Finding 2025-002 – Cash Management (Reimbursement Request Error) Federal Program: Coronavirus State and Local Fiscal Recovery Funds ALN: 21.027 Compliance Requirement: Cash Management Type of Finding: Significant Deficiency in Internal Control Over Compliance and Noncompliance Criteria Per 2 CFR §200.305(b)(1) and the terms of the subaward, the pass-through entity required the non-Federal entity to use the reimbursement method. Under this method, payment may be requested only for actual, allowable, and properly supported expenditures. Additionally, per 2 CFR §§200.302 and 200.303, the non-Federal entity must maintain financial management systems and internal controls sufficient to ensure reimbursement requests are accurate and supported by appropriate documentation. Condition The Town of Wheatland requested reimbursement totaling $74,113.15 in excess of actual, allowable, and supported expenditures due to an error in compiling reimbursement request amounts. As a result, the request was not fully supported by underlying documentation at the time of submission. The error was later identified by the Town and corrected through a subsequent reimbursement adjustment. Cause The condition resulted from insufficient review procedures over reimbursement requests, including a lack of detailed reconciliation between requested amounts and supporting expense documentation prior to submission. Effect The Town temporarily requested federal funds in excess of allowable and supported expenditures, resulting in noncompliance with cash management requirements. Questioned Costs None. Repeat Finding No. Recommendation We recommend the Town strengthen internal controls over reimbursement requests by implementing a secondary review of reimbursement calculations prior to submission, establishing a formal reconciliation process between requested amounts and supporting documentation, and using a standardized checklist to verify the completeness and accuracy of reimbursement requests. Views of Responsible Officials Management agrees with the finding and has corrected the identified error. Additional review procedures and reconciliations will be implemented to ensure reimbursement requests are accurate and fully supported prior to submission.
Finding 2025-004 – Reporting Federal Program: Coronavirus State and Local Fiscal Recovery Funds ALN: 21.027 Compliance Requirement: Reporting Type of Finding: Significant Deficiency in Internal Control Over Compliance and Noncompliance Criteria Per 2 CFR §200.328, non-Federal entities must submit financial and performance reports that are accurate, current, and complete. Additionally, per 2 CFR §200.303, entities must maintain effective internal control over Federal awards. Treasury SLFRF guidance requires Project and Expenditure (P&E) Reports to provide complete and accurate project information. Condition The Town’s March 2025 Project and Expenditure Report contained a project description that revenue replacement funds were used on payroll costs, when the costs were construction related. This error was not identified prior to submission. Cause The condition resulted from insufficient review of financial and narrative reporting elements. Effect The report submitted to Treasury was not accurate, resulting in noncompliance with federal reporting requirements. Questioned Costs None. Repeat Finding No. Recommendation We recommend the Town strengthen controls over SLFRF reporting by establishing documented review and approval controls, ensuring alignment between project descriptions and actual use of funds, and providing training on reporting requirements. Views of Responsible Officials Management agrees with the finding and will strengthen review procedures to ensure financial and narrative reports are accurate, complete, and consistent with underlying records.
Condition: During our test of the annual expenditure report filed by the County for compliance with grant reporting requirements, it was noted that the report listed inaccurate information regarding the actual expenditures. The annual report listed the expenditures totaling $2,680,335; however, the confirmed amount on the financial statement and SEFA indicated the actual expenditures were $2,813,954 resulting in an understatement of $133,619. Cause of Condition: Policies and procedures have not been designed and implemented to ensure compliance with federal grant requirements. Effect of Condition: This condition resulted in noncompliance with federal grant requirements for this program and could result in loss of federal funds to the County. Recommendation: OSAI recommends the County gain an understanding of the compliance requirements for federal programs to ensure compliance with the grant requirements and filing accurate quarterly reports. Management Response: Chairman of the Board of County Commissioners and County Clerk: The Creek County Clerk's Office will work with the SEFA preparer to ensure that the correct paid dates are being used when reporting. This should eliminate the actual expenditures differences. We will work to educate all offices involved in the reporting process on financial statement and SEFA. Criteria: Title 2 CFR § 200.303(a) Internal Controls reads (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 Controls Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Compliance and Reporting Guidance, State and Local Fiscal Recovery Funds (10. Reporting.) reads as follows: All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. In addition, where appropriate, your organization needs to establish controls to ensure completion and timely submission of all mandatory performance and/or compliance reporting.
Condition: During the review of 100% of federal disbursements totaling $2,813,954 for Coronavirus State and Local Fiscal Recovery Fund, program disbursements were not expended in accordance with the Activities Allowed or Unallowed and Allowable Costs/Cost Principles as noted below: • One (1) purchase order in the amount of $108,728 did not have invoices or supporting documentation to determine if the project was allowable. This disbursement was approved in the BOCC meeting with no documentation. Cause of Condition: Policies and procedures have not been designed and implemented to ensure compliance with federal award requirements. Effect of Condition: This condition resulted in noncompliance with federal grant requirements and could result in loss of federal funds to the County. Recommendation: OSAI recommends the County gain an understanding of the requirements for this program and design and implement policies and procedures to ensure compliance with these requirements. Management Response: Chairman of the Board of County Commissioners and County Clerk: Creek County will work with all offices making sure that a proper invoice is attached on all purchase orders. Educating offices that there is a difference in a quote verses an invoice. The County Clerk will make sure that there are multiple eyes on the purchase orders to ensure that this is caught before payment is issued. Criteria: Title 2 CFR § 200.303(a) Internal Controls 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). Additionally, Title 2 CFR § 200.403 - Factors affecting allowability costs 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.
2025-016 Improve Controls over Transparency Act Reporting Compliance Requirement: Reporting Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Agriculture Pass-Through Entity: None AL Numbers and Titles: 10.553 – School Breakfast Program 10.555 – National School Lunch Program 10.556 – Special Milk Program for Children 10.582 – Fresh Fruit and Vegetable Program Federal Award Numbers: 245GA324N1099 (Year: 2024), 245GA324N1199 (Year: 2024), 245GA324L11603 (Year: 2024), 255GA324N1099 (Year: 2025), 255GA324N1199 (Year: 2025), 255GA324L1603 (Year: 2025) Questioned Costs: None Identified Repeat of Prior Year Findings: 2024-014, 2023-012 Description: The Georgia Department of Education should improve internal controls to ensure that subaward information associated with the Federal Funding Accountability and Transparency Act is reported appropriately and timely. Background Information: The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential child care institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and schools and encourages the domestic consumption of nutritious agricultural commodities. Funds associated with the CNC program are provided to the Georgia Department of Education (GaDOE) for allocation to eligible subrecipients. Because the GaDOE subgrants program funds to various entities, the GaDOE must comply with the Federal Funding Accountability and Transparency Act of 2006 (FFATA). The FFATA requirements were signed into law on September 26, 2006 in an effort to give the American public access to information on how their tax dollars are being spent. This information, including information associated with the use of CNC program funds, is accessible via the USAspending.gov website. Criteria: As a recipient of federal awards, the GaDOE is required to establish, document, and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Under the FFATA (Public Law 109-282), as codified in Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, recipients of grants or cooperative agreements, including the GaDOE, who make first-tier subawards of $30,000 or more are required to register in the System for Award Management (SAM.gov). Subaward data, such as the subaward date, subawardee Unique Entity Identifier number, amount of subaward, subaward obligation/action date, date of report submission, and subaward number, are submitted through SAM.gov and accessible to the general public through the USASpending.gov website. Condition: Our examination of reporting requirements associated with CNC revealed that the GaDOE failed to submit subaward data to the SAM.gov. Therefore, all first-tier subawards of $30,000 or more, and the associated subaward data, were not reflected on the USAspending.gov website as required. Cause: The GaDOE had established procedures in place to comply with the FFATA reporting requirements for federal awards, but the GaDOE ceased FFATA reporting when it was removed from the Office of Management and Budget (OMB) Compliance Supplement in anticipation of the transition to the proposed new federal reporting model. When FFATA reporting reappeared in the OMB Compliance Supplement, the GaDOE reinstated FFATA reporting procedures for all federal programs and hired a new staff member in June 2022 to solely assist with bringing all FFATA reporting up to date for all federal programs. However, reporting for CNC proved to be challenging due to the continuously changing award amounts based on the number of claims each month. The GaDOE submitted a request to the USDA to report FFATA information on an annual basis, but that request was denied. Consequently, at fiscal year-end, the GaDOE was still formulating a method that will allow for compliance with CNC FFATA monthly reporting requirements in a more efficient manner. Additionally, during fiscal year 2025, the FFATA reporting system changed from the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS) to SAM.gov. This website required new interface software for uploading large amounts of data; however, the GaDOE did not have this information technology (IT) capability. Therefore, due to personnel changes and the absence of the required IT system interface, the GaDOE has experienced delays in completing CNC FFATA reporting. Effect: The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA requirements was not achieved as the general public was unable to review expenditure data associated with the State of Georgia’s CNC programs. Recommendation: We recommend that the GaDOE: • Finalize processes and procedures associated with the CNC FFATA reporting requirements; • Incorporate additional oversight, training, and/or staff to aid in the identification of subawards to be reported and the reporting of appropriate data elements, as applicable, in a timely manner; and • Maintain documentation of subaward agreements and the determination of whether each subaward should be entered into SAM.gov in compliance with the FFATA reporting requirements. Views of Responsible Officials: The Georgia Department of Education concurs with this finding.
2025-029 Improve Controls over Employer Tax Form and Payment Submissions Compliance Requirement: Special Tests and Provisions Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Labor Pass-Through Entity: None AL Number and Title: 17.225 – Unemployment Insurance Federal Award Numbers: UI356432155A13 (Year: 2021), UI372182255A13 (Year: 2022), UI379762260A13 (Year: 2022), UI393172355A13 (Year: 2023), 23A60UB000032 (Year: 2023), 23A60UB000074 (Year: 2023), 23A60UB0000117 (Year: 2023), 23A60UD000001 (Year: 2023), 23A60UD000016 (Year: 2023), 23A60UR000037 (Year: 2023), 24A55UI000019 (Year: 2024), 24A55UT000008 (Year: 2024), 25A55UI000074 (Year: 2025), 25A60UD000068 (Year: 2025), 25A60UD000070 (Year: 2025) Questioned Costs: None Identified Description: The Georgia Department of Labor did not maintain adequate documentation of taxes due or taxes received. Background Information: The Unemployment Insurance (UI) program, created by the Social Security Act (Pub. L. No. 74-271), provides Unemployment Compensation (UC) benefits to workers who are unemployed through no fault of their own and are seeking reemployment. To receive benefits, claimants must be able to work, available for work, and actively seeking work. Employers meeting any of the following criteria are required to report UI taxes: • Private employers with a quarterly payroll of $1,500 or at least one worker in 20 different calendar weeks during a calendar year; • Agricultural employers with at least $20,000 in gross payroll for a calendar quarter or with 10 or more workers on any day during 20 different weeks in a calendar year; or • Domestic employers with a payroll of at least $1,000 in any calendar quarter. State Workforce Agencies, including the Georgia Department of Labor (DOL), are required to maintain employer accounts for UI taxes received or due from individual employers. Criteria: As a recipient of federal awards, the DOL is required to establish, document, and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Additionally, provisions included in the Uniform Guidance, Section 200.302(b) state, in part, that the DOL’s “financial management system must provide for… maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds… [and] records must be supported by source documentation.” Condition: Our audit of the UI program included a review of quarterly tax and wage forms and employer payments received. From a population of 906,391 transactions, a sample of 25 transactions related to the collection of taxes due from employers was randomly selected for testing using a nonstatistical sampling method. The following deficiencies were identified: • We found no evidence that internal controls had been established, documented, or maintained for the items tested. • Of the 25 transactions tested, 13 transactions could not be traced to bank statements, and no supporting documentation could be provided for the transactions. Cause: The DOL has an antiquated system for recording tax transactions that does not maintain an audit trail of electronic tax forms collected. While physical documentation and payments remitted through the mail are maintained on file, no records of electronic employer submissions are maintained for review by the DOL. Effect: The deficiencies in employer tax form and payment submissions resulted in noncompliance with federal regulations. Additionally, without properly designed controls in place, the DOL cannot adequately maintain employer accounts or support the transactions posted to employer accounts. Furthermore, grant provisions allow the grantor to penalize the DOL for noncompliance by suspending or terminating the award or withholding future awards. This may prevent eligible individuals from receiving benefits in the future. Recommendation: The DOL should implement internal controls over the documentation of taxes due and received by: • Ensuring that appropriate documentation is maintained for employer tax submissions, detailing the employer name, wages reported, calculation of taxes, penalties, interest, and FIFA costs due, payment remitted (if any) with time stamps. • Implementing a process in which the system generates a tax form for each employer submission to be maintained as reviewable evidence of taxes due. • Maintaining a receipt log by employer, including amount received, date received, and amount per bank statement or ACH transmission file, as documentation of taxes received. Views of Responsible Officials: We concur with this finding.
2025-027 Improve Controls over Eligibility Determinations Compliance Requirement: Eligibility Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Labor Pass-Through Entity: None AL Numbers and Titles: 17.225 – Unemployment Insurance 17.225 – COVID-19 – Unemployment Insurance Federal Award Numbers: UI347102055A13 (Year: 2020), UI356432155A13 (Year: 2021), UI372182255A13 (Year: 2022), UI379762260A13 (Year: 2022), UI393172355A13 (Year: 2023), 23A60UB000032 (Year: 2023), 23A60UB000074 (Year: 2023), 23A60UB0000103 (Year: 2023), 23A60UB0000117 (Year: 2023), 23A60UD000001 (Year: 2023), 23A60UD000016 (Year: 2023), 23A60UR000037 (Year: 2023), 24A55UI000019 (Year: 2024), 24A55UT000008 (Year: 2024), 25A55UP000019 (Year: 2025), 25A55UI000074 (Year: 2025), 25A60UB000128 (Year: 2025), 25A60UB000156 (Year: 2025), 25A60UB000165 (Year: 2025), 25A60UD000068 (Year: 2025), 25A60UD000070 (Year: 2025) Questioned Costs: $487 Repeat of Prior Year Findings: 2024-032, 2023-028, 2022-028, 2021-035 Description: The Georgia Department of Labor did not have effective internal controls in place to ensure unemployment benefit payments were made correctly and only to eligible claimants. Background Information: The Unemployment Insurance (UI) program, created by the Social Security Act (Pub. L. No. 74- 271), provides Unemployment Compensation (UC) benefits to workers who are unemployed through no fault of their own and are seeking reemployment. To receive benefits, claimants must be able to work, available for work, and actively seeking work. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional UI provisions. Title II, Subtitle A of the CARES Act, authorizes the following temporary UI programs: • Federal Pandemic Unemployment Compensation (FPUC) – The FPUC program provides eligible individuals with $600 per week in addition to the weekly benefit amount they receive from certain other UC programs. • Pandemic Emergency Unemployment Compensation (PEUC) – The PEUC program provides up to 13 weeks of benefits to individuals who have exhausted all rights to regular compensation under State law or Federal law with respect to a benefit year that ended on or after July 1, 2019, have no rights to regular compensation with respect to a week under any other State or Federal UC law, are not receiving compensation with respect to such week under the UC law of Canada, and are able to work, available to work, and actively seeking work. • Pandemic Unemployment Assistance (PUA) – The PUA program provides up to 39 weeks of benefits to those individuals who are not eligible for regular UC or extended benefits under State or Federal law or PEUC, including those who have exhausted all rights to such benefits. In addition, the State Extended Benefits (SEB) program, which is an extension of UC benefits, becomes available for payment when the State’s 13-week insured unemployment rate (IUR) exceeds 5% and pays claimants up to an additional 13 weeks of compensation. Under the SEB program, the State is required to provide 50% of the amounts paid to the majority of eligible SEB claimants, which are those not covered by Federal law or special provisions of State law. However, under the CARES Act, the U.S. Department of Labor will reimburse the State at 100% of eligible costs for the SEB program. The State of Georgia became eligible to pay SEB May 10, 2020. However, the first payable weekending date (WED) was on July 4, 2020, as the first payable WED of PEUC was April 4, 2020. Further, the last payable WED for SEB was February 6, 2021. Criteria: As a recipient of federal awards, the Georgia Department of Labor (DOL) is required to establish, document, and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Additionally, provisions included in Title 20 CFR Section 604.3(a) state, “A State may pay UC only to an individual who is able to work and available for work for the week for which UC is claimed.” Furthermore, Title II, Subtitle A of the CARES Act provides specific eligibility guidance for the FPUC, PEUC, and PUA programs. Condition: Our audit of the Unemployment Compensation Fund (UCF) included a review of benefit payments related to regular UC, SEB, and CARES Act UI programs. A sample of 60 UI benefit payment transactions processed by the DOL was randomly selected for testing using a nonstatistical sampling method. The following deficiencies were identified: • In one instance, a claimant of the PUA program did not provide proof of wages or income, which resulted in an overpayment of $316. • In one instance, a claimant did not self-certify that they are able to work, available for work, and actively seeking work each week they claimed benefits, which resulted in an overpayment of $171. Questioned Costs: Upon testing a sample of $18,720 in UI program payments, known questioned costs of $487 were identified. Using the population of UI payments sampled, which totaled $359,839,058, we project likely questioned costs to be approximately $6,881,509. Cause: The DOL must manually review proof of employment or self-employment or a valid offer to begin employment and proof of wages for all PUA claims. This is a very time-consuming process and the DOL does not have the resources to review the volume of PUA claims in a timely manner. In addition, DUA program claims are submitted by paper, including weekly certifications by claimants; however, the DOL misplaced the paper copy of the certification for the week tested and could not provide evidence the claimant self-certified for the week in which the claimant received benefits. Effect: Without effective controls, the DOL increases its risk of providing benefits to ineligible claimants and not detecting these unallowable payments. The deficiencies in eligibility determinations also resulted in noncompliance with federal regulations and questioned costs. While funds for benefit payments are not provided to states through grant awards, states are awarded funds to administer these programs. Grant provisions allow the grantor to penalize the DOL for noncompliance by suspending or terminating the award or withholding future awards. This may prevent eligible individuals from receiving benefits in the future. Recommendation: The DOL management should develop, implement and document internal controls over eligibility and claims processing to ensure procedures are consistently enforced and operate effectively. Management should also provide training on procedures for processing unemployment claims for programs created by the CARES Act. Strong monitoring controls should be implemented, as well, to ensure that the DOL achieves its objectives in complying with the eligibility requirements for the various UC programs. Additionally, the DOL management should develop and document IT controls to stop the release of payment until eligibility requirements are substantiated and verified. The DOL management should also develop, implement and document procedures to stop or reduce payments when individuals do not provide required documentation. Views of Responsible Officials: We concur with this finding. GDOL acknowledges that this is a repeat finding from prior years. In addition, GDOL’s current UI Information Technology (IT) system was developed in 1982 using mainframe legacy technology. Due to its age and structural limitations, many automated processes and corrective controls cannot be easily implemented. As a result, numerous tasks, including the validation and processing of all PUA and DUA documentation to determine eligibility, must be performed manually by staff.
2025-028 Improve Controls over Performance Reporting Compliance Requirements: Reporting Special Tests and Provisions Internal Control Impact: Material Weakness Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Labor Pass-Through Entity: None AL Numbers and Titles: 17.225 – Unemployment Insurance 17.225 – COVID-19 – Unemployment Insurance Federal Award Numbers: UI347102055A13 (Year: 2020), UI356432155A13 (Year: 2021), UI372182255A13 (Year: 2022), UI379762260A13 (Year: 2022), UI393172355A13 (Year: 2023), 23A60UB000032 (Year: 2023), 23A60UB000074 (Year: 2023), 23A60UB0000103 (Year: 2023), 23A60UB0000117 (Year: 2023), 23A60UD000001 (Year: 2023), 23A60UD000016 (Year: 2023), 23A60UR000037 (Year: 2023), 24A55UI000019 (Year: 2024), 24A55UT000008 (Year: 2024), 25A55UI000074 (Year: 2025), 25A55UP000019 (Year: 2025), 25A60UB000128 (Year: 2025), 25A60UB000156 (Year: 2025), 25A60UB000165 (Year: 2025), 25A60UD000068 (Year: 2025), 25A60UD000070 (Year: 2025) Questioned Costs: None Identified Description: The Georgia Department of Labor should improve internal controls over required performance reports to ensure the information is reported appropriately and timely. Background Information: The Unemployment Insurance (UI) program, created by the Social Security Act (Pub. L. No. 74-271), provides Unemployment Compensation (UC) benefits to workers who are unemployed through no fault of their own and are seeking reemployment. To receive benefits, claimants must be able to work, available for work, and actively seeking work. The Georgia Department of Labor (DOL) is responsible for reporting programmatic data related to UI programs, including those associated with the Reemployment Services and Eligibility Assessments (RESEA) program, to the U.S. Department of Labor’s Employment and Training Administration (ETA). Every grant awarded by the ETA requires accurate quarterly and annual reporting as a part of sound financial and management responsibilities. This reporting supports the ETA’s ability to measure fund utilization for performance accountability and assess compliance with statutory expenditure requirements. This information also allows for the measurement of successful outcomes for participants, ensures sound service delivery and reporting practices, and helps determine whether the federal funds achieved maximum benefit. The following performance reports are required to be submitted to the ETA: • ETA 9050 – Time Lapse of All First Payments except Workshare monthly report, • ETA 9052 – Nonmonetary Determination Time Lapse Detection monthly report, • ETA 9055 – Appeals Case Aging monthly report, • ETA 9128 – RESEA Workload quarterly report, and • ETA 9129 – RESEA Outcomes quarterly report. Criteria: As a recipient of federal awards, the DOL is required to establish, document, and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. In addition, provisions included in UI Program Letter (UIPL) No. 08-24 and UIPL No. 12-25 require ETA 9128 and 9129 reports to be reviewed by UI staff member(s) for accuracy prior to submission. Condition: Our audit of the reporting requirements for the UI program revealed there was no evidence of review and approval or a comparable internal control procedure associated with the ETA 9050, ETA 9052, ETA 9055, ETA 9128, and ETA 9129 performance reports. Cause: While a staff member was assigned to complete the performance reports, there was no process in place to have the reports reviewed for accuracy prior to submission due to management oversight. Effect: Without properly designed controls in place, the DOL cannot adequately ensure the accuracy of information included in performance reports. In addition, the deficiency in internal control resulted in noncompliance with federal regulations. While funds for benefit payments are not provided to states through grant awards, states are awarded funds to administer these programs. Grant provisions allow the grantor to penalize the DOL for noncompliance by suspending or terminating the award or withholding future awards. This may prevent eligible individuals from receiving timely benefits in the future. Recommendation: The DOL should design, implement and document effective controls over performance reporting to ensure that reports are reviewed by an individual, other than the preparer, prior to submission of the reports. The DOL should also establish an audit trail that documents what date the report was reviewed and by whom. Views of Responsible Officials: We concur. Due to staffing changes, we failed to document review and approval of these reports by management.
2025-030 Improve Controls over the Identification, Recording, and Reporting of Overpayments Compliance Requirement: Special Tests and Provisions Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Labor Pass-Through Entity: None AL Numbers and Titles: 17.225 – Unemployment Insurance 17.225 – COVID-19 – Unemployment Insurance Federal Award Numbers: UI347102055A13 (Year: 2020), UI356432155A13 (Year: 2021), UI372182255A13 (Year: 2022), UI379762260A13 (Year: 2022), UI393172355A13 (Year: 2023), 23A60UB000032 (Year: 2023), 23A60UB000074 (Year: 2023), 23A60UB0000103 (Year: 2023), 23A60UB0000117 (Year: 2023), 23A60UD000001 (Year: 2023), 23A60UD000016 (Year: 2023), 23A60UR000037 (Year: 2023), 24A55UI000019 (Year: 2024), 24A55UT000008 (Year: 2024), 25A55UP000019 (Year: 2025), 25A55UI000074 (Year: 2025), 25A60UB000128 (Year: 2025), 25A60UB000156 (Year: 2025), 25A60UB000165 (Year: 2025), 25A60UD000068 (Year: 2025), 25A60UD000070 (Year: 2025) Questioned Costs: None Identified Repeat of Prior Year Findings: 2024-035, 2023-030, 2022-029, 2021-038, 2020-038 Description: The Georgia Department of Labor did not maintain adequate controls over the identification, recording, and reporting of benefit overpayments associated with the Unemployment Insurance programs. Background Information: The Unemployment Insurance (UI) program, created by the Social Security Act (Pub. L. No. 74- 271), provides Unemployment Compensation (UC) benefits to workers who are unemployed through no fault of their own and are seeking reemployment. To receive benefits, claimants must be able to work, available for work, and actively seeking work. The Georgia Department of Labor (DOL) is responsible for reporting overpayment data related to UI programs to the U.S. Department of Labor’s Employment and Training Administration (ETA). Every grant awarded by the ETA requires accurate reporting as a part of sound financial and management responsibilities. This reporting supports the ETA’s ability to ensure benefit payments are properly made. The following reports reflect overpayment data that must be submitted to the ETA: • ETA 227 – Overpayment Detection and Recovery Activities quarterly report, and • ETA 902P – Pandemic Unemployment Assistance Activities monthly report. Criteria: As a recipient of federal awards, the DOL is required to establish, document, and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Title 34, Chapter 8, Article 9 of the Official Code of Georgia Annotated (OCGA) §34-8-254 defines overpayments as the sum of benefits received by any person while any conditions for the receipt of benefits were not fulfilled or while the person was disqualified from receiving benefits. OCGA §34-8-254 assigns legal responsibility and authority for the collection of overpayments to the Commissioner of the DOL. Additionally, according to the UI Report Handbook No. 401, the ETA 227 and ETA 902P reports are required to be submitted to the U.S. Department of Labor in a timely and accurate manner. The ETA 227 reports are due quarterly on the first day of the second month after the quarter of reference, and all applicable data on the ETA 227 reports should be traceable to the data regarding overpayments and recoveries in the state’s financial accounting system. The ETA 902P report is due on the 30th of the month following the month to which data relate and should contain monthly data on PUA activities. Condition: In an effort to assess risk and plan audit procedures, auditors obtained an understanding of the internal controls over the processes for identifying and recording overpayments. In performing these procedures, the DOL stated that crossmatches used to identify possible overpayments are run three to six months after a quarter’s benefits have been paid. Additionally, it is our understanding that after the DOL runs a wage crossmatch for a quarter, the quarter is not run again. In this case, if an employer does not report wages for its employee timely to the DOL, the wages would not be in the crossmatch performed. Based upon this information, auditors requested a complete population of overpayment cases and a reconciliation of the population data to the year-end financial statements. Although the DOL provided a population of overpayment cases, auditors could not summarize the data to match amounts reported on the financial statements. The data provided by the DOL is very limited, reflecting only total overpayments established, paid, and remaining balances by claimant at year-end. All amounts are grouped together and can contain multiple overpayments established on different dates. Auditors could not distinguish important information, such as the date the overpayment was established, week-ending dates for the weeks determined to be overpaid, when the original benefit was paid, and whether the overpayment was caused by fraud. Auditors planned to select a sample of overpayment cases that the DOL had established during the fiscal year under review and verify that the DOL was properly identifying and processing overpayments. While the DOL provided data related to overpayment cases, the auditors were not able to verify the completeness of the population provided as a $6.5 million variance was noted between the amount reported in the financial statements and the amount reflected in the population data. Additionally, upon review of the overpayment information provided, it was determined the underlying data was not mathematically accurate as the sum of all current year activity by claimant did not agree to the ending balance reflected for each claimant. Auditors recalculated the ending balance by claimant based on the activity reflected in the overpayment data file and noted a $2.7 million net variance. Furthermore, auditors inquired if overpayment data in the system of record was reconciled to the billing system and the DOL stated they did not perform such reconciliation. Auditors noted a variance of approximately $128 million between the amount reported in the financial statements and the amount shown in the billing system. Finally, auditors compared the total overpayments reported in the financial statements to ETA 227 submissions and noted an unreconciled variance of $158 million. Cause: The DOL did not have the ability to easily run transaction-level or claimant-level queries for overpayments in their systems. Additionally, the DOL did not reconcile overpayment data to subsystems, federal reports, or accounting records and was unable to do so in a timely manner when requested by the Georgia Department of Audits and Accounts and the State Accounting Office. Effect: Due to the lack of controls, there is an increased risk that possible fraudulent claims and improper benefits paid will not be identified and investigated timely. The deficiencies in the identification and recording of benefit overpayments resulted in noncompliance with federal and state regulations. Additionally, inaccurate reports were likely filed with the U.S. Department of Labor. Furthermore, the lack of accurate and complete data associated with benefit overpayments prevented auditors from testing compliance requirements associated with overpayments. These unknown factors, along with additional issues, are the basis for our adverse opinion on the UI program. Recommendation: The DOL management should develop, implement and document procedures to identify and record benefit overpayments in a timely and accurate manner. These procedures should allow for the tracking of information by fiscal year and periodic reconciliation of detailed records to the general ledger and various required reports. Specifically, the DOL should implement, at a minimum, a monthly reconciliation process to reconcile, by claimant, the overpayment balances and activity within the billing system to the activity and balances reflected in the system of record. Additionally, a review of the detailed listing by claimant from the system of record should be performed to ensure the amounts included in the listing are mathematically accurate. Views of Responsible Officials: We concur with this finding. GDOL acknowledges this is a repeated finding from previous years. The current unemployment system is aged and distressed. GDOL’s limited technology resources will hinder our ability to update our current system to perform reconciliation between the multiple tools used to perform different functions. Therefore, we acknowledge that this finding will persist until a system-wide resolution is implemented in the new modernized UI system.
2025-026 Improve Controls over Transparency Act Reporting Compliance Requirement: Reporting Internal Control Impact: Material Weakness Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Labor Pass-Through Entity: None AL Numbers and Titles: 17.258 WIOA Adult Program 17.259 WIOA Youth Activities 17.278 WIOA Dislocated Worker Formula Grants Federal Award Numbers: 23A55AA038524-01-04 (Year: 2023), 23A55AT000010-01-01 (Year: 2023), 24A55AT000060-01-01 (Year: 2024), 23A55AY000004-01-00 (Year: 2023), 24A55AY000074-01-00 (Year: 2024), 23A55AW000013-01-01 (Year: 2023), 24A55AW000059-01-01 (Year: 2024) Questioned Costs: None Identified Description: The Technical College System of Georgia should improve internal controls to ensure that subaward information associated with the Federal Funding Accountability and Transparency Act is reported appropriately and timely. Background Information: The Workforce Innovation and Opportunity Act (WIOA) authorizes formula grant programs to states to help job seekers access employment, education, training, and support services to succeed in the labor market. Using a variety of methods, states provide employment and training services through a network of American Job Centers (AJC), also known as One-Stop Centers. The WIOA programs provide employment and training programs for adults, dislocated workers, and youth. Funds associated with the WIOA programs are provided to the Technical College System of Georgia (TCSG) for allocation to eligible subrecipients. Because the TCSG subgrants program funds to various entities, the TCSG must comply with the Federal Funding Accountability and Transparency Act of 2006 (FFATA). The FFATA requirements were signed into law on September 26, 2006, in an effort to give the American public access to information on how their tax dollars are being spent. Criteria: As a recipient of federal awards, the TCSG is required to establish, document, and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Under the FFATA (Public Law 109-282), as codified in Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, recipients of grants or cooperative agreements, including the TCSG, who make first-tier subawards of $30,000 or more are required to register in the System for Award Management (SAM.gov). Subaward data, such as the subaward date, subawardee Unique Entity Identifier number, amount of subaward, subaward obligation/action date, date of report submission, and subaward number, are submitted through SAM.gov and accessible to the general public through the USAspending.gov website. Condition: Our audit of the WIOA programs revealed there was no evidence of review and approval or a comparable internal control over the FFATA reports. Additionally, auditors identified 18 subrecipients with 254 first-tier subawards or subaward modifications of $30,000 or more during the period under review. A sample of 40 subawards or subaward modifications totaling $11,058,922 was randomly selected for testing using a non-statistical sampling method. Auditors examined documentation to determine if the subrecipient’s information was properly reported on the USAspending.gov website. Upon performing testing over FFATA reporting, auditors noted the following deficiencies: • Three subawards totaling $560,792 had not been reported as of the end of audit fieldwork; • One subaward totaling $80,000 was not reported timely; and • Three subawards totaling $1,004,249 were not reported accurately. Cause: Through discussion with management, it was noted that the omissions, untimely reporting, and errors were due to an oversight by personnel and a lack of review. Effect: The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA requirements was not achieved as the general public was unable to review all expenditure data associated with the State of Georgia’s WIOA programs. Recommendation: We recommend that the TCSG: • Establish and document processes and procedures associated with the FFATA reporting requirements; and • Incorporate additional oversight, training, and/or staff to aid in the identification of subawards to be reported and the reporting of appropriate data elements, as applicable, in a timely manner. Views of Responsible Officials: We concur with this finding. The Technical College System of Georgia acknowledges the finding associated with the recent DOAA audit. In the past, The TCSG Office of Workforce Development would have a single staff member enter the information from the FFATA into FSRS.gov, in which a receipt of submission would be downloaded and saved to a local shared folder. However, in March 2025, the FFATA reporting was moved to SAM.gov, which does not provide any proof of submission, only a database of reported subawards. Along with staff turnover and leadership transition, OWD recognizes that an adjustment to the FFATA Subaward submission is needed to continue the assurance of effective controls and compliance.
2025-031 Strengthen Controls over Matching, Earmarking, and Period of Performance Compliance Requirements: Matching, Level of Effort, Earmarking Period of Performance Internal Control Impact: Material Weakness Compliance Impact: None Federal Awarding Agency: U.S. Department of Transportation Pass-Through Entity: None AL Numbers and Titles: 20.600 – State and Community Highway Safety 20.616 – National Priority Safety Programs Federal Award Numbers: 69A37525300004020GA0 (Year: 2025), 69A3752530000405BGAL (Year: 2025), 69A3752530000405CGA0 (Year: 2025), 69A3752530000405DGAM (Year: 2025), 69A3752530000405EGAA (Year: 2025), 69A3752530000405FGA1 (Year: 2025), 69A3752530000405GGA0 (Year: 2025), 69A3752530000405HGA0 (Year: 2025) Questioned Costs: None Identified Description: The Georgia Department of Public Safety should improve internal controls over matching, earmarking, and period of performance requirements to ensure expenditures meet required matching and earmarking percentages and are incurred within the required timeframes. Background Information: The Highway Safety Act of 1966 established the Highway Safety Cluster (HSC) as a formula grant for states to save lives and prevent injuries due to road traffic crashes. Funding is apportioned to State and Territorial Highway Safety Offices using statutory apportionment formulas and requirements. To receive funding, states must have an approved Triennial Highway Safety Plan and an approved Annual Grant Application that details planned projects. The Georgia Department of Public Safety (DPS) is required to maintain adequate internal controls over federal awards, including the matching, earmarking, and period of performance requirements for each federal award. Proper tracking allows the entity to ensure that expenditures meet appropriate matching and earmarking percentages and are incurred within the allowable timeframes in compliance with grant requirements. Criteria: As a recipient of federal awards, the DPS is required to establish, document and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Condition: Our audit of the HSC programs revealed there was no evidence of internal controls implemented over the matching, earmarking, and period of performance compliance requirements. Cause: For the matching and earmarking requirements, management has a process in place to calculate and track the required percentages; however, documentation supporting the calculations and tracking was not maintained. In addition, for the period of performance requirement, management did not establish and document an internal process to independently monitor grant activity and ensure expenditures occurred within the allowable period of performance. Effect: Without proper internal controls in place, there is an increased risk of noncompliance with the matching, earmarking, and period of performance requirements. Recommendation: We recommend that the DPS: • Establish and document processes and procedures associated with the matching, earmarking, and period of performance requirements; • Incorporate additional oversight, training, and/or staff to ensure staff are knowledgeable about applicable requirements; and • Retain sufficient documentation of internal control activities performed. Views of Responsible Officials: We concur with this finding.
2025-032 Improve Controls over Transparency Act Reporting Compliance Requirement: Reporting Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Transportation Pass-Through Entity: None AL Numbers and Titles: 20.600 – State and Community Highway Safety 20.616 – National Priority Safety Programs Federal Award Numbers: 69A37525300004020GA0 (Year: 2025), 69A3752530000405BGAL (Year: 2025), 69A3752530000405CGA0 (Year: 2025), 69A3752530000405DGAM (Year: 2025), 69A3752530000405EGAA (Year: 2025), 69A3752530000405FGA1 (Year: 2025), 69A3752530000405GGA0 (Year: 2025), 69A3752530000405HGA0 (Year: 2025) Questioned Costs: None Identified Description: The Georgia Department of Public Safety should improve internal controls to ensure that subaward information associated with the Federal Funding Accountability and Transparency Act is reported appropriately and timely. Background Information: The Highway Safety Act of 1966 established the Highway Safety Cluster (HSC) as a formula grant for states to save lives and prevent injuries due to road traffic crashes. Funding is apportioned to State and Territorial Highway Safety Offices using statutory apportionment formulas and requirements. To receive funding, states must have an approved Triennial Highway Safety Plan and an approved Annual Grant Application that details planned projects. Funds associated with the HSC program are provided to the Georgia Department of Public Safety (DPS) for allocation to eligible subrecipients. Because the DPS subgrants program funds to various entities, the DPS must comply with the Federal Funding Accountability and Transparency Act of 2006 (FFATA). The FFATA requirements were signed into law on September 26, 2006 in an effort to give the American public access to information on how their tax dollars are being spent. This information, including information associated with the use of HSC program funds, is accessible via the USAspending.gov website. Criteria: As a recipient of federal awards, the DPS is required to establish, document and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Under the FFATA (Public Law 109-282), as codified in Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, recipients of grants or cooperative agreements, including the DPS who make first-tier subawards of $30,000 or more are required to register in the System for Award Management (SAM.gov). Subaward data, such as the subaward date, subawardee Unique Entity Identifier number, amount of subaward, subaward obligation/action date, date of report submission, and subaward number, are submitted through SAM.gov and accessible to the general public through the USAspending.gov website. Condition: Our examination of reporting requirements associated with HSC revealed that the DPS failed to submit subaward data to SAM.gov. Therefore, all first-tier subawards of $30,000 or more, and the associated subaward data, was not reflected on the USAspending.gov website as required. Cause: Through discussion with management, it was noted that there was a lack of clarity regarding the DPS’s responsibility for completing the FFATA reporting requirements. In addition, the DPS did not have a designated individual assigned to perform and oversee the FFATA reporting process. As a result, the required subaward information was not reported on SAM.gov in accordance with applicable requirements. Effect: The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA requirements was not achieved as the general public was unable to review expenditure data associated with the State of Georgia’s HSC programs. Recommendation: We recommend that the DPS: • Establish and document processes and procedures associated with the FFATA reporting requirements; • Incorporate additional oversight, training, and/or staff to aid in the identification of subawards to be reported and the reporting of appropriate data elements, as applicable, in a timely manner; and • Maintain documentation of subaward agreements and the determination of whether each subaward should be entered into SAM.gov in compliance with the FFATA reporting requirements. Views of Responsible Officials: We concur with this finding.
2025-033 Improve Controls over the Procurement Process Compliance Requirement: Procurement and Suspension and Debarment Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of the Treasury Pass-Through Entity: None AL Number and Title: 21.027 – COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Federal Award Number: SLFRP1029 (Year: 2023) Questioned Costs: None Identified Repeat of Prior Year Finding: 2024-037 Description: The Georgia Department of Human Services should improve internal controls to ensure that they are complying with the State of Georgia’s Procurement Policy. Background Information: The Coronavirus State Fiscal Recovery Fund, (CSLFRF), provides direct payments to states, US territories, Tribal governments, metropolitan cities, counties, and non-entitlement units of local government to: 1. Respond to the public health emergency with respect to Coronavirus Disease 2019 (COVID-19) or its negative economic impacts, including by providing assistance to households, small businesses, nonprofits, and impacted industries, such as tourism, travel, and hospitality; 2. Respond to workers performing essential work during the COVID-19 public health emergency by providing premium pay to eligible workers of the recipient that perform essential work or by providing grants to eligible employees that have eligible workers who are performing essential work; 3. Provide government services, to the extent of the reduction in revenue of the eligible entities due to the COVID-19 public health emergency relative to revenues collected in the most recent full fiscal year of the eligible entities prior to the emergency; and 4. Make necessary investments in water, sewer, or broadband infrastructure. In August 2022, the Governor’s Office of Planning and Budget (OPB) dedicated more than $1 billion of CSLFRF federal funds to the Department of Human Services (DHS) to establish the Cash Assistance program. The Cash Assistance program provided one-time cash assistance of up to $350 for active enrollees of the Medicaid, PeachCare for Kids, Supplemental Nutrition Assistance Program, and/or Temporary Assistance for Needy Families government benefit programs in response to the negative economic impacts of the COVID-19 public health emergency. Criteria: As a recipient of federal awards, the DHS is required to establish, document, and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. The DHS is also required to comply with the procurement standards set forth in 2 CFR 200.317 through 2 CFR 200.327 of the Uniform Guidance. Pursuant to 2 CFR 200.317, “When conducting procurement transactions under a Federal award, a State… must follow the same policies and procedures it uses for procurements with non-Federal funds.” As a state agency, the DHS adheres to the State of Georgia Procurement Manual issued by the Department of Administrative Services (DOAS). Per the State of Georgia Procurement Manual, all contract extensions must occur in writing and require the supplier’s consent. The State Procurement Department’s (SPD) prior consent to the contract extension may also be required depending on the type of extension. Condition: Our examination of compliance with Procurement and Suspension and Debarment regulations for the Cash Assistance program revealed that the DHS did not follow the State of Georgia’s ongoing contract management process for the continuation of services. The DHS was also unable to provide a written notice of extension or amendment to continue services and was unable to provide documentation of written permission from the SPD. Cause: Through discussion with the DHS management, the DHS relied on the contractor to replace cash assistance cards that were lost or undeliverable in the prior year under the original terms of the contract rather than extending or amending the contract. Effect: Without a valid contract extension or amendment, federal funds may be used in a manner that is not in compliance with federal provisions and the Georgia Procurement Manual. Recommendation: The DHS should improve internal controls as they relate to the procurement and contracting processes to ensure that all contract extensions or amendments follow the processes established in the Georgia Procurement Manual. Views of Responsible Officials: DHS concurs with the finding.
2025-019 Improve Controls over Eligibility Determinations Compliance Requirement: Eligibility Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: None AL Number and Title: 93.558 – Temporary Assistance for Needy Families Federal Award Numbers: 2101GATANF (2021), 2201GATANF (2022), 2301GATANF (2023), 2401GATANF (2024), 2501GATANF (2025) Questioned Costs: $2,379 Description: The Department of Human Services should improve internal controls and monitoring over eligibility requirements to ensure that only eligible individuals receive benefits from the Temporary Assistance for Needy Families Program. Background Information: The Department of Human Services (DHS) delivers a wide range of services designed to promote self-sufficiency, safety, and well-being for all Georgians. In delivering these services, the DHS is awarded funding associated with the Temporary Assistance for Needy Families (TANF) program. The TANF program was designed to provide time-limited assistance to needy families with children so that the children can be cared for in their own homes or in the homes of relatives; to end dependence of needy parents on government benefits by promoting job preparation, work, and marriage; to prevent and reduce the incidence of out-of-wedlock pregnancies, including establishing prevention and reduction goals; and to encourage the formation and maintenance of two-parent families. The TANF program has specific eligibility requirements that must be satisfied by beneficiaries to receive TANF assistance. As part of the application process, applicants are required to complete and submit various forms to document eligibility information, including the Form 354, Expense Statement, which is used to verify income for the purpose of determining initial and ongoing eligibility for TANF benefits. Criteria: As a recipient of federal awards, the DHS is required to establish, document, and maintain effective internal control over federal awards that provide reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Section 200.303 – Internal Controls. Eligibility determination requirements for the TANF program are addressed in Section 1300 of the DHS TANF Policy Manual. In accordance with provisions reflected in the TANF Policy Manual, benefits should only be paid to recipients who meet applicable eligibility criteria. Condition: Our audit of the TANF program revealed deficiencies in the performance of eligibility determinations. The DHS paid TANF benefits totaling $12,200,599 to 5,338 beneficiaries during the period under review. A sample of 40 individual case files was randomly selected for testing using a nonstatistical sampling method. Auditors performed procedures to determine if eligibility determinations were performed appropriately. Testing revealed that three case files did not include the required Form 354. Therefore, these individuals were deemed to be ineligible for benefits and overpaid by a total of $2,379. Questioned Costs: Upon testing a sample of $102,055 of TANF benefits payments, known questioned costs of $2,379 were identified for benefit payments to ineligible TANF recipients. Using the total population amount of $12,200,599, we project the likely questioned costs to be approximately $284,408. Cause: Through discussion with the DHS, management stated that high staff turnover resulted in increased training demands and caused delays in case processing and caseload management. In addition, established policies and procedures were not consistently followed, which resulted in errors in case processing. Effect: The deficiencies in eligibility determinations resulted in noncompliance with federal regulations. Also, grant provisions allow the grantor to penalize the DHS for noncompliance by suspending or terminating the award or withholding future awards. In addition, the DHS may be providing TANF benefits to ineligible individuals and claiming federal reimbursement for unallowable expenditures. Recommendation: We recommend that DHS: • Follow established processes and procedures associated with TANF eligibility determinations. • Clearly define roles and responsibilities for personnel involved in the eligibility process to ensure compliance with TANF rules and regulations; and • Incorporate additional oversight, training, and/or staff to aid in the applicant intake and case management process to ensure that only eligible individuals receive benefits. We also recommend that management consult with the grantor to discuss whether the questioned costs identified in the audit should be repaid. Views of Responsible Officials: DHS concurs with the finding.
2025-025 Improve Controls over Transparency Act Reporting Compliance Requirement: Reporting Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: None AL Number and Title: 93.667 – Social Services Block Grant Federal Award Numbers: 2301GASOSR (Year: 2023), 2401GASOSR (Year: 2024), 2501GASOSR (Year: 2025) Questioned Costs: None Identified Description: The Georgia Department of Human Services and the Georgia Department of Behavioral Health and Developmental Disabilities should improve internal controls over required Federal Funding Accountability and Transparency Act reporting to ensure that information is reported appropriately and timely. Background Information: The Social Services Block Grant (SSBG) is a flexible funding source that allows states and territories to tailor social service programming to their population’s needs. Through the SSBG, states provide essential social services that help achieve a myriad of goals to reduce dependency and promote self-sufficiency; protect children and adults from neglect, abuse, and exploitation; and help individuals who are unable to take care of themselves to stay in their homes or to find the best institutional arrangements. Funds associated with the SSBG program are provided by the Georgia Department of Human Services (DHS) to the Georgia Department of Behavioral Health and Developmental Disabilities (DBHDD) for allocation to eligible subrecipients. Because the DBHDD subgrants program funds to various entities, the DBHDD must comply with the Federal Funding Accountability and Transparency Act of 2006 (FFATA). The FFATA requirements were signed into law on September 26, 2006 in an effort to give the American public access to information on how their tax dollars are being spent. This information, including information associated with the use of the SSBG program funds, is accessible via the USAspending.gov website. Criteria: As a recipient of federal awards, the DBHDD is required to establish, document, and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Under the FFATA (Public Law 109-282), as codified in Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, recipients of grants or cooperative agreements, including DBHDD who make first-tier subawards of $30,000 or more are required to register in the System for Award Management (SAM.gov). Subaward data, such as the subaward date, subawardee Unique Entity Identifier number, amount of subaward, subaward obligation/action date, date of report submission, and subaward number, are submitted through SAM.gov and accessible to the general public through the USAspending.gov website. Condition: Our examination of reporting requirements associated with the SSBG program revealed that the DBHDD failed to submit subaward data to SAM.gov. Therefore, all first-tier subawards of $30,000 or more, and the associated subaward data, were not reflected on the USAspending.gov website as required. Cause: Through discussion with the DBHDD and the DHS management, it was noted that the Memorandum of Understanding (MOU) between the entities for the state pass-through of SSBG program funds did not outline specific responsibility for reporting the first-tier subawards of $30,000 or more. The DBHDD did not provide the DHS with information related to the subawards of $30,000 or more and the associated subaward data. In addition, staff turnover resulted in internal control processes and procedures not being followed in regard to FFATA reporting. Effect: The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA requirements was not achieved as the general public was unable to review all expenditure data associated with the State of Georgia’s SSBG program. Recommendation: We recommend that the DHS and the DBHDD: • Implement and document processes and procedures associated with the FFATA reporting requirements. • Incorporate additional oversight, training, and/or staff to aid in the identification of subawards to be reported and the reporting of appropriate data elements, as applicable, in a timely manner. • Maintain documentation of subaward agreements and the determination of whether each subaward should be entered into SAM.gov in compliance with the FFATA reporting requirements. • Update the MOU between the DHS and the DBHDD to include clear role responsibilities between the entities related to FFATA reporting requirements. Views of Responsible Officials: DBHDD agrees with this finding
2025-020 Improve Controls over Eligibility Determinations Compliance Requirement: Eligibility Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: None AL Number and Title: 93.767 – Children’s Health Insurance Program Federal Award Numbers: 2405GA5021 (Year: 2024); 2505GA5021 (Year: 2025) Questioned Costs: $260 Repeat of Prior Year Finding: 2024-027 Description: The Department of Community Health and Department of Human Services did not have adequate controls in place to ensure that the required continuing eligibility determinations were performed. Background Information: The Department of Community Health (DCH) administers the Children’s Health Insurance Program (CHIP) that provides child medical coverage to low-income families who exceed Medicaid income limits. CHIP is a large public assistance program in Georgia with federal and state funds totaling approximately $761 million for fiscal year 2025. Eligibility for the CHIP program is determined by the Division of Family and Children Services (DFCS), a division within the Department of Human Services (DHS), which has offices in each of the 159 counties in the State of Georgia. Once eligibility information has been obtained, the DFCS enters the individual into the Georgia Gateway eligibility system, and an approval or denial notice is generated. The Georgia Medicaid Management Information System (GAMMIS) is updated through the Georgia Gateway interface when eligibility for a member is approved. When eligibility is denied, the DFCS sends the denial notice to the DCH, which triggers the removal of the denied member from GAMMIS. Additionally, children covered by public or private health, Third Party Liability (TPL), insurance are ineligible for coverage under CHIP. Criteria: As recipients of federal awards, both the DCH and the DHS are required to establish, document, and maintain effective internal controls over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Section 200.303 – Internal Controls. Chapter 2200, Basic Eligibility Criteria, of the DFCS Medicaid Policy Manual outlines the eligibility determination requirements for CHIP members. Specifically, Section 30 addresses requirements associated with TPLs, and Section 55 addresses age requirements for participation in Family Medicaid. In accordance with these provisions, claims should only be paid on behalf of recipients who meet the eligibility criteria. Condition: Our audit of the CHIP program revealed deficiencies in the performance of eligibility determinations. During fiscal year 2025, the DCH paid CHIP benefits totaling $725,407,936 for 1,382,228 claims transactions. We used a nonstatistical sampling method to select a random sample of 40 benefit payments from this population and tested the sample to determine if eligibility determinations were performed appropriately. Upon completing this testing, it was determined that two members were covered by TPL insurance and therefore, should have been deemed ineligible for benefits. Questioned Costs: Known questioned costs of $260 were identified for benefit payments to the two ineligible CHIP members. The Federal and State share of questioned cost is approximately $198 and $62, respectively. Using the total population amount of $725,407,936, we project the likely questioned costs to be approximately $60,913,280. The Federal and State share of likely questioned costs is approximately $46,434,193 and $14,479,087, respectively. Cause: The processes that the DFCS performed did not ensure the correct eligibility determinations were made for all CHIP members. The DCH monitoring was not effective over eligibility information contained in the Georgia Gateway and GAMMIS systems. Effect: The deficiencies in eligibility determinations resulted in material noncompliance with federal regulations. Also, grant provisions allow the grantor to penalize the DCH for noncompliance by suspending or terminating the award or withholding future awards. In addition, the DCH may be providing CHIP benefits to ineligible individuals and claiming federal reimbursement for unallowable expenditures. Recommendation: The DCH and DHS management should strengthen oversight of the DFCS eligibility determinations for CHIP members to ensure they are being performed as required. Specifically, we recommend that: • The DCH management should review and improve their procedures for monitoring eligibility, and provide training as necessary to responsible staff; and • The DHS management should continue to provide training associated with these compliance requirements to all staff. We also recommend management consult with the grantor to discuss whether the questioned costs identified in the audit should be repaid. Views of Responsible Officials: DHS concurs with the finding.
2025-018 Improve Controls over Medicaid Eligibility Determinations for Ex Parte Members Compliance Requirement: Eligibility Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: None AL Number and Title: 93.778 – Grants to States for Medicaid Federal Award Numbers: 2405GA5MAP (Year: 2024); 2505GA5MAP (Year: 2025) Questioned Costs: $5,247 Repeat of Prior Year Finding: 2024-028 Description: The Department of Community Health and Department of Human Services did not have effective internal controls in place to ensure the required continuing Medicaid eligibility determinations were performed for Supplemental Security Income Ex Parte members. Background Information: The Department of Community Health (DCH) administers the State’s Medicaid program that provides payments for medical assistance to low-income individuals. Medicaid is one of Georgia’s largest public assistance programs with federal and state funds totaling approximately $18 billion for fiscal year 2025. Eligibility for the Medicaid program is determined by the Division of Family and Children Services (DFCS), a division within the Department of Human Services (DHS), which has offices in each of the 159 counties in the State of Georgia. Individuals who are eligible for Supplemental Security Income (SSI) are also eligible for the Medicaid benefits, and those whose SSI benefits are terminated or denied by the Social Security Administration are SSI Ex Parte members for the Medicaid program. For those members, the DCH makes temporary determinations of continued eligibility under a new Ex Parte Medicaid Class of Assistance in the Georgia Medicaid Management Information System (GAMMIS). The DFCS is responsible for performing a Continuing Medicaid Determination (CMD) for each new SSI Ex Parte member. The DFCS uses the daily Ex Parte Determination Reports generated by GAMMIS to identify the new SSI Ex Parte members that require a CMD. GAMMIS also generates monthly Ex Parte Non-Confirmation Reports, which identify all entries from the Ex Parte Determination Reports that are over 30-days old and have not yet been acted upon. When a CMD is complete, the DFCS enters the individual in the Georgia Gateway eligibility system, and an approval or denial notice is generated. GAMMIS is updated through the Georgia Gateway interface when eligibility for a member is approved. When eligibility is denied, the DFCS sends the denial notice to the DCH, which triggers the removal of the denied member from GAMMIS. Criteria: As recipients of federal awards, both the DCH and the DHS are required to establish, document, and maintain effective internal controls over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Section 200.303 – Internal Controls. The eligibility determination requirements for SSI Ex Parte members are addressed in Chapter 2700, Section 50 - DCH Reports - Ex Parte Lists of the DHS Medicaid Manual. In accordance with provisions reflected in the Medicaid Manual, the DFCS is required to perform eligibility determinations of those members whose SSI benefits are terminated or denied. Condition: Our audit of the Medicaid program revealed deficiencies in the performance of eligibility determinations for SSI Ex Parte members. During fiscal year 2025, the DCH paid Medicaid SSI Ex Parte members benefits totaling $51,119,147 for 9,082 members. We used a nonstatistical sampling method to select a random sample of 60 Ex Parte benefit payments from this population and tested the sample to determine if eligibility determinations were performed appropriately. The following deficiencies were identified: • 45 members were denied by the DFCS in Georgia Gateway but remained active in GAMMIS in error. • GAMMIS reflected one member as deceased; however, benefit payments continued to be made. • Eligibility determinations were not performed for six members tested. Questioned Costs: Known questioned costs of $5,247 were identified for benefit payments to the 52 ineligible SSI Ex Parte members. The Federal and State share of questioned cost is approximately $3,464 and $1,783, respectively. Using the total population amount of $51,119,147, we project the likely questioned costs to be approximately $30,958,586. The Federal and State share of likely questioned costs is approximately $20,438,675 and $10,519,911, respectively. Cause: The processes that the DFCS performed did not ensure the required eligibility determinations were made for all SSI Ex Parte members. Also, while the DCH has systems in place to automate the eligibility process, the Georgia Gateway and GAMMIS systems were not properly interfaced. This resulted in a failure to effectively update member eligibility data between the two platforms. Effect: The deficiencies in eligibility determinations resulted in noncompliance with federal regulations. Also, grant provisions allow the grantor to penalize the DCH for noncompliance by suspending or terminating the award or withholding future awards. In addition, the DCH may be providing Medicaid benefits to ineligible individuals and claiming federal reimbursement for unallowable expenditures. Recommendation: The DCH and DHS management should strengthen oversight of the DFCS eligibility determinations for SSI Ex Parte members to make certain they are being performed timely and accurately. Specifically, management should: • Dedicate the necessary resources to ensure that the Georgia Gateway and GAMMIS systems are interfaced properly; • Review settings within GAMMIS to prevent payments associated with deceased individuals; • Oversee a reconciliation process between members with completed CMDs to members listed on the daily and monthly Ex Parte Determination Reports; and • Continue to provide training associated with these compliance requirements to all staff. We also recommend that management consult with the grantor to discuss whether the questioned costs identified in the audit should be repaid. Views of Responsible Officials: We concur with this finding.
2025-021 Improve Controls over Medicaid Eligibility Determinations for Non-SSI Members Compliance Requirement: Eligibility Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: None AL Number and Title: 93.778 – Grants to States for Medicaid Federal Award Numbers: 2405GA5MAP (Year: 2024); 2505GA5MAP (Year: 2025) Questioned Costs: $187 Description: The Department of Community Health and Department of Human Services did not have effective internal controls in place to ensure the required continuing Medicaid eligibility determinations were performed for Non-Supplemental Security Income members. Background Information: The Department of Community Health (DCH) administers the State’s Medicaid program that provides payments for medical assistance to low-income individuals. Medicaid is one of Georgia’s largest public assistance programs with federal and state funds totaling approximately $18 billion for fiscal year 2025. Eligibility for the Medicaid program is determined by the Division of Family and Children Services (DFCS), a division within the Department of Human Services (DHS), which has offices in each of the 159 counties in the State of Georgia. Once eligibility information has been obtained, the DFCS enters the individual in the Georgia Gateway eligibility system, and an approval or denial notice is generated. The Georgia Medicaid Management Information System (GAMMIS) is updated through the Georgia Gateway interface when eligibility for a member is approved. When eligibility is denied, the DFCS sends the denial notice to the DCH, which triggers the removal of the denied member from GAMMIS. Criteria: As recipients of federal awards, both the DCH and the DHS are required to establish, document, and maintain effective internal controls over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Section 200.303 – Internal Controls. The eligibility determination requirements for Non-Supplemental Security Income (Non-SSI) members are addressed in Chapter 2200, Section 55 – Age (Family Medicaid) of the DHS Medicaid Manual. In accordance with provisions reflected in the Medicaid Manual, claims should only be paid on behalf of recipients who meet the eligibility criteria. Condition: Our audit of the Medicaid program revealed deficiencies in the performance of eligibility determinations for Non-SSI members. During fiscal year 2025, the DCH paid Medicaid Non-SSI members benefits totaling $9,047,815,777 for 6,111,754 claims transactions. We used a nonstatistical sampling method to select a random sample of 33 Non-SSI benefit payments from this population and tested the sample to determine if eligibility determinations were performed appropriately. The following deficiencies were identified: • One member was erroneously determined to be eligible because the incorrect pay frequency was used in the income rate determination. • One member was a newborn at the time that eligibility was determined, and the required Social Security Number documentation was not updated once the child reached one year of age. • One member’s eligibility was limited to the Public Health Emergency (PHE) period, but their renewal was extended beyond the authorized timeframe. Questioned Costs: Known questioned costs of $187 were identified for benefit payments to the three ineligible Non-SSI members. The Federal and State share of questioned cost is approximately $123 and $64, respectively. Using the total population amount of $9,047,815,777, we project the likely questioned costs to be approximately $270,771,946. The Federal and State share of likely questioned costs is approximately $178,780,013 and $91,991,933, respectively. Cause: The processes that the DFCS performed did not ensure the required eligibility criteria were met. Additionally, the process did not ensure PHE-related eligibility was terminated as required. Furthermore, the DCH monitoring process was not adequate to identify data fields that were incomplete or not current in the transmission between the Georgia Gateway and GAMMIS systems. Effect: The deficiencies in eligibility determinations resulted in noncompliance with federal regulations. Also, grant provisions allow the grantor to penalize the DCH for noncompliance by suspending or terminating the award or withholding future awards. In addition, the DCH may be providing Medicaid benefits to ineligible individuals and claiming federal reimbursement for unallowable expenditures. Recommendation: The DCH and DHS management should strengthen oversight of the DFCS eligibility determinations for Non-SSI members to make certain they are being performed accurately. Specifically, we recommend that: • The DHS management should implement review procedures that ensure data is entered correctly; • The DHS and DCH management should implement monitoring procedures that target incomplete required data elements; • The DHS and DCH management should implement monitoring procedures over waiver recipients prior to the end of the waiver period to ensure correct determinations are made; and • The DHS management should continue to provide training associated with these compliance requirements to all staff. We also recommend that management consult with the grantor to discuss whether the questioned costs identified in the audit should be repaid. Views of Responsible Officials: DHS concurs with the finding.
2025-023 Improve Controls over Earmarking Requirements Compliance Requirement: Matching, Level of Effort, Earmarking Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: None AL Numbers and Titles: 93.958 – Block Grants for Community Mental Health Services 93.958 – COVID-19 – Block Grants for Community Mental Health Services Federal Award Numbers: B09SM085388 (Year: 2021), B09SM087284 (Year: 2021), B09SM087352 (Year: 2023) Questioned Costs: $2,872,330 Description: The Georgia Department of Behavioral Health and Developmental Disabilities should improve internal controls to ensure that earmarking requirements associated with federal programs are met. Background Information: The Community Mental Health Services Block Grant (MHBG) program was created to provide funds to states and territories to enable them to carry out their respective plans for providing comprehensive community-based mental health services for adults with serious mental illness and children with serious emotional disturbances. MHBG program funds are allocated to individual states based upon a formula. This funding is provided to the Georgia Department of Behavioral Health and Development Disabilities (DBHDD) and may be distributed by the DBHDD to cities, counties, or service providers within the State of Georgia to carry out activities associated with the state plan. In carrying out the state plan and providing community mental health services, the DBHDD must meet specific earmarking requirements to ensure that MHBG funds are used for specifically designated purposes or activities. Therefore, the DBHDD is responsible for implementing adequate controls to ensure that earmarking requirements are met and earmarked funds are accurately recorded, monitored, and reported. Criteria: As a recipient of federal awards, the DBHDD is required to establish, document, and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in Title 42 of the U.S. Code (USC) §300x-9(c)(1) require states to “expend not less than 10 percent of the amount the State receives… each fiscal year to support evidence-based programs that address the needs of individuals with early serious mental illness, including psychotic disorders, regardless of the age of the individual at onset.” Provisions included in Title 42 USC §300x-9(c)(2) provide that “in lieu of expending 10 percent of the amount the State receives…, a State may elect to expend not less than 20 percent of such amount by the end of such succeeding fiscal year.” Further, provisions included in Title 42 USC §300x-9(d)(1) require states to “expend at least 5 percent of the amount the State receives… each fiscal year to support evidenced-based programs that address the crisis care needs of individuals with serious mental illnesses and children with serious emotional disturbances, which may include individuals (including children and adolescents) experiencing mental health crises demonstrating serious mental illness or serious emotional disturbance, as applicable.” Provisions included in Title 42 USC §300x-9(d)(3) provide that “in lieu of expending 5 percent of the amount the State receives…, a State may elect to expend not less than 10 percent of such amount to support such programs by the end of two consecutive fiscal years.” Condition: Upon review of award documentation associated with the MHBG program, auditors identified three MHBG awards for which closeout procedures were performed during the fiscal year under review. Therefore, these awards were specifically tested to ensure that earmarking requirements were met with regards to administrative expenses, evidence-based programs that address early serious mental illness, and evidenced-based programs that address crisis care. The following deficiencies were noted upon testing the earmarking requirements for award number B09SM085388, which was awarded a total of $30,385,390: • The DBHDD was required to expend at least 10 percent of amounts received, or $3,038,539, to support evidenced-based programs that address early serious mental illness. The DBHDD only expended $1,685,479 for this purpose. Therefore, the DBHDD should have expended an additional $1,353,060 to meet this earmarking requirement. • The DBHDD was required to expend at least 5 percent of amounts received, or $1,519,270, to support evidenced-based programs that address crisis care. However, no funds were expended for this purpose, and the DBHDD did not meet this earmarking requirement. Questioned Costs: Known questioned costs of $2,872,330 were identified for funding that should have been expended to satisfy earmarking requirements but was expended for other purposes. Cause: Per discussions with the DBHDD management, the complexity of administering multiple supplemental grant awards, along with the termination of one award prior to the original liquidation date, contributed to inconsistent monitoring of earmarking requirements. As a result, communication gaps and coordination challenges arose between program and finance management. Effect: The deficiencies noted with MHBG earmarking requirements resulted in noncompliance with federal regulations. Also, grant provisions allow the grantor to penalize the DBHDD for noncompliance by suspending or terminating the award or withholding future awards. Recommendation: We recommend that the DBHDD strengthen controls over earmarking requirements by ensuring established policies and procedures are consistently followed. Management should also enhance monitoring procedures over grant awards with multiple supplemental awards to ensure earmarked funds are accurately tracked and expended in accordance with applicable requirements. In addition, management should provide training to program and finance staff to improve coordination between departments, understanding of earmarking requirements, and timely identification of issues. We also recommend that management consult with the grantor to discuss whether the questioned costs identified in the audit should be repaid. Views of Responsible Officials: DBHDD agrees with the finding.
2025-022 Improve Controls over Transparency Act Reporting Compliance Requirement: Reporting Internal Control Impact: Material Weakness Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: None AL Numbers and Titles: 93.788 – Opioid STR 93.958 – Block Grants for Community Mental Health Services 93.958 – COVID-19 – Block Grants for Community Mental Health Services 93.959 – Block Grants for Prevention and Treatment of Substance Abuse 93.959 – COVID-19 – Block Grants for Prevention and Treatment of Substance Abuse Federal Award Numbers: H79TI085741 (Year: 2022), H79TI087737 (Year: 2024), B09SM089617 (Year: 2024), B09SM084001 (Year: 2021), B09SM085388 (Year: 2021), B09SM090335 (Year 2025), B08TI083934 (Year: 2021), B08TI085799 (Year: 2023), B08TI087031 (Year: 2024), B08TI083530 (Year: 2021), B08TI088098 (Year: 2025) Questioned Costs: None Identified Repeat of Prior Year Findings: 2024-030, 2023-023, 2022-025 Description: The Georgia Department of Behavioral Health and Developmental Disabilities should improve internal controls over required Federal Funding Accountability and Transparency Act reporting to ensure that information is reported appropriately and timely. Background Information: The Block Grants for Community Mental Health Services Block Grant (MHBG) program was created to provide funds to states and territories to enable them to carry out their respective plans for providing comprehensive community-based mental health services for adults with serious mental illness and children with serious emotional disturbances. MHBG program funds are allocated to individual states based upon a formula. This funding may be distributed to cities, counties, or service providers within each state to carry out activities associated with the state plan. The objective of the Substance Abuse Prevention and Treatment Block Grant (SABG) program is to provide funds to states, territories, and one Indian tribe for the purpose of planning, carrying out, and evaluating activities to prevent and treat, Substance Abuse (SA) and other related activities as authorized by the statute. The objective of the Opioid STR (OSTR) program is to provide funds to states and Tribes for the purpose of addressing the opioid crisis within their communities. OSTR program funds are for carrying out activities that supplement opioid-related activities and these activities are undertaken by the state agency that administers the SABG program. Funds associated with the MHBG, SABG, and OSTR programs are provided to the Georgia Department of Behavioral Health and Developmental Disabilities (DBHDD) for allocation to eligible entities, including local health agencies, community-based organizations, and other public or private entities, through subgrants. Because the DBHDD subgrants MHBG, SABG, and OSTR program funds to various entities, the DBHDD must comply with the Federal Funding Accountability and Transparency Act of 2006 (FFATA). The FFATA requirements were signed into law on September 26, 2006 in an effort to give the American public access to information on how their tax dollars are being spent. This information, including information associated with the use of MHBG, SABG, and OSTR program funds, is accessible via the USAspending.gov website. Criteria: As a recipient of federal awards, the DBHDD is required to establish, document, and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Under the FFATA (Public Law 109-282), as codified in Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, recipients of grants or cooperative agreements, including the DBHDD, who make first-tier subawards of $30,000 or more are required to register in the System for Award Management (SAM.gov). Subaward data, such as the subaward date, subawardee Unique Entity Identifier number, amount of subaward, subaward obligation/action date, date of report submission, and subaward number, are submitted through SAM.gov and accessible to the general public through the USAspending.gov website. Condition: Our audit of the MHBG, SABG, and OSTR programs revealed there was no evidence of review and approval or a comparable internal control over the FFATA reports. Additionally, upon performing testing over FFATA reporting, auditors noted the following deficiencies: • From a population of 99 first-tier subawards or subaward modifications of $30,000 or more associated with the MHBG program, a sample of 15 subawards or subaward modifications totaling $3,185,584 was randomly selected for testing using a non-statistical sampling method. Auditors examined documentation to determine if the subrecipient’s information was properly reported on the USAspending.gov website. Testing revealed that all 15 subawards or subaward modifications tested were not reported timely. • From a population of 279 first-tier subawards or subaward modifications of $30,000 or more associated with the SABG program, a sample of 40 subawards or subaward modifications totaling $9,156,749 was randomly selected for testing using a non-statistical sampling method. Auditors examined documentation to determine if the subrecipient’s information was properly reported on the USAspending.gov website. Testing revealed that 37 subawards or subaward modifications totaling $8,303,493 were not reported timely. • From a population of 48 first-tier subawards or subaward modifications of $30,000 or more associated with the OSTR program, a sample of seven subawards or subaward modifications totaling $2,607,200 was randomly selected for testing using a non-statistical sampling method. Auditors examined documentation to determine if the subrecipient’s information was properly reported on the USAspending.gov website. Testing revealed that one subaward or subaward modification totaling $550,700 was reported under the incorrect federal award identification number and five subawards or subaward modifications totaling $2,015,000 were not reported timely. Cause: Formal internal control processes for FFATA reporting were established but not implemented correctly during the fiscal year under review. As a result, noncompliance occurred with respect to FFATA reporting. Effect: The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA requirements may not be achieved as the general public was unable to review timely expenditure data associated with the State of Georgia’s MHBG, SABG, and OSTR programs. Recommendation: We recommend that the DBHDD: • Implement and document established processes and procedures associated with the FFATA reporting requirements. • Incorporate additional oversight, training, and/or staff to aid in the identification of subawards to be reported and the reporting of appropriate data elements, as applicable, in a timely manner; and • Review, update, and maintain documentation of subaward agreements and the determination of whether each subaward should be entered into SAM.gov in compliance with the FFATA reporting requirements. Views of Responsible Officials: DBHDD agrees with this finding.
2025-024 Improve Controls over Earmarking Requirements Compliance Requirement: Matching, Level of Effort, Earmarking Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: None AL Numbers and Titles: 93.959 – Block Grants for Prevention and Treatment of Substance Abuse 93.959 – COVID-19 – Block Grants for Prevention and Treatment of Substance Abuse Federal Award Numbers: B08TI083934 (Year: 2021, B08TI083530 (Year: 2021), B08TI085799 (Year: 2023) Questioned Costs: $3,015,691 Description: The Georgia Department of Behavioral Health and Developmental Disabilities should improve internal controls to ensure that earmarking requirements associated with federal programs are met. Background Information: The objective of the Substance Abuse Prevention and Treatment Block Grant (SABG) program is to provide funds to states, territories, and one Indian tribe for planning, carrying out, and evaluating activities to prevent, treat, and provide recovery services for Substance Abuse (SA) and other related activities as authorized by the statute. SABG program funding is provided to the Georgia Department of Behavioral Health and Development Disabilities (DBHDD) to carry out these activities. In carrying out these activities, the DBHDD must meet specific earmarking requirements to ensure that SABG funds are used for specifically designated purposes or activities. Therefore, the DBHDD is responsible for implementing adequate controls to ensure that earmarking requirements are met and earmarked funds are accurately recorded, monitored, and reported. Criteria: As a recipient of federal awards, the DBHDD is required to establish, document, and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in Title 45 CFR Sections 96.124 (b)(1) require states to “expend not less than 20 percent for programs for individuals who do not require treatment for substance abuse, which programs – (i) educate and counsel the individuals on such abuse; and (ii) provide for activities to reduce the risk of such abuse by the individuals.” Further, provisions included in Title 42 of the U.S. Code §300x-24(b) define designated states as “any State whose rate of cases of acquired immune deficiency syndrome is 10 or more such cases per 100,000 individuals (as indicated by the number of such cases reported to and confirmed by the Director of the Centers for Disease Control and Prevention for the most recent calendar year for which such data are available)” and require designated states to expend not less than two percent and not more than five percent of the SABG award amount to carry out one or more projects to make available to individuals early intervention services for human immunodeficiency virus (EIS HIV) at the sites where the individuals are undergoing substance abuse treatment. Condition: Upon review of award documentation associated with the SABG program, auditors identified three SABG awards for which closeout procedures were performed during the fiscal year under review. Therefore, these awards were specifically tested to ensure that earmarking requirements associated with primary prevention programs for individuals who do not require treatment, carrying out one or more projects to make available to individuals EIS HIV, and administration expenses had been satisfied. The following deficiencies were noted: • For award number B08TI083934, which totaled $38,820,318, the DBHDD was required to expend at least 20 percent of the award amount, or $7,764,064, to support primary prevention programs for individuals who do not require treatment. The DBHDD only expended $5,781,988 for this purpose. Therefore, the DBHDD should have expended an additional $1,982,076 to meet this earmarking requirement. • For award number B08TI085799, $58,922,488 of the total award was subject to EIS HIV earmarking requirements. The DBHDD was required to expend a maximum of five percent of the adjusted award amount, or $2,946,124, to carry out one or more projects to make available to individuals EIS HIV. However, the DBHDD expended $3,675,943 for this purpose, exceeding the maximum amount by $729,819. • For award number B08TI083530, which totaled $50,518,974, the DBHDD was required to expend a maximum of five percent of the award amount, or $2,525,949 to carry out one or more projects to make available to individuals EIS HIV. However, the DBHDD expended $2,829,745 for this purpose, exceeding the maximum amount by $303,796. Questioned Costs: Known questioned costs of $3,015,691 were identified for funding that was expended in excess of earmarking requirements or should have been expended to satisfy earmarking requirements but was expended for other purposes. Cause: Per discussions with DBHDD management, the complexity of administering multiple supplemental grant awards, along with the termination of one award prior to its liquidation date, contributed to inconsistent monitoring of earmarking requirements. As a result, communication gaps and coordination challenges arose between program and finance management. Effect: The deficiencies noted with SABG earmarking requirements resulted in noncompliance with federal regulations. Also, grant provisions allow the grantor to penalize the DBHDD for noncompliance by suspending or terminating the award or withholding future awards. Recommendation: We recommend that the DBHDD strengthen controls over earmarking requirements by ensuring established policies and procedures are consistently followed. Management should also enhance monitoring procedures over grant awards with multiple supplemental awards to ensure earmarked funds are accurately tracked and expended in accordance with applicable requirements. In addition, management should provide training to program and finance staff to improve coordination between departments, understanding of earmarking requirements, and timely identification of issues. We also recommend that management consult with the grantor to discuss whether the questioned costs identified in the audit should be repaid. Views of Responsible Officials: DBHDD agrees with this finding.
2025-034 Improve Controls over Indirect Cost Rate Plan Compliance Requirement: Allowable Costs/Cost Principles Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agencies: U.S. Social Security Administration Pass-Through Entities: None AL Number and Title: 96.001 – Social Security Disability Insurance Federal Award Numbers: 2504GADI00 (Year: 2025), 2404GADI00 (Year: 2024) Questioned Costs: $4,363,991 Description: The Georgia Vocational Rehabilitation Agency did not have a federally approved negotiated indirect cost rate agreement in place with its cognizant Federal agency for the fiscal period under audit. Background Information: The Social Security Disability Insurance (DI) program was established in 1954 under Title II of the Social Security Act and provides benefits to disabled wage earners and their families in the event the family wage earner becomes disabled. The Georgia Vocational Rehabilitation Agency (GVRA) works with the U.S. Social Security Administration (SSA) to make disability determinations for Georgia citizens and ultimately disburses DI program funding to eligible recipients. In performing this work, the GVRA incurs both direct and indirect costs. Under federal regulations, indirect costs charged to the DI program should be based on a rate approved by the cognizant federal agency, SSA, as evidenced by a written agreement. Criteria: As a recipient of federal awards, the GVRA is required to establish, document, and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Additionally, provisions included in the Uniform Guidance, Appendix VII to Part 200 – States and Local Government and Indian Tribe Indirect Cost Proposals, Section D1(b) state, “A governmental department or agency… that receives more than $35 million in direct Federal funding during its fiscal year must submit its indirect cost rate proposal to its cognizant agency for indirect costs.” Section D(1)(d) further explains that “Indirect cost proposals must be developed (and, when required, submitted) within six months after the close of the governmental unit’s fiscal year, unless an exception is approved by the cognizant agency for indirect costs.” Condition: Our audit of the DI program included a review of indirect cost expenditures charged to the program. Our review revealed that the indirect cost rate plan utilized was related to fiscal year 2015 and was not federally approved for the fiscal year under review. Therefore, unallowable indirect costs totaling $4,363,991 were calculated using this unapproved indirect cost rate plan and recorded through four journal entries during the year under review. Questioned Cost: Known questioned costs of $4,363,991 were identified for expenditures that were not supported by a federally approved indirect cost rate plan. These known questioned costs related to expenditures that were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs. Cause: Because the GVRA is administratively attached to the Georgia Department of Human Services, the GVRA management faced challenges determining the appropriate cognizant Federal agency with whom to communicate and confusion associated with which indirect cost plan to implement for the fiscal year under review. Therefore, for fiscal year 2025, the GVRA followed the methodology from the most recently approved indirect cost rate plan, which was from fiscal year 2015. Effect: The deficiencies noted in the indirect cost process resulted in noncompliance with federal regulations and questioned costs. Without effective controls in place, there is an increased risk of federal funds being expended for unallowable purposes and untimely detection and correction of noncompliance. Also, grant provisions allow the grantor to penalize the GVRA for noncompliance by suspending or terminating the award or withholding future awards. Recommendation: Management should improve controls over indirect costs to ensure an indirect cost rate proposal is developed and submitted to the cognizant Federal agency for negotiation and approval within six months of each fiscal year end. Additionally, the GVRA management should incorporate additional oversight, training, and/or staffing within the indirect cost rate proposal process. We also recommend that management consult with the grantor to discuss whether the questioned costs identified in the audit should be repaid. Views of Responsible Officials: GVRA believes its internal controls and cost allocation practices are aligned with established standard operating procedures. In early 2024, GVRA engaged with an accounting firm specializing in governmental cost allocation, to develop a Cost Allocation Plan reflective of the agency’s unique organizational structure, grant reporting requirements, and federal oversight. Given that GVRA’s federal funding is administered under the oversight of three separate federal agencies, the Cost Allocation Plan is subject to a formal, multi-agency review and approval process. GVRA’s established procedures require coordinated engagement with each federal cognizant agency and its parent agency to ensure documented compliance with all applicable statutory, regulatory, and oversight requirements. In late 2024, final revisions to the federal Uniform Guidance regarding the “de minimis” indirect cost rate were issued, providing GVRA the opportunity to simplify its cost allocation methodology and meet its federal compliance obligations under the updated standard. GVRA received written email approval from the Social Security Administration (SSA) to continue utilizing its current cost allocation methodology until a negotiated indirect cost rate is established. GVRA has undergone audit review by both SSA and the Rehabilitation Services Administration (RSA) under the current methodology, with no findings or questioned costs reported. Additionally, the current Georgia Department of Audits and Accounts (DOAA) audit has continued to review funds administered under this approach. Auditor’s Concluding Remarks: As noted above, the indirect cost plan presented for audit was drafted in 2015 and did not reflect the required evidence of approval by the grantor. Given that the plan was outdated and appeared to be unapproved, we reaffirm our finding and will review the status of the finding during our next audit.
Reference Number: 2025-002 Prior Year Finding: No Federal Agency: U.S. Department of Agriculture State Agency: Department of Elementary and Secondary Education Federal Program: Child Nutrition Cluster Assistance Listing Number: 10.555, 10.582 Award Number and Year: 254MA303N1099 (10/1/2024-9/30/2025) 254MA303N1199 (10/1/2024-9/30/2025) 254MA300L1603 (10/1/2024-9/30/2025) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (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). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. On March 8, 2025, FSRS.gov was retired, and all subaward reporting data and functionality transitioned to SAM.gov after that date. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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 comply 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). Condition: The Department of Elementary and Secondary Education (Department) did not report subaward information in SAM.gov. Context: Twelve of forty subawards selected for testing were not reported in SAM.gov. The Department did not complete any FFATA reporting after FSRS reporting transitioned to SAM.gov in March 2025 resulting in subaward reporting not being completed for subawards issued after February 2025. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Department did not update its procedures and controls regarding subaward reporting after FSRS reporting transitioned to SAM.gov in March 2025. Effect: Subawards were not reported to FSRS. Questioned costs: None noted. Recommendation: We recommend the Department develop procedures and internal controls to ensure that all required subawards are reported timely and accurately to SAM.gov no later than the end of the month following the month of issuance of each subaward. If the Department is unable to complete reporting in SAM.gov, it should follow up with the Service Desk and consult with their federal award contacts for assistance and guidance. Views of responsible officials: There is no disagreement with the finding.
Reference Number: 2025-003 Prior Year Finding: 2024-007 Federal Agency: U.S. Department of Labor State Agency: Executive Office of Labor and Workforce Development Federal Program: Employment Service Cluster Assistance Listing Number: 17.207, 17.801 Award Number and Year: 24A55WP000063 (7/1/2024 – 9/30/2027), 23555DV000008 (10/1/2022 – 12/31/2024), 23555DV000005 (7/1/2023 - 9/30/2026) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (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). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. On March 8, 2025, FSRS.gov was retired, and all subaward reporting data and functionality transitioned to SAM.gov after that date. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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 comply 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). Condition: The Executive Office of Labor and Workforce Development (Department) did not report subaward information in accordance with FFATA requirements. Context: Nine of nine subawards selected for testing were not reported in accordance with FFATA reporting requirements. Specifically, we noted the following: • 6 of 9 subawards were not reported within the required timeframe. These subawards were not reported until after they were selected for testing by the auditors. Two subawards were due to be reported by 11/30/2024 and four subawards were due to be reported by 2/28/2025. These subawards were reported on 11/21/2025, which was subsequent to when the requests to review the reports were made by the auditors. • 3 of 9 subaward modifications were not reported. These modifications included two increases to the original subaward of less than $30,000 and one decrease to the original subaward of less than $30,000. The original subawards were greater than $30,000 requiring any modifications to the subaward, regardless of the dollar value, to be reported. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Department’s procedures and controls were not sufficient to ensure that subawards were reported timely nor that subaward modifications less than $30,000 were reported. Effect: The Department omitted subaward amendments from FFATA reporting and did not report other subawards until after they were selected by auditors for testing. Auditors note that the Department’s corrective action plan from the prior audit had not yet been fully implemented in FY 2025. Questioned costs: None. Recommendation: We recommend the Department complete implementation of its corrective action plan from the prior year. The Department should implement procedures and internal controls to ensure that all required subawards and subaward modifications are reported no later than the end of the month following the month of issuance. Views of responsible officials: There is no disagreement with the finding.
Reference Number: 2025-004 Prior Year Finding: 2024-009 Federal Agency: U.S. Department of Labor State Agency: Executive Office of Labor and Workforce Development Federal Program: Employment Service Cluster Assistance Listing Number: 17.207, 17.801 Award Number and Year: 2355DV000008-01-00 (10/1/2022 – 12/31/2024) 24555DV000087 (10/1/2023 – 12/31/2025) 25555DV000114 (10/1/2024 – 9/30/2025) Compliance Requirement: Reporting – VETS-402(A/B) Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: VETS-402 (A/B), Expenditure Detail Report – This expenditure and staff utilization report separately identifies Jobs for Veterans State Grant-expenditures each quarter and year-to-date as a supplement to the DVOP and LVER SF 425, Federal Financial Reports. Control: Per 2 CFR section 200.303(a), a 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 comply 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). Condition: Reports submitted by the Executive Office of Labor and Workforce Development (the Department) did not agree with supporting documentation. Context: Five of five reports selected for testing did not agree with supporting documentation. Numerous variances were noted in multiple sections of the reports filed for the 12/31/2024 and 3/31/2025 quarters. • For the 12/31/2024 reports, variances were noted in the following line items: o Section B: Allocations by Activity specific to Local Veterans Employment Representatives and Management and Administrative Costs o Section C: Outlays and Obligations by Activity specific to Line C.1 Disabled Veterans Outreach Program (DVOP) for funded DVOP positions, DVOP salaries paid, total DVOP outlays, and DVOP unliquidated obligations, Line C.3 Local Veterans Employment Representatives (LVER) for funded LVER positions, LVER salaries paid, LVER benefits paid, and total LVER outlay and Line C.5 Management and Administrative Costs for management and administrative outlays and management and administrative unliquidated obligations. • For the 3/31/2025 reports, variances were noted in the following line items: o Section C: Outlays and Obligations by Activity specific to Line C.1 Disabled Veterans Outreach Program (DVOP) for funded DVOP positions, DVOP unliquidated obligations and Line C.3 Local Veterans Employment Representatives (LVER) for LVER salaries paid, LVER benefits paid, and total LVER outlay line items. Cause: The Department’s procedures were not sufficient to ensure that reports agreed with supporting documentation. Internal controls did not prevent or detect the errors. Auditors noted that the Department has not completed implementation of their corrective action plan from the prior year. Effect: Numerous line items in quarterly reports tested did not agree with supporting documentation. Questioned costs: Undetermined. Recommendation: We recommend the Department complete implementation of its corrective action plan from the prior year. Procedures and internal controls over reporting should be sufficient to ensure that reports are accurate and agree with supporting documentation. Views of responsible officials: There is no disagreement with the finding.
Reference Number: 2025-005 Prior Year Finding: No Federal Agency: U.S. Department of Labor State Agency: Executive Office of Labor and Workforce Development Federal Program: Employment Service Cluster Assistance Listing Number: 17.207, 17.801 Award Number and Year: 23A55WP000005 (7/1/2023 – 9/30/2026) 24A55WP000063 (7/1/2024 – 9/30/2027) Compliance Requirement: Allowable Costs/Cost Principles – Time and Effort Reporting Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per 2 CFR § 200.430 (a), costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity's laws or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable. Per 2 CFR § 200.430 (i), charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: • Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, • Be incorporated into the official records of the non-Federal entity, • Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities, • Encompass both federally assisted, and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity's written policy, • Comply with the established accounting policies and practices of the non-Federal entity, • Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Control: Per 2 CFR section 200.303(a), a 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 comply 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). Condition: The Executive Office of Labor and Workforce Development (the Department) charged budgeted personnel costs to the program instead of actual costs due to errors coding employee timesheets. Context: Four of forty timesheets selected for testing charged costs to the program based on budgeted rates instead of actual time worked per employee timesheets. Combination codes are used by employees to allocate and certify hours worked to Federal grants and employees’ supervisors are required to perform a line-item review of hours spent on each grant before approving timesheets. If a timesheet is approved without the use of combination codes, the system defaults to budgeted grant allocations entered into the Labor Cost Management (LCM) module of the Massachusetts Management Accounting and Reporting System (MMARS). Specifically, we noted the following: • 2 of 40 employee timesheets selected for testing did not use combination codes and the employees’ time was defaulted to a budgeted grant allocation rather than the employees’ actual time and effort on the program. • 2 of 40 employee timesheets selected for testing had a bilingual differential and were missing combination codes. The payment was not based on the employee’s timesheet but instead was based on a budgeted percentage of time. One employee’s time was overcharged by 25% and the other was overcharged by 40%. Cause: The Department’s controls were not operating effectively to ensure that time and effort reporting was performed in accordance with federal requirements. Effect: Noncompliance occurred as payroll charges allocated to the grants were not reflective of actual activity for which the employees were compensated. Questioned costs: $5,389, the amount overcharged to the program based on budgeted time rather than actual time recorded on employee timesheets. Recommendation: The Department should update its procedures and controls and perform additional training over time and effort reporting to ensure that payroll costs charged to the program are based on actual time and effort and a combination code that is allowable under the program. The Department should not seek federal reimbursement unless it can substantiate that the time and effort was dedicated to the federal program. Views of responsible officials: There is no disagreement with the finding.
Reference Number: 2025-006 Prior Year Finding: No Federal Agency: U.S. Department of Labor State Agency: Executive Office of Labor and Workforce Development Federal Program: Employment Service Cluster Assistance Listing Number: 17.207, 17.801 Award Number and Year: 23A55WP000005 (7/1/2023 – 9/30/2026) Compliance Requirement: Reporting – ETA 9130 – Financial Report Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: ETA 9130, Financial Report – All ETA grantees are required to submit quarterly financial reports for each grant award they receive. Reports are required to be prepared using the specific format and instructions for the applicable program(s); in this case, Employment Service and Unemployment Insurance Programs (Employment Service Cluster). Reports are due 45 days after the end of the reporting quarter. Financial data is required to be reported cumulatively from grant inception through the end of each reporting period. Control: Per 2 CFR section 200.303(a), a 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 comply 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). Condition: ETA 9130 financial reports submitted by the Executive Office of Labor and Workforce Development (Department) did not agree to supporting documentation. Context: One of seven ETA 9130 reports selected for testing did not agree with supporting documentation. Specifically, unliquidated obligations reported for program FES2024 in the 6/30/2024 quarter did not agree to underlying records. Cause: The Department’s procedures were not sufficient to ensure that the ETA 9130 report was accurate and agreed with supporting documentation. Internal controls did not prevent or detect the error. Effect: Incorrect data was reported which could misrepresent the State’s financial performance in the program. Questioned costs: Undetermined. Recommendation: The Department should review its procedures to ensure that ETA 9130 reports are accurate and agree with supporting documentation. We further recommend that internal controls are enhanced to ensure that reports are reviewed for accuracy prior to submission. Views of responsible officials: There is no disagreement with the finding.
Reference Number: 2025-007 Prior Year Finding: No Federal Agency: U.S. Department of Labor State Agency: Executive Office of Labor and Workforce Development Federal Program: Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: UI372292255A25 (10/1/2021 – 12/31/2024) UI393282355A25 (10/1/2022 – 12/31/2025) 23A55UI039328 (10/1/2022 – 12/31/2025) 24A55UI00054 (10/1/2023 – 12/31/2026) 25A55UI000099 (10/1/2024 – 12/31/2027) Compliance Requirement: Reporting – ETA 2112, UI Financial Transaction Summary Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: ETA 2112, UI Financial Transaction Summary (OMB No. 1205-0154) – Per ET Handbook 401, 5th Edition, Form ETA 2112 is a monthly summary of transactions in a state unemployment fund which consists of the Clearing Account, Unemployment Trust Fund (UTF) Account, and Benefit Payment Account. All payments by employers (and employees where applicable) into a state unemployment fund for contributions, payments in lieu of contributions, and special assessments should be accounted for in the report. Penalty and interest should be reported if deposited into the clearing account and transferred to the UTF. Funds received from the Federal Employees Compensation Account (FECA) and the Extended Unemployment Compensation Account (EUCA) as advances or reimbursements for Federal benefit obligations paid through the benefit payment account should be identified and reported in appropriate line items. All funds deposited into, transferred, or paid from the state unemployment fund (the state clearing account, the state account in the UTF, and the state benefit payment account) should be reflected on the ETA 2112 except for payments/benefits paid under the Alternative Trade Adjustment Assistance (ATAA) and Trade Adjustment Assistance (TAA) programs. Form ETA 2112 provides a summary of data pertaining to state unemployment insurance (UI) tax collections, regular benefits paid, Federal and state shares of extended benefits paid, Federal temporary program benefits paid, and other transactions affecting the UTF. In addition, it reflects specific areas where adjustments are indicated to determine the adequacy of resources available for regular unemployment benefit payments. Data from this form are also used with data from other statistical reports to study trends in financial aspects of the UI program and as a basis for solvency studies. This report is due the 1st day of the second month following the month of reference. Control: Per 2 CFR section 200.303(a), a 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 comply 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). Condition: ETA 2112, UI Financial Transaction Summary reports submitted by the Executive Office of Labor and Workforce Development (Department) did not agree to supporting documentation. Context: Four ETA 2112 reports were selected for testing. For 2 of the 4 reports tested, we noted the following exceptions: • For 1 of the 4 reports tested, the incorrect amount was reported on Line 28 (Other Sources #4) for Item D. Clearing Account. The report was overstated by $56,283. • For 1 of the 4 reports tested, the amounts on Line 11 (Net UI Contributions), Line 19 (Reimb Local Govt/Indian Tribes) and Line 21 (Reimbursement Non-Profit) under Item D. Clearing Account did not agree to supporting documentation. While the total amount agrees overall, each individual line item does not reconcile to the supporting documentation. Questioned costs: Undetermined. Cause: The Department’s procedures were not sufficient to ensure that ETA 2112 reports were accurate and agreed with supporting documentation. Internal controls did not prevent or detect the errors. Effect: Incorrect data was reported which could misrepresent the State’s financial performance in the program. Recommendation: The Department should review its procedures to ensure that ETA 2112 reports are accurate and agree with supporting documentation. We further recommend that internal controls are enhanced to ensure that reports are reviewed for accuracy prior to submission. Views of responsible officials: There is no disagreement with the finding.
Reference Number: 2025-008 Prior Year Finding: No Federal Agency: U.S. Department of Labor State Agency: Executive Office of Labor and Workforce Development Federal Program: Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: UI372292255A25 (10/1/2021 – 12/31/2024) UI393282355A25 (10/1/2022 – 12/31/2025) 23A55UI039328 (10/1/2022 – 12/31/2025) 24A55UI00054 (10/1/2023 – 12/31/2026) 25A55UI000099 (10/1/2024 – 12/31/2027) Compliance Requirement: Reporting – ETA 2208A – Quarterly UI Above-Base Report Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: Compliance: ETA 2208A, Quarterly UI Above-Base Report (OMB No. 1205-0132) – Quarterly report of staff years worked and paid by program category. Reports are due no later than 30 days after the end of each quarter. Control: Per 2 CFR section 200.303(a), a 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 comply 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). Condition: ETA 2208A – Quarterly UI Above-Base Reports submitted by the Executive Office of Labor and Workforce Development (Department) contained multiple data entry and calculation errors. Context: Three ETA 2208A reports were selected for testing for each of the 9/30/2024 and 12/31/2024 quarters for a total of six ETA 2208A reports tested. The ETA 2208A is commonly referred to as the “UI‑3,” which is the legacy name for the report. Exceptions were identified in 2 of the 6 reports selected for testing. Specifically, we noted the following: • For 1 of 3 reports selected for the 9/30/2024 quarter, the incorrect number was input on "Line 1 Initial Claims" of the ETA UI-3 Additional Benefits report. The total workload reported was 232 and should have been 268. In addition, "Line 2 weeks claims" for the UI-3 Additional Benefits report was incorrectly reported. The number on the underlying support was 3,661 and the reported total workload was 3,361. • For 1 of 3 reports selected for the 12/31/2024 quarter, the incorrect number was input on "Line 1 Initial Claims" of the UI-3 Additional Benefits report. The total workload reported was 233 and should have been 305. In addition, the underlying support for “Line 1. Initial Claims” reported total workload of 1 for Unemployment Compensation for Federal Employees for the month of December 2024, but should have been reported as 0. Questioned costs: Undetermined. Cause: The Department’s procedures were not sufficient to ensure that ETA 2208A reports were accurate and agreed with supporting documentation. Internal controls did not prevent or detect the errors. Effect: Incorrect data was reported which could misrepresent the State’s financial performance in the program. Recommendation: The Department should review and update its reporting procedures and controls to ensure that ETA 2208A reports are accurate and agree with supporting documentation. We further recommend that internal controls are enhanced to ensure that reports are reviewed for accuracy prior to submission. Views of responsible officials: There is no disagreement with the finding.
Reference Number: 2025-009 Prior Year Finding: No Federal Agency: U.S. Department of Labor State Agency: Executive Office of Labor and Workforce Development Federal Program: Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: UI372292255A25 (10/1/2021 – 12/31/2024) UI393282355A25 (10/1/2022 – 12/31/2025) 23A55UI039328 (10/1/2022 – 12/31/2025) 24A55UI00054 (10/1/2023 – 12/31/2026) 25A55UI000099 (10/1/2024 – 12/31/2027) Compliance Requirement: ETA 9052 – Nonmonetary Determination Time Lapse Detection Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: Compliance: ETA 9052, Nonmonetary Determination Time Lapse Detection - The ETA 9052 report contains monthly information on the time it takes states to issue nonmonetary determinations from the date the issues are first detected by the agency. Single-claimant and multi-claimant non-monetary determinations are included in the report. Nonmonetary determinations made by organizational units such as Benefits Accuracy Measurement (BAM) and Benefit Payment Control (BPC) are also included in the report. Note: Overpayment notices on uncontested earnings detected by any method (e.g., crossmatch) should not be included. The report is submitted electronically to the ETA National Office on the 20th of the month following the month to which the data relates. Control: Per 2 CFR section 200.303(a), a 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 comply 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). Condition: The Department was unable to provide documentation that the ETA 9052 – Nonmonetary Determination Time Lapse Detection report was submitted timely. Context: Four monthly ETA 9052 reports were selected for testing. Specifically, we noted the following: • For 1 of 4 reports selected for testing, the Department was unable to provide support that the report was submitted timely. The report for the month of May 2025 had a submission due date of June 20, 2025. The Department did not maintain a copy of the original report and auditors were unable to verify the submission date. After the original submission, the Department discovered a reporting error caused by a system transition, and the Department submitted a revised report on July 22, 2025. Questioned costs: Undetermined. Cause: The Department’s internal controls were insufficient to ensure that copies of submitted reports were retained. Effect: The untimely submission of required federal reports resulted in noncompliance with federal reporting requirements. Recommendation: The Department should review and update its reporting procedures and controls to ensure that ETA 9052 - Nonmonetary Determination Time Lapse Detection reports are submitted timely and that copies of report submissions are maintained and are readily available for audit. Reports should be reviewed for accuracy prior to submission. Views of responsible officials: There is no disagreement with the finding.
Reference Number: 2025-010 Prior Year Finding: No Federal Agency: U.S. Department of Labor State Agency: Executive Office of Labor and Workforce Development Federal Program: Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: 24A55UI00054 (10/1/2023 – 12/31/2026) Compliance Requirement: Reporting – ETA 9130, Financial Status Report, UI Programs Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: Compliance: ETA 9130, Financial Status Report, UI Programs (OMB No. 1205-0461) – The ETA 9130 report is used to report program and administrative expenditures. All ETA grantees are required to submit quarterly financial reports for each grant award which they operate, including standard program and pilot, demonstration, and evaluation projects. Financial data is required to be reported cumulatively from grant inception through the end of each reporting period. A separate ETA 9130 is submitted for each of the following: UI, PEUC, and PUA Administration, DUA, TRA/RTAA, and UI Projects (administration and benefits). Control: Per 2 CFR section 200.303(a), a 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 comply 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). Condition: ETA 9130, Financial Status Reports for UI Programs submitted by the Executive Office of Labor and Workforce Development (Department) did not agree to supporting documentation. Context: Eight ETA 9130 reports were selected for testing. For 1 of the 8 reports tested, we noted the following exception: • Expenditures related to the Interdepartmental Service Agreements (ISA) object class were not included in “Line G Federal Share of Unliquidated Obligations” of the report. The supporting documentation for the report included the object class ISA in the amount of federal share of unliquidated obligations; however, this was not included in the report. Questioned costs: Undetermined. Cause: The Department’s procedures were not sufficient to ensure that ETA 9130 reports were accurate and agreed with supporting documentation. Internal controls did not prevent or detect the errors. Effect: Incorrect data was reported which could misrepresent the State’s financial performance in the program. Recommendation: The Department should review its procedures to ensure that ETA 9130 reports are accurate and agree with supporting documentation. We further recommend that internal controls are enhanced to ensure that reports are reviewed for accuracy prior to submission. Views of responsible officials: There is no disagreement with the finding.
Reference Number: 2025-011 Prior Year Finding: 2024-005 Federal Agency: U.S. Department of Labor State Agency: Executive Office of Labor and Workforce Development Federal Program: Unemployment Insurance, COVID-19 – Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: UI372292255A25 (10/1/2021 – 12/31/2024) UI393282355A25 (10/1/2022 – 12/31/2025) 23A55UI039328 (10/1/2022 – 12/31/2025) 24A55UI00054 (10/1/2023 – 12/31/2026) 25A55UI000099 (10/1/2024 – 12/31/2027) Compliance Requirement: Special Tests and Provisions – UI Benefit Payments Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: The State Workforce Agency (SWA) is required by 20 CFR section 602.11(d) to operate and maintain a quality control system. The Benefits Accuracy Measurement (BAM) program is DOL’s quality control system designed to assess the accuracy of UI benefit payments and denied claims, unless the SWA is exempted from such requirement (20 CFR section 602.22). BAM estimates error rates, number of claims improperly paid or denied, and dollar amounts of benefits improperly paid or denied, by projecting the results from investigations of statistically sound random samples to the universe of all claims paid and denied in a state. Specifically, the SWA’s BAM unit is required to draw a weekly sample of payments and denied claims, complete prompt, and in-depth investigations to determine if the administration of the UC program is consistent with state and federal law (20 CFR section 602.21(d)). As presented in the ET Handbook No. 395, the investigation involves a review of state agency records, as well as contacting the claimant, employers, and third parties (either in-person, by telephone, or by fax) to conduct new and original fact-finding related to all of the information pertinent to the paid or denied claim that was sampled. BAM investigators review cases for adherence to federal and state law as well as official policy. The following time limits are established for completion of all cases for the year. (The "year" includes all batches of weeks ending in the calendar year.): • a minimum of 70 percent of cases must be completed within 60 days of the week ending date of the batch; • 95 percent of cases must be completed within 90 days of the week ending date of the batch; • a minimum of 98 percent of cases for the year must be completed within 120 days of the ending date of the calendar year. Control: Per 2 CFR section 200.303(a), a 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 comply 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). Condition: The Executive Office of Labor and Workforce Development (Department) did not complete BAM case investigations within the time limits established in the ET Handbook No. 395. Context: Sixty cases were selected for testing. The Department did not meet the required time limits for closing cases within 90 days. We noted that 92% of cases tested (55 of 60 cases) were closed within 90 days, which is less than the required 95%. Questioned costs: Undetermined. Cause: The Department’s procedures and controls were not sufficient to ensure it met the required BAM investigation time limits for closing cases. Auditors note that the Department’s corrective action plan from the prior audit had not yet been fully implemented in FY 2025. Effect: Noncompliance with BAM case investigation time limits could delay the detection and correction of inaccurate benefit payments and denied claims. Recommendation: We recommend the Department complete implementation of its corrective action plan from the prior year. We recommend the Department review and enhance procedures and controls to ensure that BAM case investigations are completed timely in accordance with the time limits established in the ET Handbook No. 395. Views of responsible officials: There is no disagreement with the finding.
Reference Number: 2025-012 Prior Year Finding: 2024-006 Federal Agency: U.S. Department of Labor State Agency: Executive Office of Labor and Workforce Development Federal Program: Unemployment Insurance, COVID-19 – Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: UI372292255A25 (10/1/2021 – 12/31/2024) UI393282355A25 (10/1/2022 – 12/31/2025) 23A55UI039328 (10/1/2022 – 12/31/2025) 24A55UI00054 (10/1/2023 – 12/31/2026) 25A55UI000099 (10/1/2024 – 12/31/2027) 23A60UR000009 (1/1/2023 – 9/30/2025) 24A60UR000073 (1/1/2024 – 9/30/2026) 25A60UR000122 (1/1/2025 – 6/30/2027) Compliance Requirement: Special Tests and Provisions: UI Reemployment Programs: RESEA Type of Finding: Significant Deficiency in Internal Control Over Compliance Criteria or specific requirement: Compliance: Per 42 U.S. Code § 506 (a) The Secretary of Labor (in this section referred to as the “Secretary”) shall award grants under this section for a fiscal year to eligible States to conduct a program of reemployment services and eligibility assessments for individuals referred to reemployment services as described in section 503(j) of this title for weeks in such fiscal year for which such individuals receive unemployment compensation. Further, per 42 U.S. Code § 506 (c) (1), In carrying out a State program of reemployment services and eligibility assessments using grant funds awarded to the State under this section, a State shall use such funds only for interventions demonstrated to reduce the number of weeks for which program participants receive unemployment compensation by improving employment outcomes for program participants. The UI program serves as one of the principal “gateways” to the workforce system. It is often the first workforce program accessed by individuals who need workforce services. The Worker Profiling and Reemployment Services (WPRS) and Reemployment Services and Eligibility Assessments (RESEA) programs serve as UI’s primary programs that facilitate the reemployment needs of UI claimants. RESEA is authorized by Section 306 of the Social Security Act and builds on the success of RESEA’s predecessor, the former UI Reemployment and Eligibility Assessment (REA) program. RESEA uses an evidence-based integrated approach that combines an eligibility assessment for continuing UI eligibility and the provision of reemployment services. State administration of the RESEA is voluntary and under certain circumstances may be designed to also satisfy WPRS requirements. Operating guidance for the RESEA program is updated annually. UIPL 10-22 provides RESEA operating Guidance for FY 2022. RESEA-related performance reports are due on the 20th day of the second month following the end of the reporting quarter. A state UI staff member must review these reports for accuracy each calendar quarter and prior to submission, in addition to being reviewed by the RESEA program lead (if a different staff member). Control: Per 2 CFR section 200.303(a), a 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 comply 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). Condition: The Department did not review performance reports prior to submission. Context: The Department lacks a formalized process for validating the accuracy of quarterly performance reports. Consequently, there was no documentation available to confirm that these reports were reviewed prior to submission. Questioned costs: Undetermined. Cause: The Department’s procedures and controls were not sufficient to ensure it met RESEA program and reporting requirements. The Department does not have a formal process to validate the accuracy of quarterly performance reports. Auditors note that the Department’s corrective action plan from the prior audit had not yet been fully implemented in FY 2025. Effect: The Department was unable to demonstrate that it was operating the RESEA program in accordance with federal requirements. Recommendation: We recommend the Department complete implementation of its corrective action plan from the prior year. We recommend the Department review and enhance procedures and controls to ensure that RESEA program requirements are met. We further recommend the Department develop a formal process to review quarterly performance reports for accuracy prior to submission. Views of responsible officials: There is no disagreement with the finding.
Reference Number: 2025-013 Prior Year Finding: No Federal Agency: U.S. Department of Labor State Agency: Executive Office of Labor and Workforce Development Federal Program: Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: UI372292255A25 (10/1/2021 – 12/31/2024) UI393282355A25 (10/1/2022 – 12/31/2025) 23A55UI039328 (10/1/2022 – 12/31/2025) 24A55UI00054 (10/1/2023 – 12/31/2026) 25A55UI000099 (10/1/2024 – 12/31/2027) Compliance Requirement: Special Tests and Provisions: UI Program Integrity – Overpayments Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: Compliance: States are (1) required to impose a monetary penalty (not less than 15 percent) on claimants whose fraudulent acts resulted in overpayments, and (2) states are prohibited from providing relief from charges to an employer’s Unemployment Insurance (UI) account when overpayments are the result of the employer’s failure to respond timely or adequately to a request for information. States may continue to waive recovery of overpayments in certain situations and must continue to offer the individual a fair hearing prior to recovery. In addition, states may approve “blanket waivers” where individuals are eligible for payment under an unemployment benefit program for a given week, but through no fault of the individual, they were paid incorrectly under either the PUA or PEUC program at a higher WBA, or specific to PUA, when, through no fault of the individual, the state paid the individual a minimum WBA based on DUA guidance other than UIPL No. 03-20 (UIPL No. 20-21, section 4.d.ii). Program requirements for overpayments include the State must identify the basis for the overpayment consistent with its written procedures. An overpayment memorandum is created summarizing the details of the overpayment and submitted to UI cross-match staff or claims deputy for review. Upon review, the overpayment is established, and a Deputy Decision or WVUC-B-14-J Overpayment Determination is generated and sent to the claimant. Control: Per 2 CFR section 200.303(a), a 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). Condition: The Executive Office of Labor and Workforce Development (Department) was not in compliance with program requirements for recovering overpayments. Context: Sixty overpayment claims were selected for testing. For 10 of 60 claims selected for testing we noted multiple errors were identified regarding overpayments documentation and recovery. Specifically, we noted the following: • For 5 of 60 claims, the claim was the result of a claimant error related to fault or fraud. The claimant was not being charged interest on the overpayment as required. • For 3 of 60 claims, the incorrect cause of the overpayment was reported in the system. • For 1 of 60 claims, there was a penalty balance charged to the claimant although the overpayment was not the result of fault or fraud. Questioned costs: Undetermined. Cause: The Department’s procedures and controls are not sufficient to ensure that overpayments are recovered in accordance with program requirements. Staff are not adequately trained in proper handling of overpayment documentation and recovery. Effect: Failure to recover overpayments in accordance with federal requirements compromises the integrity and sustainability of the UI program. Unrecovered overpayments reduce funds available to pay legitimate benefits, increase the risk of fraud and improper payments, and undermine compliance with federal program standards. Recommendation: The Department should perform staff training and strengthen its procedures and controls to ensure overpayments are identified, recorded, and recovered in a timely manner and in full compliance with federal requirements. Views of responsible officials: There is no disagreement with the finding.
Reference Number: 2025-014 Prior Year Finding: No Federal Agency: U.S. Department of Labor State Agency: Executive Office of Labor and Workforce Development Federal Program: WIOA Cluster, Employment Service Cluster Assistance Listing Number: 17.258, 17.259, 17.278, 17.207, 17.801 Award Number and Year: AA-38535-22-55-A-25 (4/1/2022 – 6/30/2025) 23A55AW000048 (7/1/2023 – 6/30/2026) 23A55AY000020 (4/1/2023 – 6/30/2026) 23A55WP000005 (7/1/2023 – 9/30/2026) 24A55WP000063 (7/1/2024 – 9/30/2027) 25A55WP000139 (7/1/2025 - 9/30/2028) 24A55WG000092 ((7/1/2024 – 9/30/2027) 23A55WG000028 (7/1/2023 – 9/30/2026) ES387362255A25 (7/1/2022 - 9/30/2025) 25555DV000114 (10/1/2024 - 9/30/2025) 24555DV000087 (10/1/2023 - 12/31/2025) 23555DV000008 (10/1/2022 - 12/31/2024) Compliance Requirement: Allowable Costs/Cost Principles – Indirect Costs Type of Finding: Significant Deficiency in Internal Control Over Compliance Criteria or specific requirement: Compliance: Per 2 CFR Part 200, Appendix V, all costs and other data used to distribute costs included in the central service cost allocation plan should be supported by formal accounting and other records that will support the propriety of the costs assigned to Federal awards. Per 2 CFR Part 200, Appendix VII C.1.b., where a governmental unit's department or agency has several major functions which benefit from its indirect costs in varying degrees, the allocation of indirect costs may require the accumulation of such costs into separate cost groupings which then are allocated individually to benefitted functions by means of a base which best measures the relative degree of benefit. The indirect costs allocated to each function are then distributed to individual Federal awards and other activities included in that function by means of an indirect cost rate(s). Control: Per 2 CFR section 200.303(a), a 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 comply 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). Condition: The Executive Office of Labor and Workforce Development (the Department) was unable to provide documentation supporting the calculation of its internal negotiated indirect cost rate (NICR) which was approved by the U.S. Department of Labor and was in effect for FY 2025. Context: WIOA Cluster: For 32 of 40 reimbursement requests selected for testing, the Department applied the approved internal NICR in effect for FY 2025. Auditors recalculated the NICR using supporting documentation provided by the Department and determined that the rate was 6.60% but the rate submitted to and approved by the U.S. Department of Labor was 4.19%. The Department was unable to provide documentation for how the 4.19% rate was calculated. Employment Service Cluster: For 32 of 40 reimbursement requests selected for testing, the Department applied the approved internal NICR in effect for FY 2025. Auditors recalculated the NICR using supporting documentation provided by the Department and determined that the rate was 6.60% but the rate submitted to and approved by the U.S. Department of Labor was 4.19%. The Department was unable to provide documentation for how the 4.19% rate was calculated. Cause: The Department’s procedures and internal controls were not operating effectively to ensure that it properly calculated its NICR nor that it maintained appropriate documentation supporting the rate calculation. The department indicated the lack of supporting documentation for the 4.19% rate was due to staff turnover. Effect: The rate supported by documentation was 6.60%, but the rate submitted to the U.S. Department of Labor was 4.19%, resulting in the Department receiving lower indirect cost reimbursement than it was entitled to. Questioned costs: None. The approved indirect cost rate was properly applied, but was lower than the rate calculated using supporting documentation. Recommendation: The Department should review and enhance its procedures and internal controls regarding the calculation of its negotiated indirect cost rate and for maintaining documentation supporting the rate calculation. This documentation should be readily available for audit. Views of responsible officials: There is no disagreement with the finding.
Reference Number: 2025-015 Prior Year Finding: 2024-010 Federal Agency: U.S. Department of Labor State Agency: Executive Office of Labor and Workforce Development Federal Program: WIOA Cluster Assistance Listing Number: 17.258, 17.259, 17.278 Award Number and Year: 24A55AW000097 (7/1/2024 – 6/30/2027) AA-38535-22-55-A-25 (4/1/2022 – 6/30/2025) 24A55AT000067 (7/1/2024 – 6/30/2027) 24A55AY000057 (4/1/2024 – 6/30/2027) 23A55AY000020 (4/1/2023 – 6/30/2026) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (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). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. On March 8, 2025, FSRS.gov was retired, and all subaward reporting data and functionality transitioned to SAM.gov after that date. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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 comply 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). Section III – Findings and Questioned Costs – Major Federal Programs (Continued) Condition: The Executive Office of Labor and Workforce Development (Department) did not report subaward information timely and did not have evidence of review and approval of FFATA reports prior to report submission. Context: Ten subawards were selected for testing and several of these subawards were modified after the initial award, for a total of fourteen subaward transactions tested. Nine of fourteen subaward transactions tested were not reported in accordance with FFATA requirements. Specifically, we noted the following: • 9 of 14 subaward transactions were not reported timely. The subaward transactions were reported from one to seven months after the due date. • For 2 of 14 subaward transactions, the Department was unable to produce documentation supporting review and approval of the FFATA reports prior to submission. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Department’s procedures and controls were not sufficient to ensure that subaward transactions were reported timely nor that the FFATA report submissions were reviewed and approved prior to submission. Auditors note that the Department’s corrective action plan from the prior audit had not yet been fully implemented in FY 2025. Effect: Subawards were not reported in accordance with FFATA requirements. Questioned costs: None. Recommendation: We recommend the Department complete implementation of its corrective action plan from the prior year. The Department’s procedures and internal controls should ensure that all required FFATA report submissions are reviewed, approved and subsequently reported timely no later than the end of the month following the month of issuance of the subaward or subaward modification. Documentation of implemented controls should be readily available for audit. Views of responsible officials: There is no disagreement with the finding.
Reference Number: 2025-016 Prior Year Finding: 2024-011 Federal Agency: U.S. Department of Labor State Agency: Executive Office of Labor and Workforce Development Federal Program: WIOA Cluster Assistance Listing Number: 17.258, 17.259, 17.278 Award Number and Year: 23A55AT000036 (7/1/2023 – 6/30/2026) 24A55AW000097 (7/1/2024 – 6/30/2027) AA-38535-22-55-A-25 (4/1/2022 – 6/30/2025) 24A55AT000067 (7/1/2024 – 6/30/2027) 23A55AW000048 (7/1/2023 – 6/30/2026) Compliance Requirement: Reporting – ETA 9130 – Financial Report Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: ETA 9130, Financial Report – All ETA grantees are required to submit quarterly financial reports for each grant award they receive. Reports are required to be prepared using the specific format and instructions for the applicable program(s): Employment Service and Unemployment Insurance Programs (Employment Service Cluster) and Workforce Innovation and Opportunity Act (WIOA) instructions for the following: Statewide Adult; Workforce Statewide Youth; Statewide Dislocated Worker; Local Adult; Local Youth; and Local Dislocated Worker. A separate ETA 9130 is submitted for each of these categories. Funds reserved and set aside for PFP contract strategies are required to be reported on ETA 9130 basic reports for each ESC or WIOA fund source utilized. Reports are due 45 days after the end of the reporting quarter. Financial data is required to be reported cumulatively from grant inception through the end of each reporting period. Control: Per 2 CFR section 200.303(a), a 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 comply 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). Condition: ETA 9130 financial reports submitted by the Executive Office of Labor and Workforce Development (Department) did not agree to supporting documentation. Context: Nine ETA 9130 reports were selected for testing, which included three reports for the Adult program, four reports for the Dislocated Worker program, and two reports for the Youth program. For 7 of the 9 reports tested, exceptions were noted for several line items on each report. Specifically, we noted the following exceptions: • 3 of 3 reports for the Adult program did not agree to supporting documentation. The discrepancies were found in the following line items: o Federal share of expenditure o Total administration expenditures o Federal share unobligated obligations o Total program income earned o Program income expended in accordance with the addition method • 3 of 4 reports for the Dislocated Worker program did not agree to support documentation. The discrepancies were found in the following line items: o Federal share of expenditure o Total administration expenditures o Federal share unobligated obligations o Total program income earned o Program income expended in accordance with the addition method o Real property proceeds expended • 1 of 2 reports for the Youth program did not agree to supporting documentation. The discrepancies were found in the following line items: o Recapture funds expended o Program income expended in accordance with the addition method Cause: The Department’s procedures were not sufficient to ensure that ETA 9130 reports were accurate and agreed with supporting documentation. Internal controls did not prevent or detect the errors. Auditors note that the Department’s corrective action plan from the prior audit had not yet been fully implemented in FY 2025. Effect: Incorrect data was reported which could misrepresent the State’s financial performance in the program. Questioned costs: Undetermined. Recommendation: We recommend the Department complete implementation of its corrective action plan from the prior year. The Department should review its procedures to ensure that ETA 9130 reports are accurate and agree with supporting documentation. We further recommend that internal controls are enhanced to ensure that reports are reviewed for accuracy prior to submission. Views of responsible officials: There is no disagreement with the finding.
Reference Number: 2025-017 Prior Year Finding: 2024-013 Federal Agency: U.S. Department of Labor State Agency: Executive Office of Labor and Workforce Development Federal Program: WIOA Cluster Assistance Listing Number: 17.258, 17.259, 17.278 Award Number and Year: 24A55AW000097 (7/1/2024 – 6/30/2027) 23A55AW000048 (7/1/2023 – 6/30/2026) AA-38535-22-55-A-25 (7/1/2022 – 6/30/2025) Compliance Requirement: Allowable Costs/Cost Principles – Time and Effort Reporting Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per 2 CFR § 200.430 (a), costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity's laws or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable. Per 2 CFR § 200.430 (i), charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: • Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, • Be incorporated into the official records of the non-Federal entity, • Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities, • Encompass both federally assisted, and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity's written policy, • Comply with the established accounting policies and practices of the non-Federal entity, • Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Control: Per 2 CFR section 200.303(a), a 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 comply 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). Condition: The Executive Office of Labor and Workforce Development (the Department) charged budgeted personnel costs to the program instead of actual costs due to errors coding employee timesheets. Context: Two of sixty timesheets selected for testing charged costs to the program based on budgeted rates instead of actual time worked per employee timesheets. Combination codes are used by employees to allocate and certify hours worked to Federal grants and employees’ supervisors are required to perform a line-item review of hours spent on each grant before approving timesheets. If a timesheet is approved without the use of combination codes, the system defaults to budgeted grant allocations entered into the Labor Cost Management (LCM) module of the Massachusetts Management Accounting and Reporting System (MMARS). For these two transactions, the employee had a bilingual differential and was missing combination codes. Payment was not based on the employee timesheets of 55% worked on the program but instead was based on a budgeted percentage of time of 100%. The program was therefore overcharged by 45% for the bilingual differential portion of the employee payroll. Cause: The Department’s controls were not operating effectively to ensure that time and effort reporting was performed in accordance with federal requirements. Auditors note that the Department’s corrective action plan from the prior audit had not yet been fully implemented in FY 2025. Effect: Noncompliance occurred as payroll charges allocated to the grants were not reflective of actual activity for which the employees were compensated. Questioned costs: $72, the amount overcharged to the program for the pay period tested for the bilingual differential. Recommendation: We recommend the Department complete implementation of its corrective action plan from the prior year. The Department should update its procedures and controls and perform additional training over time and effort reporting to ensure that payroll costs charged to the program are based on actual time and effort and a combination code that is allowable under the program. The Department should not seek federal reimbursement unless it can substantiate that the time and effort was dedicated to the federal program. Views of responsible officials: There is no disagreement with the finding.
Reference Number: 2025-018 Prior Year Finding: No Federal Agency: U.S. Department of Labor State Agency: Executive Office of Labor and Workforce Development Federal Program: WIOA Cluster Assistance Listing Number: 17.258, 17.259, 17.278 Award Number and Year: 24A55AW000097 (7/1/2024 – 6/30/2027) 23A55AW000048 (7/1/2023 – 6/30/2026) AA-38535-22-55-A-25 (7/1/2022 – 6/30/2025) Compliance Requirement: Allowable Costs/Cost Principles – Time and Effort Reporting Earmarking Type of Finding: Significant Deficiency in Internal Control Over Compliance Criteria or specific requirement: Compliance: Per 2 CFR § 200.430 (a), costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity's laws or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable. Per 2 CFR § 200.430 (i), charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: • Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, • Be incorporated into the official records of the non-Federal entity, • Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities, • Encompass both federally assisted, and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity's written policy, • Comply with the established accounting policies and practices of the non-Federal entity, • Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Earmarking – Statewide Activities: The governor shall reserve not more than 15 percent of each of the amounts allotted to the state Adult, Dislocated Worker, and Youth Activities for a fiscal year to carry out statewide activities under 29 USC 3164(b) or statewide employment and training activities for adults or dislocated workers under 29 USC 3174(a) (29 USC 3163(a), 128 Stat. 1502). Control: Per 2 CFR section 200.303(a), a 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 comply 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). Condition: The Executive Office of Labor and Workforce Development (the Department) does not have procedures to ensure it does not exceed the 15% limit for statewide activities. Context: The Department does not have controls in place to track or monitor the Governor's Discretionary Funds (GDF) to ensure expenditures charged against this allotment, whether through direct timesheets or payroll adjustments, do not exceed the required 15% limit across all programs within the WIOA Cluster. Cause: The Department lacks sufficient procedures or controls to ensure that it does not exceed the 15% limit for statewide activities. Effect: Failure to track or monitor the GDF could result in the Department exceeding the 15% limit for statewide activities. Questioned costs: None noted. The Department did not exceed the 15% limit. Recommendation: We recommend the Department develop procedures and controls to ensure expenditures coded to the GDF from timesheets or manual adjustments do not exceed the 15% limit. Views of responsible officials: There is no disagreement with the finding.
Reference Number: 2025-019 Prior Year Finding: 2024-014 Federal Agency: U.S. Department of Labor State Agency: Executive Office of Labor and Workforce Development Federal Program: WIOA Cluster Assistance Listing Number: 17.258, 17.259, 17.278 Award Number and Year: AA-38535-22-55-A-25 (4/1/2022 – 6/30/2025) 23A55AY000020 (4/2/2023 – 6/30/2026) 23A55AT000036 (7/1/2023 – 6/30/2026) 23A55AW000048 (7/1/2023 – 6/30/2026) 24A55AY000057 (4/1/2024 – 6/30/2027) 24A55AT000067 (7/1/2024 – 6/30/2027) 24A55AW000097 (7/1/2024 – 6/30/2027) Compliance Requirement: Subrecipient Monitoring Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per 2 CFR section 200.332(a) - Requirements for Pass-Through Entities states, in part, that all pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Control: Per 2 CFR section 200.303(a), a 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 comply 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). Condition: The Executive Office of Labor and Workforce Development (Department) omitted required federal award information from subawards it issued to their subrecipients. Context: For six of six subawards selected for testing, the subaward agreement did not include the federal award date for when the Federal agency awarded the funds to the prime recipient. Cause: The Department’s procedures and internal controls were not sufficient to ensure that subawards included all required information in accordance with 2 CFR section 200.332. Effect: Excluding required federal grant award information at the time of the subaward may cause subrecipients and their auditors to be uninformed about specific program information and other regulations that apply to the funds they receive. There is also the potential for subrecipients to have incomplete Schedules of Expenditures of Federal Awards (SEFA) in their Single Audit reports, and federal funds may not be properly audited at the subrecipient level in accordance with the Uniform Guidance. Questioned costs: Undetermined. Recommendation: We recommend the Department review and enhance internal controls and procedures to ensure that required information is included in its subawards. In its FY 2024 corrective action plan, the Department indicated that it had revised its documented internal controls and procedures to correct the prior year finding. We recommend that the Department revisit its procedures and controls and update as needed to ensure that the federal award date is included in all subaward agreements. Views of responsible officials: There is no disagreement with the finding.
Reference Number: 2025-020 Prior Year Finding: No Federal Agency: U.S. Department of Education State Agency: Department of Elementary and Secondary Education Federal Program: COVID-19 – Elementary and Secondary School Emergency Relief Fund COVID-19 – American Rescue Plan-Elementary and Secondary School Emergency Relief (ARP ESSER) Assistance Listing Number: 84.425D, 84.425U Award Number and Year: S425D210025 (1/6/2021 – 3/31/2025) S425U210025 (3/4/2021 – 3/28/2026) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (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). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. On March 8, 2025, FSRS.gov was retired, and all subaward reporting data and functionality transitioned to SAM.gov after that date. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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 comply 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). Condition: The Department of Elementary and Secondary Education (Department) did not report subaward information in accordance with FFATA requirements. Context: Twelve of forty subawards selected for testing were not reported timely. The subawards were reported from 1 day to 423 days late. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Department’s procedures and controls were not sufficient to ensure that subawards were reported no later than the end of the month following the month of issuance. Effect: Subawards were not reported timely in accordance with FFATA reporting requirements. Questioned costs: None noted. Recommendation: We recommend the Department develop procedures and internal controls to ensure that all required subawards are reported timely and accurately no later than the end of the month following the month of issuance of each subaward. Views of responsible officials: There is no disagreement with the finding.
Reference Number: 2025-021 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Agency: Executive Office of Aging and Independence Federal Program: Aging Cluster Assistance Listing Number: 93.044, 93.045, 93.053 Award Number and Year: 2101MASSC6 (4/1/2021 - 9/30/2024) 2101MAHDC6 (4/1/2021 - 9/30/2024) 2101MACMC6 (4/1/2021 - 9/30/2024) 2201MAOASS (10/1/2021 - 9/30/2024) 2201MAOAPH (10/1/2021 - 9/30/2024) 2201MAOAHD (10/1/2021 - 9/30/2024) 2201MAOANS (10/1/2021 - 9/30/2024) 2201MAOACM (10/1/2021 - 9/30/2024) 2301MAOACM (10/1/2022 - 9/30/2024) 2301MAOAHD (10/1/2022 - 9/30/2024) 2301MAOAPH (10/1/2022 - 9/30/2025) 2301MAOASS (10/1/2022 - 9/30/2024) 2401MAOANS (10/1/2023 - 9/30/2025) 2401MAOASS (10/1/2023 - 9/30/2025) 2401MAOACM (10/1/2023 - 9/30/2025) 2401MAOAHD (10/1/2023 - 9/30/2025) 2501MAOANS (10/1/2024 - 9/30/2026) 2501MAOASS (10/1/2024 - 9/30/2026) 2501MAOACM (10/1/2024 - 9/30/2026) 2501MAOAHD (10/1/2024 - 9/30/2026) Compliance Requirement: Reporting - Financial Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Standard Form 425 - The submission of interim federal financial reports (FFR) will be on a quarterly, semi-annual, or annual basis, as directed by the Federal agency. A final FFR shall be submitted at the completion of the award agreement. The following reporting period end dates shall be used for interim reports: 3/31, 6/30, 9/30, or 12/31. For final FFRs, the reporting period end date shall be the end date of the project or grant period. Quarterly and semi-annual interim reports shall be submitted no later than 30 days after the end of each reporting period. Annual reports shall be submitted no later than 90 days after the end of each reporting period. Final reports shall be submitted no later than 90 days after the project or grant period end date. Administration for Community Living (ACL)/Administration of Aging (AoA) Title III Supplemental Form to SF-425: Final reports should be marked on the supplemental when a final has been submitted in the current and/or prior reporting periods. State Agencies are required to complete the Supplemental Form to the SF-425 Title III. States which are a Single State Planning and Service Area and do not have Area Agencies on Aging (AAA) are also required to complete the ACL/AoA Supplemental Form with each submission. This includes all lines and columns, except where a line is specifically designated for an Area Agency on Aging (AAA). The totals for each Part should total back to the ITEM on the SF425 form. Control: Per 2 CFR section 200.303(a), a 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 comply 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). Condition: The Executive Office of Aging and Independence (Department) failed to submit Federal Financial Reports (FFRs) and Title III Supplemental Form to SF-425 as required by the program. Context: Eleven of fourteen FFRs required to be submitted by the Department during FY 2025 were not submitted. The Department submitted reports only for awards 2201MAOACM, 2201MAOAHD, and 2201MAOASS. Three of four Title III Supplemental Form to SF-425 required to be submitted by the Department during FY 2025 were not submitted. The Department only submitted a report related to 2022. Questioned costs: Undetermined. Cause: The Department does not have procedures or internal controls to ensure that FFRs and Title III Supplemental Form to SF-425 are submitted as required by the program. Effect: FFRs were not submitted for approximately 80% of the grant awards issued to the Department and Title III Supplemental Form to SF-425 were not submitted for approximately 75% of the open grant years. Recommendation: We recommend the Department develop procedures and internal controls to ensure that it submits reports for all grant awards it receives for the program, in accordance with its grant agreements. Views of responsible officials: There is no disagreement with the finding.
Reference Number: 2025-022 Prior Year Finding: 2024-016 Federal Agency: U.S. Department of Health and Human Services State Agency: Executive Office of Aging and Independence Federal Program: Aging Cluster Assistance Listing Number: 93.044, 93.045, 93.053 Award Number and Year: 2101MASSC6 (4/1/2021 - 9/30/2024) 2101MAHDC6 (4/1/2021 - 9/30/2024) 2101MACMC6 (4/1/2021 - 9/30/2024) 2201MAOASS (10/1/2021 - 9/30/2024) 2201MAOAPH (10/1/2021 - 9/30/2024) 2201MAOAHD (10/1/2021 - 9/30/2024) 2201MAOANS (10/1/2021 - 9/30/2024) 2201MAOACM (10/1/2021 - 9/30/2024) 2301MAOACM (10/1/2022 - 9/30/2024) 2301MAOAHD (10/1/2022 - 9/30/2024) 2301MAOAPH (10/1/2022 - 9/30/2025) 2301MAOASS (10/1/2022 - 9/30/2024) 2401MAOANS (10/1/2023 - 9/30/2025) 2401MAOASS (10/1/2023 - 9/30/2025) 2401MAOACM (10/1/2023 - 9/30/2025) 2401MAOAHD (10/1/2023 - 9/30/2025) 2501MAOANS (10/1/2024 - 9/30/2026) 2501MAOASS (10/1/2024 - 9/30/2026) 2501MAOACM (10/1/2024 - 9/30/2026) 2501MAOAHD (10/1/2024 - 9/30/2026) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (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). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. On March 8, 2025, FSRS.gov was retired, and all subaward reporting data and functionality transitioned to SAM.gov after that date. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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 comply 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). Condition: The Executive Office of Aging and Independence (Department) did not report subaward information per FFATA requirements. Context: The Department informed auditors that no subawards were reported. Therefore, a sample was unavailable for testing. Cause: The Department does not have procedures or controls regarding subaward reporting in accordance with FFATA requirements. Auditors noted that the Department’s corrective action plan from the prior audit had not been completed. Effect: Subawards were not reported in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the Department complete implementation of its corrective action plan from the prior year. We recommend the Department develop procedures and internal controls to ensure that all required subawards are reported timely and accurately no later than the end of the month following the month of issuance of each subaward. Views of responsible officials: There is no disagreement with the finding.
Reference Number: 2025-023 Prior Year Finding: 2024-018 Federal Agency: U.S. Department of Health and Human Services State Agency: Executive Office of Aging and Independence Federal Program: Aging Cluster Assistance Listing Number: 93.044, 93.045, 93.053 Award Number and Year: 2101MASSC6 (4/1/2021 - 9/30/2024) 2101MAHDC6 (4/1/2021 - 9/30/2024) 2101MACMC6 (4/1/2021 - 9/30/2024) 2201MAOASS (10/1/2021 - 9/30/2024) 2201MAOAPH (10/1/2021 - 9/30/2024) 2201MAOAHD (10/1/2021 - 9/30/2024) 2201MAOANS (10/1/2021 - 9/30/2024) 2201MAOACM (10/1/2021 - 9/30/2024) 2301MAOACM (10/1/2022 - 9/30/2024) 2301MAOAHD (10/1/2022 - 9/30/2024) 2301MAOAPH (10/1/2022 - 9/30/2025) 2301MAOASS (10/1/2022 - 9/30/2024) 2401MAOANS (10/1/2023 - 9/30/2025) 2401MAOASS (10/1/2023 - 9/30/2025) 2401MAOACM (10/1/2023 - 9/30/2025) 2401MAOAHD (10/1/2023 - 9/30/2025) 2501MAOANS (10/1/2024 - 9/30/2026) 2501MAOASS (10/1/2024 - 9/30/2026) 2501MAOACM (10/1/2024 - 9/30/2026) 2501MAOAHD (10/1/2024 - 9/30/2026) Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Per 2 CFR section 200.332(a) - Requirements for Pass-Through Entities states, in part, that all pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Per 2 CFR section 200.332(e) and (g), pass-through entities must monitor the activities of a subrecipient as necessary to ensure that the subrecipient complies with Federal statutes, regulations, and the terms and conditions of the subaward. The pass-through entity is responsible for monitoring the overall performance of a subrecipient to ensure that the goals and objectives of the subaward are achieved. In monitoring a subrecipient, a pass-through entity must review financial and performance reports, ensure that the subrecipient takes corrective action on all significant developments that negatively affect the subaward, issue a management decision for audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity, resolve audit findings specifically related to the subaward, and verify that a subrecipient is audited as required by Subpart F. Control: Per 2 CFR section 200.303(a), a 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 comply 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). Condition: The Executive Office of Aging and Independence (Department) issued subawards that did not contain all required federal award information, and it failed to properly monitor subrecipients. Context: Exceptions were found for eight of eight subawards selected for testing. Subawards were missing one or more required federal award identification elements and were not properly monitored. Specifically, we noted the following: • 4 of 8 subawards were missing one or more required award identification elements including the Federal Award Date, the Federal Award Identification Number (FAIN), the name of the Federal agency, the Assistance Listing number (ALN) and the federal award title, the dollar amount made available under each ALN, and the federal award project description as required by the Federal Funding Accountability and Transparency Act (FFATA). • 2 of 8 subrecipients selected for testing were not properly monitored by the Department. The Department was unable to provide documentation that it had proper monitoring procedures in place nor that monitoring procedures were followed for these subrecipients. • For 1 of 8 subrecipients, the Department did not obtain a copy of the subrecipient’s annual single audit report. Therefore, the Department did not verify that its annual single audit had been conducted, nor did it issue a management decision on audit findings. Questioned costs: Undetermined. Cause: The Department’s procedures and internal controls were not sufficient to ensure that the Department provided all required federal information to subrecipients at the time of the subaward nor that subrecipient monitoring was completed in accordance with the requirements of the federal programs. Auditors noted that the Department’s corrective action plan from the prior audit had not been completed. Effect: Excluding required federal grant award information at the time of the subaward may cause subrecipients and their auditors to be uninformed about specific program and other regulations that apply to the funds they receive. There is also the potential for subrecipients to have incomplete Schedules of Expenditures of Federal Awards (SEFA) in their Single Audit reports, and federal funds may not be properly audited at the subrecipient level in accordance with the Uniform Guidance. Failure to conduct adequate subrecipient monitoring may result in a failure of the Department to detect that subawards were used for unauthorized purposes, were managed in violation of the terms and conditions of the subawards, or that subaward performance goals were not achieved. There is an increased risk that subrecipients could be inappropriately spending and/or inaccurately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by Department personnel on a timely basis. Recommendation: We recommend the Department complete implementation of its corrective action plan from the prior year. The Department should review and enhance internal controls and procedures to ensure that it includes all required information in the subaward agreements. We also recommend the Department review and enhance its internal controls and procedures to ensure subrecipient monitoring is performed in compliance with the requirements of the federal programs. Views of responsible officials: There is no disagreement with the finding.
Reference Number: 2025-024 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Agency: Executive Office of Aging and Independence Federal Program: Aging Cluster Assistance Listing Number: 93.044, 93.045, 93.053 Award Number and Year: 2101MASSC6 (4/1/2021 - 9/30/2024) 2101MAHDC6 (4/1/2021 - 9/30/2024) 2101MACMC6 (4/1/2021 - 9/30/2024) 2201MAOASS (10/1/2021 - 9/30/2024) 2201MAOAPH (10/1/2021 - 9/30/2024) 2201MAOAHD (10/1/2021 - 9/30/2024) 2201MAOANS (10/1/2021 - 9/30/2024) 2201MAOACM (10/1/2021 - 9/30/2024) 2301MAOACM (10/1/2022 - 9/30/2024) 2301MAOAHD (10/1/2022 - 9/30/2024) 2301MAOAPH (10/1/2022 - 9/30/2025) 2301MAOASS (10/1/2022 - 9/30/2024) 2401MAOANS (10/1/2023 - 9/30/2025) 2401MAOASS (10/1/2023 - 9/30/2025) 2401MAOACM (10/1/2023 - 9/30/2025) 2401MAOAHD (10/1/2023 - 9/30/2025) 2501MAOANS (10/1/2024 - 9/30/2026) 2501MAOASS (10/1/2024 - 9/30/2026) 2501MAOACM (10/1/2024 - 9/30/2026) 2501MAOAHD (10/1/2024 - 9/30/2026) Compliance Requirement: Matching Type of Finding: Significant Deficiency in Internal Control Over Compliance Criteria or specific requirement: Compliance: Matching requirements for Title III Supportive Services and Nutrition Services and American Rescue Plan Supportive Services and Nutrition Services Grants include the following: • State and Area Agencies – Area Plan Administration: State and area agencies, in the aggregate, must contribute at least 25 percent of the costs of administration of area plans. For States, since this match is computed based on the aggregate of all area agencies in the state. • Service Provision: All services, whether provided by the State Agency, an Area Agency, or other service providers (excluding any ombudsman services provided under the authority of 42 USC 3024 (d)(1)(D)) must be funded with a nonfederal match of at least 15 percent. One-third of the required 15 percent match must come from state sources, and this percentage must be met on a statewide basis. Funds for ombudsman services provided under the authority of 42 USC 3024 (d)(1)(B) are not required to be matched. Control: Per 2 CFR section 200.303(a), a 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 comply 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). Condition: The Executive Office of Aging and Independence (Department) did not review its calculation of matching requirements for accuracy. Context: The Department’s calculation of match for Area Plan Administration and for Service Provision were not reviewed for accuracy prior to submission. Auditors determined that the calculations did not agree to supporting documentation. These variances did not affect the total match calculated and the Department met compliance related to the program’s overall required match. Questioned costs: None noted. The Department’s overall match requirement was met. Cause: The Department’s internal controls were not sufficient to ensure that calculations of its matching requirements were reviewed for accuracy prior to submission. Effect: Failure to review matching requirement calculations could result in potential errors going undetected and the Department might not meet its matching requirements. Recommendation: We recommend the Department review and enhance its internal controls regarding review and approval of program matching calculations to ensure that they are accurate and agree to supporting documentation. Views of responsible officials: There is no disagreement with the finding.
Reference Number: 2025-025 Prior Year Finding: 2024-019 Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Public Health Federal Program: Immunization Cooperative Agreements, COVID-19 - Immunization Cooperative Agreements Assistance Listing Number: 93.268 Award Number and Year: 6 NH23IP922629 (7/1/2019-6/30/2025) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (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). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. On March 8, 2025, FSRS.gov was retired, and all subaward reporting data and functionality transitioned to SAM.gov after that date. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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 comply 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). Condition: The Department of Public Health (Department) did not report subaward information in accordance with FFATA requirements. Context: Eight of eight subawards were not reported to SAM.gov until after they were selected for testing by auditors. The subawards were issued from 7/1/2024 through 3/31/2025 but were not reported until 1/22/2026 after they were selected for testing during the FY 2025 audit. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Department has not implemented its corrective action plan from the prior audit. It does not have sufficient procedures and internal controls to ensure that all required subawards are reported timely and accurately. Effect: Subawards were not reported to SAM.gov until after they were selected for testing by auditors. Questioned costs: None noted. Recommendation: We recommend the Department complete implementation of its corrective action plan from the prior audit. It should establish procedures and internal controls to ensure that all required subawards are reported timely and accurately to SAM.gov no later than the end of the month following the month of issuance of each subaward. Views of responsible officials: There is no disagreement with the finding.
Reference Number: 2025-026 Prior Year Finding: 2024-020 Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Public Health Federal Program: Epidemiology and Laboratory Capacity for Infectious Diseases COVID-19 – Epidemiology and Laboratory Capacity for Infectious Diseases Assistance Listing Number: 93.323 Award Number and Year: 19NU50CK000518 (8/1/2022 – 7/31/2027) 24NU51CK000343 (8/1/2024 – 7/31/2025) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (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). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. On March 8, 2025, FSRS.gov was retired, and all subaward reporting data and functionality transitioned to SAM.gov after that date. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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 comply 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). Condition: The Department of Public Health (Department) did not report subaward information in accordance with FFATA requirements. Context: Eight of eight subawards were not reported to SAM.gov until after they were selected for testing by auditors. The subawards were issued in May 2024 but were not reported until January 2026 after they were selected for testing during the FY 2025 audit. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Department has not implemented its corrective action plan from the prior audit. The Department does not have sufficient procedures and internal controls to ensure that all required subawards are reported timely and accurately. Effect: Subawards were not reported to SAM.gov until after they were selected for testing by auditors. Questioned costs: None noted. Recommendation: We recommend the Department complete implementation of its corrective action plan from the prior audit. It should establish procedures and internal controls to ensure that all required subawards are reported timely and accurately to SAM.gov no later than the end of the month following the month of issuance of each subaward. Views of responsible officials: There is no disagreement with the finding.
Reference Number: 2025-027 Prior Year Finding: 2024-022 Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Public Health Federal Program: Epidemiology and Laboratory Capacity for Infectious Diseases COVID-19 – Epidemiology and Laboratory Capacity for Infectious Diseases Assistance Listing Number: 93.323 Award Number and Year: 19NU50CK000518 (8/1/2022 – 7/31/2027) 24NU51CK000343 (8/1/2024 – 7/31/2025) Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Per 2 CFR section 200.332(a) - Requirements for Pass-Through Entities states, in part, that all pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Per 2 CFR section 200.332(e) and (g), pass-through entities must monitor the activities of a subrecipient as necessary to ensure that the subrecipient complies with Federal statutes, regulations, and the terms and conditions of the subaward. The pass-through entity is responsible for monitoring the overall performance of a subrecipient to ensure that the goals and objectives of the subaward are achieved. In monitoring a subrecipient, a pass-through entity must review financial and performance reports, ensure that the subrecipient takes corrective action on all significant developments that negatively affect the subaward, issue a management decision for audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity, resolve audit findings specifically related to the subaward, and verify that a subrecipient is audited as required by Subpart F. Control: Per 2 CFR section 200.303(a), a 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 comply 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). Condition: The Department of Public Health (Department) did not properly monitor subrecipients and the Department omitted required federal award information from subawards. Context: Eight subawards issued to eight subrecipients were selected for testing. Specifically, we noted the following exceptions: • For eight of eight subrecipients selected for testing, the Department did not adequately monitor the subrecipients. It did not obtain a copy of the subrecipients’ annual single audit report. Therefore, the Department did not verify that the annual single audits had been conducted, nor did it issue a management decision on any audit findings. • For eight of eight subawards selected for testing, the Federal Award Identification Number (FAIN) was omitted from the subaward agreements. Cause: The Department’s procedures were not sufficient to ensure that subrecipients were properly monitored, nor that subawards included all required information. Internal controls did not detect or prevent the errors. The Department had not completed implementation of its corrective action plan from the prior year. Effect: Excluding required federal grant award information at the time of the subaward may cause subrecipients and their auditors to be uninformed about specific program and other regulations that apply to the funds they receive. There is also the potential for subrecipients to have incomplete Schedules of Expenditures of Federal Awards (SEFA) in their Single Audit reports, and federal funds may not be properly audited at the subrecipient level in accordance with the Uniform Guidance. Failure to conduct adequate subrecipient monitoring may result in a failure of the Department to detect that subawards were used for unauthorized purposes, were managed in violation of the terms and conditions of the subawards, or that subaward performance goals were not achieved. There is an increased risk that subrecipients could be inappropriately spending and/or inaccurately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by Department personnel on a timely basis. Questioned costs: None. Recommendation: We recommend the Department complete implementation of its corrective action plan from the prior year. We recommend the Department review and enhance its internal controls and procedures to ensure subrecipient monitoring is performed in compliance with the requirements of the federal program. The Department should review and enhance internal controls and procedures to ensure that it includes all required information in the subaward agreements. Views of responsible officials: There is no disagreement with the finding.
Reference Number: 2025-028 Prior Year Finding: 2024-021 Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Public Health Federal Program: Epidemiology and Laboratory Capacity for Infectious Diseases, COVID-19 - Epidemiology and Laboratory Capacity for Infectious Diseases Assistance Listing Number: 93.323 Award Number and Year: 19NU50CK000518 (8/1/2022 – 7/31/2027) 24NU51CK000343 (8/1/2024 – 7/31/2025) Compliance Requirement: Reporting Type of Finding: Significant Deficiency in Internal Control Over Compliance Criteria or specific requirement: Compliance: Non-federal entities are required to submit Financial and Performance Measure Reports in accordance with the terms and conditions of the Federal award. Control: Per 2 CFR section 200.303(a), a 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 comply 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). Condition: The Department of Public Health (Department) did not review and approve quarterly Core Base Grant financial reports or COVID Core Base Grant financial reports prior to submission. Context: Four quarterly reports were selected for testing, comprising of two Core Base Grant Financial Reports and two COVID Core Base Grant financial. For two of the four reports tested, there was no evidence of review and approval prior to submission. Questioned costs: Undetermined. Cause: The Department has not completed implementation of the corrective action plan from the prior audit. The Department's internal controls were not sufficient to ensure that quarterly financial reports were reviewed prior to submission. Effect: Failure to review and approve reports prior to submission could allow reporting errors to be undetected. Recommendation: We recommend the Department complete implementation of its corrective action plan from the prior audit. We recommend that the Department review and enhance its internal controls to ensure financial reports are reviewed and approved prior to submission. Views of responsible officials: There is no disagreement with the finding.
Reference Number: 2025-031 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Children and Families Federal Program: Adoption Assistance Assistance Listing Number: 93.659 Award Number and Year: 2501MAADPT (10/1/2023 – 9/30/2024) 2401MAADPT (10/1/2024 – 9/30/2025) Compliance Requirement: Eligibility Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Adoption assistance subsidy payments may be paid on behalf of a child if eligibility requirements are met. Requirements include the following: (1) Categorical Eligibility - Applicable and Non-Applicable Children – An applicable child is a child for whom an adoption assistance agreement was entered into in fiscal year (FY) 2010 or later and who meets the applicable age requirement (differs over a multi fiscal year phase-in period beginning in FY 2010), or a child who has been in foster care under the responsibility of the Title IV-E agency for at least 60 consecutive months, or a sibling to either such child if both are to have the same adoption placement (42 USC 673(e)(2) and (e)(3)). (2)(f) The prospective adoptive parent(s) and any other adult living in the home who has resided in the provider home in the preceding five years must satisfactorily have met a child abuse and neglect registry check. This requirement became effective on October 1, 2006, unless the state requires legislation to implement the requirement, in which case a delayed implementation is permitted until the first quarter of the state’s regular legislative session following the close of the first regular session beginning after October 1, 2006. The requirement applies to foster care maintenance payments for calendar quarters beginning on or after that date. Control: Per 2 CFR section 200.303(a), a 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 comply 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). Condition: The Department of Children and Families (Department) was unable to provide documentation supporting participant eligibility in the form of a signed subsidy agreement and was unable to provide documentation that child abuse and neglect registry checks were performed for out-of-state adoptive family homes. Context: Forty participants were selected for testing and the following exceptions were noted: • For 1 of 40 participants, the Department was unable to provide a copy of the original signed subsidy agreement. The legalization date was 5/17/2013 but the original signed agreement was unavailable. The child is still receiving a subsidy, and the Department was able to provide the two most recent signed subsidy renewal letters from 2022 and 2024. The subsidy renewal letter is signed by the adoptive parent confirming the child is currently residing in the home, the parent is legally responsible for the child, and the parent provides financial support for the child. The Department uses iFamilyNet as their statewide case management system. iFamilyNet includes the signed subsidy agreement date; however, we were unable to verify the accuracy of that date without a copy of the original signed subsidy agreement. • For 2 of 40 participants, the Department was unable to provide documentation that a child abuse and neglect registry check was completed as part of the application or license approvals for homes in which the adoptive parent(s) previously lived out-of-state. These homes were originally licensed in 2006 and 2013, respectively and these homes received subsidies during FY 2025. The homes are currently closed and are no longer receiving subsidies subsequent to June 30, 2025. Cause: The Department’s procedures and internal controls were not sufficient to ensure that participant eligibility documentation was maintained and that child abuse and neglect registry checks were performed. For the missing registry checks, at the time these homes were licensed, the Department did not have a formal process to request or document out of state child welfare registry checks. Effect: Claims may have been paid on behalf of an ineligible participant and children may have been placed in homes that were ineligible to participate in the program. Questioned costs: Undetermined. Recommendation: The Department should enhance its procedures and internal controls to ensure it maintains documentation of participant eligibility and child abuse and neglect registry checks, and that this documentation is readily available for audit. We also recommend the Department enhance the renewal letter to include the reaffirmation of the original subsidy agreement date by the participant. Views of responsible officials: There is no disagreement with the finding.