides funding to DOT for the Airport Improvement Program, Infrastructure Investment and Jobs Act Programs, and COVID-19 Airports Programs. This funding assists sponsors, owners, or operators of public-use airports in the development of a nationwide system of airports adequate to meet the needs of civil aeronautics. Criteria: Under 2 CFR s. 200.303, DOT is required to establish, document, and maintain effective internal control over federal awards to provide reasonable assurance that the federal awards are managed in compliance with federal statutes, regulations, and the award terms and conditions. In accordance with the FAA’s Office of Airports (ARP) - Grant Payment and Sponsor Financial Reporting Policy, for each open grant DOT is required to submit annually Standard Form 425 (SF-425) Federal Financial Report and either a Standard Form 271 (SF-271) or a Standard Form 270 (SF-270) to request reimbursement for grant expenditures. Under 2 CFR s. 200.344, DOT must submit a final version for each form during grant closeout. In addition to reporting financial information, DOT is required to report on project physical completion in the SF-271. Condition: We identified concerns with the accuracy and completeness of the information DOT reported in the SF-425 report, and on the SF-271 and SF-270 forms completed during FY 2024-25. We found that DOT did not report accurate information related to cash receipts and cash disbursements in the annual SF-425 report we reviewed. For example, while DOT reported cash disbursements of $229.4 million on the SF-425 attachment used to list cash disbursements for multiple grants, DOT reported $0 in cash disbursements in the SF-425 report. We also found that DOT reported inaccurate information on at least one line in 3 of the 11 annual SF-271 forms we reviewed. These errors ranged from $5,000 to $50,000 and also included an inaccurate reporting period. In addition, for all four of the final SF-271 forms we reviewed, DOT could not provide documentation to support that it had verified the project met physical completion requirements prior to reporting the project as 100.0 percent physically complete. Finally, for the two SF-270 forms we reviewed, DOT did not report the nonfederal share of total program expenditures, which was $69,658 for the annual SF-270 and $21,328 for the final SF-270 we reviewed. Context: During FY 2024-25, DOT expended $71.6 million under the Airport Improvement Program, Infrastructure Investment and Jobs Act Programs, and COVID-19 Airports Programs. We interviewed DOT staff to gain an understanding of the procedures for compiling and reviewing information for the SF-270 and SF-271 forms, and the SF-425 report. During FY 2024-25, DOT submitted 6 annual SF-425 reports, 102 annual SF-271 forms, and 17 annual SF-270 forms. DOT also submitted final reports, including both a SF-425 report and a SF-271 or SF-270 form, as applicable, for 22 grants. We reviewed one annual SF-425 report, 11 annual SF-271 forms, and one annual SF-270 form. We also reviewed the final SF-271 or SF-270 forms and the related final SF-425 reports for five grants. We tested the forms we reviewed by comparing the amounts reported to the accounting records and other supporting documentation. We reviewed the email documentation of the secondary reviews of the forms we tested. Questioned Costs: None. Effect: DOT reported inaccurate or unsupported information in some of its federal financial reports filed in FY 2024-25, which resulted in inaccurate or unsupported information being provided to the federal awarding agency. Cause: While a secondary review and approval process existed for the annual SF-271 and SF-270 forms, documentation of the review was maintained only through email communications. DOT did not have procedures in place to ensure that errors identified by the secondary reviewer were corrected before submission to the federal government. In two instances, we found an error had been identified by the reviewer, but the error was not corrected before submission to the federal government. In addition, DOT indicated that it understood that certain information was not required because it had never been completed and FAA has never requested that DOT correct its submissions. DOT did not have procedures in place to require a secondary review and approval for the final SF-271 and SF-270 forms or for the annual and final SF-425 reports. DOT indicated that a secondary review process was not implemented for the final SF-271 and SF-270 because DOT submits draft reports to the FAA Airports District Office that reviews them against information in the U.S. Department of Transportation’s grants payment system. Therefore, DOT did not consider the need for an internal secondary review to compare draft reports against the State’s accounting records. In addition, DOT staff preparing the final SF- 271 form did not have a process in place to document project completion information obtained from project managers. Recommendation: We recommend the Wisconsin Department of Transportation: -improve its documentation of its internal secondary review for the annual SF-271 form and SF-270 form and update its procedures for the internal secondary review to ensure that corrections made in response to the secondary review are reviewed for accuracy before submission to the federal government; -develop and implement written procedures for an internal secondary review of the final SF-271 form, the final SF-270 form, and the annual and final SF-425 reports, including procedures for maintaining sufficient documentation of the review; and -obtain and maintain documentation of the project completion information used to complete the SF-271 form. Finding 2025-501: Airport Improvement Program, Infrastructure Investment and Jobs Act Programs, and COVID-19 Airports Programs—Financial Reporting Airport Improvement Program, Infrastructure Investment and Jobs Act Programs, and COVID-19 Airports Programs (Assistance Listing number 20.106) Award Numbers Award Years Various Various Questioned Costs: None COVID-19—Airport Improvement Program, Infrastructure Investment and Jobs Act Programs, and COVID-19 Airports Programs (Assistance Listing number 20.106) Award Numbers Award Years Various Various Questioned Costs: None Type of Finding: Significant Deficiency, Noncompliance Response from the Wisconsin Department of Transportation: The Wisconsin Department of Transportation agrees with the audit finding and recommendations.
Grants to States for Medicaid and Children’s Health Insurance Program—Agency Directives Background: The U.S. Department of Health and Human Services provides funding to DHS for Grants to States for Medicaid (MA Program) and CHIP. DHS contracts with a third-party contractor to serve as the fiscal agent responsible for operating and maintaining the Medicaid Management Information System (MMIS). The fiscal agent provides administrative services that support the MA Program and CHIP, including processing benefit claims through MMIS for eligible participants, certifying healthcare providers, reviewing prior authorization requests, and providing customer service for members and healthcare providers. The fiscal agent also provides several MMIS reports detailing the benefit payments. These reports are used to record expenditures in the State’s accounting system, to submit claims for federal reimbursement, and to meet federal reporting requirements. Criteria: Under 2 CFR 200.303, DHS is responsible for establishing, documenting, and maintaining effective internal control over federal awards to provide reasonable assurance that federal awards are managed in compliance with federal statutes, regulations, and the award terms and conditions. Effective controls should be in place for MMIS and should include procedures to ensure that all changes to MMIS or to other information maintained by the fiscal agent are appropriate and authorized. Such controls may include ensuring only authorized employees provide directives to the fiscal agent and that the employee who approves the directive is distinct from the employee authorized to create a directive. The State owns MMIS and the fiscal agent maintains and operates MMIS. DHS is responsible for oversight of the fiscal agent, for ensuring that transactions are processed in compliance with state and federal regulations, and for ensuring that any changes to MMIS are appropriate. When changes are needed, DHS communicates the specific MMIS changes to the fiscal agent through the use of written directives. There are four primary types of directives, which include: -modifications that are more significant or relate to nonroutine projects; -resource estimates that request an estimate for staff, cost, and timeline that are required for potential MMIS or other enhancements; -financial maintenance that results in manual financial transactions or payment deductions; and -operational maintenance that results in changes to information maintained by the fiscal agent, routine configuration updates, website updates, or updates to existing claims processing rules. DHS submits directives to the fiscal agent using the Project Information and Systems Management (PRISM) system. DHS provides PRISM system access to those DHS employees who submit directives to the fiscal agent. DHS communicates to the fiscal agent separate listings of employees authorized to approve each type of directive or a specific subset of directives under each type. DHS requires the fiscal agent to ensure each directive is properly authorized prior to implementing the requested change. If a directive is approved by someone that is not included on the authorization listings provided, DHS has instructed the fiscal agent to seek confirmation. Condition: We identified two concerns with DHS’s use of directives in communicating changes to the fiscal agent for MMIS changes during FY 2024 25. First, we found that the fiscal agent implemented a requested change for 9 of 21 operational maintenance directives we reviewed for which the directive approver was not included in the authorization listing provided. These directives instructed the fiscal agent to perform certain maintenance or updates, such as one directive to begin suspending claims for prepayment review, and one directive that updated a provider’s certification. In these nine instances, we also found that there was no documentation to evidence that the fiscal agent confirmed the requested change with DHS. In a separate review of financial maintenance directives, we also identified one directive approved by a DHS employee who was not on the authorization list that authorized the fiscal agent to process an $87,854 payment to a provider. Second, we identified that 500 of 822 operational maintenance directives approved during FY 2024-25 were both created and approved by the same DHS employee. Further, we found three of the nine operational maintenance directives we reviewed and the one financial maintenance directive we reviewed that were not approved by an authorized approver were also created and approved by the same employee. Context: During FY 2024-25, DHS expended $8.3 billion in federal funds under the MA Program and $317.4 million in federal funds under CHIP, which included $7.9 billion and $296.2 million, respectively, in benefit payments processed through MMIS. We discussed with DHS staff those DHS policies related to directives, the approval of directives, and the process for submitting directives to the fiscal agent. Based upon a DHS listing as of July 2025, there were 214 DHS employees who could submit a directive through PRISM. We obtained a listing from the fiscal agent of all directives received during FY 2024-25, which included 117 modification directives, 13 resource estimate directives, 642 financial maintenance directives, and 797 operational maintenance directives. From DHS we obtained the list of authorized approvers in effect during the audit period for each type of directive or specific subset of directives under each type. We randomly sampled 40 directives, including 21 operational maintenance directives, 15 financial maintenance directives, and 4 modification directives. We reviewed the sampled directives for appropriate approvals. We also obtained a listing from DHS of all directives approved in PRISM during FY 2024-25, including 651 financial maintenance directives and 822 operational maintenance directives. We performed an analysis to identify directives that were both created and approved by the same DHS employee. We further discussed with DHS the items identified during the audit. Questioned Costs: None. Effect: DHS did not establish, document, and maintain effective internal control over changes to MMIS. Unauthorized or improper changes to MMIS or other information maintained by the fiscal agent operations may have occurred, which could result in improper processing of claims, inaccurate reporting of information, potential for fraud, or noncompliance with state and federal regulations. Cause: DHS has a large number of employees who submit changes to MMIS or other information maintained by the fiscal agent using the directive process. DHS procedures were not sufficient to ensure that the directives submitted to the fiscal agent were approved by the appropriate DHS employee. For instance, DHS manually maintains its directive authorized approvers listings based on periodic communications with DHS supervisors, and there is no automated process to update these manual approval authority lists when staff leave or change positions, which may result in the lists being outdated. As DHS could not provide documentation that the fiscal agent sought to confirm the requested change in instances where the directive was approved by a DHS employee not on the authorized approver list provided by DHS, it is unknown whether the DHS instructions to the fiscal agent were followed. Directives to the fiscal agent are varied and range from significant changes that require additional resources and communication with DHS to others that have a limited effect on the programs. DHS’s policies did not identify directives that are of a higher risk and should be reviewed by other DHS staff prior to communicating them to the fiscal agent. In addition, the PRISM system was configured to allow any user to approve a directive, including directives that the user themselves created. For example, there is no differentiation within the PRISM system to provide a user the ability to either create or approve a certain type of directive. DHS indicated that enhancements would be needed to the PRISM system to provide this functionality. Recommendation: We recommend the Wisconsin Department of Health Services: -enforce with the fiscal agent that directives require appropriate approval and that the fiscal agent should confirm any directive where the approver may not be authorized; -ensure that the listings of authorized directive approvers provided to the fiscal agent are updated at least quarterly; -review policies related to directives, update these polices to identify those directives that require an approver other than the creator, and document justifications for any directives for which the creator and approver may be the same employee; and -assess the feasibility of changes to the PRISM system that would enforce an approval from a user other than the creator of a directive. Finding 2025-302: Grants to States for Medicaid and Children’s Health Insurance Program—Agency Directives Grants to States for Medicaid (Assistance Listing number 93.778) Award Numbers Award Years 2405WI5MAP 2024 2505WI5MAP 2025 Questioned Costs: None Children’s Health Insurance Program (Assistance Listing number 93.767) Award Numbers Award Years 2405WI15CHIP 2024 2505WI15CHIP 2025 Questioned Costs: None Type of Finding: Significant Deficiency Response from the Wisconsin Department of Health Services: The Wisconsin Department of Health Services agrees with the audit finding and recommendations.
2025 – 002: Internal Controls – Common Origination and Disbursement Reporting Federal Agency: Department of Education Federal Program Title: Student Financial Aid Cluster – Various Assistance Listing Numbers: Various Federal Award Identification Number and Year: Various Pass-Through Agency: N/A Pass-Through Number: N/A Award Period: July 1, 2024, through June 30, 2025 Type of Finding: • Significant Deficiency in Internal Control Over Compliance • Other Matters Criteria or specific requirement: The 2 CFR Section 200.303 require that nonfederal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with Federal Statues, regulations, and the term and conditions of the federal awards. Condition: During our testing of Common Origination and Disbursement (COD), we noted there was a review process implemented; however, there was no process in place to retain the review being performed as to provide evidence to ensure the controls are being performed effectively. Questioned costs: None Context: During our testing, it was noted the Academy does not have a process in place to ensure controls are being performed effectively. Cause: The Academy did not have a process in place to ensure controls implemented are being performed effectively. Effect: There is no way to determine who was involved in the process should an error be present. Repeat finding: Yes, see 2024-003 Recommendation: We recommend the Academy reevaluate its procedures and review policies surrounding controls implemented for Title IV Aid. Views of responsible officials: There is no disagreement with the audit finding.
2025-001 Finding – Federal Award Type: Special Reporting - Federal Funding Accountability and Transparency Act (FFATA) – Material Non- Compliance and Material Weakness in Internal Controls over Compliance. (Repeat of finding 2024-002) Identification of Federal Program: AL Number: 64.033 Supportive Services for Veteran Families Criteria / Requirement: 2 CFR section 200.303 requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards 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 awards. Under the requirements of the Federal Funding Accountability and Transparency Act (Pub. L. No. 109-282), as amended by Section 6202 of Pub. L. No. 110-252, that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). The subawards meeting the above definition are to be reported no later than the last day of the month following the month in which the subaward/subaward amendment obligation was made or the subcontract award/subcontract modification was made. Condition / Context: During the year June 30, 2025, CAT entered into three first-tier subawards greater than $30,000 under AL number 64.033. The auditor tested one of these subawards, noting that the award was reported four days late under the Federal Funding Accountability and Transparency Act to the Federal Subaward Reporting System(FSRS). Per further inquiry, all of the first-tier subawards were reported late, by four days, to FSRS. Cause: CAT was aware of the FFATA reporting requirements, but corrective action was not taken quickly enough to correct the FFATA filing requirement for the year ended June 30, 2025. Procedures were not in place at the beginning of the year, when subawards are entered into, to track and report first-tier subawards within the time frame required by federal requirements. Effect: Failure to maintain sufficient internal controls and proper procedures, related to tracking over reporting firsttier subawards may result in wrongful use of federal funds and non-compliance with federal awards. Questioned Costs: None. Recommendation: The Organization should establish written policies and procedures for first-tier subawards including tracking and proper internal control procedures. Management’s Response: Management concurs with the finding and has defined corrective action to address it. We have identified gaps in our reporting processes and worked to implement changes to ensure compliance with special reporting requirements. Policies and procedures will be updated regarding special reporting requirements. The Fiscal department will also be responsible for reviewing all contracts to identify all compliance requirements. Tracking procedures will be implemented to ensure reports are filed timely. The above identified corrective action has been fully implemented for the year ended June 30, 2026. Stacey Wilson, Fiscal Director, has implemented a tracking system for the FFATA.
Finding 2025-001 Monitoring of Subrecipients Research and Development Cluster National Aeronautics and Space Administration (ALN 43.001) Grant Number: 80NSSC23K1013 Statistically Valid Sample: No, and it was not intended to be Prior Year Finding: Not a repeat finding. Finding Type: Significant Deficiency and Noncompliance Criteria: According to 2 CFR 200.332(d), a pass-through entity must 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 subawards, and that the subaward performance goals are achieved, Accordingly, 2 CFR 200.332(d)(3) and 2 CFR 200.521 state that a pass-through entity is required to issue a management decision on federal awards audit findings within six months of the acceptance of the report by the Federal Audit Clearinghouse and ensure the subrecipient takes timely and appropriate corrective action on all audit findings. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, 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. Effective internal controls should include procedures to ensure single audit reports are reviewed and completed in a timely manner, and management decisions are issued within required timeframes. Condition and Context: The Garden performs a comprehensive risk assessment for all subrecipients and has established monitoring procedures which are applied to each of their four subrecipients throughout the life of the grant. These procedures include a detailed review of invoices submitted for reimbursement by the subrecipient and communication with the subrecipient as needed throughout the year. While the Garden obtained a copy of the subrecipients’ single audit report during the initial risk assessment process, the Garden did not obtain or review the most recently issued single audit report for each subrecipient during 2025 to determine if there were any findings related to their federal awards which would require the Garden to issue a management decision on audit findings. Cause: Management had a control in place to obtain the subrecipient single audit reports upon entering into the subaward agreements. However, the control was not properly designed to obtain subrecipient single audit reports annually in the subsequent years the agreement was still in place.. Effect: Failure to obtain and review the subrecipient single audit reports in a timely manner may result in the Garden not being aware of a material noncompliance by a subrecipients and the Garden not documenting management’s decision timely in accordance with the guidance. Questioned Costs: No questioned costs were noted as a result of the audit procedures performed. Recommendation: We recommend the Garden establish procedures to ensure subrecipient single audit report are obtained and reviewed on an annual basis. In addition, the Garden should document whether a management decision was prepared or whether it is not required based on review of the findings, if any. Views of Responsible Officials: Management agrees with the finding. Subsequent to year end, Management has obtained and reviewed Single Audit filings for all its Subrecipients from the Federal Audit Clearinghouse. In their review of the Subrecipient Single Audit Reports, they did not note any findings related to its Federal programs. Management has implemented a control to continue to obtain and review the Single Audit filings for its Subrecipients on an annual basis.
(1) Summary of Auditors’ Results Financial Statements a. Type of report issued on whether the financial statements were prepared in accordance with generally accepted accounting principles: Unmodified b. Internal control deficiencies over financial reporting disclosed by the audit of the financial statements: • Material weaknesses: No • Significant deficiencies: No c. Noncompliance material to the financial statements: No Federal Awards d. Internal control deficiencies over major programs disclosed by the audit: • Material weaknesses: Yes • Significant deficiencies: No e. Type of report issued on compliance for major programs: Qualified f. Audit findings that are required to be reported in accordance with 2 CFR 200.516(a): Yes g. Major programs: • Student Financial Assistance Cluster – Various ALNs h. Dollar threshold used to distinguish between Type A and Type B programs: $750,000 i. Auditee qualified as a low-risk auditee: No (2) Findings Relating to the Financial Statements Reported in Accordance with Government Auditing Standards None (3) Findings and Questioned Costs Relating to Federal Awards Finding Number: 2025-01 Program: Student Financial Assistance Cluster ALN #: 84.063 and 84.268 Federal Award #’s: P063P235372, P268K225372 Federal Award Years: July 1, 2024 to June 30, 2025 Federal Agencies: U.S. Department of Education Pass-Through Entity: N/A – Direct Award Compliance Requirement: Enrollment Reporting Finding Type: Material Weakness and Material Noncompliance Criteria: Under the Pell grant and the Direct and Federal Family Education Loan programs, institutions are required to report enrollment information via the National Student Loan Data System (NSLDS) (OMB No. 845-0035). The administration of the Title IV programs depends heavily on the accuracy and timeliness of the enrollment information reported by institutions. Institutions must review, update and verify student enrollment statuses, program information and effective dates that appear on the Enrollment Reporting Roster file or on the Enrollment Maintenance page of the NSLDS Financial Aid Professionals (NSLDSFAP) website. The data on the institution’s Enrollment Reporting Roster, or Enrollment Maintenance page, is what NSLDS has as the most recently certified enrollment information. There are two categories of enrollment information, “Campus Level” and “Program Level,” both of which need to be reported accurately and have separate record types. The NSLDS Enrollment Reporting Guide provides the requirements and guidance for reporting enrollment details using the NSLDS Enrollment Reporting Process. Institutions are responsible for timely reporting, whether they report directly or via a third-party servicer. Institutions must complete and return the Enrollment Reporting roster file placed in their Student Aid Internet Gateway (SAIG) (OMB No. 1845-0002) mailboxes sent by ED via NSLDS within 15 days. An institution determines how often it receives the Enrollment Reporting roster file with the default set at a minimum of every 60 days. Once received, the institution must update for changes in the data elements for the Campus Record and the Program Record identified above, and submit the changes electronically through the batch method, spreadsheet submittal or the NSLDS website. Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide 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. Condition found: During our testwork over student enrollment reporting, we noted Regent did not report all students' status changes accurately or within the required 60 days. For a sample of 60 students who were recipients of Direct Loans or Pell Grants between July 1, 2024 and June 30, 2025 and that had been identified as having withdrawn, graduated, or modified their enrollment status as defined by Regent’s Satisfactory Academic Progress Policy through a change in course load, the following was noted: For 24 students out of the 60 selected for compliance testing, Regent did not transmit the students’ status change to NSLDS within 60 days. For 9 students out of the 60 selected for compliance testing, Regent did not transmit the students’ status change to NSLDS within 60 days and failed to report the correct effective date of the status change. For 2 students out of the 60 selected for compliance testing, Regent failed to report the correct effective date of the status change. For 2 students out of the 60 selected for compliance testing, Regent failed to report the proper status to NSLDS. Additionally, while Regent has controls in place to ensure that enrollment changes are reported timely to the National Student Clearinghouse (NSC), the control does not ensure that any required correspondence with NSC to resolve data matters is happening accurately and timely. Cause: For the students noted above, management communicated that there were delays in the data transmission from the NSC and the NSLDS. While the data was provided to the NSC in a timely manner, there were issues with the data that needed to be resolved between Regent and the NSC in order to proceed with the submission to NSLDS. For the reasons noted above, we determined the related control in place at Regent, which is designed to address the accuracy and timeliness of the transmission reports, is not designed at a sufficient level to verify the accuracy and timeliness of the data transmission to the NSC. Nor does Regent have a control to ensure that any subsequent issues are resolved timely and that the data is ultimately submitted to the NSLDS timely. Proper perspective: Regent’s policy is to submit enrollment data to the NSC on a predetermined schedule that allows Regent to comply with the enrollment reporting requirements. For our sample of 60 students with status changes, we identified 37 students where either the status change was not reported within 60 days, improper status was reported, or the effective date was not accurately reported which indicates a systemic issue. Possible asserted effect: Untimely submission of student enrollment information affects the determinations that lenders and servicers of students’ loans make related to in-school status, deferments, graces periods, and repayment schedules, as well as the federal government’s payment and interest schedules. Questioned costs: None noted. Statistical sampling: The sample was not intended to be, and was not, a statistically valid sample. Repeat finding: A similar finding was reported in the prior year. The prior year finding number was 2024-001 Recommendation: We recommend Regent evaluate its processes and procedures when submitting data to the NSC to mitigate the number of errors in data transmissions in order to expedite the accuracy and timeliness of the NSLDS enrollment reporting. Views of responsible officials: Regent agrees with this finding. Regent intends to strengthen its controls and quality assurance measures over the timeliness of enrollment information to NSLDS.
Finding 2025-011 – Lack of Internal Controls Over Major Federal Program – Coronavirus State and Local Fiscal Recovery Funds PASS THROUGH GRANTOR: Direct Grant FEDERAL AGENCY: U.S. Department of Treasury ASSISTANCE LISTING: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Procurement and Suspension and Debarment; Reporting QUESTIONED COSTS: $-0- Condition: During the process of documenting the County’s internal controls regarding federal disbursements, we noted the County has not established procedures to ensure compliance with the following compliance requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Procurement and Suspension and Debarment; Reporting. Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal expenditures are made in accordance with federal compliance requirements. Effect of Condition: This condition could result in noncompliance with grant requirements and could lead to a loss of federal funds to the County. Recommendation: OSAI recommends the County gain an understanding of requirements for this program and implement internal control procedures to ensure compliance with requirements. Management Response: Chairman of the Board of County Commissioners: The Board of County Commissioners will work with all County Officials to go over all grants and federal monies that Comanche County receives to ensure that proper internal controls are implemented. Criteria: 2 CFR § 200.303 Internal Controls (a) reads as follows: The non-Federal entity must: 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). Further, accountability and stewardship should be overall goals in management's accounting of federal funds. Internal controls should be designed to monitor compliance with laws and regulations pertaining to grant contracts.
Finding 2025-002: Reporting Federal Program: Building an Inclusive Workforce: Lifting Underrepresented Communities Assistance Listing Number: 17.289 Federal Agency: U.S. Department of Labor Federal Award Number(s): 24A60CP000157-01-04 Type of Finding: Significant Deficiency in Internal Control over Compliance and Non-compliance Criteria: In accordance with 2 CFR §200.303, non-Federal entities are required to establish and maintain effective internal control over Federal awards to provide reasonable assurance that the entity is managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Such internal controls should be consistent with the Standards for Internal Control in the Federal Government or the COSO Internal Control—Integrated Framework, including controls designed to ensure timely submission of required reports. Additionally, 2 CFR §200.328(c) states that "the recipient or subrecipient must submit financial reports as required by the Federal award." Condition: During the audit, we noted that one required report selected for testing was not submitted in accordance with the reporting deadline established in the terms and conditions of the Federal award. Cause: This condition resulted from management oversight related to monitoring and tracking report due dates. Effect or Potential Effect: The failure to submit required reports timely increases the risk of noncompliance with Federal reporting requirements and may result in delayed oversight by the Federal awarding agency, potential sanctions, or increased scrutiny in future monitoring or audits. Questioned Costs: None. Context: 1 of 2 financial reports were not submitted timely. The sample is representative of the population. Identification as a Repeat Finding, if Applicable: 2024-001 Recommendation: We recommend that the Coalition implement formal procedures to ensure timely submission of all required Federal reports. Such procedures may include the use of an automated tracking or calendar system to notify responsible personnel of upcoming reporting deadlines, as well as documented review and approval of reports prior to submission.
FEDERAL AWARD FINDING: 2025-101 The District did not timely return Title IV funds to the U.S. Department of Education, increasing the risk of reduced or terminated future awards Cluster name: Student Financial Assistance Cluster Assistance Listings number(s) and name(s): 84.007 Federal Supplemental Educational Opportunity Grants 84.033 Federal Work-Study Program 84.038 Federal Perkins Loan Program—Federal Capital Contributions 84.063 Federal Pell Grant Program 84.268 Federal Direct Student Loans Award number(s) and year(s): P063P241066 July 1, 2024 to June 30, 2025 P007A240115 July 1, 2024 to June 30, 2025 P033A240115 July 1, 2024 to June 30, 2025 P268K241066 July 1, 2024 to June 30, 2025 Federal agency: U.S. Department of Education Compliance requirement: Special tests and provisions - return of Title IV funds Questioned costs: None Condition Contrary to federal regulation and the District’s policies and procedures, the District’s Student Financial Services Office (SF Office) did not initiate a return of Title IV funds to the U.S. Department of Education (ED) within the required 45 days of becoming aware that a student withdrew from the District. Specifically, for 3 of 25 students tested, the District did not initiate returns until between 71 and 83 days after becoming aware the students withdrew. Effect The District’s failure to timely return Title IV funding and the lack of monitoring over the SF Office’s compliance with federal regulation and District policies and procedures increases the risk that additional Title IV funds could be returned past the 45-day requirement and increases the risk that ED could reduce or terminate future awards of Title IV funds for noncompliance. Cause The District did not monitor its SF Office’s adherence to District-wide policies and procedures to ensure compliance with Title IV program requirements. Specifically, although the District had communicated District-wide policies to the SF Office that is responsible for administering the federal programs, adhering to federal regulations, and following District-wide policies and procedures, the District did not have procedures in place to monitor and address employee turnover of personnel responsible for adherence to District-wide policies regarding timely return of Title IV funds. Criteria Federal regulation and District policies and procedures require the return of Title IV funds when a recipient of Title IV grant or loan assistance withdraws from the District during a payment period or period of enrollment in which the recipient began attendance. Specifically, the District must determine the amount of Title IV aid earned by the student as of the student’s withdrawal date. If the total amount of Title IV assistances earned by the student is less than the amount that was disbursed to the student or on his or her behalf as of the date of the institution’s determination that the student withdrew, the difference must be returned to the Title IV programs no later than 45 days after the date of the District’s determination that the student withdrew (34 Code of Federal Regulations [CFR] §668.22[a –j]). Further, federal guidelines require establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations to the District 1. Monitor its SF Office to ensure its compliance with District policies and procedures for the return of Title IV funds. 2. Design and document control procedures to monitor and address employee turnover of personnel responsible for performing procedures related to the return of Title IV funds. 3. Initiate returns of Title IV funds to ED no later than 45 days after the date of the District’s determination that the student withdrew. Views of responsible officials District management concurs with this finding. The District’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials regarding these recommendations. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy.
Cluster name(s): CDBG – Entitlement/Special Purpose Grants Cluster Assistance Listings number(s) and name(s): 14.218 Community Development Block Grants/Entitlement Grants Award number(s) and year(s): B-20-UW-04-0501 July 1, 2023 through September 1, 2027 B-23-UC-04-0501 July 1, 2023 through September 1, 2030 B-24-UC-04-0501 July 1, 2024 through September 1, 2031 Federal agency: U.S. Department of Housing and Urban Development Compliance requirement(s): Reporting Questioned costs: Not applicable Condition Contrary to federal laws and regulations and County policies, the County’s Human Services Department (Department) failed to report complete and accurate information on the federal government’s reporting system for nearly $3 million in subawards it made to subrecipients during fiscal year 2025 for the Community Development Block Grants/Entitlement Grants (CDBG) program. As shown in the bullets below and Table 1 on page 9, we tested a total sample of 5 subawards for the program at the Department and found that, for the 5 subawards, the Department failed to report the following: X Any required information about the subaward amendments, including the amended amounts and terms, for 2 subawards tested, totaling nearly $1.1 million of the total nearly $3 million of subawards we tested in our sample. X Required information within the time frame for all 5 subawards tested, totaling nearly $2.5 million, resulting in the reports being submitted between 2 and 13 months late. X Accurate key elements for 4 subawards tested, totaling $1.7 million, that included incorrect subaward obligation/action dates, changes in funding sources, and subaward project descriptions. Furthermore, for 1 of these 4 subawards, the same information for 1 amendment totaling $766,648 was entered into the federal government’s reporting system 3 separate times. FEDERAL AWARD FINDING AND QUESTIONED COSTS: 2025-101 Arizona Auditor General Maricopa County | Year Ended June 30, 2025 10 Effect The County’s stakeholders and the public did not have access to transparent and timely information about the Department’s federal award spending decisions on USAspending.gov as required by federal laws and regulations. Additionally, the Department is at risk that this finding applies to other federal programs it administers. During fiscal year 2025, the Department is at risk of not transparently reporting its subaward information related to nearly $2.2 million of federal monies it spent related to the subrecipient expenditures, or 54% of the Department’s total of nearly $4.1 million reported on the schedule of expenditures of federal awards for the CDBG Cluster. Cause The Department experienced turnover in the contract manager position, and neither contract manager employed during fiscal year 2025 updated the tracking list used in prior fiscal years to monitor grants and report information on the federal government’s reporting system, including grants contracted through other departments and amendments. In addition, the Department did not require independent reviews of the reports for accuracy and completeness prior to uploading subaward data to the federal government’s reporting system. Table 1 The Department failed to report complete and accurate information on the federal government’s reporting system for nearly $3 million in subawards related to the CDBG program June 30, 2025 Subaward issue Number of subawards Associated error amount Not reported timely1 5 $2,475,127 Incorrect key elements 4 1,734,748 Amendments not reported1 2 1,051,900 Total distinct subawards tested and total error amount2 5 $2,975,127 1 These rows include overlapping information for 2 subawards as these subawards, original amounts were reported; however, they had multiple amendments during the fiscal year that were either not reported or not reported timely. As a result, $551,900 was included as an associated error amount in both rows because of multiple amendments for the same subaward and amount. 2 Number of subawards with issues and associated error amounts might overlap, but the totals show the distinct number of subawards tested and their total associated error amount. Source: Auditor General staff review of subaward contracts provided by the Department on September 5, 2025. Arizona Auditor General Maricopa County | Year Ended June 30, 2025 11 Criteria The Federal Funding Accountability and Transparency Act (FFATA) and federal Uniform Guidance regulations require the Department, as a direct recipient of federal awards, to report certain information about each subaward action equaling or exceeding $30,000 in federal monies on the federal government’s reporting system no later than month-end of the month following the subaward action so that the information can be displayed to the public on USAspending.gov.1 Specifically, the federal Uniform Guidance requires the Department to report the subrecipient organization’s name, award amount, award term, and other information about the subaward, if applicable, for each subaward action equaling or exceeding the $30,000 threshold (2 Code of Federal Regulations [CFR] §170.320 and Appendix A to part 170). Additionally, the County’s grant policies and procedures and the Department’s FFATA Reporting Policy require the Department to perform this reporting for federal awards.2,3 Also, an update to the Department’s FFATA Reporting Policy in March 2025 requires Department personnel to review and update, on a monthly basis, the tracking list used to monitor grants and report information to the federal government’s reporting system, ensuring all grants contracted through other departments and amendments are included and accurately reported.2 Further, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations to the Department 1. Immediately report on the federal government’s reporting system the required information for its subawards, including reviewing, correcting, and/or resubmitting any inaccurate reported information. 2. Follow the County’s grant policies and procedures and the Department’s FFATA Reporting policy for reporting subaward actions equaling or exceeding $30,000 no later than monthend of the month following the subaward action, as required by the FFATA and federal Uniform Guidance, which may include providing training to Department staff responsible for reporting the Department’s subaward actions to the federal government’s reporting system. 3. Implement the Department’s FFATA Reporting policy requirements to review and update the tracking list used to monitor grants and report information to the federal government’s reporting system, ensuring all grants contracted through other departments and amendments are included and accurately reported. 4. Develop and implement procedures requiring independent reviews to ensure the subaward data is complete and accurate prior to uploading it to the federal government’s reporting system. 1 The FFATA of 2006 (Public Law 109-282), as amended by section 6202 of Public Law 110-252, was enacted to provide the public with transparency on federal award spending to hold the recipient government accountable for each spending decision and to help reduce wasteful spending of federal monies. As such, federal Uniform Guidance requires reporting on the FFATA Subaward Reporting System at https://sam.gov/. 2 Maricopa County. (2025). Maricopa County Human Services Federal Funding Accountability and Transparency Act (FFATA Reporting APP0220). 3 Maricopa
Finding 2025-001 Inaccurate NSLDS Reporting Federal Agency: U.S. Department of Education (USDE) Program Name: Student Financial Assistance Cluster ALN and Program Expenditures: 84.063 ($32,562,241) 84.268 ($174,471,585) Federal Award Numbers: P063P240105 P268K250105 P063P230105 Federal Award Year: July 1, 2024 to June 30, 2025 Questioned Costs: None Compliance Requirement: NSLDS Reporting Condition Found: The University did not accurately report student enrollment status changes to the National Student Loan Data System (NSLDS). The U.S. Department of Education (USDE) uses enrollment data reported by the University to determine: (1) eligibility for interest subsidies, (2) loan repayment start dates, and (3) in-school loan deferments. The enrollment information is also used by USDE to measure program completion data to evaluate the effectiveness of financial aid programs. During our testing of 40 students (31 students with Federal Direct Loan Program disbursements of $1,002,311 and 9 students with Federal Direct Loan Program disbursements of $114,486 and Federal Pell Grant disbursements of $64,090) that had a reduction or increase in attendance levels, graduated, withdrew, dropped out, or enrolled but never attended during the fiscal year, we noted the following: • The status change for one graduated student (with Federal Direct Loan Program disbursements of $15,434) was reported incorrectly to the NSLDS as a Withdrawn (W) status rather than a Graduated (G) status. Specifically, in the 2024-2025 academic year, the student was previously reported to the NSLDS as withdrawn due to no enrollment but then subsequently graduated, and as a result the University did not update the enrollment status change to graduated. Upon further review, management identified an additional 43 students (21 students with Federal Direct Loan Program disbursements of $192,242 and 22 students with Federal Direct Loan Program disbursements of $65,398 and Federal Pell Grant disbursements of $64,907) during the fiscal year who were reported incorrectly to the NSLDS as a W status rather than a G status. We further noted management review controls implemented by the University were not designed at a level of precision to ensure University enrollment data submitted to NSLDS was accurate. The University disbursed Federal Direct loans and Pell grants to 9,674 and 5,822 students, respectively, during the year ended June 30, 2025. Criteria or Requirement: According to 34 CFR Sections 690.83(b)(2) and 685.309, under the Pell grant and Federal Direct Loan programs, institutions must complete and return the Enrollment Reporting Roster File via NSLDS within 15 days of receipt. Institutions must review, update, and verify student enrollment statuses, program information, and effective dates that appear on the Enrollment Reporting Roster File. Unless an institution expects to submit its next updated enrollment report to the USDE within the next 60 days, an institution must notify NSLDS within 30 days after the date that the institution discovers that (1) a Direct loan was made to or on behalf of a student who was enrolled or accepted for enrollment at the institution, and the student has ceased to be enrolled on at least a half-time basis or failed to enroll on at least a half-time basis for the period for which the loan was intended; or (2) a student who is enrolled at the institution and who received a loan under Title IV has changed his or her permanent address. The November 2022 NSLDS Enrollment Reporting Guide states “for a student who has graduated, schools who initially report a withdrawn status must subsequently report the student as having graduated by certifying a ‘G’ status at the Campus-Level and/or Program-Level as appropriate.” In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, 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. Effective internal controls should include establishing procedures to ensure student enrollment status changes are accurately reported to the NSLDS. Cause: Cause: In discussing these conditions with the University, they stated that the specific issue was due to a gap in staffing and failure to understand that a secondary manual update to the record was necessary. The individual who took the previous control operator’s place did not have an effective understanding of the reporting process and did not report the student’s status appropriately. Possible Asserted Effect: Inaccurate submission of student enrollment status affects the determinations that lenders and servicers of student loans make related to in-school deferments, grace periods, and repayment schedules, as well as the Federal government’s payment of interest subsidies. Repeat Finding: A similar finding was not reported in the prior year audit. (Finding code 2025-xxx) Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend the University review and revise its procedures to ensure accurate reporting of enrollment status information to the NSLDS. Views of University Officials: DePaul is committed to fulfilling the federal requirement to report withdraw and graduation status to the NSLDS. The University Registrar’s Office is responsible for that task and accomplishes it by reporting enrollment through the National Student Clearinghouse (NSC), a third-party servicer. Generally, there are not typically issues with reporting students who withdraw or who graduate. However, we concur with the finding and acknowledge the specific set of circumstances that led to this issue. The number of these cases is limited. We understand the importance of accurate reporting and our internal procedures have been adjusted. We are committed to maintaining compliance with all regulatory requirements.
FINDING 2025-002 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children, Fresh Fruit and Vegetable Program Assistance Listings Numbers: 10.553, 10.555, 10.559, 10.582 Federal Award Number and Year (or Other Identifying Number): FY2024 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-004. Condition and Context The School Corporation did not have effective internal controls in place to ensure compliance with the Procurement and Suspension and Debarment compliance requirement. The School Corporation did not have adequate procedures in place to ensure that the requirements for small purchases were met for each applicable procured good or service or to ensure that vendors were not suspended or debarred prior to entering into a covered transaction. INDIANA STATE BOARD OF ACCOUNTS 17 WABASH CITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a nonfederal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds: micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. For the audit period, the School Corporation self-certified a micro-purchase threshold of $50,000. Any purchase above this threshold but below the $150,000 simplified acquisition threshold would be considered a small purchase. During fiscal year 2023-2024 , the School Corporation had one vendor with disbursements totaling $60,757, which exceeded the School Corporation established small purchase threshold of $50,000. The School Corporation did not provide supporting documentation that an adequate number of price or rate quotes were obtained from qualified sources for the purchases. The lack of effective internal controls and noncompliance were isolated to the one vendor noted above. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. Upon inquiry of the School Corporation and inspection of supporting documentation in order to review the procedures in place for verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, it was identified that the School Corporation did not have policies or procedures in place to verify if vendors were suspended or debarred or otherwise excluded from participation in federal awards. In 2023-2024, for one covered transaction totaling $60,757, there was no evidence provided that the School Corporation verified the vendor's suspension and debarment status prior to payment. The lack of effective internal controls and noncompliance were isolated to the one vendor noted above. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 18 WABASH CITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (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 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM Exclusions; or (b) Collecting a certification from that person; or INDIANA STATE BOARD OF ACCOUNTS 19 WABASH CITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (c) Adding a clause or condition to the covered transaction with that person." Cause An effective system of internal controls was not designed and implemented by management of the School Corporation. The School Corporation had outlined a process for handling small purchase vendor related transactions, but that process was not followed, nor was supporting evidence maintained for the items described in the Condition and Context. Also, the School Corporation had designed a process for determining whether a vendor is suspended or debarred, but that process was not completed. Effect As a result of not designing and implementing an effective system of internal controls and following the School Corporation's policies and procedures, goods that fell within the small purchase threshold were not properly procured, and vendors to whom payments equal to or in excess of $25,000 were made were not verified to be not suspended, debarred, or otherwise excluded. 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. Recommendation We recommended that management of the School Corporation design and implement an effective internal control system and follow through with the policies and procedures related to small purchase vendor procurement and suspension and debarment compliance requirements that they designed through an action plan to correct the prior audit period finding. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2025-003 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, Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 22611-054-PN01, 22619-054-PN01, 22611-054-ARP, 22619-054-ARP, 23611-054-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-009. INDIANA STATE BOARD OF ACCOUNTS 20 WABASH CITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The School Corporation is a member of the Wabash-Miami Area Program (Cooperative). During fiscal years 2023-2024 and 2024-2025, 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 nonpublic expenditures spent did not meet the earmarking requirements for grant award number 22611-054-PN01, 22619-054-PN01, 22611-054-ARP, 22619-054-ARP, and 23611-054-PN01. Total grant expenditures were posted as expended. The nonpublic proportionate share expenditures for each member school were determined by applying a percentage based on the total grant award to the nonpublic school total expenditures. The lack of internal controls and noncompliance was isolated to 22611-054-PN01, 22619-054-PN01, 22611-054-ARP, 22619-054-ARP, and 23611-054-PN01 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 21 WABASH CITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause Through inquiry of management, they were unaware of the requirements to track the nonpublic proportionate share expenditures directly for each member school. The Cooperative did implement new processes and procedures to ensure expenditures were tracked by member school starting with the 2023-2024 grants, and these grants were still ongoing during the audit period. 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 school. 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.
2025-002 Finding – Federal Awards – AL #14.267 – Continuum of Care Program Type: Significant Deficiency in Internal Control over Compliance – Special Tests: Rent Reasonableness Criteria / Requirement: 2 CFR section 200.303 requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards 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 awards. Condition / Context: In testing Special Tests - Rental Reasonableness one out of four sample selected did not have a documented file review. The file appeared complete and there was no noncompliance noted, however there was no documented internal control over the rent reasonableness calculation. Cause: The process for file review was updated during the year to include a HUD file checklist not previously used. Three of the four files included the checklist which documents the review by the Housing Program Manager; however, one file was created before the checklist was in use. No other documentation of the review of the file was maintained, other than the associated check issued to the rental property company. Effect: Rental payments made on behalf of the Organization’s clients could be made for amounts above the HUD guideline’s maximum amount for the area, and therefore out of compliance with the federal award. Questioned Costs: None Recommendation: We recommend that the Organization continue with the internal controls established later in the year and ensure that Rent Reasonableness testing is documented including the file review. Additionally, as there have been recent revisions to the Uniform Grant Guidance (2 CFR 200) that now require documented internal controls over compliance, we also recommend that a specific policy be established for Rent Reasonableness to give clear directives of how the Organization determines rent reasonableness, how it is documented, and retained, ensuring there is current documentation of the internal controls over compliance. Management’s Response: Management concurs with the finding and has implement effective internal controls over Special Tests – Rent Reasonableness.
2025-001 Finding – Federal Awards – AL #93.592 – Family Violence Prevention and Services/ Discretionary Type: Significant Deficiency in Internal Control over Compliance – Financial Reporting Criteria / Requirement: 2 CFR section 200.303 requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards 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 awards. Condition / Context: The Organization filed the required Federal Financial Report timely, the information reported was supported by detail within their general ledger, and there was no noncompliance noted. However, the Federal Financial Report was compiled and submitted by one employee. There was no internal control within the Federal Financial Reporting procedure that would have prevented or detected inaccurate information from being reported. Cause: Procedures were not in place to properly review Federal Financial Reporting prior to submission. Effect: Federal Financial Reporting could potentially include inaccurate information. Questioned Costs: None Recommendation: We recommend that the Organization implement the necessary internal controls to ensure that Federal Financial Reporting is performed, and review of reports submitted is documented. Additionally, as there have been recent revisions to the Uniform Grant Guidance (2 CFR 200) that now require documented internal controls over compliance, we also recommend that a specific policy be established for Federal Financial Reporting to give clear directives of how Federal Financial Reporting will be performed, documented, and retained ensuring there is current documentation of the internal controls over compliance. Management’s Response: Management concurs with the finding and will implement effective internal controls over Financial Reporting.
FINDING 2025-001 Subject: TRIO Cluster - Eligibility Federal Agency: US Department of Education Federal Program: TRIO Talent Search Assistance Listings Number: 84.044 Federal Award Number and Year (or Other Identifying Number): P044A220683 Compliance Requirement: Eligibility Audit Findings: Significant Deficiency, Other Matters This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2024-002. Condition and Context An effective internal control system was not in place at the College to ensure compliance with the Eligibility compliance requirements. The following deficiencies over determination and noncompliance were noted: For TRIO Talent Search, 2 of the 16 students from the Northwest (Lake) Campus did not have evidence of internal controls over admission to the program. For TRIO Talent Search, 1 of the 16 students from the Northwest (Lake) Campus of the College could not provide evidence that the participant was a citizen, national, or permanent resident of the United States or in the United States for other than a temporary purpose. The lack of internal controls was isolated to the Northwest (Lake) Campus TRIO Talent Search program. 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). . . ." 34 CFR 646.3 states: "A student is eligible to participate in a Student Support Services project if the student meets all of the following requirements: INDIANA STATE BOARD OF ACCOUNTS 18 IVY TECH COMMUNITY COLLEGE OF INDIANA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Is a citizen or national of the United States or meets the residency requirements for Federal student financial assistance. (b) Is enrolled at the grantee institution or accepted for enrollment in the next academic term at that institution. (c) Has a need for academic support as determined by the grantee, in order to pursue successfully a postsecondary educational program. (d) Is– (1) A low-income individual; (2) A first generation college student; or (3) An individual with disabilities." Cause The College's management had not developed an effective system of internal controls that would have ensured compliance with the Eligibility compliance requirement. This was due to policies and procedures not being adequate to retain the documentation for TRIO Eligibility. Effect The failure to establish an effective internal control system could enable material noncompliance to go undetected. Noncompliance with the Eligibility compliance requirement could have resulted in the loss of federal funds to the College. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the College's management strengthen the internal controls related to the compliance requirement listed above. We also recommended strengthening its policies and procedures to ensure appropriate supporting documentation for evidence of review and other internal controls procedures for federal programs are retained to be presented for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report. INDIANA STATE BOARD OF ACCOUNTS 19
FINDING 2025-002 Subject: TRIO Cluster - Reporting Federal Agency: US Department of Education Federal Programs: TRIO Student Support Services, TRIO Talent Search, TRIO Upward Bound Assistance Listings Numbers: 84.042A, 84.044, 84.047 Federal Award Numbers and Years (or Other Identifying Numbers): P042A200749, P042A200690, P042A201220, P042A201222, P044A220683, P047A221086, P047A221077 Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2024-003. Condition and Context An effective internal control system was not in place at the College to ensure compliance with requirements related to the Reporting compliance requirement. The following errors on the fiscal year 2024 Annual Performance Report (APR) were noted: For TRIO Student Support Services at the Indianapolis Campus, key line items were tested for 24 students. For 1 student, field 31 "Undergraduate Degree/Certificate Completed at Grantee Institution" was inaccurately reported. For TRIO Student Support Services at the Northwest (Lake) Campus, key line items were tested for 22 students. o For 1 student, field 15 "Eligibility" was inaccurately reported. o For 2 students, field 18 "Date of First Project Service" was inaccurately reported. o For 1 student, field 19 "College Grade Level (entry into project)" was inaccurately reported. o For 7 students, field 23 "Enrollment Status (at end of academic year)" was inaccurately reported. o For 1 student, field 24 "Academic Standing" was inaccurately reported. o For 3 students, field 31 "Undergraduate Degree/Certificate Completed at Grantee Institution" was inaccurately reported. For TRIO Student Support Services at the Richmond Campus, key line items were tested for 25 students. o For 2 students, field 17 "First Enrollment Date (at grantee institution)" was inaccurately reported. INDIANA STATE BOARD OF ACCOUNTS 20 IVY TECH COMMUNITY COLLEGE OF INDIANA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) o For 1 student, field 22 "Participant Status (during academic year)" was inaccurately reported. o For 8 students, field 23 "Enrollment Status (at end of academic year)" was inaccurately reported. o For 1 student, field 27 "College Grade Level (at end of academic year)" was inaccurately reported. For TRIO Talent Search at the Northwest (Lake) Campus, key line items were tested for 40 students. o For 10 students, the College could not provide supporting documentation for item A1 "Persisted in school for the next academic year at the next grade level or graduated high school." o For 2 students, the College inaccurately reported that the students persisted in the next academic year at the next grade level; however, the students did not advance to the next grade level. For TRIO Upward Bound at the Indianapolis Campus, key line items were tested for 10 students. For 1 student, field 17 "Reading Language Arts or Math Proficiency Not Achieved" was inaccurately reported. For TRIO Upward Bound at the Muncie Campus, key line items were tested for 9 students. o For 3 students, field 16 "Eligibility" was inaccurately reported. o For 1 student, field 17 "Reading Language Arts or Math Proficiency Not Achieved" was inaccurately reported. o For 1 student, field 19 "Pre-Algebra or Algebra Course Not Successfully Completed by Beginning of 10th Grade" was inaccurately reported. The lack of effective internal controls and noncompliance was a systemic issue at four of the five campuses that were reported on the TRIO Cluster program during the audit period. 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). . . ." INDIANA STATE BOARD OF ACCOUNTS 21 IVY TECH COMMUNITY COLLEGE OF INDIANA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.329(c)(1) states in part: "The recipient or subrecipient must submit performance reports as required by the Federal award. . . ." 34 CFR 646.32(c) states in part: "Recordkeeping. A grantee must maintain participant records that show– (1) The basis for the grantee's determination that each participant is eligible to participate in the project under § 646.3; (2) The grantee's basis for determining the academic need for each participant; (3) The services that are provided to each participant; (4) The performance and progress of each participant by cohort for the duration of the participant's attendance at the grantee's institution . . ." Cause The College's management had not developed an effective system of internal controls that would have ensured compliance with the Reporting compliance requirement. The College had not developed policies and procedures to verify that the TRIO Cluster reporting agreed with supporting records. Effect Without the proper implementation of an effectively designed system of internal controls, the College cannot ensure reporting for the TRIO Cluster is accurate and in agreement with supporting records. Noncompliance with the reporting requirement could have resulted in the loss of federal funds to the College. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the College's management strengthen the internal controls related to the compliance requirement listed above. We also recommended strengthening its policies and procedures to ensure reporting for the TRIO Cluster programs agree with supporting records of the College. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Prior Year Finding: 2024-003 Federal Agency: U.S. Department of Treasury Federal Program: COVID 19 – Coronavirus State and Local Fiscal Relief Fund Assistance Listing: 21.027 Pass-Through Entity: Maryland Department of Housing and Community Development Pass-Through Award Number and Period: Not Available, (7/1/2024 – 6/30/2025) Compliance Requirement: Suspension and Debarment Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: Internal Control: Per 2 CFR 200.303(a), a non‑Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the award. These internal controls should comply with the guidance in Standards for Internal Control in the Federal Government or the COSO Internal Control – Integrated Framework. Compliance: Per 2 CFR 200.213, suspension and debarment restrict awards, subawards, and contracts with parties that are debarred, suspended, or otherwise excluded from participation in Federal assistance programs. Per 2 CFR 180.300, an entity may determine suspension and debarment status by: (a) Checking the SAM Exclusions database; (b) Collecting a certification from the vendor; or (c) Including a clause or condition in the covered transaction. Condition/Context: The vendor was not suspended or debarred, and a suspension and debarment check was performed and maintained in the vendor file. However, there was no evidence to confirm that the check was completed prior to contract execution or the initiation of transactions, as documentation did not include a dated “Received” stamp as required by the Town’s internal control process. Questioned Costs: There are no questioned costs related to this finding as the vendors were not federally suspended or debarred. Cause: The Town did not consistently perform its stated control requiring the SAM.gov check to be reviewed, approved, and dated by the Assistant Town Administrator prior to contract execution or the processing of expenditures. Effect: The Town’s internal controls related to federal suspension and debarment were not consistently performed for purchases made under the program. Failure to verify suspension and debarment requirements may result in the Town entering into a contract or purchase with a vendor that is suspended or debarred and not authorized to provide goods or services under the program. Recommendation: We recommend that the Town reinforce the consistent execution of its existing procedures and internal controls to ensure vendors are verified as not suspended or debarred prior to charging goods and services to the program. In addition, the Town should consistently retain documentation evidencing the timely performance and review of suspension and debarment checks for audit purposes. Views of Responsible Officials: Management agrees with the finding.
Prior Year Finding: No Federal Agency: U.S. Department of Treasury Federal Program: COVID 19 – Coronavirus State and Local Fiscal Relief Fund (CSLFR) Assistance Listing: 21.027 Pass-Through Entity: Maryland Department of Housing and Community Development Pass-Through Award Number and Period: Not Available, (7/1/2024 – 6/30/2025) Compliance Requirement: Reporting Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matter Criteria or Specific Requirement: Internal Control: Per 2 CFR 200.303(a), a non‑Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the 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 comply with the guidance in Standards for Internal Control in the Federal Government or the COSO Internal Control – Integrated Framework. Compliance: Per U.S. Department of the Treasury CSLFRF guidance, non‑Federal entities are required to accurately identify, classify, and report amounts designated as revenue replacement. Reported revenue replacement amounts must be supported by the underlying accounting records and must not exceed the elected standard allowance of $10,000,000. Condition/Context: The amount reported by the Town as revenue replacement in the required CSLFRF reports did not agree to the expenditures designated as revenue replacement in the underlying accounting records. Specifically, the reported revenue replacement amounts did not reconcile to the expenditures recorded and designated as revenue replacement in the Town’s general ledger. As a result, the reported revenue replacement amounts were not supported by the underlying accounting records for the program. Questioned Costs: There are no questioned costs related to this finding, as all expenditures charged to the program were allowable and properly supported. Cause: The Town’s internal controls were not designed or operating effectively to ensure accurate reporting under the CSLFRF program, specifically with respect to properly identifying, reconciling, and reviewing amounts designated as revenue replacement prior to submission of required federal reports. Effect: Failure to accurately report revenue replacement amounts may result in misstated program activity in required federal reports or increase the risk that unallowable expenditures could be allocated to the program. While this issue did not impact expenditure allowability or exceed the standard allowance, it adversely affects the reliability of CSLFRF reporting. Recommendation: We recommend the Town enhance its internal controls over CSLFRF reporting to ensure that amounts reported as revenue replacement are accurately identified, supported, and reconciled to the underlying accounting records prior to submission of required federal reports. This should include implementing a formal reconciliation process between the general ledger and CSLFRF reporting schedules, along with documented review procedures to verify that expenditures designated as revenue replacement are allowable, properly classified, and consistently supported by accounting documentation. Views of Responsible Officials: Management agrees with the finding.
Department of Health and Human Services Iowa Department of Health and Human Services Public Health Emergency Preparedness 93.069 – PUHE-EPR-25-003 for 2025 Subrecipient Monitoring Material Weakness in Internal Control Over Compliance and Material Noncompliance Criteria – 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Subrecipient monitoring requirements are contained in 2 CFR 200.331 through 2 CFR 200.333 and include requirements to identify the award and applicable requirements to the subrecipient and monitor the activities of the subrecipient. Condition – The County did not formally communicate the required information to the subrecipient. No subrecipient agreement was executed. In addition, no monitoring activities were documented. Cause – The County did not have an internal control process in place to ensure subrecipient monitoring requirements were met. Effect – Without the proper communication of applicable requirements and monitoring of the subrecipient, there is a possibility that federal statutes, regulations, and the terms and conditions of the federal award, were not complied with. Questioned Costs – None reported. Context – $754,170 was passed through to one subrecipient during the year ended June 30, 2025. Repeat Finding from Prior Years – No Recommendation – We recommend the County implement a control process which includes the applicable subrecipient monitoring requirements. Views of Responsible Officials – Clinton County is working with Genesis Health System on implementing a subrecipient agreement and will put a control process in place to monitor.
No Internal Controls Over Student Enrollment Status Reporting The University did not have internal controls in place to ensure changes in student enrollment status were reported accurately and timely to the National Student Loan Data System (NSLDS). During the audit period, the University disbursed approximately $16.6 million in federal financial assistance to 1,763 students subject to this reporting requirement. The U.S. Department of Education, lenders, and loan servicers rely on enrollment status data to monitor compliance with federal financial assistance programs and to manage student loan deferments, grace periods, and repayment schedules. Although the University reported enrollment status changes accurately and timely to NSLDS during the audit period, it did not have formal internal controls in place, such as written policies, assigned responsibilities, or verification procedures. Without these controls, there is an increased risk of errors in future reporting. If enrollment status changes are not reported accurately and timely, students may enter repayment too early or stay in deferment too long, financial assistance eligibility could be miscalculated, and the University’s eligibility to participate in federal financial assistance programs could be at risk.According to University management, they relied on National Student Clearinghouse, a third-party servicer, to report the enrollment data to NSLDS. The University did not develop internal procedures over the data reported to NSLDS by the third-party service provider to ensure accurate and timely reporting. Federal regulations require the University to establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the University is managing the program in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Federal Award Information: Federal Awarding Agency: U.S. Department of Education; Assistance Listing Numbers (titles): 84.063 (Federal Pell Grant Program) and 84.268 (Federal Direct Student Loans); Federal Award Identification Numbers (award period): P063P240318 and P268K250318 (July 1, 2024 – June 30, 2025). Recommendation: University management should develop and implement formal internal controls to ensure accurate and timely reporting of enrollment status changes to NSLDS, such as: •Assigning clear responsibility to designated personnel for overseeing the reporting process. •Establishing a process for monitoring and verifying the accuracy and timeliness of data reported by third-party service providers. •Developing written procedures that outline how enrollment status changes are identified and submitted. View of Responsible Officials of the Auditee: The University concurs with the recommendation to formalize internal controls, and notes that our existing operational practices resulted in accurate and timely reporting during the audit period, as noted by auditors. We rely on the National Student Clearinghouse and monitor their error reports regularly; no reporting errors were identified. However, to ensure alignment with 2 CFR 200.303 regarding documented internal controls, we have implemented a formal quality control check. This involves pulling a random sample from NSLDS to validate Clearinghouse data. Initial testing of this new control confirmed that our reporting remains accurate. We are currently documenting this process in our official policy manual.
FINDING 2025-002 Information on the federal program: Subject: Special Education Cluster (IDEA) – Suspension and Debarment Federal Agency: Department of Education Federal Program: Special Education Cluster Assistance Listing Number: 84.027 Federal Award Numbers and Years (Or Other Identifying Numbers): H027A230084, H027A240084 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Suspension and Debarment Audit Findings: Significant Deficiency 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)...." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." Part 4 of the Treasury's Compliance and Reporting Guidance states: ". . . recipients are expected to have procurement policies and procedures in place that comply with the procurement standards outlined in the Uniform Guidance . . ." Condition: An effective system of internal controls was not in place at the School Corporation to ensure the School Corporation’s compliance with applicable requirements related to the Special Education Cluster (IDEA), specifically with respect to Suspension and Debarment requirements. No instances of noncompliance (entering a contract with a vendor that was suspended or debarred) were identified in the transactions selected for testing. The matter represents a deficiency in internal controls over the Suspension and Debarment process, rather than identified noncompliance with program requirements. Cause: The School Corporation’s management had not developed an effective system of internal controls to ensure compliance with the Suspension and Debarment requirements for vendors procured by the School Corporation’s Cooperative. No instances of noncompliance (entering a contract with a vendor that was suspended or debarred) were identified in the transactions selected for testing. The matter represents a deficiency in internal controls over the Suspension and Debarment process, rather than identified noncompliance with program requirements. Effect: Without the proper implementation of an effectively designed system of internal controls, the School Corporation cannot ensure the contractors paid with federal funds are eligible to participate in federal programs. Any program funds the School Corporation used to pay contractors that have been suspended or debarred would be unallowable, and the funding agency could potentially recovery them. Furthermore, 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. Context: Suspension and Debarment As part of its internal control procedures, the School Corporation utilizes the System for Award Management (SAM.gov) to verify the eligibility status of vendors prior to engaging in financial transactions. This verification process is designed to ensure that vendors are not suspended, debarred, or otherwise excluded from participation in federal programs, in accordance with applicable procurement regulations. Two covered transactions that equaled or exceeded $25,000 were identified. Each of the identified transactions were selected for testing, totaling $73,208. The School Corporation did not verify the vendors' suspension and debarment status prior to payment for each of the covered transactions. Identification as a repeat finding: Not a repeat finding. Recommendation: We recommend that the School Corporation adhere to School Policy 6325 (Procurement – Federal Grants/Funds) to ensure that all contractors who are paid $25,000 or more, all or in part with federal funds, are not suspended or debarred from participation in federal programs before entering into any contracts. Views of Responsible Officials and Planned Corrective Actions: For the views of the responsible officials, refer to the Corrective Action Plan that is part of this report.
B. Major Federal Program Findings and Questioned Costs 2025-001 Failure to Properly Complete Required Training – Significant Deficiency Federal Program – Maternal, Infant and Early Childhood Home Visiting Program CFDA 93.870 Pass-through Entity – Community Based Care Federal Agency – United States Department of Health and Human Services Criteria: 2 CFR 200.303 states a non-Federal entity must establish and maintain effective internal controls 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. Condition: During our audit, auditors tested 25 employees for completion certificate of required training as a condition of the grants. Two of the required annual training were significantly non-compliant. • The Annual HIPPA Training 4 of the 25 (16%) of employees did not properly complete the training. • The Annual 504/Civil Rights Training 5 of the 25 (20%) of the employees did not properly complete the training. Questioned Costs: No questioned costs were noted. Cause: The cause of this condition appears to be a lack of oversight in monitoring training completion records and insufficient internal controls over training compliance. Effect: Failure to properly complete required training increases the risk of noncompliance with federal program requirements, potentially leading to disallowed costs, penalties, or other adverse consequences. Recommendation: We recommend that management, enhance internal controls over training compliance by implementing more effective tracking and monitoring system and assign responsibility for ensuring timely completion of required training to a specific individual or department. Additionally, we recommend Hibiscus consider implementing a rolling-year training schedule rather than an annual hire-date renewal process. This approach can streamline tracking, reduce administrative burdens, and ensure consistent compliance by aligning training requirements with a standard cycle applicable to all employees.
(2025-011) Title: Internal control over SNAP eligibility determinations and benefit calculations needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster Assistance Listing Number: 10.551, 10.561 Federal Award Identification Number: See E-65 to E-66 Compliance Area: Allowable costs/cost principles Eligibility Special tests and provisions Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: ALN 10.551 $47,493 Likely Questioned Costs: Undeterminable; incorrectly calculated Supplemental Nutrition Assistance Program (SNAP) benefits may result in overpayments or underpayments to clients. Due to the unique circumstances of each case, a projection of questioned costs cannot be reasonably estimated. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 272.10; 7 CFR 273.2 and .12 The Department must establish, document, and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. All State agencies must sufficiently automate their SNAP operations and computerize their systems for obtaining, maintaining, utilizing and transmitting information concerning SNAP. State agencies shall verify information such as residency, identity, disability, and household composition. Changes reported during the certification period are subject to the same verification procedures as applied at initial certification, except that the State agency shall not verify changes in income less than $50 or actual medical or utility expenses less than $25, unless the information is incomplete, inaccurate, inconsistent, or outdated. The State agency shall take prompt action on all changes to determine if the change affects the household’s eligibility or allotment. Condition: SNAP is administered by the Office for Family Independence (OFI) and provides monthly benefits to eligible households to purchase nutritious foods. OFI is required by Federal program regulations to utilize an automated information system for SNAP. The information system must maintain all case file information necessary to properly process eligibility determinations and benefit calculations. The Automated Client Eligibility System (ACES) is the information system used by OFI to automate SNAP operations. ACES relies on the maintenance of a complex framework of system results to make eligibility determinations and related benefit calculations. The Office of the State Auditor (OSA) tested 40 household monthly benefit payments to verify the accuracy of SNAP operations utilizing ACES, and identified: • that OFI does not require verification or investigation of information that is unclear, incomplete, inaccurate, or outdated as required by Federal requirements. A total of 32 overpayments of monthly SNAP benefits were identified, including: o 29 benefit overpayments totaling $25,800 due to manual processing errors, including: • 9 benefit overpayments totaling $5,095 to clients whose household income or expenses were not verified. • 8 benefit overpayments totaling $6,084 to clients whose household income was incorrectly calculated. • 6 benefit overpayments totaling $6,209 to clients whose information was outdated but was not further investigated for verification. 1 of the 6 clients disclosed new living arrangements; however, documentation from 2014 was not updated. • 5 benefit overpayments totaling $6,656 to clients whose household composition was not verified. • 1 benefit overpayment of $1,756 to a client whose disability status, exempting the client from work requirements, was not verified. o 3 benefit overpayments due to automated processes errors in ACES, including: • 1 benefit overpayment of $442; income information was available in ACES, however, it was not utilized when the benefit amount was calculated. • 1 benefit overpayment of $292, resulting from an incorrect benefit suspension. OSA identified a material weakness/material noncompliance with questioned costs as issued in finding 25-1108-02, Internal control over automated SNAP eligibility certification periods needs improvement, for incorrect benefit suspensions. • 1 benefit overpayment of $266; the full standard utility allowance was utilized in the calculation of the monthly benefit, however, the only reported utility was a phone. ACES applied the full standard utility allowance based on a phone expense manually entered into ACES by an eligibility specialist. • 15 of the 40 clients tested whose ACES case file information did not include proper verification of identity or residency documentation, including: o 8 clients whose case file information did not include any verification of identity documentation. o 5 clients whose identification card was expired at the time it was presented and was accepted for verification by OFI. o 2 clients whose only identification was an out-of-state license or school identification card, which is not acceptable documentation to support residency. OSA utilized a risk-based approach to select 20 cases with the highest monthly benefits and selected a non-statistical random sample for the remaining 20 cases. OSA reviewed self-employment income information reported by SNAP clients in fiscal year 2025, identified 10 clients with reported losses greater than $10,000 for further review, and found the following: • 4 benefit overpayments totaling $19,462; self-employment income was incorrectly entered into ACES and did not match underlying documentation. Of the 4 clients, 1 client’s income information was from a 2021 tax return. • 1 benefit overpayment totaling $1,231; income information was calculated utilizing tax documentation that did not include all income sources. The Department does not have adequate policies and procedures in place to ensure that ACES case file modifications, whether manual or system interfaced, that result in adjustments to previously issued monthly SNAP benefits are appropriately processed. This includes a recalculation of previously issued benefits when case file modifications are processed, the establishment of corresponding overpayments or underpayments, and related follow-up actions by OFI. Context: In fiscal year 2025, the State provided approximately 169,000 SNAP clients with $355.9 million in Federal benefits. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Known questioned costs • Potential future questioned costs and disallowances • Benefits may be incorrectly calculated, resulting in households being underpaid or overpaid. • Noncompliance with Federal regulations Recommendation: We recommend that the Department implement additional policies and procedures to ensure that: • case information entered into ACES is accurate; • automated eligibility determinations and benefit calculations are processed in accordance with Federal regulations; • information that is unclear, incomplete, inaccurate, or outdated is investigated and verified with supporting documentation as required; and • recalculations of previously issued benefits and related follow-up actions occur when case file modifications are retroactive. Corrective Action Plan: See F-11 Management’s Response: The Department partially agrees with the finding. There are many instances of exceptions cited by the Office of State Auditor (OSA) in which there isn’t a specific requirement that exists or the requirement has been waived in unusual cases such as the 2 clients who could not provide proof of residency. The residency requirements state that they shall be verified “except in unusual cases like households newly arrived in a project area.” There is merit in each of the larger categories identified by OSA however, the extent of the issues is far less than those cited and many of the verification standards applied by OSA far exceed the requirements of Food and Nutrition Services (FNS). The Department agrees with the exception based on an expired certification period. Contact: Ian Yaffe, Director, OFI, DHHS, 207-592-1481 Auditor’s Concluding Remarks: The Department must comply with the following Federal requirements: • At initial certification and recertification, the State agency shall verify information that is incomplete, inaccurate, inconsistent, or outdated (7 CFR 273.2(e)(1), and 273.2(f)(8)(i)(A) and (D)), including: o residency (7 CFR 273.2(f)(1)(vi)); o identity (7 CFR 273.2(f)(1)(vii)); o disability (7 CFR 273.2(f)(1)(viii)); and o household composition (7 CFR 273.2(f)(1)(x)). • When a household reports a change in residence, the State agency must investigate and take action on potential changes in shelter costs arising from this reported change (7 CFR 273.12(c)(4)(i)). For the cases cited in the Condition, OFI could not provide documentation to support that information used to determine eligibility and benefits was verified or investigated. Therefore, OFI is not in compliance with Federal regulations. The finding remains as stated. (State Number: 25-1108-05)
(2025-012) Title: Internal control over automated SNAP eligibility certification periods needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster Assistance Listing Number: 10.551, 10.561 Federal Award Identification Number: See E-65 to E-66 Compliance Area: Allowable costs/cost principles Special tests and provisions Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: ALN 10.551 $7,658 Likely Questioned Costs: Undeterminable; incorrectly suspending Supplemental Nutrition Assistance Program (SNAP) benefits may result in overpayments and underpayments to households. Since there are known overpayments and underpayments in our sample, a projection of questioned costs cannot be reasonably estimated. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 272.10; 7 CFR 273.10 and .12 The Department must establish, document, and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. All State agencies must sufficiently automate their SNAP operations and computerize their systems for obtaining, maintaining, utilizing and transmitting information concerning SNAP, which includes automatic cutoff of participation for households which have not been recertified at the end of their certification period. SNAP households must be assigned eligibility certification periods of at least 6 months, unless the household is classified as exempt based on program regulations. The State agency must have at least 1 contact with each SNAP household every 12 months. Submission of periodic eligibility reports is required by non-exempt households. Non-exempt households that are certified for longer than 6 months must file a periodic report between 4 months and 6 months, as required by the State agency. In addition, the State agency must not require the submission of periodic reports by households certified for 12 months or less in which all adult members are elderly or have a disability and no earned income. Condition: SNAP is administered by the Office for Family Independence (OFI) and provides monthly benefits to eligible households to purchase nutritious foods. OFI is required by Federal program regulations to utilize an automated information system for SNAP. The information system must maintain all case file information necessary to properly process eligibility determinations and benefit computations. The Automated Client Eligibility System (ACES) is the information system used by OFI to automate SNAP operations. ACES relies on the maintenance of a complex framework of system rules to make eligibility determinations, including notification letters to clients when 6-month reports and 12-month redeterminations of eligibility are required. All SNAP households, except for elderly and disabled cases with no earned income, are required to submit 6-month reports. In addition, all SNAP households must undergo an annual redetermination of eligibility. Each household’s recertification requirements are indicated by date fields in the ACES case file. If a required report or redetermination is not completed by the date indicated in the applicable field, the case’s monthly SNAP benefit is automatically suspended by the system. The Office of the State Auditor (OSA) tested a sample of 40 cases automatically suspended for failure to complete a required review in fiscal year 2025 to verify the accuracy of automated SNAP operations utilizing ACES. In 11 of the 40 cases tested, OSA identified that ACES incorrectly suspended benefits, as follows: • 8 cases were overpaid SNAP benefits totaling $7,543 because benefit suspensions occurred 1 to 4 months after the 6-month reporting requirement. • 2 cases were underpaid SNAP benefits totaling $873 because benefit suspensions occurred 1 to 2 months prior to the annual redetermination requirement. • 1 case was overpaid SNAP benefits totaling $115 because benefit suspension occurred 5 months after the annual redetermination requirement. OSA selected a non-statistical random sample. Context: In fiscal year 2025, the State provided approximately 169,000 SNAP clients with $355.9 million in Federal benefits. 279 clients were automatically suspended by ACES during fiscal year 2025 due to recertification or redetermination requirements. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight • Automated SNAP eligibility system recertification and suspension criteria were not configured in accordance with Federal regulations. Effect: • Known questioned costs • Potential future questioned costs and disallowances • Noncompliance with Federal regulations • Benefits may be incorrectly suspended, resulting in households being underpaid or overpaid. Recommendation: We recommend that the Department enhance policies and procedures to ensure that automated SNAP eligibility certification periods and related ACES case file fields are properly configured to process benefits in accordance with Federal regulations. In addition, we recommend that the Department identify underpayments and/or overpayments resulting from recertification period errors and take action as warranted. Corrective Action Plan: See F-11 Management’s Response: The Department agrees with this finding. OFI has had a number of technological challenges with the automatic setting of renewal and six-month report dates related to the suspension of Medicaid renewals during the pandemic, the extension of certification periods during the unwinding period, and the application of the new passive Medicaid renewal technology. Contact: Michael E. Downs, Public Service Coordinator II – SNAP, OFI, DHHS, 207-592-4850 (State Number: 25-1108-02)
(2025-013) Title: Internal control over EBT card security needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture U.S. Department of Health and Human Services Assistance Listing Title: SNAP Cluster Summer Electronic Benefits Transfer Program for Children Temporary Assistance for Needy Families (TANF) Assistance Listing Number: 10.551, 10.561; 10.646; 93.558 Federal Award Identification Number: See E-65 to E-66 Compliance Area: Allowable costs/cost principles Special tests and provisions Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 7 CFR 274.5; 7 CFR 292.16(h)(3); National Institute of Standards and Technology (NIST) Special Publication 800 Series The Department must establish, document, and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The State is required to provide the following minimum security and control procedures for electronic benefits transfer (EBT) cards: secure storage; access limited to authorized personnel; inventory control records; and a periodic review and validation of inventory controls and records by parties not otherwise involved in maintaining control records. Issuance, inventory, reconciliation, and other accountability records must be maintained for a period of 3 years. NIST Special Publication 800 Series states that organizations: • consider the inherited risk from the use of common controls. If common controls are provided to organizations by external entities, arrangements must be made with the external/shared service providers to obtain information on the effectiveness of the deployed controls. • are responsible and accountable for information security risk incurred through the use of system services provided by external vendors. The responsibility for mitigating risks arising from the use of external information system services remains with authorizing officials. Condition: The Temporary Assistance for Needy Families (TANF) program provides cash assistance to families while they work towards becoming self-sufficient. The Supplemental Nutrition Assistance Program (SNAP) and Summer Electronic Benefits Transfer Program for Children (Summer EBT) provide benefits to eligible households to purchase nutritious foods. The programs distribute benefits through EBT cards utilizing the Electronic Payment Processing and Information Control (EPPIC) system. Review of vendor, subservice provider, and subcontractor controls The Office for Family Independence (OFI) contracts with a vendor that engages a subservice provider and a subcontractor to support EBT card services. The contract with the vendor requires annual System and Organization Controls (SOC) 1 type 2 and SOC 2 type 2 assurance testing and reporting of results of the vendor and its subservice providers. Also, since the vendor relies on a subcontractor for printing and distributing the EBT cards, OFI relies on SOC-type testing results of the subcontractor’s controls for assurance over the security of the EBT cards. The Department’s policy is to perform an annual review and document a plan to remediate deviations identified in these reports. SOC-type testing results can measure the degree to which the Department is able to rely on the suitability of the design and operating effectiveness of specific controls provided by the vendor, subservice provider, and subcontractor. OFI did not receive the required 2025 SOC 1 type 2 or SOC 2 type 2 reports from the vendor, subservice provider, or subcontractor, as follows: • Vendor – The Department did not receive SOC 1 type 2 or SOC 2 type 2 reports for the period of October 1, 2024, through June 30, 2025. • Subservice provider – The Department did not receive SOC 1 type 2 or SOC 2 type 2 reports for fiscal year 2025. • Subcontractor – The Department did not receive SOC 1 type 2 or SOC 2 type 2 reports for the period of October 1, 2024, through June 30, 2025. Additionally, documentation could not be provided to support that OFI followed up on the deviations identified in the 2024 SOC report. As a result, OFI did not have assurance over the suitability of the design and operating effectiveness over EBT card security controls with the vendor, subservice provider, or subcontractor. Department controls EBT cards are processed and distributed through the EPPIC system and then mailed to the client. EBT cards that are undeliverable are returned to the regional Department of Health and Human Services (DHHS) office, where they are then sent to the central DHHS office for processing. Upon receipt of a returned EBT card, OFI staff use the Automated Client Eligibility System (ACES) to verify a client’s personal information, determine what action to take based on case file information, and to document the action through electronic case notes. The Department has assigned responsibility for processing returned EBT cards to 3 employees. This process includes receipt of returned cards, maintenance of inventory control records including supporting documentation in ACES and EPPIC, and destruction or retransmission of the card. The Office of the State Auditor (OSA) identified that once delivered to the central office, the returned cards are placed in an open mailbox. While the mailbox is in a secure area of the facility, any employee working within this area has access to this mailbox. Furthermore, while the returned cards are being processed, they are placed in a locked closet that was previously used for storage. OSA identified that the personal identification number lock was never changed after the closet was repurposed for EBT returned card storage. Therefore, access to the returned card mailbox and storage area is not limited to the 3 employees assigned responsibility for processing returned EBT cards. In addition, the State is required to maintain accurate and complete inventory records for returned EBT cards. Returned cards must be destroyed or retransmitted, and OFI documents actions taken on tracking spreadsheets and in ACES and the EPPIC system. Quarterly, management monitors the inventory tracking spreadsheets by selecting a sample of returned EBT cards for review; however, this oversight procedure does not include a reconciliation between the number of cards returned and the number of cards entered on the tracking spreadsheets. To further evaluate this oversight procedure, OSA obtained documentation of the total number of EBT cards returned in June 2025 and compared it to the number of cards entered on the tracking spreadsheets and found that only 113 of the 1,184 returned cards had been entered on the tracking spreadsheets. OSA also identified instances where information recorded on the tracking spreadsheets was incorrect or incomplete, including invalid client identification numbers, client names that did not match the correct client identification numbers, and the name of the person who processed the returned card was not entered as required. A total of 2,383 returned SNAP and Summer EBT cards were recorded on the fiscal year 2025 inventory tracking spreadsheets. OSA tested a sample of 60 returned SNAP cards and 7 returned Summer EBT cards to verify the accuracy and completeness of the activity recorded, and identified: • 10 returned SNAP EBT cards and 1 returned Summer EBT card were recorded on the tracking spreadsheet as retransmitted to an updated address, but no documentation was maintained in ACES to support that a new address was obtained. o 1 of the 10 EBT cards returned had online purchase activity during the period that the card was in the mail, and there was no documentation in ACES to support that the Department investigated the purchase activity. • 3 returned SNAP EBT cards where processing activity was not documented in a case note. • 2 returned SNAP EBT cards were retransmitted to another DHHS office for pickup, but no documentation was maintained in ACES to support the reason. • 1 returned Summer EBT card was retransmitted to an out-of-state address, but no documentation was maintained in ACES to support that client contact was made, or that the case was referred to an eligibility specialist in accordance with DHHS’ returned mail procedures. OSA selected a non-statistical random sample. Context: In fiscal year 2025, the State provided approximately 169,000 SNAP clients and 100,000 Summer EBT clients with $355.9 million and $14.5 million in Federal benefits, respectively. According to the inventory tracking spreadsheets, the Department processed 2,383 returned SNAP and Summer EBT cards; 802 were recorded as retransmitted and 1,581 were recorded as destroyed. The total number of EBT cards returned in the mail is unknown. Cause: • The Department did not enforce contractual obligations with the vendor as they anticipate utilizing a new EBT card vendor in fiscal year 2026. • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Noncompliance with Federal regulations • Potential unauthorized use of EBT cards, which may lead to unallowable costs • Potential breach of confidential or sensitive information • Potential corrupted, lost, or inaccurate information • Potential downtime and/or extended shutdowns Recommendation: We recommend that the Department enhance and subsequently monitor policies and procedures to: • ensure the contractually required SOC-type assurance testing and reported results is obtained and reviewed timely, and document and implement effective corrective action plans, if necessary. This will provide assurance that any deviations identified in the annual SOC reports are being tracked and remediated in a timely manner. • require adequate security and oversight of returned EBT cards, including maintenance of accurate and complete inventory control records and increased physical security controls. Corrective Action Plan: See F-12 Management’s Response: The Department agrees with this finding. There were separate processes mentioned in the finding. Therefore, there will be two separate Corrective Action Plans (CAP), which will be tracked independently. The first CAP is to correct deficiencies associated to SOC reporting. The second CAP is to strengthen our internal processes regarding returned EBT cards. Contact: Ian Yaffe, Director, Office for Family Independence, DHHS, 207-592-1481 (State Number: 25-1108-01)
(2025-014) Title: Internal control over EBT reconciliation needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster Assistance Listing Number: 10.551, 10.561 Federal Award Identification Number: See E-65 to E-66 Compliance Area: Special tests and provisions Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 7 CFR 274.4; National Institute of Standards and Technology (NIST) Special Publication 800 Series The Department must establish, document, and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. State agencies shall account for the full cycle of electronic benefit transfer (EBT) issuance through a reconciliation process. The EBT system shall provide reports and documentation pertaining to, but not limited to: • reconciliation of individual household account balances against account activities on a daily basis; • reconciliation of each individual retail store’s Supplemental Nutrition Assistance Program (SNAP) transactions per point of sale (POS) terminal and in total to deposits on a daily basis; • verification of retailer’s credits against deposit information entered into the automated clearinghouse (ACH) network; and • maintenance of audit trails that document the full cycle of issuance from benefit allotment posting to the State issuance authorization file through posting to POS transactions at retailers through settlement of retailer credits. NIST Special Publication 800 Series states that organizations: • consider the inherited risk from the use of common controls. If common controls are provided to organizations by external entities, arrangements must be made with the external/shared service providers to obtain information on the effectiveness of the deployed controls. • are responsible and accountable for information security risk incurred through the use of system services provided by external vendors. The responsibility for mitigating risks arising from the use of external information system services remains with authorizing officials. Condition: SNAP provides monthly benefits to eligible households to purchase nutritious foods by distributing benefits through EBT cards utilizing the Electronic Payment Processing and Information Control (EPPIC) system. The Department must account for all issuances through a reconciliation process. The Office for Family Independence (OFI) contracts with the EBT card vendor to perform the following: • Reconciliation of individual household account balances against account activities on a daily basis • Reconciliation of each individual retail store’s SNAP transactions per POS terminal and in total to deposits on a daily basis • Verification of retailer’s credits against deposit information entered into the ACH network • Maintenance of audit trails that document the full cycle of issuance from benefit allotment posting to the State issuance authorization file through posting to POS transactions at retailers through settlement of retailer credits EBT card vendor reconciliations and maintenance of audit trails are reviewed by OFI through annual System and Organization Controls (SOC)-type assurance testing and reporting of results. However, the Office of the State Auditor identified a material weakness/material noncompliance as issued in finding 2025-013 for OFI’s lack of receipt and review of the required SOC 2 type 2 report from the vendor for the period of October 1, 2024, through June 30, 2025. OFI did not perform alternative procedures to ensure these reconciliations were performed by the vendor. As a result, OFI did not have assurance over the suitability of the design and operating effectiveness over EBT reconciliation controls with the vendor for the last nine months of fiscal year 2025. Context: In fiscal year 2025, the State provided approximately 169,000 SNAP clients with $355.9 million in Federal benefits. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight • The Department did not enforce contractual obligations with the vendor as they anticipate utilizing a new EBT card vendor in fiscal year 2026. Effect: • Noncompliance with Federal regulations • Potential inaccurate reconciliations performed by the EBT card vendor Recommendation: We recommend that the Department enhance and subsequently monitor policies and procedures to ensure adequate oversight of vendor-provided EBT reconciliations. Corrective Action Plan: See F-12 Management’s Response: The Department agrees with this finding. The Office for Family Independence has developed and will implement a corrective action plan to address the issue identified. Contact: Ian Yaffe, Director, OFI, DHHS, 207-592-1481 (State Number: 25-1108-07)
(2025-016) Title: Internal control over SNAP procurement needs improvement Prior Year Findings: None State Department: Administrative and Financial Services Health and Human Services State Bureau: Office of State Procurement Services Division of Contract Management Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster Assistance Listing Number: 10.551, 10.561 Federal Award Identification Number: See E-65 to E-66 Compliance Area: Procurement and suspension and debarment Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.317; 7 CFR 277.14; 5 MRSA 1825-B and D; Office of State Procurement Services (OSPS) policies The Department must establish, document, and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must follow the same policies and procedures it uses for procurements with non-Federal funds. 7 CFR 277.14 requires the Department to submit proposed contracts and related procurement documents to the U.S. Department of Agriculture’s Food and Nutrition Service (FNS) for preaward review and approval when the procurement is expected to exceed $10,000 and is to be awarded without competition, or only one bid or offer is received in response to solicitation. Awards shall be made to the best-value bidder, taking into consideration the best interest of the State. The requirement to competitively bid a contract may be waived if specific criteria is met, including the item or service can only be procured from one source or it is an emergency procurement. Each bid, with the name of the bidder, must be entered on record. Each record, with the successful bid indicated, must be open to public inspection after the letting of the contract. The Department must justify the selection of vendor, either through competitive or noncompetitive process, and provide a detailed explanation of cost, demonstrating how the best value for the State is ensured. The Chief Procurement Officer shall make the public aware of contracts and grants for which bids are being requested and communicate the procedure used in reviewing bids. Contracts must be submitted to OSPS at least 14 days prior to the contract start date. Condition: The Supplemental Nutrition Assistance Program (SNAP) provides monthly benefits to eligible households to purchase nutritious foods, along with funds for administration, nutrition education, and obesity prevention. SNAP is administered by the Office for Family Independence (OFI). OSPS is the central oversight agency for all State procurement. The Department of Health and Human Services (DHHS) Division of Contract Management (DCM) oversees the solicitation and contract implementation for all DHHS procurement. DCM coordinates with DHHS program personnel to evaluate and select vendors and subrecipients, determine contract terms, and provide required documentation to OSPS. OSPS is responsible for reviewing and approving Procurement Justification Forms (PJF) submitted by DCM on behalf of program personnel prior to the award of contracts. The PJF represents program personnel’s assertion that the selected procurement method is appropriate under applicable State and Federal requirements, and that required evaluation procedures have been performed. OSA tested 2 noncompetitive contracts that accounted for approximately $4.4 million of the $5.8 million in SNAP procurement-related transactions in fiscal year 2025 and found: • OFI could not provide documentation that FNS approved applicable procurement documents prior to contract award as required by 7 CFR 277.14. • PJFs were reviewed for reasonableness by DCM and OSPS, but DHHS could not provide documentation to support the assertions made by OFI were accurate. • For 1 contract, DCM provided the PJF to OSPS for their review and OSPS approved the PJF after the contract had commenced, 42 days and 66 days, respectively, after the contract start date. OSA selected a non-statistical random sample. Context: In fiscal year 2025, the Department expended $5.8 million in procurement-related transactions from SNAP administration funds of $19.5 million. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Potential questioned costs and future disallowances • Noncompliance with Federal and State procurement requirements could result in the need to void a contract or exposure to legal proceedings. Recommendation: We recommend that OSPS: • increase agency awareness of the procedures related to the timing of procurement contract documentation being submitted to OSPS for review prior to the contract start date; and • finalize and implement an updated procurement policy and procedure manual that identifies the parties responsible for key aspects of the procurement process. We also recommend that DCM and OFI develop policies and procedures and increase oversight to ensure all procurement transactions comply with Federal and State requirements, including: • Federal pre-procurement approvals are obtained before contracts are awarded, if required; • DCM obtaining and reviewing documentation to support the assertions made by OFI for accuracy and reasonableness; and • ensuring PJFs are completed, reviewed, and submitted to OSPS prior to the contract start date. Corrective Action Plan: See F-13 Management’s Response: DAFS Response: The Department agrees with this finding. OSPS does not authorize, encourage, or approve agencies allowing vendors to perform work at risk. However, OSPS also does not delay review and approval solely due to contract start-date issues, as doing so would increase the State’s risk exposure, potentially disrupt federally required programs, and hinder agencies’ compliance with federal period-of-performance requirements. To address these concerns, OSPS will formalize and issue policy guidance that clearly defines agency and OSPS roles and responsibilities in the contracting process. This guidance will expand the agency-focused section to emphasize timely submission and processing, along with the risks and implications associated with contracting delays. In advance of fiscal year-end, OSPS will issue a separate policy document and companion guidance as a spotlight topic in the monthly newsletter and posted to the intranet for agency reference. DAFS Contact: David Morris, Acting Chief Procurement Officer, OSPS, 207-624-7335 DHHS Response: The Department partially agrees with this finding. There is not a requirement to provide documentation that the Department personnel’s assertions are accurate regarding Department personnel’s review of PJFs. The Department agrees that it can improve the timing of procurement documents in relation to the start dates of the contracts. Extenuating circumstances exist periodically that prevent the timeliness of these documents. In some cases, there are delays in the grant approval at the Federal level. Delays in Legislative approval of budgets can also lead to procurement documentation delays. DHHS Contact: Jim Lopatosky, Director, Division of Contract Management, DHHS, 207-287-5075 Auditor’s Concluding Remarks: 2 CFR 200.303 requires the Department to establish, document, and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Absent adequate documentation to support the veracity of the assertions made on the PJF by program personnel, the best value for the State cannot be ensured. The finding remains as stated. (State Number: 25-1108-06)
(2025-015) Title: Internal control over SNAP deceased client cases needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster Assistance Listing Number: 10.551, 10.561 Federal Award Identification Number: See E-65 to E-66 Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 272.8 and .14 The Department must establish, document, and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. State agency action on information items about recipient households shall include review of information and comparison of it to case record information. State agencies must initiate and pursue actions on recipient households within 45 days of the receipt of the information items. States shall establish a system to verify and ensure that benefits are not issued to individuals who are deceased. Condition: The Office for Family Independence (OFI) manages the Automated Client Eligibility System (ACES) used to determine eligibility for Federal assistance programs, including the Supplemental Nutrition Assistance Program (SNAP). Information maintained in ACES is relied upon by OFI for determining monthly SNAP benefits issued to client Electronic Benefit Transaction (EBT) cards. OFI relies on numerous data sources for identifying and providing client date of death (DOD) information for input into ACES, including monthly data exchanges with the Maine Center for Disease Control & Prevention’s (MeCDC) Vital Records, which includes Social Security Administration data. Federal program regulations require OFI to act on client cases within 45 days of receipt of DOD information. This includes review and comparison of DOD information to ACES case file information, and suspension of program participation and related benefits as warranted. OFI policies for SNAP require deactivation of the client’s EBT card as well as expungement of authorized benefits from the EBT card. If activity occurs on the client’s EBT card subsequent to the DOD, the case must be reported as potential fraud and referred for investigation. The Office of the State Auditor (OSA) obtained DOD information from MeCDC Vital Records and compared it to clients who received SNAP benefits during fiscal year 2025. OSA identified 29 cases where SNAP benefits were issued more than 75 days following the client’s DOD; this benchmark was applied to denote the 45-day Federal program regulation related to monthly receipt of DOD information. OSA tested all 29 cases and identified the following: • Single-member household clients should not have EBT card purchase activity after DOD; however, 7 single-member household clients had $4,335 in total EBT card purchase activity after DOD that occurred in fiscal year 2025: o 6 clients were identified as potential fraud in the ACES case file between 3 and 6 months after the DOD information was received by MeCDC Vital Records. o 1 client’s DOD was not properly recorded in ACES until 11 months after the DOD information was received by MeCDC Vital Records. OFI recorded an incorrect DOD in ACES and did not identify EBT purchase activity after the DOD as potential fraud until OSA notified OFI. • 1 client’s DOD was not recorded in ACES until the client’s family informed OFI of the client’s death 268 days after the DOD information was received by MeCDC Vital Records. As a result, SNAP benefits were calculated based on incorrect income and household composition information, resulting in an overpayment of $2,359. • 14 single-member household clients had benefits loaded to their cards more than 75 days after DOD information was received by MeCDC Vital Records. Of those 14 clients: o 11 clients’ cases remained open 77 to 305 days after DOD information was received by MeCDC Vital Records, resulting in 2 to 11 months of unauthorized SNAP benefit issuances. Of these 11 clients, 5 clients’ benefits were not expunged upon receipt of DOD information as required by OFI policies; benefits remained open and available for spending up to 274 days after the last issuance when they were expunged by the system-automated process based on inactivity. o 2 clients were not identified as deceased by OFI until OSA notified OFI. As of June 30, 2025, MeCDC Vital Records received DOD information 644 days and 587 days prior, respectively; benefits were expunged by the system-automated process based on inactivity after 274 days. o 1 client was not identified as deceased by OFI until July 2025. As of June 30, 2025, DOD information was on file for 196 days. Context: In fiscal year 2025, the State provided approximately 169,000 SNAP clients with $355.9 million in Federal benefits. Of the 169,000 SNAP clients, 1,970 had a DOD in fiscal year 2025. Cause: • Monthly data exchanges with MeCDC Vital Records did not alert OFI of DOD information in 27 of the 29 cases tested. • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Benefits issued to deceased clients may result in unauthorized EBT card purchase activity. • Potential future questioned costs and disallowances • Noncompliance with Federal regulations Recommendation: We recommend that the Department enhance policies and procedures to ensure that DOD information is received, reviewed, and updated in ACES on a more frequent basis to prevent unauthorized SNAP benefit issuances and EBT card purchase activity. In addition, we recommend that the Department review all client cases noted in the Condition of this finding to ensure that: • ACES case file DOD information is accurate, including verifying that all DOD information is received timely from MeCDC Vital Records; • SNAP benefits are expunged and EBT cards are deactivated in accordance with existing policies; • cases are identified as potential fraud and referred for investigation as warranted; and • unallowable costs are identified and reported to Federal oversight agencies and required recoupment activities are pursued. Corrective Action Plan: See F-12 Management’s Response: The Department agrees with this finding. The data matching failed because there were inconsistencies in the data between the two systems, specifically in the spelling of names. The Department acted timely on all deaths that were reported correctly. Contact: Michael E. Downs, Public Service Coordinator II – SNAP, DHHS, 207-592-4850 (State Number: 25-1108-03)
(2025-017) Title: Internal control over SNAP subrecipient monitoring procedures needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster Assistance Listing Number: 10.551, 10.561 Federal Award Identification Number: See E-65 to E-66 Compliance Area: Subrecipient monitoring Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.332 The Department must establish, document, and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must: • ensure that every subaward is clearly identified to the subrecipient as a subaward and includes specific information. • evaluate each subrecipient’s risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring procedures. Condition: The Supplemental Nutrition Assistance Program (SNAP) is administered by the Office for Family Independence (OFI). In addition to providing monthly benefits to eligible households to purchase nutritious foods, SNAP has administrative funding that may be used to educate the public on nutrition and to assist SNAP clients in gaining the skills, training, and work experience needed to build a career and achieve long-term stability. The Office of the State Auditor (OSA) tested all 7 contracts with 4 SNAP subrecipients for compliance with: • award identification requirements, and found: o 6 contracts did not include Federal award identification numbers; and o 1 contract did not include the Assistance Listing title and number. • subrecipient risk evaluation procedures. OFI provided evidence to support that subrecipient monitoring procedures were performed; however, documentation that risk evaluation procedures performed corresponded to the appropriate level of monitoring activities could not be provided. Context: In fiscal year 2025, OFI provided $5.1 million from a total of $19.7 million in SNAP administrative funds to SNAP subrecipients. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Noncompliance with Federal regulations • Subrecipients that are deemed higher risk may not be monitored on a more frequent basis. Conversely, subrecipients that are deemed lower risk may not be monitored on a less frequent basis, which would free resources and time to dedicate towards other higher risk subrecipients. Recommendation: We recommend that the Department implement policies and procedures to: • ensure that all required information is included in contracts and contract amendments. This will ensure compliance with Federal requirements. • require evaluation of each subrecipient’s risk of noncompliance specifically for the purpose of determining the appropriate subrecipient monitoring to be performed. This will ensure subrecipients are monitored appropriately based on risk designation. Corrective Action Plan: See F-13 Management’s Response: The Department partially agrees with the finding. We acknowledge six of the contracts did not include the Federal award identification number, and that one contract did not include the assistance listing title and number. The Department disagrees that we do not have adequate subrecipient risk evaluation procedures. The Department evaluates risk on its subrecipients for the purposes of determining the appropriate subrecipient monitoring in multiple ways. The first assessment of risk is when a subaward is competitively bid. The second assessment of risk is built into the Maine Uniform Accounting and Auditing Practices for Community Agencies (MAAP) in which higher risk subrecipients undergo a higher level of testing by Independent Public Accountants. Finally, the Social Service Unit of the Division of Audit performs a risk assessment and tests transactions for those subrecipients that have been determined to be higher risk. Contact: Patricia Dushuttle, Special Projects Manager- SNAP, DHHS, 207-215-0995 Auditor’s Concluding Remarks: 2 CFR 200.332(b) states that the Department must evaluate each subrecipient’s risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring. The Department has indicated in Management’s Response that the criteria set forth in 2 CFR 200.332(b) have been met; however, the following rebuttals illustrate that the Department is not in compliance with Federal requirements: • The Department identifies the first assessment of risk: when a subaward is competitively bid. o While OSA acknowledges this does occur, 6 of the 7 subawards tested were not competitively bid. o The level of subrecipient monitoring that the Department performs is based on the services provided, not on specific subrecipients, as required. • The Department identifies the second assessment of risk: built into MAAP in which higher risk subrecipients undergo a higher level of testing by independent public accountants. o A subrecipient deemed higher risk as the result of a risk evaluation in accordance with 2 CFR 200.332 may not be deemed higher risk in accordance with MAAP standards. • The Department identifies the third assessment of risk: the Social Service Unit of the Division of Audit (DOA) performs a risk assessment and tests transactions for those subrecipients that have been determined to be higher risk. o The Department did not provide documentation to demonstrate that subrecipient monitoring procedures are performed by program personnel as a result of a risk evaluation conducted by DOA. The Department’s existing policies and procedures do not require nor provide support for the evaluation of each subrecipient’s risk of noncompliance specifically for the purpose of determining the appropriate subrecipient monitoring to be performed. The finding remains as stated. (State Number: 25-1108-04)
(2025-018) Title: Internal control over CNC eligibility needs improvement Prior Year Findings: See Schedule of findings and Questioned Costs for chart/table State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: See E-65 to E-66 Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: ALN 10.555 $73,683 ALN 10.559 $226,773 Likely Questioned Costs: Undeterminable; erroneous eligibility determinations do not always result in overpayments of Federal program funds; therefore, an error rate cannot be applied to the population and a projection of questioned costs cannot be reasonably estimated. Criteria: 2 CFR 200.303; 7 CFR 210.7 and .9; 7 CFR 225.6, .14, and .16; 7 CFR 245.12 The Department must establish, document, and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. 7 CFR 210 outlines the application requirements for participation in the National School Lunch Program (NSLP) and specifies that applications shall provide the State agency with sufficient information to determine eligibility. 7 CFR 225 requirements for the Summer Food Service Program (SFSP) include: • the type of information that must be required in sponsor applications for participation; • sites that serve an area in which poor economic conditions exist or are approved for reimbursement only for free meals served to enrolled children who meet the program’s income standards; • the proposed site is not or will not be served in whole or in part by another site; • State agency requirements related to the approval of applications and determinations of eligibility; • the process and requirements for claims for reimbursement (CFRs); and • performance standards for financial viability, administrative capability, and program accountability. 7 CFR 245 describes the action taken by State agencies related to the eligibility determination of individuals and special eligibility determinations of schools including Provision II and Community Eligible Provision schools. These regulations outline how the School Food Authority (SFA) and State agency should collect and report eligibility information in the schools, and how that information should be used in establishing rates and percentages in CFRs. Condition: The Child Nutrition Cluster (CNC) includes the School Breakfast Program, NSLP, Special Milk Program for Children, SFSP, and the Fresh Fruit and Vegetable Program. The objectives of the programs are to provide nutritious meals to eligible children in schools and summer food programs; to foster healthy eating habits by providing fresh fruits and vegetables to children attending elementary schools; and to encourage the consumption of nutritious agriculture commodities. The Department of Education (DOE) is responsible for the administration of CNC programs for the State. DOE provides benefits to each SFA or sponsor on a reimbursement basis. SFAs and sponsors must submit electronic applications for participation in CNC programs and DOE is required to review every application and site information sheet to ensure that only eligible SFAs or sponsors participate in the programs. The Office of the State Auditor (OSA) tested 47 SFA and sponsor applications and found instances that did not align with program regulations, as follows: • 9 applications were approved with sites that did not meet the eligibility criteria, as follows: o 5 sponsors with sites classified as camps and also designated as open sites. This allowed the camp to use area eligibility determination, rather than individual child eligibility as required for camps, resulting in questioned costs totaling $180,788. o 1 sponsor of a camp used projected enrollment numbers on their application and did not provide the actual number of eligible children for each session at the site prior to submitting claims, resulting in questioned costs totaling $26,381. o 1 sponsor was erroneously approved as a non-congregate site without required supporting documentation. In addition, incorrect census data was used to demonstrate eligibility, resulting in questioned costs totaling $73,683. o 1 sponsor site was erroneously classified as a school; however, supporting documentation within the application indicated that the correct site classification was a non-residential day camp. o 1 sponsor without a designated site classification used special eligibility certification rather than area eligibility determination; OSA determined that the site was eligible based on other information in the application. • 1 application’s financial viability calculation did not meet program requirements, as reported expenses exceeded reported revenue and budget revisions were not made prior to approval of the program by DOE, resulting in questioned costs totaling $1,350. • 1 application was missing a required policy statement, resulting in questioned costs totaling $18,254. OSA selected a non-statistical random sample. Context: In fiscal year 2025, CNC program expenditures totaled $71.3 million, including $58.5 million for NLSP and $2.8 million for SFSP in SFA and sponsor reimbursements. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • CNC program participation by ineligible SFAs or sponsors • Known questioned costs • Potential future questioned costs and disallowances • Noncompliance with Federal regulations Recommendation: We recommend that the Department enhance policies and procedures and increase oversight to ensure that: • all required documentation for applications is complete and in compliance with program requirements prior to participation in CNC programs; • eligibility determinations and resulting site classifications are properly supported; and • appropriate eligibility information is collected and reviewed prior to SFA and sponsor claim payments. Corrective Action Plan: See F-14 Management’s Response: The Department partially agrees with this finding. The exceptions referenced in this finding are from the program FY23 audit. All identified exceptions have been addressed in the 2025 program year and the upcoming 2026 program year. The SUN Meals (SFSP) application packet is updated continually to reflect evolving federal program requirements. In recent years, significant federal changes have required substantial updates to application processes, data collection, and training for program operators. Requests for system updates are submitted to the Child Nutrition software developer to ensure continued alignment with federal guidelines. Child Nutrition with the supporting documents provided by the Northeast Regional Office of the USDA, disagrees with the exception addressing the “camp” definition in this finding. The application review process is administered by 1.5 FTE State Agency staff, who review over 1,000 documents within a 6–8 week timeframe, while also providing training and technical assistance to sponsors. Despite these constraints and ongoing federal program changes, staff manage the application process with only limited and isolated incidents. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 Auditor’s Concluding Remarks: Management’s Response stating “the exceptions referenced in this finding are from the program FY23 audit” is incorrect. All exceptions identified relate to SFA and sponsor applications active during fiscal year 2025. OSA is not defining site classification nor taking exception to DOE’s “camp” definition. The exceptions identified are approved camp site sponsors that do not conform to the required eligibility criteria for camps. The exceptions noted were not limited or isolated, as 11 out of 47 SFA and sponsor applications tested did not align with Federal program requirements for eligibility. This results in an error rate of 23.4 percent. The finding remains as stated. (State Number: 25-1203-01)
(2025-019) Title: Internal control over CNC claim reimbursements needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: See E-65 to E-66 Compliance Area: Allowable costs/cost principles Reporting Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: ALN 10.559 $61,336 ALN 10.582 $12,215 Likely Questioned Costs: Undeterminable; due to the variety of exceptions in the test population, an error rate cannot be applied to the population, and a projection of questioned costs cannot be reasonably estimated. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 210.7 and .8; 7 CFR 225.6, .9, and .16; Richard B. Russell National School Lunch Act (NSLA), Section 19 The Department must establish, document, and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. 7 CFR 210.7 and .8 for the National School Lunch Program (NSLP) require: • claims for reimbursement (CFRs) to be based on lunch counts taken daily at the point of service, which correctly identify the number of free, reduced price, and paid lunches served to eligible children. • the Department to compare, on a monthly basis, the number of free and reduced price lunches claimed to the number of children approved for free and reduced price lunches enrolled in the School Food Authority (SFA) for the month of October and multiply that number by the days of operation and the attendance factor employed by the SFA. At its discretion, the Department may conduct this comparison against data which reflects the number of children approved for free and reduced price lunches for a more current month(s). 7 CFR 225 for the Summer Food Service Program (SFSP) requires: • information that must be on a site information sheet provided by the sponsor for approval by the Department prior to participation in SFSP, including estimated meal counts, types of meals, meal service times, and procedures to ensure duplicate meals are not distributed at non-congregate sites. In order to approve a site, the area where the site proposes to serve is not or will not be served in whole or in part by another site. • payments to a sponsor must equal the amount derived by multiplying the number of eligible meals, by type, actually served under the sponsor’s program to eligible children by the current applicable reimbursement rate for each meal type. Sponsors must be eligible to receive additional reimbursement for each meal served to participating children at rural or self-preparation sites. Section 19 of the Richard B. Russell NSLA states that the per-pupil grant provided to a school under the Fresh Fruit and Vegetable Program (FFVP) shall be not less than $50, nor more than $75. Condition: The Child Nutrition Cluster (CNC) includes the School Breakfast Program, NSLP, Special Milk Program for Children, SFSP, and FFVP. The objectives of the programs are to provide nutritious meals to eligible children in schools and summer food programs; to foster healthy eating habits by providing fresh fruits and vegetables to children attending elementary schools; and to encourage the consumption of nutritious agriculture commodities. The Department of Education (DOE) is responsible for the administration of CNC programs for the State. DOE provides benefits to each SFA or sponsor on a reimbursement basis. SFAs and sponsors must submit CFRs based on actual meals served for the month utilizing the Child Nutrition Program (CNPWeb) system. Claims pass through a system of edit checks built into the CNPWeb system, are automatically approved after those edit checks, and are processed based on rates programmed in the system. DOE does not verify the allowability or accuracy of monthly CFRs prior to payment, and edit checks built into the CNPWeb system are not routinely monitored. There are no monthly procedures in place that operate as controls over the allowability of claims. As a result, DOE has no assurance that SFA and sponsor monthly claim submissions are accurate or complete, or that the resulting CFR is allowable prior to payment. For SFSP, DOE requires applications from sponsors that include individual site sheets. The information on the sheet must include the estimated number of meals, types of meals to be served, and meal service times. Non-congregate sites must provide enough detail to ensure the area where the site proposes to serve meets certain criteria, including verification that the site is rural; is not or will not be served in whole or in part by another site; serves an area in which poor economic conditions exist or is approved for reimbursement only for free meals served to enrolled children who meet income standards; and has procedures to ensure that duplicate meals are not served to any child. Residential and non-residential camps must include in their site sheets the number of children enrolled in each session who meet income standards prior to filing the camp’s CFR for each session. The Office of the State Auditor (OSA) tested 44 SFSP CFRs and found: • 4 residential or non-residential camp CFRs that did not include the number of children enrolled in each session who met income standards prior to filing their CFR, resulting in questioned costs totaling $31,647. Additionally, of these 4 CFRs: o 2 were missing non-congregate site plan attestations; and o 1 did not include a site classification type on its site sheet, which determines the appropriate reimbursement rate. • 1 CFR to a non-congregate site that did not have documented procedures to prevent duplicate meal service on the site sheet and had census data contained within the non-congregate plan that did not match U.S. Census Bureau data, resulting in questioned costs totaling $29,689. OSA selected a non-statistical random sample. Furthermore, for each month of operation, DOE must report the number of meals served by meal type and sponsor type to the United States Department of Agriculture’s Food Nutrition Services (FNS) on the FNS-418 report. DOE does not have assurance that the CNPWeb system’s default classification of urban sites as self-prep when the field is left blank results in accurate FNS-418 reporting. DOE initiated a request to the CNPWeb system vendor to correct this system error in April 2025; however, the issue persisted for the entirety of fiscal year 2025. For FFVP, allocations made by DOE must result in a per-pupil grant not less than $50 nor more than $75 to participating SFAs and sponsors. OSA tested 18 SFAs and sponsors that participated in FFVP in fiscal year 2025 and found that 11 SFAs and sponsors had per-pupil allocations that were not between $50 and $75 per pupil, ranging from $15 per pupil to $104 per pupil. The allocation of funds over $75 per pupil resulted in questioned costs of $12,215. OSA selected a non-statistical random sample. Context: In fiscal year 2025, DOE processed SFA and sponsor CFRs totaling: • $58.5 million under NSLP; • $2.8 million under SFSP; and • $2.7 million under FFVP. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Noncompliance with Federal regulations • Known questioned costs • Potential future questioned costs and disallowances • Potential incorrect rates of reimbursement paid to SFAs and sponsors • Inaccurate FNS-418 reports submitted to FNS Recommendation: We recommend that the Department enhance policies and procedures and increase oversight to: • review CFRs on a monthly basis to provide assurance that SFA and sponsor payments are accurate and complete; • ensure all required information is included in SFA and sponsor applications and CFR submissions prior to payment, including site classification types and non-congregate plan information on site information sheets; and • ensure FFVP per pupil allocation amounts comply with Federal regulations. Corrective Action Plan: See F-14 Management’s Response: The Department agrees with this finding. The exceptions referenced in this finding are from the program FY23 audit. All identified exceptions have been addressed in the 2025 program year and the upcoming 2026 program year with the strengthening of program software and provided training to the program sponsors. During program years 2020–2023, the Summer Food Service Program (SFSP) operated under emergency authorities in response to COVID-19, during which the USDA implemented numerous program flexibilities and temporarily waived certain regulatory requirements. In subsequent years, many of these flexibilities continued but were reintroduced with additional regulatory requirements, expanded data collection, and ongoing updates to program guidance. As a result, program regulations and administrative requirements have evolved rapidly, with federal guidance frequently being released throughout the program year. The Child Nutrition team has worked to remain current with these evolving requirements and implement updates as changes occur. In some instances, updated regulations or federal guidance are issued after the program year has begun, which can result in necessary system changes or corrections to the Child Nutrition software system being implemented after the operating period has already started. At the request of School Administrative Units, Child Nutrition re-allocated funds for the FFVP from schools with unexpended balances, to schools requesting additional funds. A procedure has been implemented for SFY 2026 to ensure school allocations remain within the $50-75/student allocation range. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 Auditor’s Concluding Remarks: Management’s Response stating “the exceptions referenced in this finding are from the program FY23 audit” is incorrect. All exceptions identified relate to payments made to SFAs and sponsors and Federal reporting submissions during fiscal year 2025. The finding remains as stated. (State Number: 25-1203-02)
(2025-020) Title: Internal control over CNC subrecipient monitoring procedures needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: See E-65 to E-66 Compliance Area: Subrecipient monitoring Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.332; 7 CFR 210.18; 7 CFR 225.7; U.S. Department of Agriculture Policy Memo SP 46-2015 The Department must establish, document, and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must 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. The Department must conduct administrative reviews of School Food Authorities (SFAs) participating in the National School Lunch Program (NSLP) and the School Breakfast Program (SBP). These procedures must also be followed, as applicable, to conduct administrative reviews of the Special Milk Program (SMP) and the Fresh Fruit and Vegetable Program (FFVP). Documented corrective action is required for any degree of violation of general or critical areas identified in an administrative review. Corrective action may be provided at the time of the review; however, it must be postmarked or submitted electronically to the State agency no later than 30 days from the deadline for completion of each required corrective action. The State agency must maintain any documented corrective action on file for review by the Food and Nutrition Service (FNS). The Department must withhold all program payments to an SFA if: • documented corrective action for critical area violations is not provided with deadlines specified; or • corrective action for critical area violations was not completed. FNS may suspend or withhold program payments, in whole or in part, to those states failing to withhold payments in accordance with regulations and may withhold administrative funds. The Department must review sponsors to ensure compliance with Summer Food Service Program (SFSP) regulations. The Department is required to conduct a review of base year certification and benefit issuance documentation for any SFA requesting approval to participate in NSLP or SBP using U.S. Department of Agriculture (USDA) Special Provision 2, which is a provision established to reduce application burdens and simplify claim procedures. The review must occur at some point during the base year. If errors are identified as a result of the review, the Department must adjust all of the SFA’s closed claims that occurred in the current school year. Condition: The Child Nutrition Cluster (CNC) includes the NSLP, SBP, SMP, SFSP, and FFVP. The objectives of the programs are to provide nutritious meals to eligible children in schools and summer food programs; to foster healthy eating habits by providing fresh fruits and vegetables to children attending elementary schools; and to encourage the consumption of nutritious agriculture commodities. The Department of Education (DOE) is responsible for the administration of CNC programs for the State. DOE partners with local SFAs and sponsors to provide benefits to school-aged children. DOE has assigned subrecipient monitoring responsibilities, which include administrative reviews and other reviews as needed, to the Child Nutrition Services (CNS) division. Administrative reviews of all SFAs and sponsors are required at least once every 5 years; however, regulations also specify that high-risk SFAs and sponsors must receive targeted follow-up within 2 years. CNS utilizes a spreadsheet to track and facilitate the reviews, and a USDA questionnaire and information within the Child Nutrition Program (CNPWeb) system to document the completion of the review and related corrective action. CNS does not have a mechanism to centrally track the high-risk SFAs and sponsors to ensure follow-up occurs. CNS is required to retain documentation to support all elements of the administrative reviews and to demonstrate SFA and sponsor compliance with the program, even if corrective action occurs onsite during the review. The Office of the State Auditor (OSA) tested 16 administrative reviews completed by CNS and found: • Performance Standard 1 findings, deemed critical findings by USDA, were identified in 1 NSLP review, but required follow up fiscal action was not properly tracked. • Performance Standard 2 findings, also deemed critical by USDA, were identified in 3 reviews, but follow up corrective actions were not properly tracked, received, and/or approved. In addition, corrective action was not provided within 30 days for 2 of the 3 reviews. • corrective action for 3 reviews required fiscal action; 2 reviews indicated a reduction of a future claim would be processed, and 1 review indicated a check for repayment to the State would be received. Documentation in the CNPWeb system: o was not available to support that 2 required fiscal actions were taken, and o conflicted with the tracking spreadsheet for 1 fiscal action. • corrective action responses were missing for 4 reviews, 1 of which was marked as approved by CNS. • corrective action responses submitted by 2 SFAs were missing CNS approval information, but the reviews were marked as closed. • corrective action responses submitted by 3 SFAs were missing SFA contact information and submission dates. • the date for required corrective action to be provided was omitted for 4 reviews. • corrective action for 1 review was received late. • USDA questionnaire sections related to SFSP procurement were erroneously excluded for 4 reviews. • USDA questionnaires were not fully completed for 2 reviews. • the review tracking spreadsheet was not fully completed or conflicted with information obtained from the administrative review for 10 reviews. • the SFSP administrative review tracking spreadsheet was not designed to properly track corrective action, related due dates, and CNS review and approval dates; this was noted in all 8 SFSP administrative reviews tested. CNS updated the design of the tracking spreadsheet in fiscal year 2025 to ensure this information is properly tracked. OSA selected a non-statistical random sample. In addition to administrative reviews, CNS must perform base year reviews for all SFAs and sponsors that have applied to participate in USDA Special Provision 2. These base year reviews provide the required information necessary to determine the level of claims the SFA or sponsor may submit in the subsequent 3 years. In fiscal year 2025, CNS identified 4 SFAs that required a base year review, 2 of which were completed alongside the SFA’s administrative review. OSA tested the remaining 2 base year reviews and identified that neither review was completed by CNS as required. OSA cannot determine if unallowable costs exist through the audit of subrecipient monitoring activities, as required information was not collected through OSA’s subrecipient monitoring testing procedures; however, OSA reported questioned costs in the audit of allowable costs/cost principles and eligibility. See findings 2025-019 Internal control over CNC claim reimbursements needs improvement and 2025-020 Internal control over CNC eligibility needs improvement, respectively. Context: In fiscal year 2025, the Department provided 241 subrecipients with $70.7 million in CNC program funds, which represents 99 percent of CNC programs’ $71.3 million total expenditures. Cause: • Lack of supervisory oversight • Lack of adequate policies and procedures Effect: • Noncompliance with Federal regulations • Subrecipients may not be complying with Federal statutes, regulations, or the terms and conditions of the subaward. • Base year reviews provide authorization for the level of allowable claims an SFA or sponsor can claim in subsequent periods; if a base year review is not completed and participation in USDA Special Provision 2 continues, SFAs and sponsors could be underclaiming or overclaiming costs. • Potential questioned costs and disallowances Recommendation: We recommend that the Department enhance policies and procedures and increase oversight to ensure that: • reviews are completed as required and supporting documentation is retained; • required corrective and fiscal actions are implemented, reviewed, and completed; and • high-risk SFAs and sponsors are tracked and considered in planning follow-up reviews. Corrective Action Plan: See F-15 Management’s Response: The Department partially agrees with this finding. Regulatory requirements for the administrative review process including corrective and fiscal action were met. Staff will receive training on tracking sheet completion and additional internal control measures that document requirements were met. The 2026 SFSP tracker has been updated to clarify the date of corrective action and now reads “Corrective Action Received Date”. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 Auditor’s Concluding Remarks: The exceptions noted in the finding outline instances where documentation in support of the administrative review process, including required corrective action by subrecipients, could not be provided or was incomplete. The Department’s existing policies and procedures do not provide assurance that administrative reviews are monitored, completed, documented, and considered in subsequent reviews as required by Federal program regulations. The finding remains as stated.
(2025-021) Title: Internal control over CNC special reporting needs improvement Prior Year Findings: None State Department: Education State Bureau: Commissioner’s Office Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: See E-65 to E-66 Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 170 The Department must establish, document, and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Agencies must report each subaward that equals or exceeds the first-tier subaward threshold of $30,000 in Federal funds in the public-facing Federal Funding Accountability and Transparency Act (FFATA) System for Award Management (SAM). Condition: The Child Nutrition Cluster (CNC) includes the School Breakfast Program, National School Lunch Program, Special Milk Program for Children, Summer Food Service Program, and the Fresh Fruit and Vegetable Program. The objectives of the programs are to provide nutritious meals to eligible children in schools and summer food programs; to foster healthy eating habits by providing fresh fruits and vegetables to children attending elementary schools; and to encourage the consumption of nutritious agriculture commodities. The Department of Education (DOE) is responsible for the administration of CNC programs for the State and provides subawards to eligible School Food Authorities and sponsors. When an amount exceeding the first-tier subaward threshold is awarded to a CNC subrecipient, DOE must collect and enter data into SAM. Documentation could not be provided to demonstrate that subaward information or amounts were reviewed or approved prior to being reported to the Federal government. Additionally, the Office of the State Auditor (OSA) tested 23 CNC program subawards totaling $6,124,073 that exceeded the first-tier subaward threshold. Federal regulations require the following information for identified noncompliance to be included in FFATA findings: • 11 subawards totaling $1,039,361 were not reported; • 6 subawards totaling $1,147,396 were not reported timely; • 6 subaward amounts were reported incorrectly; and • 4 subawards reported incorrect key data elements. OSA selected a non-statistical random sample. Context: In fiscal year 2025, the Department was required to report 185 first-tier subawards totaling $60.9 million under CNC programs. First-tier subawards account for 85 percent of CNC programs’ fiscal year 2025 expenditures totaling $71.3 million. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Noncompliance with Federal regulations • Accurate first-tier subaward information for CNC programs was not reported to the Federal government timely and included inaccurate or incomplete information. This information may be used for programmatic, policy, or statistical purposes. Recommendation: We recommend that the Department enhance policies and procedures and increase oversight to ensure that first-tier subawards are reported accurately, timely, and in accordance with Federal regulations. Corrective Action Plan: See F-15 Management’s Response: The Department agrees with this finding. Regular monthly reporting was disrupted mid-year on March 8, 2025, due to a change in federal reporting systems. Due to the volume of monthly reportable items, the department was unable to manually input this data until a batch upload option was available. Reporting was brought up to date by August 2025. Contact: Nicole Denis, Director of Finance, DOE, 207-530-2161 (State Number: 25-1203-05)
(2025-022) Title: Internal control over CNC donated food inventory needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: See E-65 to E-66 Compliance Area: Special tests and provisions Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 7 CFR 250.12 and .19 The Department must establish, document, and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. On an annual basis, the distributing agency must conduct a physical review of donated food inventories at all storage facilities used by the distributing agency and must reconcile physical and book inventories of donated foods. The distributing agency must ensure that a separate inventory record of donated foods is maintained. The distributing agency’s system of inventory management must ensure that donated foods are distributed in a timely manner and in optimal condition. Condition: The Child Nutrition Cluster includes the School Breakfast Program, National School Lunch Program (NSLP), Special Milk Program for Children, Summer Food Service Program (SFSP), and the Fresh Fruits and Vegetable Program. The objectives of the programs are to provide nutritious meals to eligible children in schools and summer food programs; to foster healthy eating habits by providing fresh fruits and vegetables to children attending elementary schools; and to encourage the consumption of nutritious agriculture commodities. The Department receives donated foods from the U.S. Department of Agriculture (USDA) for distribution to School Food Authorities (SFAs) and sponsors participating in the NSLP or the SFSP. The donated food inventory is managed by a vendor and tracked by the Department using the Child Nutrition Program (CNPWeb) system. In March 2024, the Department identified that the CNPWeb system was not functioning correctly and SFA and sponsor order quantities were duplicated, resulting in inaccurate inventory tracking. The Department remediated the system error in October 2024. The Office of the State Auditor (OSA) tested 9 donated food products to ensure proper tracking by the Department. OSA reviewed the USDA food requests, inventory receipts, and distributions made to SFAs and sponsors to verify that the documentation corresponded to information in the inventory system and physical inventory counts. OSA found 5 instances where records did not agree, including: • 4 food products where the physical inventory count indicated 2 cases fewer than OSA calculated and system inventory records, as follows: o The physical inventory totaled 887 cases; OSA calculated and system inventory records totaled 889 cases. o The physical inventory totaled 326 cases; OSA calculated and system inventory records totaled 328 cases. o The physical inventory totaled 489 cases; OSA calculated and system inventory records totaled 491 cases. o The physical inventory totaled 1380 cases; OSA calculated and system inventory records totaled 1382 cases. • 1 food product where the physical inventory totaled 232 cases; OSA calculated and system inventory records totaled 233 cases. Upon further review, the Department documented the discrepancies on monthly tracking sheets as damaged cases; however, a reconciliation of system records was not completed throughout the year to account for such activity. The Department does not have controls in place to ensure that CNPWeb system inventory tracking is accurate and complete. OSA selected a non-statistical random sample. Context: In fiscal year 2025, the Department distributed 45 USDA donated food products valued at $9.2 million to SFAs and sponsors. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Potential inaccurate reporting of noncash Federal awards on the Schedule of Expenditures of Federal Awards • Theft, loss, or damage of inventory may go undetected. Recommendation: We recommend that the Department enhance policies and procedures and increase oversight to ensure that: • system inventory records are regularly reconciled to physical inventory counts; • justification of inventory discrepancies is documented in the CNPWeb system timely; and • CNPWeb system inventory tracking is accurate and complete. Corrective Action Plan: See F-15 Management’s Response: The Department partially agrees with this finding. The Child Nutrition acknowledges the identified miscounts and has implemented an additional tracking system to monitor and reconcile inventory. However, the Department maintains that its existing internal control procedures provide reasonable assurance that CNPWeb inventory counts are not materially misstated. The errors found in case counts attribute to less than 1% of the total cases in the test group and may be due to pick errors from the vendor or warehouse, or the delivery of out-of-condition food. The vendor is responsible for the accuracy of counts, all loss or damage caused by the vendor including delivery of out-of-condition food. Monthly inventory tests have been established between the department and the distributor. A ticket has been placed for fixes to the computerized inventory system. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 Auditor’s Concluding Remarks: OSA acknowledges planned corrective action outlined in Management’s Response; however, these additional measures, including monthly inventory tests and CNPWeb system enhancements, were not in place during the audit period. As a result, the Department did not have controls in place to ensure that CNPWeb system inventory tracking was accurate and complete for fiscal year 2025. The finding remains as stated. (State Number: 25-1203-03)
(2025-023) Title: Internal control over CNC subrecipient audit monitoring needs improvement Prior Year Findings: None State Department: Education State Bureau: Commissioner’s Office Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: See E-65 to E-66 Compliance Area: Subrecipient monitoring Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.332 The Department must establish, document, and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must verify that subrecipients are audited as required. Condition: The Department of Education (DOE) is responsible for the administration of Child Nutrition Cluster (CNC) programs for the State. DOE partners with subrecipient School Food Authorities and sponsors to provide nutritious meals to eligible children in schools and summer food programs; to foster healthy eating habits by providing fresh fruits and vegetables to children attending elementary schools; and to encourage the consumption of nutritious agriculture commodities. DOE is required to verify that all subrecipients are audited as required when Federal award expenditures exceed the Single Audit threshold. DOE utilizes a spreadsheet to track and facilitate subrecipient audit monitoring. The spreadsheet tracks each DOE subrecipient, the subrecipient’s auditor, the date of receipt of the Single Audit report, the date the report was reviewed by DOE, any requests for an extension, any exceptions noted within the Single Audit report, and a corrective action plan due date, as applicable. The Office of the State Auditor (OSA) tested 22 CNC subrecipients required to receive a Single Audit and found: • 2 subrecipients were granted submission extensions; however, both audit reports were received after the approved extension date and documentation for an additional extension or late receipt could not be provided. • 1 subrecipient was documented on the tracking spreadsheet; however, the only information included was the subrecipient’s name. In addition, email communications indicated multiple expired extensions, but this information was not included or tracked by DOE. OSA selected a non-statistical random sample. Context: In fiscal year 2025, the Department provided 241 subrecipients with $70.7 million in CNC program funds, which represents 99 percent of CNC programs’ $71.3 million total expenditures. Cause: • Lack of supervisory oversight • Lack of adequate policies and procedures Effect: • Noncompliance with Federal regulations • Subrecipients may not be undergoing audits as required by Federal regulations. Recommendation: We recommend that the Department enhance policies and procedures and increase oversight to ensure that all CNC subrecipients are properly tracked and submit Single Audit reports as required. Corrective Action Plan: See F-16 Management’s Response: The Department agrees with this finding. Audit tracking was previously performed through a manual process. As the result of a RFP, an upgrade to the Maine Education Financial System will include an automated tracking system and dashboard to more effectively manage receipt of school administrative unit audits. In the interim, the Policy and Procedure Manual will be updated to include supervisory review of the tracking spreadsheet on a monthly basis. Contact: Nicole Denis, Director of Finance, DOE, 207-530-2161 (State Number: 25-1203-07)
(2025-026) Title: Internal control over Summer EBT eligibility needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture U.S. Department of Health and Human Services Assistance Listing Title: Summer Electronic Benefits Transfer Program for Children Assistance Listing Number: 10.646 Federal Award Identification Number: See E-65 to E-66 Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: ALN 10.646 $1,680 Likely Questioned Costs: Undeterminable; incorrect eligibility determinations for the Summer Electronic Benefits Transfer Program for Children (Summer EBT) are the result of conditions that do not uniformly apply to the entire population. Due to the unique circumstances of each case, a projection of questioned costs cannot be reasonably estimated. Criteria: 2 CFR 200.303; 7 CFR 292.6, .8, .12, .15 and .16 The Department must establish, document, and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Children eligible for the Summer EBT program include those who, at any time during the period of eligibility, are: • school-aged and categorically eligible through their status as a foster child, migrant child, or through their participation in the Supplemental Nutrition Assistance Program (SNAP) or the Temporary Assistance to Needy Families (TANF) program; or • enrolled in a National School Lunch Program (NSLP)-participating school and meet the requirements to receive free or reduced price meals; or • enrolled in a special provision school, and otherwise meet the requirements to receive free or reduced price meals. Summer EBT agencies must submit a Plan for Operations and Management to the Federal government to ensure that Summer EBT benefits are issued to children based on their enrollment at the end of the instructional year immediately preceding each summer. In enrolling eligible children, Summer EBT agencies must establish procedures to allow households to provide updated contact information for the purpose of receiving Summer EBT benefits, and enable anyone who has been determined to be eligible for Summer EBT benefits to confirm their eligibility status and unenroll, or opt out, of the program, if they do not want to receive benefits. Summer EBT agencies must develop procedures to detect and prevent dual participation across multiple states. State Summer EBT agencies must establish issuance and accountability systems which ensure that only certified eligible households receive benefits; that program benefits are distributed timely in the correct amounts; and that benefit issuance and reconciliation activities are properly conducted and accurately reported to the Federal government. Condition: The Summer EBT program is administered by the Office for Family Independence (OFI) and provides a $120 annual benefit to eligible children to purchase nutritious foods during the summer; benefits are distributed through EBT cards. To establish a population of children eligible for the Summer EBT program, OFI utilized information in the Automated Client Eligibility System (ACES) and automatically deemed children who were SNAP or TANF clients as categorically eligible. Children who are Medicaid clients are not categorically eligible and must be filtered to only those clients whose income does not exceed the NSLP income limit of 185 percent of the Federal Poverty Level (FPL) during the eligibility period. To capture Summer EBT-eligible children who are not in ACES, OFI has data sharing agreements in place with the Department of Education (DOE) and the Office of Child and Family Services. OFI relied on automated batch processes to extract data from ACES and DOE information systems; the majority of eligible children were identified in both datasets. OFI removed duplicate children to ensure only 1 benefit was issued per child; however, no additional verification procedures were performed by OFI to ensure the resulting population of children deemed eligible met the required program eligibility criteria. The Office of the State Auditor (OSA) tested 55 benefit payments and found: • 10 benefit payments to children who were not eligible, as follows: o 8 benefit payments to children whose household income was not verified and may exceed the NSLP income limit of 185 percent of the FPL allowed. Therefore, OSA is questioning all 8 payments totaling $960. o 2 benefit payments to children whose household income exceeded the NSLP income limit of 185 percent of the FPL. Therefore, OSA is questioning both payments totaling $240. • 10 benefit payments to children that had an out-of-state address in ACES, as follows: o 6 children had not lived in Maine at any point during the eligibility period. According to ACES, 1 child had last lived in Maine in 2017. All 6 children are ineligible as OFI had confirmation they had unenrolled and left the state. o 3 children were verified as unenrolled from a Maine school in ACES but were eligible at a point in the eligibility period; however, OFI could not provide documentation to support dual participation in both Maine and the state the client moved to. o 1 child whose ACES case should have closed in June 2023; however, due to an incorrect suspension, the child was erroneously deemed eligible. OSA identified a material weakness/material noncompliance with questioned costs as issued in finding 2025-012, Internal control over automated SNAP eligibility certification periods needs improvement, for incorrect benefit suspensions. OSA is questioning costs totaling $240, as 8 of the 10 cards above were never used and benefits were expunged after 122 days. • one 20-year-old client was only recorded in the DOE information system to document that they were dropping out of school; therefore, OSA is questioning the $120 benefit payment. • one 2-year-old client was included in the DOE information; however, the child was too young for public school and was not enrolled. Therefore, OSA is questioning the $120 benefit payment. OSA utilized a risk-based approach to select 25 cases based on age and 10 cases based on address, and selected a non-statistical random sample for the remaining 20 cases. OSA also identified the following exceptions: • For all children issued Summer EBT benefits from July 2024 to November 2024, OFI did not retain documentation to support that families were provided the required notices to advise against duplicate participation, opt out of participation, verify household eligibility, and confirm their address. • In the 2025 Plan for Operations and Management submitted to the Federal government, OFI did not include procedures to ensure that Summer EBT benefits are only issued to children based on their enrollment at the end of the instructional year immediately preceding each summer. The Department does not have adequate policies and procedures in place to ensure that ACES case file modifications, whether manual or system-interfaced, that result in changes to eligibility determinations are appropriately considered at the time of issuance. OFI does not track changes to eligibility information in ACES that are applied retroactively. Context: In fiscal year 2025, the State issued benefits to approximately 121,000 Summer EBT clients; Summer EBT expenditures totaled $14.5 million. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Known questioned costs • Potential future questioned costs and disallowances • Eligibility determinations may be incorrect, resulting in households being underpaid or overpaid. • Noncompliance with Federal regulations Recommendation: We recommend that the Department implement additional policies and procedures and enhance oversight to ensure that benefits are only issued to eligible Summer EBT clients in accordance with Federal regulations. Corrective Action Plan: See F-16 Management’s Response: The Department partially agrees with this finding. The Department partially agrees with exceptions regarding the children with an out-of-state address. Six of these individuals, including one who used the benefits, were incorrectly identified as eligible based on ACES data. The other four, including one who used the benefits, were identified through National School Lunch Program (NSLP) Participation. SUN Bucks certifications for these four children were established correctly and cannot be retroactively altered. 7 C.F.R. § 292.5 states SUN Bucks eligibility is based on the eligibility standards for NSLP. 7 C.F.R. § 245.6(c)(1) requires that children found eligible for NSLP benefits by their Local Educational Agency (LEA) continue to receive those benefits regardless of subsequent changes. 7 C.F.R. §§292.6 and 292.12 require state agencies to enroll children in SUN Bucks if they meet certification standards at any point during the eligibility period. Household circumstances after the eligibility determination are made, including changes in enrollment, are irrelevant. The Department partially agrees with the exceptions related to documentation and records retention. However, the templates were provided demonstrating that required language concerning dual enrollment and opt out procedures was included. The Department disagrees with the exception related to potential income over 185% FPL. These individuals were found eligible based on Medicaid-based eligibility and income verification rules. 7 C.F.R. § 292.14(a)(iii) only requires income verification for a three percent sample of SUN Bucks manual applications. The SUN Bucks team is not authorized to conduct additional eligibility investigations or require additional documentation for individuals meeting eligibility through participation in another means tested program. All SUN Bucks certifications in the sample reviewed for children enrolled in Medicaid with income within 185% of the Federal Poverty Limit were correctly established using income values determined through Medicaid Passive Renewal and Reasonable Compatibility policies that are consistent with applicable federal rules governing Medicaid. The Department disagrees with exceptions regarding the 2 children with brief enrollment. These children were identified as SUN bucks eligible through NSLP Participation. As detailed above once that determination is made, the Department is not able to over-ride the determination of the LEA. Contact: Evan Denno, Program Manager – SNAP, OFI, DHHS, 207-446-3201 Auditor’s Concluding Remarks: OFI states that “household circumstances after the eligibility determination (is) made, including changes in enrollment, are irrelevant.” However, correspondence regarding the Plan for Operations and Management dated May 2, 2024 between OFI and the U.S. Department of Agriculture specifies “unless the State has specific information that the child has actively unenrolled and moved to another state, the Summer EBT agency should not remove children from the issuance list.” For the cases cited in the Condition, OFI had verification of unenrollment and relocation to another state as early as 2017 and as recent as March 2024, 3 months prior to benefit issuance, which indicates that the children should have been removed from the benefit issuance list. Regarding the Summer EBT children who are also enrolled in Medicaid with household income that exceeded the NSLP income limit of 185 percent of the FPL, OFI asserts that they do not “require additional documentation for individuals meeting eligibility through participation in another means tested program.” However, Medicaid was not approved as a means tested program until October 2024. As a result, OFI’s assertion does not apply to summer 2024 benefit issuances. For the “2 children with brief enrollment,” neither child was deemed eligible for free or reduced price lunch in DOE documentation, nor did they meet other Summer EBT eligibility requirements in 2 CFR 292.6. The finding remains as stated. (State Number: 25-1121-02)
(2025-027) Title: Internal control over Summer EBT procurement needs improvement Prior Year Findings: None State Department: Administrative and Financial Services Health and Human Services State Bureau: Office of State Procurement Services Division of Contract Management Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Summer Electronic Benefits Transfer Program for Children Assistance Listing Number: 10.646 Federal Award Identification Number: See E-65 to E-66 Compliance Area: Procurement and suspension and debarment Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.317; 7 CFR 277.14; 7 CFR 292.11; 5 MRSA 1825-B and D; Office of State Procurement Services (OSPS) policies The Department must establish, document, and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must follow the same policies and procedures it uses for procurements with non-Federal funds. 7 CFR 277.14 requires the Department to submit proposed contracts and related procurement documents to the U.S. Department of Agriculture’s Food and Nutrition Service (FNS) for preaward review and approval when the procurement is expected to exceed $10,000 and is to be awarded without competition, or only one bid or offer is received in response to solicitation. 7 CFR 292.11 states that the standards prescribed in 7 CFR 277.14, as well as the requirement for prior approval, apply to information system services and equipment acquired primarily to support Summer Electronic Benefits Transfer (Summer EBT). Awards shall be made to the best-value bidder, taking into consideration the best interest of the State. The requirement to competitively bid a contract may be waived if specific criteria is met, including the item or service can only be procured from one source or it is an emergency procurement. Each bid, with the name of the bidder, must be entered on record. Each record, with the successful bid indicated, must be open to public inspection after the letting of the contract. The Department must justify the selection of vendor, either through competitive or noncompetitive process, and provide a detailed explanation of cost, demonstrating how the best value for the State is ensured. The Chief Procurement Officer shall make the public aware of contracts and grants for which bids are being requested and communicate the procedure used in reviewing bids. Contracts must be submitted to OSPS at least 14 days prior to the contract start date. Condition: The Summer EBT program provides a $120 annual benefit to eligible children to purchase nutritious foods during the summer and is administered by the Office for Family Independence (OFI). OSPS is the central oversight agency for all State procurement. The Department of Health and Human Services (DHHS) Division of Contract Management (DCM) oversees the solicitation and contract implementation for all DHHS procurement. DCM coordinates with DHHS program personnel to evaluate and select vendors and subrecipients, determine contract terms, and provide required documentation to OSPS. OSPS is responsible for reviewing and approving Procurement Justification Forms (PJF) submitted by DCM on behalf of program personnel prior to the award of contracts. The PJF represents program personnel’s assertion that the selected procurement method is appropriate under applicable State and Federal requirements, and that required evaluation procedures have been performed. OSA tested 2 contracts, 1 procured competitively and 1 procured noncompetitively, that accounted for $408,351 of the $424,272 in Summer EBT program procurement-related transactions in fiscal year 2025 and found: • OFI could not provide documentation that FNS approved applicable procurement documents prior to contract award as required by 7 CFR 292.11. • PJFs were reviewed for reasonableness by DCM and OSPS, but DHHS could not provide documentation to support the assertions made by OFI were accurate. OSA utilized a risk-based approach to select 1 contract issued by OFI and a non-statistical random sample of all other contracts. Context: In fiscal year 2025, the Department expended $424,272 in procurement-related transactions from Summer EBT funds of $14.5 million. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Potential questioned costs and future disallowances. • Noncompliance with Federal and State procurement requirements could result in the need to void a contract or exposure to legal proceedings. Recommendation: We recommend that OSPS: • increase agency awareness of the procedures related to the timing of procurement contract documentation being submitted to OSPS for review prior to the contract start date; and • finalize and implement an updated procurement policy and procedure manual that identifies the parties responsible for key aspects of the procurement process. We also recommend that DCM and OFI develop policies and procedures and increase oversight to ensure all procurement transactions comply with Federal and State requirements, including: • Federal pre-procurement approvals are obtained before contracts are awarded, if required; • DCM obtaining and reviewing documentation to support the assertions made by OFI for accuracy and reasonableness; and • ensuring PJFs are completed, reviewed, and submitted to OSPS prior to the contract start date. Corrective Action Plan: See F-17 Management’s Response: DAFS Response: The Department agrees with this finding. OSPS will amend and formalize our draft policy guidance that clearly defines agency and OSPS roles and responsibilities in the contracting process. This will include the expansion of an agency-focused section to further emphasize contract submission and processing expectations, as well as the risks and implications associated with contracting delays. The amended and additional content will be integrated into the draft OSPS Policy Manual for release later this year. DAFS Contact: David Morris, Acting Chief Procurement Officer, OSPS, 207-624-7335 DHHS Response: The Department partially agrees with this finding. There is not a requirement to provide documentation that the Department personnel’s assertions are accurate regarding Department personnel’s review of PJFs. The Department agrees that it can improve the timing of procurement documents in relation to the start dates of the contracts. Extenuating circumstances exist periodically that prevent the timeliness of these documents. In some cases, there are delays in the grant approval at the Federal level. Delays in Legislative approval of budgets can also lead to procurement documentation delays. DHHS Contact: Jim Lopatosky, Director, Division of Contract Management, DHHS, 207-287-5075 Auditor’s Concluding Remarks: 2 CFR 200.303 requires the Department to establish, document, and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Absent adequate documentation to support the veracity of the assertions made on the PJF by program personnel, the best value for the State cannot be ensured. The finding remains as stated. (State Number: 25-1121-03)
(2025-028) Title: Internal control over National Guard cash management and the related financial reporting needs improvement Prior Year Findings: None State Department: Defense, Veterans and Emergency Management State Bureau: Military Federal Agency: U.S. Department of Defense Assistance Listing Title: National Guard Military Operations and Maintenance (O&M) Projects Assistance Listing Number: 12.401 Federal Award Identification Number: See E-65 to E-66 Compliance Area: Cash management Reporting Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.302; 32 CFR 33.20 The Department must establish, document, and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Financial records must adequately identify the source and application of funds and provide accountability for all funds, property, and assets related to the Federally-funded activities. Fiscal control and accounting procedures of the State must be sufficient to permit the tracing of funds to a level of expenditures adequate to establish that such funds have not been used in violation of the restrictions and prohibitions of applicable statutes and must permit preparation of required reports. Condition: The National Guard Military Operations and Maintenance Projects (National Guard O&M Projects) program supports the Army and Air National Guard in minor construction, maintenance, repair, or operation of facilities, and provides mission operational support to be performed by the State. The Department submits a Request for Advance or Reimbursement Form (SF-270) to the Federal government to process the National Guard O&M Projects program’s reimbursement request. The program is funded utilizing estimated revenue; estimated revenue represents the estimated amount of funds needed to process expenditures, where the Department utilizes State funds prior to receiving Federal reimbursement, and is limited to the amount requested and approved by the Office of the State Controller. As a result, the program carries a negative cash balance while waiting for the reimbursement requests to be approved by the Federal National Guard Bureau. Delays in receiving Federal approval have led to larger negative cash balances for the program. The negative cash balances should be comprised of all submitted but unapproved SF-270 requests and total expenditures that have not been submitted for reimbursement. The Department tracks outstanding SF-270 requests utilizing a spreadsheet; however, the spreadsheet is not periodically reconciled to the State’s accounting system to ensure all expenditures are included. Additionally, the Department does not have documented policies and procedures to follow up on outstanding reimbursement requests to facilitate more timely reimbursements from the Federal government. Context: In fiscal year 2025, the National Guard O&M Projects program expenditures totaled approximately $30.1 million. The June 30th negative cash balances for the previous 4 fiscal years were as follows: • $(6.7) million for fiscal year 2022 • $(12.4) million for fiscal year 2023 • $(13.3) million for fiscal year 2024 • $(12.4) million for fiscal year 2025 Cause: • Lack of adequate policies and procedures, including reconciling reimbursement activity to the State’s accounting system • Lack of supervisory oversight Effect: • Due to a lack of monitoring cash balances, the Department cannot readily determine if specific Federal expenditures are reimbursed timely. • Sustained negative cash balances limit the program’s ability to continue operations without additional State funding. Recommendation: We recommend that the Department develop and implement policies and procedures and enhance oversight to adequately monitor the National Guard O&M Projects program’s cash balances, including requesting the status of delayed reimbursement requests with the Federal National Guard Bureau to ensure that Federal funds are received as timely as possible. Corrective Action Plan: See F-117 Management’s Response: The Department partially agrees with this finding and will implement the “Corrective Action Plan.” The Auditor states the cause of the findings is a ‘lack’ of adequate policies and procedures and a ‘lack’ of supervisory oversight. We agree that the procedures are not adequate but there are established procedures and oversight. Contact: Diane Dunn, Commissioner, DVEM, 207- 430-5158 Auditor’s Concluding Remarks: The Office of the State Auditor acknowledges that the Department has established procedures and oversight; however, they were not adequate to prevent, or detect and correct, on a timely basis the exception noted in the Condition. The finding remains as stated. (State Number: 25-1503-01)
(2025-029) Title: Internal control over National Guard payroll costs needs improvement Prior Year Findings: None State Department: Defense, Veterans and Emergency Management Administrative and Financial Services State Bureau: Military Security and Employment Service Center Federal Agency: U.S. Department of Defense Assistance Listing Title: National Guard Military Operations and Maintenance (O&M) Projects Assistance Listing Number: 12.401 Federal Award Identification Number: See E-65 to E-66 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403, .430 and .431; 5 MRSA 7065 The Department must establish, document, and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. Compensation for personal services includes all renumeration, paid or accrued, for services of employees rendered during the period of performance under the Federal award, including but not necessarily limited to wages and salaries. Compensation for personal services may also include fringe benefits. Costs of compensation are allowable to the extent that they are reasonable for the services rendered and conform to the established written policy of the recipient. Salary increases are based on merit. Salary advancements within an established range shall not be automatic, but shall be dependent upon specific recommendation of the appointing officer and approval of the commissioner. The recommendation shall be based upon standards of performance as indicated by merit ratings or other pertinent data. No advancements in salary may be made until the employee has completed the probationary period. Condition: The National Guard Military Operations and Maintenance Projects (National Guard O&M Projects) program supports the Army and Air National Guard in minor construction, maintenance, repair, or operation of facilities, and provides mission operational support to be performed by the State. Performance Management Forms (PMFs) document an employee’s overall performance rating; identify the pay grade and step for the employee, including whether a merit increase should be applied based on performance; and document management approval, which includes the supervisor and the agency head. The Department of Defense, Veterans and Emergency Management is responsible for completing PMFs and submitting them to the Security and Employment Service Center for processing. The Office of the State Auditor (OSA) tested payroll costs for 24 employees charged to the National Guard O&M Projects program during fiscal year 2025 and found that 8 PMFs did not have evidence of the agency head approval; 7 of the 8 PMFs resulted in merit increases in fiscal year 2025. OSA selected a non-statistical random sample. Context: In fiscal year 2025, the National Guard O&M Projects program expenditures totaled $30.1 million, of which $11.1 million was expended for payroll. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Potential unauthorized salary adjustments could result in future questioned costs • Noncompliance with State regulations Recommendation: We recommend that the Department enhance policies and procedures and increase oversight to ensure that PMFs properly support the National Guard O&M Projects program’s payroll costs in accordance with Federal and State regulations. Corrective Action Plan: See F-18 Management’s Response: DVEM Response: The Department partially agrees with this finding. The Department agrees that eight positions lacked an agency head signature. As a result, we have taken steps to ensure appropriate agency heads are identified for each of those positions and the agency heads are aware of the need to sign off on the relevant forms. However, we disagree that there is lack of adequate policies and procedures that could result in future questioned costs. All of the PMFs were completed and signed by a supervisor and employee indicating that performance was properly assessed to support the employee’s pay grade, step and merit increase. DVEM Contact: Michelle Lenihan, Deputy Commissioner, DVEM, 207- 430-5997 DAFS Response: The Bureau of Human Resources partially agrees with this finding. The Bureau of Human Resources agrees that the positions identified lacked agency head signatures. BHR disagrees with OSA as to the effect of those missing signatures. As OSA indicates “Performance Management Forms (PMFs) document an employee’s overall performance rating, identify the pay grade and step for the employee, including whether a merit increase should be applied based on performance.” The performance management forms are developed and updated centrally by BHR and all Departments are required to use the same forms. The Agency Head will often not have any direct knowledge of a specific employee’s actual performance. The purpose of the Agency Head signature is not as a control to whether an employee is meeting performance expectations, rather it is because the Agency Head is responsible for the budget of their respective agency, including personnel services. Due to other controls at the Finance Service Center and Controller’s Office, all positions were appropriately budgeted for, and employees received their appropriate pay. DAFS Contact: Michael J. Dunn, Esq., Acting State Human Resources Officer, BHR, 207-215-2951 Auditor’s Concluding Remarks: 2 CFR 200.303 requires the Department to establish, document, and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. State internal control procedures require review and approval of the PMF by both the supervisor and agency head, as evidenced by their signatures, to ensure an employee’s pay grade and step are appropriate based on performance. Both signatures on the PMF support that payroll costs of the National Guard O&M Projects program have been adequately reviewed for allowability purposes in accordance with Federal and State regulations. The finding remains as stated. Contact: (State Number: 25-1503-02)
(2025-035) Title: Internal control over Health Disparities program procurement needs improvement Prior Year Findings: None State Department: Administrative and Financial Services Health and Human Services State Bureau: Office of State Procurement Services Division of Contract Management Maine Center for Disease Control & Prevention Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Health or Healthcare Crises Assistance Listing Number: 93.391 Federal Award Identification Number: See E-65 to E-66 Compliance Area: Procurement and suspension and debarment Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.317; 5 MRSA 1825-B and D; Office of State Procurement Services (OSPS) policies The Department must establish, document, and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must follow the same policies and procedures it uses for procurements with non-Federal funds. Awards shall be made to the best-value bidder, taking into consideration the best interest of the State. The requirement to competitively bid a contract may be waived if specific criteria is met, including the item or service can only be procured from one source or it is an emergency procurement. Each bid, with the name of the bidder, must be entered on record. Each record, with the successful bid indicated, must be open to public inspection after the letting of the contract. The Department must justify the selection of vendor, either through competitive or non-competitive process, and provide a detailed explanation of cost, demonstrating how the best value for the State is ensured. The Chief Procurement Officer shall make the public aware of contracts and grants for which bids are being requested and communicate the procedure used in reviewing bids. Contracts must be submitted to OSPS at least 14 days prior to the contract start date. A Notice of Intent to Waive the Competitive Bidding Process (NOI) must be posted to the OSPS website for 7 calendar days prior to the start of a noncompetitively bid contract. Condition: The Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Health or Healthcare Crises (Health Disparities) program was implemented to address disparities in access to healthcare in populations that are at high-risk and underserved, including racial and ethnic minority groups and people living in rural communities. The Health Disparities program is administered by the Maine Center for Disease Control & Prevention’s (MeCDC) Division of Population Health Equity. OSPS is the central oversight agency for all State procurement. The Department of Health and Human Services (DHHS) Division of Contract Management (DCM) oversees the solicitation and contract implementation for all DHHS procurement. DCM coordinates with DHHS program personnel to evaluate and select vendors and subrecipients, determine contract terms, and provide required documentation to OSPS. OSPS is responsible for reviewing and approving Procurement Justification Forms (PJFs) submitted by DCM on behalf of program personnel prior to the award of contracts. The PJF represents program personnel’s assertion that the selected procurement method is appropriate under applicable State and Federal requirements, and that required evaluation procedures have been performed. OSPS must publicly post a NOI for all procurements over $10,000 entered into without a competitive process for a minimum of 7 days prior to the start of the contract. The NOI includes the signed PJF provided to OSPS by DCM. OSA tested 30 contracts, 21 procured competitively and 9 procured noncompetitively, that accounted for approximately $4.5 million of the $6.2 million in Health Disparities program procurement-related transactions in fiscal year 2025 and found: • PJFs were reviewed for reasonableness by DCM and OSPS, but DHHS could not provide documentation to support the assertions made by MeCDC were accurate. • For 27 contracts, DCM provided the PJF to OSPS for their review after the contract had commenced, between 1 and 131 days after the contract start date. For all 30 contracts, OSPS approved the PJF after the contract commenced, between 5 and 169 days after the contract start date. • For all 9 noncompetitive contracts, OSPS posted the NOI after contract performance had commenced, between 24 and 171 days after the contract start date. For 7 of these contracts, services had been initiated and financial obligations incurred prior to the NOI. OSA utilized a risk-based approach to select 21 contracts issued by MeCDC and a non-statistical random sample of all other contracts. Context: In fiscal year 2025, the Department expended $6.2 million in procurement-related transactions from Health Disparities program funds of $6.7 million. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Potential questioned costs and future disallowances • Noncompliance with Federal and State procurement requirements, including NOI posting requirements, could result in the need to void a contract or exposure to legal proceedings. Recommendation: We recommend that OSPS: • increase agency awareness of the procedures related to the timing of procurement contract documentation being submitted to OSPS for review prior to the contract start date; and • finalize and implement an updated procurement policy and procedure manual that identifies the parties responsible for key aspects of the procurement process. We also recommend that DCM and MeCDC develop policies and procedures and increase oversight to ensure all procurement transactions comply with Federal and State requirements, including: • DCM obtaining and reviewing documentation to support the assertions made by MeCDC for accuracy and reasonableness; and • ensuring PJFs are completed, reviewed, and submitted to OSPS prior to the contract start date. Corrective Action Plan: See F-20 Management’s Response: DAFS Response: The Department agrees with this finding. OSPS does not authorize, encourage, or approve agencies allowing vendors to perform work at risk. However, OSPS also does not delay review and approval solely due to contract start-date issues, as doing so would increase the State’s risk exposure, potentially disrupt federally required programs, and hinder agencies’ compliance with federal period-of-performance requirements. To address these concerns, OSPS will formalize and issue policy guidance that clearly defines agency and OSPS roles and responsibilities in the contracting process. This guidance will expand the agency-focused section to emphasize timely submission and processing, along with the risks and implications associated with contracting delays. In advance of fiscal year-end, OSPS will issue a separate policy document and companion guidance as a spotlight topic in the monthly newsletter and posted to the intranet for agency reference. DAFS Contact: David Morris, Acting Chief Procurement Officer, OSPS, 207-624-7335 DHHS Response: The Department partially agrees with this finding. There is not a requirement to provide documentation that the Department personnel’s assertions are accurate regarding Department personnel’s review of PJFs. The Department agrees that it can improve the timing of procurement documents in relation to the start dates of the contracts. Extenuating circumstances exist periodically that prevent the timeliness of these documents. In some cases, there are delays in the grant approval at the Federal level. Delays in Legislative approval of budgets can also lead to procurement documentation delays. DHHS Contact: Jim Lopatosky, Director, Division of Contract Management, DHHS, 207-287-5075 Auditor’s Concluding Remarks: 2 CFR 200.303 requires the Department to establish, document, and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Absent adequate documentation to support the veracity of the assertions made on the PJF by program personnel, the best value for the State cannot be ensured. The finding remains as stated. (State Number: 25-1123-06)
(2025-030) Title: Internal control over Health Disparities program SEFA reporting needs improvement Prior Year Findings: None State Department: Administrative and Financial Services State Bureau: Health and Human Services Service Center Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Health or Healthcare Crises Assistance Listing Number: 93.391 Federal Award Identification Number: See E-65 to E-66 Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.510 The Department must establish, document, and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the State’s financial statements which must include the total Federal awards expended. At a minimum, the SEFA must provide total Federal awards expended for each individual Federal program and the Assistance Listing Number and include the total amount provided to subrecipients from each Federal program. Condition: The Department of Health and Human Services’ Service Center must complete and submit exhibits and related schedules to the Office of the State Controller (OSC) at the close of each fiscal year to report Federal award information for inclusion on the State’s SEFA. OSC is responsible for compiling this information on behalf of the State. The Office of the State Auditor reviewed amounts reported on the SEFA for the Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Health or Healthcare Crises (Health Disparities) program and identified a $1.2 million revenue transfer incorrectly reported as a reduction to expenditures. As a result, the initial amount reported on the SEFA was understated by $1.2 million. Context: In fiscal year 2025, Health Disparities program expenditures totaled $6.7 million. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Inaccurate reporting of expenditure amounts on the SEFA, which is submitted to the Federal government, may result in inaccurate information used for programmatic, policy, or statistical purposes. • Noncompliance with Federal regulations Recommendation: We recommend that the Department implement policies and procedures to ensure expenditures are appropriately reported on the SEFA. Corrective Action Plan: See F-19 Management’s Response: The DHHS and the DHHS Financial Service Center agree with this finding. The Service Center will update policies and procedures to ensure expenditures are appropriately reported on the SEFA by August 2026. Contact: Sarah Gove, Director, DHHS Service Center, DAFS, 207-458-6626 (State Number: 25-1123-01)
(2025-031) Title: Internal control over Health Disparities program cash management needs improvement Prior Year Findings: None State Department: Administrative and Financial Services Health and Human Services Public Safety State Bureau: Health and Human Services Service Center Maine Center for Disease Control & Prevention Emergency Medical Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Health or Healthcare Crises Assistance Listing Number: 93.391 Federal Award Identification Number: See E-65 to E-66 Compliance Area: Cash management Subrecipient monitoring Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 31 CFR 205.33; State Administrative and Accounting Manual (SAAM) Chapter 50 The Department must establish, document, and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must minimize the time between the drawdown of Federal funds and the disbursement of these funds for Federal program purposes. The timing and amount of funds transfers must be as close as is administratively feasible to the Department’s actual cash outlay for program costs. Section 50.40.80 of the SAAM has defined administratively feasible as no more than 7 business days. Condition: The Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Health or Healthcare Crises (Health Disparities) program was implemented to address disparities in access to healthcare in populations that are at high-risk and underserved, including racial and ethnic minority groups and people living in rural communities. The Health Disparities program is administered by the Maine Center for Disease Control & Prevention’s (MeCDC) Division of Population Health Equity. MeCDC has a memorandum of understanding in place with the Department of Public Safety’s Emergency Medical Services (EMS) Bureau to assist in administering the Health Disparities program. The Department of Health and Human Services’ Service Center is responsible for drawing down Federal funds for disbursement for program purposes. The Office of the State Auditor (OSA) identified that MeCDC began fiscal year 2025 with a $1.7 million surplus of program funds and ended the fiscal year with a $1.2 million surplus of funds. The surplus was the result of a MeCDC drawdown of $3.0 million during fiscal year 2022 which was provided to EMS for use in support of the Health Disparities program. EMS returned $1.2 million of unused funds to MeCDC in fiscal year 2025. Therefore, EMS had excess cash on hand from July 1, 2024, through April 15, 2025, and MeCDC had excess cash on hand from April 15, 2025, through June 30, 2025, which is not in compliance with Federal cash management requirements. MeCDC fully returned the surplus funds to the Federal government in July 2025. In addition, OSA tested 3 payments made to subrecipients by EMS and found a significant delay between receipt of invoice from the EMS subrecipient and issuance of payment. The delay in payment issuance ranged between 62 to 80 days. Context: In fiscal year 2025, MeCDC expended $6.7 million in Health Disparities program funds. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight • Staff turnover which delayed the processing of invoices Effect: • Noncompliance with Federal regulations • The Federal government may impose more stringent program-specific cash management requirements based on noncompliance. • The State could incur an interest liability on excess Federal cash balances. • Delays in issuing payments to subrecipients. Recommendation: We recommend that the Departments develop policies and procedures to: • govern inter-departmental transfers of funds to ensure cash management requirements are adhered to; and • ensure the timely processing of invoices. Corrective Action Plan: See F-18 Management’s Response: DHHS Response: The Department agrees with this finding. At the onset of the Health Disparities grant period, the Maine CDC and the Department of Public Safety (DPS) established an MOU to approve the single transfer of all Health Disparity grant funds allocated to DPS prior to DPS expenditure of funds. In March 2025, the Health Disparities grant was prematurely terminated and unspent funds in the amount of $1.2 million were returned to U.S. CDC. In May 2025, Maine CDC was among other Health Disparities grant recipients eligible to again utilize Health Disparities grant funds following the reinstatement of the grant as a result of successful challenging litigation. In June 2025, Maine CDC was granted internal approval to proceed with utilization of grant funds. During the process of grant termination and reinstatement and prior to undergoing the SFY25 audit, it was recognized that the MOU should include terms for reimbursement of funds based on service provision rather than authorizing the single transfer of funds prior to expenditure. Following the reinstatement of the Health Disparities grant, Maine CDC and DPS worked collaboratively to revise the original MOU to include terms for distribution of funds, including monthly submission or financial reporting to receive funds based on services provided. The revised MOU was signed by DPS and DHHS Commissioners in June and August 2025, respectively. DHHS Contact: Eden Hale, Associate Director, Division of Population Health Equity, MeCDC, 207-441-1090 DPS Response: The Department agrees with this finding. The Department of Public Safety acknowledges that there was a delay in the processing of the three invoices made to subrecipients by EMS which were all identified during the Audit. This was a result of turnover in multiple positions within the bureau including the Director and the Office Specialist II who both play an important role in the processing of invoices. Contact: Derek Gorneau, Assistant to the Commissioner, DPS, 207-530-3531 (State Number: 25-1123-02)