Finding No. 2025-028 Federal Awarding Agency: U.S. Environmental Protection Agency (EPA) Impact: Significant Deficiency, Noncompliance AL Number and Title: 66.202 Congressionally Mandated Projects (CMP) Federal Award Number: 02J80201 Applicable Compliance Requirement: Allowable Costs/Cost Principles Condition: One of 10 employee timesheets tested did not support the charges billed to the CMP program. Context: DCCED staff log work hours on timesheets, which includes coding personal service costs to the Rural Utility Business Advisor (RUBA) program . Of the 10 timesheets tested, one timesheet indicated that only a portion of time worked was chargeable to RUBA; however, 100 percent of the employee's time was erroneously charged to the program. Cause: According to DCCED management, the unsupported charges were due to a data entry error. The data entry error was not detected by payroll processing staff due to insufficient review procedures. Criteria: Title 2 CFR 200.303 requires the State to establish and maintain effective internal controls over federal awards that provide reasonable assurance that the State is managing federal awards in compliance with federal statutes, regulations, and terms and conditions of the grant awards. Title 2 CFR 200.430(g)(1) states that 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 that provides reasonable assurance that the charges are accurate, allowable, and properly allocated; and 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 allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Effect: Insufficient payroll processing controls increase the risk of noncompliance and unallowable costs. Noncompliance with federal regulations may result in the federal awarding agency imposing additional conditions or taking corrective action, including reducing/terminating federal funding. Questioned Costs: $2,273 Recommendation: DCCED’s DCRA director should strengthen timesheet processing, review, and approval procedures to ensure personal service costs charged to CMP are accurate and allowable. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2025-059 Federal Awarding Agency: U.S. Environmental Protection Agency (EPA) Impact: Significant Deficiency, Noncompliance AL Number and Title: 66.202 Congressionally Mandated Projects (CMP) Federal Award Number: 01J83401, 02J14601 Applicable Compliance Requirement: Reporting Condition: Unliquidated obligations as reported in two of three tested SF-425 Federal Financial Reports were inaccurate. Context: Recipients of EPA grants must submit annual SF-425 Federal Financial Reports for all active federal awards. During FY 25, five grant awards were subject to SF-425 submission of which three were tested. The audit identified that the federal share of unliquidated obligations (line 10f) reported for two federal awards were overstated by $543,052 and $523,069, respectively. DEC staff inadvertently included the State’s share of unliquidated obligations in the report. Cause: The errors were due to insufficient procedures over the preparation and review of SF-425 reports. Criteria: Title 2 CFR 200.328(c) requires the State to submit financial reports as required by the federal award. Title 2 CFR 200.303(a) requires the State to establish, document, and maintain effective internal controls over Federal awards that provide reasonable assurance that the State is managing Federal awards in compliance with federal statutes, regulations, and the terms and conditions of federal awards. Effect: Inaccurate federal reporting may impair federal decision-making and may result in the federal awarding agency imposing additional conditions or taking corrective action, including additional requirements or withholding/terminating funds. Questioned Costs: None Recommendation: DEC’s DAS director should strengthen procedures for the preparation and review of the SF-425 report to ensure reports submitted to EPA are accurate. Furthermore, the DAS director should work with the federal oversight agency to revise the inaccurate SF-425 reports, as needed. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2025-060 Federal Awarding Agency: EPA Impact: Significant Deficiency, Noncompliance AL Number and Title: 66.202 CMP Federal Award Number: 02J40501, 02J76901, 02J80901 Applicable Compliance Requirement: Reporting Condition: DEC did not fully comply with Federal Funding Accountability and Transparency Act (FFATA) reporting requirements applicable to FY 25 CMP subawards. Context: FFATA requires information on federal awards to be made available to the public through USASpending.gov. SAM.gov is the reporting tool federal awardees, such as the State of Alaska, use to report subaward and executive compensation data for first-tier subawards. In FY 25 there were 11 CMP subawards subject to FFATA reporting of which the audit tested seven totaling $8,965,396. One subaward totaling $4,665,000 was not reported. In addition, the reported subaward action date for three subawards did not agree with the date the subaward agreement was signed. The three subawards with the inaccurate data element totaled $763,279. Cause: According to DEC management, staff turnover, legacy system (FSRS.gov) limitations, and insufficient review procedures contributed to the errors and omissions. According to DEC management, the $4.7 million subaward was not reported due to the submission inadvertently being left in draft status in SAM.gov. Once identified by auditors, management subsequently completed the reporting. Criteria: Title 2 CFR Part 170 requires recipients of federal grants or cooperative agreements to report subawards of $30,000 or more to SAM.gov by the end of the month following the subaward obligation. Title 2 CFR 200.303(a) requires the State to establish, document, and maintain effective internal controls over Federal awards that provide reasonable assurance that the State is managing Federal awards in compliance with federal statutes, regulations, and the terms and conditions of federal awards Effect: Failure to comply with FFATA reporting requirements reduces transparency and may jeopardize future federal funding. Questioned Costs: None Recommendation: DEC’s DAS director should strengthen FFATA reporting review and submission procedures to ensure required reports are filed timely and key data elements comply with federal reporting requirements. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2025-023 Federal Awarding Agency U.S. Department of Education Impact: Significant Deficiency AL Number and Title: 84.027, 84.173 Special Education Cluster Federal Award Number: H173A240019, H027A240016 Applicable Compliance Requirement: Matching, Level of Effort, Earmarking Condition: The Coordinated Early Intervening Services (CEIS) budgets for two Local Education Agencies (LEA) exceeded the allowable federal limit. Context: The federal Individuals with Disabilities Education Act allows LEAs to use Special Education Cluster funds to provide CEIS services to K-12 students to reduce the need for special education services. LEAs identified by DEED as having significant disproportionality in the identification, placement, or discipline of students with disabilities are required to reserve the maximum allowable amount of funds to provide CEIS services to address factors contributing to the significant disproportionality. The maximum allowable amount for CEIS services is 15 percent of the Special Education allocation. In accordance with Title 34 CFR 300.646, DEED staff conducts an annual review of LEA data to determine whether significant disproportionality exists. Two LEAs were identified as having significant disproportionality in FY 25. DEED management has implemented budgetary controls in the Grant Management System (GMS) to ensure compliance with Special Education Cluster earmarking requirements. DEED program staff perform an initial review of the LEA’s requested CEIS amounts. A separate individual performs a final review and approves the LEA budget in GMS. LEA reimbursement requests are approved by DEED grant staff based on the budget established in GMS. The audit found that both LEAs with significant disproportionality in FY 25 had GMS budgets that exceeded 15 percent of the Special Education allocation; one by $876 and one by $34,358. Cause: For the two LEAs in question, DEED grant staff incorrectly used FY 24 budget data to calculate the FY 25 CEIS budget 15 percent limit which caused the CEIS budgets in GMS to exceed the maximum allowable amounts. DEED management’s review procedures over the setup of LEA CEIS budgets were not sufficient to prevent or detect the errors. Criteria: Title 34 CFR 300.226 requires an LEA to reserve no more than 15 percent of their Special Education Cluster allocation to provide CEIS services. Per 2 CFR 200.303(a), the State is required to establish and maintain effective internal controls over federal awards that provide reasonable assurance that the State is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the grant awards. Per 34 CFR 300.646(d) the State shall require any LEA identified with significant disproportionality to reserve the maximum amount of funds to provide CEIS services to address factors contributing to the significant disproportionality. Effect: Inadequate internal controls increase the risk that expenditures may be unallowable due to LEAs exceeding the federally set CEIS limit, or may result in LEAs identified as having significant disproportionality to budget for the wrong CEIS amount. Furthermore, noncompliance with federal regulations may result in the federal awarding agency imposing additional conditions or taking corrective action including adding reporting requirements or withholding/terminating funding. Questioned Costs: None Recommendation: DEED's Innovation and Education Excellence director should update procedures to ensure LEA CEIS budgets comply with federal earmarking requirements. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2025-032 Prior Audit Finding: 2024-038 Federal Awarding Agency: USDHS Impact: Material Weakness, Material Noncompliance AL Number and Title: 97.036 Disaster Grants Federal Award Number: 4413DRAKP00000001 Applicable Compliance Requirement: Subrecipient Monitoring Condition: DMVA management did not issue a management decision for a finding relating to one Disaster Grants subrecipient’s single audit. Context: Under federal regulations, pass-through entities are responsible for issuing a management decision for audit findings relating to federal awards provided to subrecipients. The management decisions must clearly state whether or not the audit finding is substantiated, the reason for the decision, and the adequacy of the recipient’s proposed corrective actions to address the findings. If the subrecipient has not completed corrective action, a timetable for follow-up should be given. One Disaster Grants subrecipients single audit contained a finding and DMVA management did not issue a management decision. The finding related to a subrecipient lacking evidence that a secondary review was conducted by an individual other than the preparer for required reports. Cause: DMVA had controls to ensure a management decision was issued on a subrecipient's single audit finding. However, DMVA’s procedures were insufficient to identify subrecipient’s findings requiring follow-up. DMVA staff stated that information reported on the Summary of Items for Follow-up document, provided by the Department of Administration, Division of Finance, did not specify that DMVA should follow up on the finding; therefore, no management decision was issued. However, the audit determined DMVA misinterpreted the information provided by the Division of Finance. Criteria: Title 2 CFR 200.521 requires the State to issue a management decision for audit findings that affect subawards it issues to subrecipients under a federal award. Title 2 CFR 200.1 defines a management decision as a pass-through entity’s written determination, provided to the auditee, of the adequacy of the auditee’s proposed corrective actions to address the findings, based on its evaluation of the audit findings and proposed corrective actions. Title 2 CFR 200.303(a) requires the State to establish and maintain effective internal control over the federal award that provides reasonable assurance that the State is managing the federal awards in compliance with federal statutes, regulations, and terms and conditions of the grant awards. Effect: The lack of a management decision may result in a subrecipient not taking appropriate corrective action on findings. Noncompliance with federal regulations may result in the federal awarding agency imposing additional conditions or taking corrective action, including additional reporting requirements or withholding/terminating funding. Questioned Costs: None Recommendation: DMVA’s DAS director should strengthen procedures to ensure findings requiring follow-up are identified and management decisions are issued within six months of a subrecipient audit report’s acceptance by the federal audit clearinghouse. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2025-035 Prior Audit Finding: 2024-040 Federal Awarding Agency: USDHS Impact: Material Weakness, Material Noncompliance AL Number and Title: 97.036 Disaster Grants Federal Award Number: 4585DRAKP00000001, 4646DRAK000000001, 4672DRAKP00000001, 4730DRAKP00000001 Applicable Compliance Requirement: Reporting Condition: Eight of 70 FY 25 subawards tested were not filed timely in the Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System . An additional 32 subawards requiring FFATA reporting were not filed. Context: FFATA requires information on federal awards be made available to the public through a single searchable website (www.usaspending.gov). The FFATA reporting tool is available for federal awardees, such as the State of Alaska, to report first-tier subawards. To comply with FFATA requirements, DHSEM staff responsible for Disaster Grants management obtain subawardee information from the OAD. The OAD is sent to DAS staff for data entry into the FFATA reporting tool. There were 70 Disaster Grants subawards totaling $54,169,139 that were subject to FFATA reporting during FY 25. The audit reviewed eight randomly selected subawards, totaling $1,813,371, for compliance and internal controls testing of FFATA reporting requirements. FFATA reports for all eight subawards were not filed timely. Further, the audit reviewed all 70 subawards and found 32 totaling $28,396,662 were not reported at all Cause: Staff turnover and vacancies contributed to the untimely filing of reports and reports not being filed. Supervisory review procedures were inadequate to ensure reports were filed as required. Criteria: Title 2 CFR 170 states federal award recipients are required to report each subaward that obligates $30,000 or more in federal funds. This information must be reported no later than the end of the month following the month in which the obligation was made and include information about each obligating action in accordance with submission instructions. Title 2 CFR 200.303(a) requires the State to establish and maintain effective internal control over the federal award that provides reasonable assurance that the State is managing the federal awards in compliance with federal statutes, regulations, and terms and conditions of the grant awards. Effect: Failure to comply with FFATA reporting requirements reduces transparency and may jeopardize future federal funding. Questioned Costs: None Recommendation: DMVA's DAS director should allocate the resources necessary to comply with FFATA reporting requirements and strengthen supervisory review procedures. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2025-030 Prior Audit Finding: 2024-036 Federal Awarding Agency: U.S. Department of Homeland Security (USDHS) Impact: Material Weakness, Material Noncompliance AL Number and Title: 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disaster) (Disaster Grants) 97.036 Disaster Grants – COVID-19 Federal Award Number: 4413DRAKP00000001, 4533DRAKP00000001, 4585DRAKP00000001, 4672DRAKP00000001 Applicable Compliance Requirement: Allowable Costs/Cost Principles Condition: A review of 17 FY 25 Disaster Grants payments found that 15 payments (88 percent) lacked adequate supporting documentation. Context: FEMA provides public assistance funding to states for federally declared disaster mitigation and response. To be allowable under the Disaster Grants program, costs must be directly tied to the performance of eligible work, adequately documented, and necessary and reasonable to accomplish the work properly and efficiently. DMVA issues subawards to eligible applicants, including not-for-profits and local governments, and transfers funds to other State departments for disaster response. The State (DMVA) and Disaster Grants subrecipients may contract for services but must meet state and federal procurement requirements when doing so. Contracts must include the procurement provisions detailed in Title 2 CFR 200.327. Furthermore, contractors’ performance must be monitored to ensure compliance with the contract conditions. According to management within DMVA’s Division of Homeland Security and Emergency Management (DHSEM), due to the high number of State disasters and a lack of staff resources, DMVA hired contractors to help oversee the federal disaster projects by performing administrative duties typically conducted by DHSEM staff, including reviewing and approving subrecipient applications for funding, obtaining the required documents to ensure projects were administered in accordance with FEMA requirements, and processing subrecipient payment requests. There were 327 Disaster Grants payments totaling $325,318,285 during FY 25. The audit tested 17 Disaster Grant payments totaling $188,888,098, of which 15 were inadequately unsupported. Specifically, 11 payments were partially supported by procurement contracts that did not include all federal requirements and four were not fully supported by complete or signed contracts. Other errors included: one payment contained amounts for an unrelated project; five payments were not fully supported by invoices; one payment included a markup on a subcontractor’s work; one included an advance payment that lacked required supporting documentation; one payment included a completion bonus; and several payments were not identified as allowable costs in the approved project worksheets. Cause: Due to competing priorities and inadequate supervisory review procedures, DHSEM staff and contractors did not verify that the contracts issued by subrecipients included federal requirements and that documentation for the reimbursement of subrecipient costs was received. Furthermore, contracts for interagency projects were not obtained by DMVA staff or contractors to verify that the costs were within the contract scope or that the contracts included all federal requirements. The audit noted that Department of Health and Social Services (DHSS) submitted a signed Contract/Procurement Review Waiver declining to submit documentation to DMVA for review with the understanding that DHSS would assume all responsibility for the procurement and contracts. DHSEM contractors accepted the waiver and did no monitoring to ensure contracts complied with appropriate procurement processes and included all federally required clauses. Lack of adequate review of the payment requests and supporting documentation, including supervisory review, resulted in payments without adequate invoices or other source documentation. Lack of adequate project oversight resulted in a subrecipient not providing supporting documentation within the 60-day timeline for advance payments. Criteria: Title 2 CFR 200.403(g) requires costs to be adequately documented. FEMA’s guidance for administering the program is detailed in the Public Assistance Program and Policy Guide (PAPPG), which requires Disaster Grants contracts to include the procurement related provisions of Title 2 CFR 200.327 and Homeland Security Acquisition Regulation Class Deviation 15-01 clauses. PAPPG also requires costs to be adequately documented and directly tied to the performance of eligible work. Further, the PAPPG states that FEMA does not reimburse costs incurred under a cost plus a percent of cost contract. Annually, DHSEM management updates the State Administrative Plan for the federal disaster assistance program, which is a required document in each federally approved FEMA-State Agreement for presidentially declared disasters. The purpose of the plan is to identify the State’s roles, responsibilities, processes and procedures for administering FEMA’s Disaster Grants program. The plan requires DHSEM staff to obtain documentation to support all costs claimed and to perform a thorough review to ensure compliance with programmatic and eligibility requirements. The plan also outlines the requirements for advancing FEMA funds to a subrecipient; specifically, the subrecipient must report on the status of advance funds within 30 days of receipt and has up to 60 days to provide the appropriate summary forms and support cost documentation, i.e, invoices, timesheets, etc. If the summary forms and supporting documentation are not received within the time limits, the Plan requires that the State de-obligate remaining funds, recoup advance funds, and close the subrecipient’s project file. Title 2 CFR 200.303(a) requires the State to establish and maintain effective internal controls over federal awards that provide reasonable assurance that the State is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Effect: Inadequate documentation may result in unallowable costs. Noncompliance with federal regulations may result in the federal awarding agency imposing additional conditions or taking corrective action, including additional reporting requirements or withholding/terminating funding. Questioned Costs: Indeterminate Recommendation: DMVA’s DHSEM director should strengthen written procedures to ensure Disaster Grants contracts are obtained and reviewed for compliance with federal requirements. Furthermore, supervisory review procedures should be strengthened to ensure DHSEM staff and contractors obtain and review cost documentation to ensure subrecipient payment requests are allowable for the project and adequately supported. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2025-031 Prior Audit Finding: 2024-037 Federal Awarding Agency: USDHS Impact: Material Weakness, Material Noncompliance AL Number and Title: 97.036 Disaster Grants 97.036 Disaster Grants – COVID-19 Federal Award Number: 4533DRAKP00000001, 4730DRAKP00000001 Applicable Compliance Requirement: Subrecipient Monitoring Condition: A review of 21 FY 25 Disaster Grants subrecipient obligating award documents (OAD) found that three did not include an accurate unique entity identifier (UEI) that matched the subrecipient’s name and one did not provide a UEI. Context: DMVA enters into awards with subrecipients using the OAD as the subgrant agreement. The subrecipient’s name and UEI are recorded on the OAD. An assurances and agreement form accompanies the OAD that includes additional federal requirements not included in the OAD. Subrecipients sign the OAD and the assurances and agreement forms certifying and agreeing to the federal requirements. According to DHSEM management, due to the high number of State disasters and a lack of staff resources, contractors were hired to help evaluate applicant eligibility, make subawards, conduct risk assessments, and monitor accordingly. The audit reviewed a random sample of 20 of 100 subrecipient OADs and one judgmentally selected OAD, including assurances and agreement forms, and found two OADs for one subrecipient in which the subrecipient’s name did not match the name associated with the UEI number provided; one OAD reported a UEI number that did not match the name and address when verified with the federal reporting website; and one OAD did not include a UEI number. Cause: According to DHSEM management, due to competing priorities and inadequate supervisory review procedures, DHSEM staff and contractors did not ensure subrecipient’s OADs included a UEI number or an accurate UEI number. Criteria: Title 2 CFR 200.303(a) requires the State to establish and maintain effective internal control over the federal award that provides reasonable assurance that the State is managing the federal awards in compliance with federal statutes, regulations, and terms and conditions of the grant awards. Title 2 CFR 200.332 requires pass-through entities ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the required information at the time of the subaward. Required information includes the subrecipient’s name, which must match the name associated with the subrecipient’s UEI. Effect: Not providing the UEI number or correct UEI number hampers subaward reporting and may impact federal oversight of the Disaster Grants program. Questioned Costs: None Recommendation: DMVA’s DHSEM director should strengthen review procedures to adequately monitor contractors to ensure subrecipient information in award documents is accurate. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2025-033 Federal Awarding Agency: USDHS Impact: Material Weakness, Material Noncompliance AL Number and Title: 97.036 Disaster Grants 97.036 Disaster Grants – COVID-19 Federal Award Number: 4533DRAKP00000001, 4730DRAKP00000001 Applicable Compliance Requirement: Subrecipient Monitoring Condition: DMVA staff did not document a risk assessment for two Disaster Grants subrecipients. Context: DMVA receives funding applications from state, local, tribal, and private not-for-profit entities once a disaster has been presidentially declared. Prior to entering into an agreement with an applicant, DHSEM staff perform a risk assessment of the applicant to determine the extent of subrecipient monitoring. DHSEM staff evaluate the applicant by completing a risk assessment checklist, and apply safeguards if the subrecipient is considered high risk. DHSEM staff also complete a payment request checklist, prior to making subrecipient payments to confirm that risk assessments have been performed. According to DHSEM management, due to the high number of State disasters and a lack of staff resources, contractors were hired to help evaluate applicant eligibility, make subawards, conduct risk assessments, and monitor accordingly. The audit reviewed a random sample of eight of 47 subrecipients. One of the eight subrecipients did not have a risk assessment. During allowable cost testing, one additional subrecipient was identified that did not have risk assessment performed. Cause: Due to competing priorities and inadequate supervisory review procedures, DHSEM staff and contractors did not consistently obtain risk assessments and DHSEM management did not adequately monitor contractors to ensure risk assessments were performed. Criteria: Title 2 CFR 200.303(a) requires the State to establish and maintain effective internal control over the federal award that provides reasonable assurance that the State is managing the federal awards in compliance with federal statutes, regulations, and terms and conditions of the grant awards. Title 2 CFR 200.332(c) requires the State to assess each subrecipient’s risk of noncompliance to determine the appropriate subrecipient monitoring. Effect: The lack of risk assessments may lead to inadequate monitoring of subrecipients increasing the risk of unallowable use of federal funds. Questioned Costs: None Recommendation: DMVA’s DHSEM director should strengthen supervisory review procedures to adequately monitor contractors and ensure risk assessments are performed. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2025-034 Prior Audit Finding 2024-039 Federal Awarding Agency: USDHS Impact: Material Weakness, Material Noncompliance AL Number and Title: 97.036 Disaster Grants 97.036 Disaster Grants – COVID-19 Federal Award Number: 4351DRAKP00000001, 4533DRAKP00000001, 4585DRAKP00000001 Applicable Compliance Requirement: Reporting Condition: Three of seven randomly selected FY 25 Disaster Grants SF-425 reports tested had the following errors: one reported incorrect recipient share required and two reported incorrect federal share of expenditures and incorrect recipient share of expenditures. Context: The SF-425 is a required quarterly federal financial form used for reporting on the financial status of federal grant awards. During FY 25, 16 disasters required quarterly SF-425 reports for a total of 64 reports filed. Seven of the 64 were selected for testing. The federal share and matching amounts for two reports were overstated and one understated total recipient share required as shown below. Cause: During FY 25, FEMA transitioned to a new grants management system. According to DMVA management, DMVA staff followed procedures to use the data in the old FEMA management system without performing any follow-up on discrepancies in previously reported amounts. Furthermore, DMVA reporting procedures were not updated to incorporate FEMA’s new grants management system for preparation and review of SF-425 reports. Criteria: Title 44 CFR 206.120(f)(2) prescribes the State shall provide financial status reports. Title 2 CFR 200.303(a) requires the State to establish and maintain effective internal control over federal awards that provide reasonable assurance that the State is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Effect: Inaccurate federal reporting may impair federal decision-making and may result in the federal awarding agency imposing additional conditions or taking corrective action, including additional reporting requirements or withholding/terminating funds. Questioned Costs: None Recommendation: DMVA's DAS director should update written procedures for the preparation and review of the SF-425 report to ensure the reports submitted to FEMA are accurate. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2025-079 Prior Year Finding: 2024-081 Federal Awarding Agency: U.S. National Science Foundation, U.S. Department of the Interior and U.S. Department of Agriculture (USDA) Impact: Significant Deficiency, Noncompliance AL Number and Title: 10.237 From Learning to Leading: Cultivating the Next Generation of Diverse Food and Agriculture Professionals 15.423, 47.050, 47.074, 47.078 Research and Development Cluster (RDC) Federal Award Number: 2040541-2025, 2224776-2025, 2322806-2025, M24AC00008-2025, 20237044040222-2025 Applicable Compliance Requirement: Cash Management Condition: The University did not make payments to subrecipients within 30 days after receipt of invoices. Context: During our testing we identified 11 out of 40 subrecipient payments related to four grants from the University of Alaska Fairbanks (UAF) under RDC, that did not process payment requests from the subrecipients timely. During our testing we identified two out of eight subrecipient payments related to one grant from UAF under the From Learning to Leading: Cultivating the Next Generation of Diverse Food and Agriculture Professionals Program, did not process payment requests from the subrecipients timely. Cause: UAF did not process payment requests from the subrecipients timely. Criteria: Uniform Grant Guidance (2 CFR section 200.305(b)(3)) requires that when the reimbursement method is used, the Federal awarding agency or pass-through entity must make payment within 30 calendar days after receipt of the billing, unless the Federal awarding agency or pass-through entity reasonably believes the request to be improper. Per Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Effect: Subrecipients on federal awards do not receive timely payment for federal contract work. Questioned Costs: None Recommendation: We recommend the University review and update policies and procedures to allow for more timely payment to subrecipients for work the University contracts them to perform. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2025-080 Federal Awarding Agency: USDA Impact: Significant Deficiency, Noncompliance AL Number and Title: 10.237 From Learning to Leading: Cultivating the Next Generation of Diverse Food and Agriculture Professionals Federal Award Number: 20237044040222 - 2025 Applicable Compliance Requirement: Reporting Condition: The University did not have documentation of the Federal Funding Accountability and Transparency Act (FFATA) reports submitted in a timely manner. Context: During our testing of two subawards from UAF that were reported to SAM.gov, we identified both reports did not have documentation of the reports being submitted by the required due date. Cause: UAF did not create a new report for the subaward amendments and replaced the information from the original subaward submission. Since the information was overwritten, there was no documentation of original submission date for the report during the fiscal year. Criteria: Uniform Grant Guidance (2 CFR 170 Appendix A(l)(2)(ii)) requires subaward information be reported no later than the end of the month following the month in which the obligation was made. Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Effect: The University was not in compliance with FFATA reporting requirements. Questioned Costs: None Recommendation: We recommend that the University review and update current procedures to ensure the program reporting requirements are completed timely. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2025-081 Federal Awarding Agency: US Department of Education (USED) Impact: Significant Deficiency, Noncompliance AL Number and Title: 84.063, 84.268, 84.007, 84.033 Student Financial Assistance Cluster (SFAC) Federal Award Number: P063P240010-2025, P268K250010-2025, P007A240090-2025, P033A240090-2025 Applicable Compliance Requirement: Allowable Costs/Cost Principles, Eligibility Condition: During inquiries with management, the University of Alaska identified multiple students during enrollment verification process that they determined were fictious. Context: During inquiries with management, the University identified multiple students that were awarded and disbursed Pell, Supplemental Educational Opportunity Grant (SEOG), and Direct Loans, who were subsequently determined to be ineligible for the programs. Cause: The University's internal control policies were not effectively designed to ensure funds are disbursed to eligible students. Criteria: The Code of Federal Regulation, 34 CFR 668.16(f), states the University is required to develop and apply an adequate system to identify and resolve discrepancies in the information that the institution receives from different sources with respect to a student's application for financial aid under Title IV, HEA programs. Uniform Guidance 2 CFR 200.303, non-federal entities receiving federal awards are required to establish and maintain internal controls designed to reasonable ensure compliance with federal laws, regulations, and program compliance requirements. Effect: The University disbursed Title IV funds to ineligible students, resulting in questioned costs. Questioned Costs: AL 84.007: $4,947 AL 84.063: $27,059 AL 84.268: $158,554 Recommendation: We recommend the University review their internal control procedures to ensure that students are eligible prior to funds being disbursed. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2025-082 Federal Awarding Agency: USED Impact: Significant Deficiency, Noncompliance AL Number and Title: 84.063, 84.268, 84.007, 84.033 SFAC Federal Award Number: P063P240010 - 2025, P268K250010 - 2025, P007A240090 - 2025, P033A240090-2025 Applicable Compliance Requirement: Special Tests and Provisions Condition: The University did not pay student's Title IV credit balance within 14 days. Context: During our testing of 40 students, we identified one student from UAF that had a credit balance refund returned later than 14 days after the credit balance occurred in student account. The refund issued after the 14 day deadline was issued on the 15th day, with only one day past the deadline. Cause: UAF was experiencing processing delays due to personnel issues. Criteria: Per 34 CFR 668.164 (h)(2), if a federal credit balance occurs (i.e., when the total Title IV aid credited to a student's account exceeds allowable charges), the institution must pay the credit balance to the student or parent no later than 14 calendar days after the date the balance occurred. Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Effect: The student did not have access to their credit balance refund timely. Questioned Costs: None Recommendation: We recommend the University review and update procedures around disbursements of credit balances and implement controls to ensure credit balances are being returned timely. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2025-083 Federal Awarding Agency: USED Impact: Significant Deficiency, Noncompliance AL Number and Title: 84.063, 84.268, 84.007, 84.033 SFAC Federal Award Number: P063P240010 - 2025, P268K250010 - 2025, P007A240090 - 2025, P033A240090-2025 Applicable Compliance Requirement: Special Tests and Provisions Condition: The University did not properly report student enrollment changes for students who received federal student aid to the National Student Loan Data System (NSLDS). Context: During our testing of 40 students, we identified from UAF one student that the student's enrollment status was reported after the 60-day reporting requirement and one student with effective date reported to NSLDS that did not align with institutional records. Cause: The University did not have proper procedures in place to verify students' status in NSLDS matched the institutions records accurately. Criteria: Per 34 CFR 682.610, institutions must report accurately the enrollment status of all students regardless of if they receive aid from the institution or not. Changes to said status are required to be reported within 30 days of becoming aware of the status change, or with the next scheduled transmission of statuses if the scheduled transmission is within 60 days. Uniform Guidance 2 CFR 200.303, non-federal entities receiving federal awards are required to establish and maintain internal controls designed to reasonable ensure compliance with federal laws, regulations, and program compliance requirements. Effect: The University was not in compliance with the requirements to properly report student enrollment data correctly. Incorrect dates submitted to NSLDS may be used to determine the grace period for the repayment and interest of outstanding Title IV student loans. Questioned Costs: None Recommendation: We recommend the University review current processes for reporting to NSLDS and implement procedures to ensure submissions are reported timely and accurately. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2025-084 Federal Awarding Agency: USED Impact: Significant Deficiency, Noncompliance AL Number and Title: 84.044 TRIO Cluster Federal Award Number: P044A210918 - 2024 Applicable Compliance Requirement: Eligibility Condition: The University did not properly maintain documentation to demonstrate a student's intent to become a permanent resident. Context: During our testing of 40 students, we identified one student from the Talent Search program from the University of Alaska Anchorage (UAA) that did not have proper documentation of their intent to become a permanent resident. Cause: UAA did not maintain eligibility documentation prior to allowing the student to participate in TRIO Talent Search services. Criteria: Per 34 CFR 643.3(a)(1)(iii), an individual is eligible to participate in a Talent Search project if the individual is in the United States for other than a temporary purpose and provides evidence from the Immigration and Naturalization Service of his or her intent to become a permanent resident. Per Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Effect: Failure to properly maintain documentation for eligibility requirements may result in noncompliance of federal regulations. Questioned Costs: None Recommendation: We recommend the University review and update current procedures to ensure all eligibility documentation is maintained prior to TRIO services being provided. Views of Responsible Officials: Management agrees with this finding.
1. FINDING NUMBER: 2025 - 004 2. THIS FINDING IS: New X Repeat from Prior year? Year originally reported? 3. Federal Program Name and Year: Child Nutrition Cluster - 2024 and 2025 4. Project No.: 2024-4210, 2024-4210-SC, 2025-4210, 2025-4211, 2024-4220, 2025-4220, 2025-4999 5. AL No.: 10.533; 10.555 6. Passed Through: Illinois State Board of Education 7. Federal Agency: U.S. Department of Agriculture 8. Criteria or specific requirement (including statutory, regulatory, or other citation): Per 2 CFR 200.303a, "The recipient and subrecipient establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award." 9. Condition: The District is required to submit monthly claim information for the Child Nutrition Cluster to the Illinois State Board of Education (ISBE). The District was unable to produce support that the monthly claims were reviewed and internally approved prior to transmission to ISBE. This is deemed to be a material weakness in internal control over compliance for reporting requirements. 10. Questioned Costs: None 11. Contex: No instances of noncompliance were noted and the District indicated that the reports were informally reviewed prior to transmission to ISBE. 12. Effect: The lack of documentation is an indicator that the control structure implemented by the District is not effectively designed. Improperly designed internal controls can lead to instances of noncompliance with applicable requirements. 13. Cause: The District's internal control structure is missing the documentation of review and approval prior to transmission to ISBE. 14. Recommendation: We recommend that the District review the design of its internal control over compliance to ensure that documentation requirements are incorporated into the control design. 15. Management's response: To enhance internal controls and ensure the segregation of duties, the Assistant Director of Food Services will be responsible for the initial preparation and completion of all claims. Subsequently, a secondary review and final approval will be performed by either the Director or the Chief School Business Official (CSBO) prior to submission.
Finding 2025-002: Significant Deficiency in Internal Control over Compliance – Documentaon, Drawdown Support, and Timeliness Type of Finding: Significant Deficiency in Internal Control over Compliance (Uniform Guidance) Criteria In accordance with 2 CFR 200.303, non-Federal enes must establish and maintain effecve internal control over federal awards to provide reasonable assurance of compliance with federal statutes, regulaons, and the terms and condions of the federal award. 2 CFR 200.516 requires auditors to report, as audit findings in the federal awards secon of the schedule of findings and quesoned costs, significant deficiencies and material weaknesses in internal control over major programs and material noncompliance with the provisions of federal statutes, regulaons, or the terms and condions of federal awards related to a major program. Condion During the audit of ALN 93.959, we encountered significant delays in obtaining supporng documentaon for expenditures selected for tesng. In many instances, documentaon was not readily available and required substanal me and effort for management to locate, assemble, or reconstruct. In addion, we observed that: Documentaon supporng drawdown requests and reimbursement claims was not maintained in a centralized, organized manner that would allow for mely retrieval or ready tracing to the underlying accounng records; and Drawdown acvity for the program was not performed on a roune basis (for example, reimbursement requests were somemes accumulated over several months and then requested in large batches, rather than through a more regular process), and support for these batched drawdowns oen had to be recreated at the me of the audit. Although the expenditures and drawdowns tested were ulmately supported and agreed to the underlying accounng records, the delays and need to recreate drawdown support indicate that documentaon and internal control over compliance with recordkeeping and cash-management-related requirements were not consistently maintained in an organized and readily accessible manner. Cause The enty does not have sufficiently effecve procedures and internal controls in place to ensure that: Supporng documentaon for federal program expenditures and drawdowns is maintained contemporaneously with the underlying transacons; Drawdown requests are rounely prepared and supported in a manner that clearly demonstrates that costs were incurred prior to requesng reimbursement; and Documentaon is organized and stored in a centralized manner that allows for mely retrieval for management, auditors, or federal/pass-through agencies. Effect As a result of these deficiencies: There is an increased risk that noncompliance with federal requirements (including documentaon and cash-management-related requirements) could occur and not be prevented, or detected and corrected, in a mely manner; The enty may be unable to readily support expenditures or drawdowns upon request by auditors, federal awarding agencies, or pass-through enes; and Audit inefficiencies and delays occurred due to the me required to obtain and/or recreate necessary documentaon. While our tesng did not idenfy unsupported or unallowable costs for the items selected, the described deficiencies represent a significant deficiency in internal control over compliance for the affected major program. Recommendaon We recommend that management strengthen internal control over compliance and documentaon for federal programs by: 1. Implemenng procedures to ensure that all supporng documentaon for federal expenditures and drawdowns is prepared and retained contemporaneously with the underlying transacons; 2. Organizing documentaon in a centralized, consistent manner (for example, by grant and period) that permits mely retrieval and clear linkage to the general ledger and reimbursement requests; 3. Establishing and following a regular process and metable for preparing and subming reimbursement requests, supported by schedules that reconcile drawdowns to underlying expenditures and accounng records; and 4. Periodically reviewing documentaon and drawdown files for completeness, organizaon, and compliance with applicable Uniform Guidance and award-specific requirements. Management Response Management agrees with the finding and will strengthen procedures over documentaon and drawdown processes, including mely, organized maintenance of supporng documentaon and improved processes for preparing and supporng reimbursement requests.
2025-001 Approval of Invoices (Material Weakness) Federal Agency: U.S. Department of Education Pass-through Agency: New Hampshire Department of Education Cluster/Program: COVID-19 – Education Stabilization Fund Assistance Listing Number: 84.425U Passed-through Identification: 20220810 Compliance Requirement: Activities Allowed or Unallowable and Allowable Costs / Cost Principles Type of Finding: Internal Control over Compliance – Material Weakness Criteria or Specific Requirement: Per 2 CFR 200.303, non-Federal entities are required to establish and maintain effective internal control over Federal awards that provides reasonable assurance that the entity is managing such awards in compliance with Federal statutes, regulations, and the terms and conditions of the award. These controls should be designed in accordance with established internal control frameworks and include appropriate supervisory review and approval processes. In addition, 2 CFR 200.403 requires that all costs charged to Federal awards be necessary, reasonable, and adequately documented. Adequate documentation includes evidence that expenditures were reviewed and approved by appropriate personnel to ensure allowability, allocability, and compliance with program requirements prior to payment. Condition: During our testing of expenditures, we identified two invoices totaling $818,074 that did not contain evidence of formal supervisory review and approval. Specifically, the invoices were not initialed, signed, or otherwise documented to demonstrate that a compliance review had been performed prior to payment. Although the School District has established procedures requiring review and approval of invoices, these procedures were not consistently followed. As a result, there was no documented evidence to support that the expenditures were reviewed for allowability, allocability, and compliance with applicable Federal requirements prior to disbursement. Cause: This deficiency appears to be the result of inconsistent adherence to established internal control procedures and a lack of effective monitoring to ensure that required review and approval controls are performed and documented. While a review process exists, it is not operating effectively in practice, and responsibilities for documenting approval may not be clearly enforced or consistently applied. Effect: As a result of the lack of documented supervisory review, the School District is unable to demonstrate that expenditures charged to the grant were evaluated for compliance with Federal requirements prior to payment. This control deficiency increases the risk that unallowable, unsupported, or noncompliant costs could be charged to the Federal program and not be detected in a timely manner. In addition, the absence of documented approval weakens the audit trail and reduces transparency and accountability over Federal expenditures, which may result in increased scrutiny from oversight agencies and the potential for questioned or disallowed costs. Questioned Costs: None. While a control deficiency was identified, our testing did not identify any instances of noncompliance or unallowable costs charged to the program. Identification as Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the School District strengthen its internal controls over Federal expenditures by ensuring that all invoices charged to Federal programs are subject to a documented supervisory review and approval prior to payment. This review should include consideration of allowability, allocability, and compliance with program requirements. Evidence of such review should be consistently documented (e.g., signature, initials, or electronic approval) and retained in accordance with Federal record retention requirements. In addition, management should implement monitoring procedures to verify that established controls are operating effectively and consistently across all applicable transactions. Views of Responsible Officials: Management’s views and corrective action plan are included at the end of this report.
2025-002 – Significant Deficiency AL Nos: 20.507 and 20.526, 20.205 Federal Grantor: U.S. Department of Transportation, Federal Transit Administration, Federal Transit Cluster - Direct Award Compliance Requirement: Other Compliance Requirements Award Nos: All awards under Assistance Listing (AL) Numbers 20.507, 20.526, and 20.205 Condition: Several changes were made to the schedule of expenditures of federal awards (SEFA) after the single audit began, including: • The periods of performance had to be updated on several grants. • Missing criteria, such as the award date, had to be added for new grants. • The assistance listing number was corrected for two grants. • A grant amount immaterial to the major program was removed from the SEFA after the single audit began. • Adjustments were made to the SEFA after the audit began to claim current year expenses for disallowed 2024 costs to fully implement the recommendation made in the 2024 single audit. • Qualified expenses were shifted between eligible routes for one grant on the SEFA. Criteria: 2 CFR Part 200, Subpart E (Uniform Guidance) Section 200.303 states that “The nonfederal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” Cause:. Grant management procedures are not documented, a complete schedule of all available grants to use when reconciling expenses for inclusion on the SEFA and accruing grant revenue was a work in progress and not all necessary changes were identified by the District’s review procedures Effect: Expenses were omitted from the SEFA and other expenses were included on the SEFA that were already reported in the prior year. The SEFA had to be revised, which delayed the audit testing and major program determination process. Context: The number of grants has increased since the pandemic due to new pandemic related grants becoming available that delayed the use of the District’s regular federal grants. This caused grants to be combined by grantors with different allowable expenses, areas of service, and periods of performance and caused grants to be extended, causing significant complexity. The dollar amount of auditor changes made to the SEFA were immaterial and the SEFA was not relied upon by the District to ensure compliance with compliance requirements so the changes to the SEFA did not result in noncompliance with other compliance requirements. The District staff made a significant effort to bill all qualifying expenses during the audit, which will help reduce the complexity of remaining grants in future years. Recommendation: We recommend the District develop written procedures to allocate expenses to routes and purposes under federal grants that document the timing of the preparation and review of the allocation schedule. A summary tab should be added to the allocation schedule to reconcile amounts for each route/purpose to total operating expenses, preventive maintenance, insurance, communications and other expenses allocated to the population of expenses in the general ledger. We also recommend the District develop a schedule to summarize all approved and pending grants that includes the amounts available under each grant, each route/purpose within each grant, periods of performance for each amount available, the last date to submit invoices, and amounts claimed and still available for each grant by route/purpose. The District should re-evaluate budgets if changes or delays occur to federal grants and ensure a new federal or local funding source is identified and claimed for the expenses. The SEFA should be prepared after expenses are reconciled to the general ledger at the invoice/paycheck level by route/purpose and the allocation schedule is thoroughly reviewed. The SEFA should be reviewed by a knowledgeable member of management to ensure completeness and accuracy. We also recommend the District claim expenses more quickly to allow the granting agency time to review and approve the claims before the audit begins. We recommend the District reconcile expenses within 30 days of quarter end and prepare claims within 45 days of quarter end. If the District is unsure about the period of performance dates or other restrictions on a grant, staff should contact the granting agency for clarification. Finally, we recommend the District request the grants be made available for general operating expenses rather than for individual routes, times etc. to reduce complexity wherever possible. View of Responsible Officials and Planned Corrective Action: Management’s response and planned corrective action is included at the Corrective Action Plan end of this report.
Federal Agency: U.S. Department of Housing and Urban Development (HUD) Federal Program: Section 8 Housing Assistance Payments Assistance Listing (ALN): 14.195 Award Period: July 1, 2024 - June 30, 2025 Compliance Requirement: Eligibility Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other MattersCriteria: Uniform Guidance requires non-federal entities to establish and maintain effective internal control over federal awards and to maintain records that adequately support compliance with federal statutes, regulations, and award terms (2 CFR 200.303 and 2 CFR 200.302). In addition, the HUD Handbook 4350.3, Section 7-2, requires owners/agents to process interim certifications when tenant income changes and to adjust assistance accordingly. Statement of Condition: During the fiscal year ended June 30, 2025, we identified one tenant file where a change in income was not properly calculated, and the HUD Form 50059 was not adjusted and the necessary repayment agreement executed. We noted three other files that had missing required eligibility documents or were not retained in accordance with HUD recordkeeping requirements. Context: The population size is 465 units which are eligible for Section 8 Assistance Payments. A sample of forty tenant files totaling $320,352 of rental assistance were tested to determine if the tenant files were in accordance with eligibility compliance requirements. Of the forty tenant files, one tenant file tested contained an incorrect income calculation that was not corrected through a corrected HUD Form 50059 and related repayment agreement. By extrapolating our identified error rate on tenant files tested that were incorrectly calculated (0.95%) over the total population of HUD Section 8 rental assistance payments for the year ended June 30, 2025 of $2,719,677; $25,941 of rental assistance could be noncompliant based on the above error rate. Questioned Cost: $25,941 Cause: Personnel turnover resulted in the missed adjustment. Effect: An incorrect amount of rental assistance was requested from HUD Section 8 funds. Repeat Finding: No Recommendation: We recommend that management implement proper training and cross-training for staff to ensure accurate calculation of rental assistance and timely completion of interim certifications whenever required. Additionally, we recommend providing a refresher training to staff on HUD Section 8 documentation standards. Views of Responsible Officials: Management agrees with the finding.
Criteria: An effective system of internal control over financial reporting requires that material balance sheet accounts be reconciled in a timely manner, reviewed by qualified personnel, and appropriately documented to ensure the accuracy, completeness, and validity of amounts reported in the financial statements. Additionally, for federal awards, controls must ensure compliance with applicable requirements, including accurate and timely financial reporting in accordance with Uniform Guidance (2 CFR 200.303). Condition: Wesleyan College did not consistently prepare and review reconciliations for certain material balance sheet accounts on a timely basis. Specifically, multiple reconciliations were not completed within reasonable monthly and annual close timelines, and in some cases were prepared several months after period-end. Additionally, reviews were often not evidenced or were performed significantly after reconciliation preparation. Cause: The primary causes include insufficiently designed controls around reconciliation timeliness, and enforcement of existing close and review procedures. Contributing factors included resource constraints within the accounting function and significant turnover in staffing to identify and remediate delayed reconciliations. Effect or Potential Effect: Because reconciliations were not performed and reviewed timely, errors or irregularities within material account balances may not have been identified and corrected within the appropriate reporting period. As a result, management lacked reasonable assurance that material misstatements in the affected accounts would be prevented or detected on a timely basis. Additionally, financial reports submitted for federal programs may be inaccurate or not prepared in accordance with applicable requirements. Recommendation: Wesleyan College should ensure their preparation and review of material balance sheet account reconciliations are performed and reviewed in a timely manner. Views of Responsible Officials: Management is developing and implementing remediation actions, including strengthening reconciliation policies, assigning clear ownership and escalation procedures, and implementing monitoring controls to ensure reconciliations are prepared and reviewed timely. These actions are expected to improve the effectiveness of controls over material account balance reconciliations. Auditor’s Evaluation of the Views of Responsible Officials: Wesleyan College’s response is appropriate to ensure their preparation and review of material balance sheet account reconciliations are performed in a timely manner.
Statement of Condition: During the fiscal year ended June 30, 2025, the Organization charged indirect costs to the federal program at a rate of 8%, consistent with the grant agreement. However, the total amount of indirect costs charged exceeded the total allowable Management and General costs incurred in the Organization’s indirect cost pool. As a result, the Organization recorded excess indirect cost recovery of approximately $50,000, resulting in a surplus within a cost-reimbursement federal award. Criteria: Under Uniform Guidance (2 CFR §200.403 and §200.414), costs charged to a federal award must be: Allowable, Allocable, consistently applied Indirect costs must be supported by actual allowable costs incurred and may not exceed the underlying cost pool to which the rate is applied. Additionally, 2 CFR §200.303 requires non-federal entities to establish and maintain effective internal controls over federal awards to ensure compliance with federal statutes, regulations, and the terms and conditions of the award. Effect and Questioned Costs: At the time indirect costs were charged, allowable costs incurred were exceeded, resulting in a compliance issue under Allowable Costs / Cost Principles. Although the Organization subsequently obtained approval from the pass-through entity to retain and use the funds for specified purposes, the excess was not allowable as incurred, and the matter remains reportable as a compliance finding. Questioned costs of approximately $50,000 were identified; however, no repayment is required, provided the funds are used in accordance with the approval and related oversight requirements. Cause: The condition resulted from a combination of factors, including reclassification of certain vendors from subrecipients to contractors, which expanded the base of expenditures eligible for indirect cost allocation and increased indirect cost recovery without a corresponding increase in indirect expenses; and insufficient monitoring of indirect cost recovery following approval of an increased grant budget during a period of leadership transition, resulting in delayed identification of the imbalance between indirect recovery and actual indirect expenditures. Recommendations: We recommend that the Organization continue to adhere to the approved resolution with the pass-through entity regarding the use of excess indirect cost recovery, implement procedures to monitor indirect cost recovery relative to the underlying cost pool throughout the year, periodically reconcile indirect costs charged to actual management and general expenses incurred, enhance budgeting and forecasting processes to incorporate expected indirect cost recovery and ensure consistent application of the approved indirect cost rate in accordance with the grant agreement.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Health Center Cluster Assistance Listing Number: 93.224 Federal Award Identification Number: H8000517; H8NCS54087 Award Periods: July 1, 2024 – February 28, 2025; March 1, 2025 – June 30, 2025 Type of Finding: Significant deficiency in internal control over compliance Criteria: 2 CFR 200.303 requires non-federal entities to establish and maintain effective internal control over federal awards to provide reasonable assurance of compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: The Clinic was unable to provide documentation that a formal review and approval process had occurred prior to initiating drawdowns via the payment management system. Questioned Costs: None Context: This condition was identified during the review and testing of drawdowns as part of testing cash management. Cause: The Clinic has a limited number of resources in its finance department and as a result has incorporated the executive director into the review process. However, documentation was not created and maintained to shown that a formal review and approval had occurred prior to initiation drawdowns. Effect: The lack of documented review increases the risk that noncompliance with federal requirements could occur and not be prevented or detected in a timely manner. Repeat Finding: No. Recommendation: We recommend the Clinic develop and implement a formal review and approval process related to drawdowns. This should include the creation and maintaining of supporting documentation which demonstrates who performed the review and when it was performed. This could be done via sign-offs, checklists, or electronic approvals.
Identification of the Federal Programs: Assistance Listing Number: 14.239 Assistance Listing Title: Home Investment Partnerships Program Federal Agency: U.S. Department of Housing and Urban Development Federal Award Number: M24-MC060521 Federal Award Year: FY2024 – FY2032 Criteria or Specific Requirements: Federal regulations require recipients of federal housing rehabilitation and loan program funds to maintain complete, accurate, and reliable documentation demonstrating compliance with all program terms and conditions. Under 2 CFR 200.303, Internal controls, recipients must establish and maintain effective internal controls over Federal awards to ensure proper stewardship of program funds. In addition, 2 CFR 200.334, Record retention requirements, requires recipients to retain records that document compliance with Federal program requirements and make such records available for audit or review. Identified Condition: During the audit, the City was unable to provide the required supporting documentation for several sampled properties. Specifically, documentation was not available to support: • proof of current homeowner’s insurance and verification of updated property tax payments for thirteen sampled properties; • evidence of owner occupancy for the required loan term for the twelve sampled properties; • executed home loan agreements for two sampled properties; and • proof supporting the number of residential units for one sampled commercial property. Because the required documents were not available, we were unable to test compliance with program eligibility requirements. Cause: The condition occurred due to insufficient internal controls over record retention and documentation management within the housing rehabilitation and loan programs. Staff turnover and transitions in program responsibilities contributed to gaps in institutional knowledge and inconsistent maintenance of required records. Effect: The lack of complete and accessible records limits the City’s ability to demonstrate compliance with Federal requirements. These documentation gaps also indicate weaknesses in internal controls over record retention and program oversight, which may affect the reliability of program administration and future audit results. Questioned Costs: None. Recommendation: The City should strengthen its internal controls over record retention and documentation management to ensure all required program records are complete, accurate, and readily accessible for audit. This includes establishing clear procedures for maintaining documentation supporting property eligibility, loan terms, and compliance requirements, as well as implementing a centralized and organized record‑keeping system. The City should also provide training to staff responsible for administering the housing rehabilitation and loan programs to promote a consistent understanding of Federal documentation and retention requirements. Additionally, periodic internal reviews should be conducted to verify that required records are being properly maintained. Views of Responsible Officials and Planned Corrective Action Plan: Management acknowledges the auditors’ review of HUD HOME eligibility testing. We believe our current processes generally comply with HUD requirements; however, we recognize the opportunity to strengthen controls. To address the auditors’ comments, we will enhance our eligibility verification procedures, improve documentation consistency, and provide additional staff training. These corrective actions will help ensure ongoing compliance and accuracy in eligibility determinations. Personnel Responsible for Implementation: Meredith Elguira Position of Responsible Personnel: Community Development Director Expected Date of Implementation: April 30, 2026
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.