Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Repeat Finding: No Criteria or Specific Requirement Lincoln Public Schools must comply with procurement standards set out at 2 CFR sections 200.303 and 200.318 through 200.326 within Uniform Guidance. Condition Lincoln Public Schools purchasing policy does not include all elements as outlined in 2 CFR sections 200.303 and 200.318 through 200.326 noted above. Questioned Costs None Context Although Lincoln Public Schools purchasing policies do not include all elements as outlined in 2 CFR sections 200.303 and 200.318 through 200.326, we did not identify transactions where contracts were awarded without proper justification in 1 of 1 procurement transactions tested. Cause Management was not aware of the procurement standards set out at 2 CFR sections 200.303 and 200.318 through 200.326 within Uniform Guidance. Effect Lincoln Public Schools is at risk for noncompliance with Federal grants as it relates to procurement. Repeat Finding No Recommendation We recommend that Lincoln Public Schools update its procurement policies to include all elements identified in 2 CFR sections 200.303 and 200.318 through 200.326. Views of Responsible Officials and Planned Corrective Action Management is working with our current auditors to update the Lincoln Public Schools procurement policies to be in compliance with the Uniform Guidance.
Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Continuum of Care Assistance Listing Number: 14.267 Federal Award Identification Number and Year: Multiple for FY2024-25 Award Period: July 1, 2024 through June 30, 2025 Type of Finding: • Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed (2 CFR 200.430(g)). In addition, under 2 CFR 200.303, the non‑Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: During our testing, we noted that LAHSA’s internal control designed to ensure payroll transactions were allowable was not consistently implemented. Questioned Costs: None Context: During our testing, it was noted that three out of forty timesheets were not approved prior to commencement of the audit. Cause: Appropriate personnel did not approve timesheets supporting payroll costs charged to the Continuum of Care program in a timely manner. Effect: LAHSA is not in compliance with maintaining an internal control over compliance for payroll costs charged to the Continuum of Care program. Repeat Finding: No Recommendation: We recommend that LAHSA implement procedures to ensure that timesheet approval is documented timely. Views of responsible officials: There is no disagreement with the audit finding.
GRANT COMMUNITY CONSOLIDATED SCHOOL DISTRICT 110 50-082-1100-04 SCHEDULE OF FINDINGS AND QUESTIONED COSTS Year Ending June 30, 2025 SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS 1. FINDING NUMBER:14 2025 - 004 2. THIS FINDING IS: X New Repeat from Prior year? Year originally reported? 3. Federal Program Name and Year: National School Lunch Program, School Breakfast Program 4. Project No.: 25-4210-00, 24-4210-00, 25-4220-00, 24-4220-00 5. AL No.: 10.555 & 10.553 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 §200.303, non-federal entities must 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 award. Additionally, 7 CFR §210.8(a) requires school food authorities to establish internal controls to ensure the accuracy of meal counts prior to submitting monthly claims for reimbursement. 9. Condition Claims submitted for reimbursement did not reconcile with the District’s internally prepared monthly claim summary report. 10. Questioned Costs Total questioned costs equal $78,821.37. 11. Context The District participates in the National School Lunch Program (ALN 10.555) and the School Breakfast Program (ALN 10.553), which require accurate reporting of meal counts to determine reimbursement. Meal count claims are prepared monthly by a designated staff member and submitted to the state agency. However, the District’s independent review process for these claims is not functioning effectively. This lack of review contributed to errors in the reimbursement claims for October 2024, December 2024, and February 2025. 12. Effect The District submitted reimbursement claims that did not reconcile to its internally prepared monthly claim summary report, resulting in both underclaims & overclaims of meals. 13. Cause The District had a review process in place requiring a secondary review of meal count claims; however, the process was not functioning effectively. 14. Recommendation The District should strengthens internal controls over meal count claims prior to submission. 15. Management's response Management concurs with finding.
2025-007 - Lack of Documented Federal Policies and Procedures Finding Type: Material weakness in internal control over compliance. Criteria: The Uniform Guidance (2 CFR 200.303) requires that non-Federal entities establish and maintain effective internal control over Federal awards to provide reasonable assurance that the awards are managed in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Federal internal control guidance also contemplates that such controls be documented and maintained. Condition: The City did not maintain documented policies and procedures over its Federal awards as of June 30, 2025. No formal documentation was available to evidence the design and implementation of internal controls over compliance. Cause: This condition is the result of the City’s lack of formal procedures to document and maintain internal controls over compliance for Federal awards. Effect: As a result of this condition, the City did not maintain adequate internal control over compliance to provide reasonable assurance that Federal awards were managed in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. Recommendation: The City should establish, document, and implement formal policies and procedures over Federal awards to ensure compliance with Uniform Guidance requirements. Management Response: See Corrective Action Plan.
Finding 2025-005: Reporting (Significant Deficiency) Federal Agency: National Institute of Health Federal Program: All of Us Research Program Assistance Listing Number: 93.368 Criteria: As noted in 2 CFR §200.303 "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). Condition: We noted one instance in which there was no documented approval date of a report, and one instance in which the submission of a report was not timely in accordance with the award agreement. Cause: The Foundation does not have the appropriate internal controls in place to ensure that all internal reviews over reports are documented with a date of review. In addition, the Foundation is lacking internal controls to ensure that all reports are submitted timely in line with award agreement requirements. Effect or Potential Effect: Without proper dating of internal review and approval over reports, there exists the possibility that the review was not done prior to submission and information reported is inaccurate. Untimely submission of reports could result in withholding of funding. Questioned Costs: None noted as this compliance requirement is an administrative reporting requirement that does not impact cost eligibility. Context: Our audit procedures consisted of testwork performed over a sample of reports required to be submitted during the year under audit. We consider our sample to be representative of the population. The issue appears to be systematic in nature. Identification as a Repeat Finding: Refer to finding 2024-005. Recommendation: We recommend that the Foundation ensure that all approvals over performance and financial reporting are documented along with the date of review. In addition, we recommend the Foundation implement procedures to ensure that all reports are submitted within the specific timeframes specified in award agreements.
U.S. Department of Agriculture Community Facilities Loans and Grants - 10.766 Criteria or Specific Requirement – Special Test Per 2 CFR 200.303, the non-federal entities receiving federal awards (i.e ., auditee management) must establish and maintain internal control design to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal award. Per the debt agreement, Section 4(d)1, the Hospital needs to accumulate $521,000 in debt reserve account deposits of $4,000 monthly until fully funded. Condition – During our test work over the USDA loan, we noted the Hospital did not make the required transfers to the debt reserve account from December 2024 to June 2025. Cause – Financial constraints and continued turnover within the accounting department of the Hospital. Effect or Potential Effect – The Hospital is not in compliance with their debt covenant and the USDA has the right to call the debt and make the entire loan balance immediately due and payable. Questioned Costs – None noted. Context – The Hospital has a waiver from the USDA in which the USDA granted permission for the Hospital to use the debt reserve account for debt service payments on the USDA loan up to December 2024. The USDA did not wish to further waive the requirement to make the monthly payments to the debt reserve account. Though, the Hospital and USDA entered into a workout agreement stating as long as the Hospital agreed to their conditions, they would not accelerate the amount due. Identification as a Repeat Finding, if applicable – Not applicable. Recommendation – We recommend the Hospital adhere to the conditions set forth by the USDA per the workout agreement, which includes making the monthly transfer of $4,000 to the debt reserve account. Views of Responsible Official and Planned Corrective Actions – Management agrees with finding. See corrective action plan.
U.S. Department of Health and Human Services Congressional Directives - 93.493 Award# CE152271 Criteria or Specific Requirement – Procurement and Suspension and Debarment subawards under covered transactions to parties that are suspended or debarred. “Covered transactions” include contracts for goods and services awarded under a non-procurement transaction (e.g ., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR Section 180.220. All non-procurement transactions entered into by a pass-through entity (i.e ., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR Section 180.215. Per 2 CFR 200.303, the non-federal entities receiving federal awards (i.e ., auditee management) establish and maintain internal control design to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition – The Hospital's Procurement Policy and Procedure is not in alignment with the requirements of 2 CFR Section 200.320. The policy does not document different procurement methods for documentation to be retained, etc. Additionally, formalized documentation supporting the Hospital is in compliance with policies and regulations supporting its procurement decisions did not exist. Lastly, there was no suspension and debarment check completed prior to purchases made with federal funds. Cause – The Hospital's procurement policies are not in accordance with the Uniform Guidance, nor are there controls in place to ensure policies are followed, and lastly, there are no controls to ensure suspension and debarment checks are performed on vendors receiving federal funds. Effect or Potential Effect – Federal funds could be used to make an unauthorized purchase including paying paying an entity that is suspended or debarred. Questioned Costs – None noted. Context – During fiscal year 2025, only one vendor was subject to procurement and suspension and debarment requirements and was therefore selected for testing. The Hospital expended $1,100,000 for goods goods and services from this vendor during the fiscal year. The Hospital was able to provide bid documentation related to vendor selection; however, the Hospital did not have formally documented written procurement policies addressing compliance with Uniform Guidance requirements, including procedures for suspension and debarment verification. As part of audit testing, it was noted that the vendor had not been evaluated for suspension or debarment at the time of procurement. A subsequent check performed during the audit indicated that the vendor was not suspended or debarred. Identification as a Repeat Finding, if applicable – Not applicable. Recommendation – Policies and procedures should be modified to ensure that procurement policies are in alignment with federal regulations, support for procurement decisions are maintained and suspension and debarment checks on vendors are performed prior to making purchases with federal funds and are in alignment with the Uniform Guidance requirements. Views of Responsible Official and Planned Corrective Actions – Management agrees with finding. See corrective action plan.
U.S. Department of Health and Human Services Congressional Directives - 93.493 Award# CE152271 Criteria or Specific Requirement – Reporting and Significant Deficiency Per 2 CFR 200.303, the non-federal entities receiving federal awards (i.e ., auditee management) establish and maintain internal control design to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition – During our test work over the Congressional Directive grant, we noted the Hospital did not maintain effective internal controls over reporting. Reports were prepared and submitted by a single individual without evidence of supervisory or independent review prior to submission. Cause – The Hospital's controls to ensure reports are filed timely and accurately were not operating effectively. Effect or Potential Effect - Without an established review process, there is an increased risk that required federal reports may contain errors, omissions, or noncompliant information, which may not be detected or corrected timely. Questioned Costs – None noted. Context – One federal financial report was required to be submitted and selected for testing. We noted there was no review process in place over the report submitted. While no material errors were identified during audit testing, the control deficiency increases the risk of noncompliance with federal reporting requirements. Identification as a Repeat Finding, if applicable – Not applicable. Recommendation – We recommend the Hospital incorporate a review and reconciliation process of the required reports to the underlying grant and accounting records. Views of Responsible Official and Planned Corrective Actions – Management agrees with finding. See corrective action plan.
Department of Education Federal Financial Assistance Listing # 84.365C, English Language Acquisition, Language Enhancement, and Academic Achievement Program for Limited English Proficient Children, 9/1/2023 – 8/31/2024 and 9/1/2024 – 8/31/2025 Activities Allowed or Unallowed and Allowable Costs/Cost Principles and Period of Performance Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria: The Organization is required to have procedures in place to ensure that federal awards are expended only for allowable costs in accordance with Subpart E – Cost Principles of the Uniform Guidance. Allowable costs are supported by appropriate documentation and correctly charged as to account, amount, and period. 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: Indirect costs charged to the federal award did not agree to the underlying direct costs for the award for the fiscal year ended June 30, 2025. Cause: The Organization drew down indirect costs during the year ended June 30, 2025 for the period September 1, 2021 to June 30, 2025. Effect: Current year amounts drawn for indirect expense category were not correctly charged as to amount and period. Questioned Costs: Indirect costs drawn for the fiscal year ending June 30, 2025 for which compliance with the federal award could not be determined were $58,531. Context: There was one draw for indirect costs of $88,074 during the fiscal year ended June 30, 2025. Indirect costs relating to the underlying direct expenses for the fiscal year ending June 30, 2025 were $29,543. There were $58,531 of indirect costs drawn for which a determination was unable to be made as to compliance with the federal award. Recommendation: We recommend management continue to review procedures over the allocation of indirect costs and ensure indirect costs are being calculated on the underlying direct costs incurred in the year under audit. Views of Responsible Officials: Management is in agreement.
Eligibility Program Name: Summer Electronic Benefits Transfer Program for Children (Summer EBT) (Assistance Listing 10.646) Federal Award Agency: United States Department of Agriculture Award Years: Federal Fiscal Years 2024 and 2025 Federal Award Number: 244CT833N1175 Background The Department of Social Services (DSS) is the lead agency that administers the Summer EBT program and partners with the State Department of Education (SDE) to facilitate the program. DSS relies on the Integrated Management of Public Assistance for Connecticut (ImpaCT) system, the Connecticut Health Insurance Exchange (HIX) system, and third-party contractors when determining client eligibility. Additionally, SDE provides eligible client listings to DSS. DSS issues Summer EBT benefits to clients in multiple iterations. The department’s business systems and quality management divisions, and third-party contractors review the iterations. Each iteration requires a database change request prior to running the iteration. If the business systems division determines that it needs to make a change to the database change request, it will provide a formal approval. Criteria Title 2 U.S. Code of Federal Regulations (CFR) Part 200.303 requires the non-federal entity to establish and maintain effective internal control over the federal award that provides reasonable assurance that it is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the award. Title 7 CFR Part 292.16(a)(5)(i) requires the state Summer EBT agency to establish a master issuance file which contains all information needed to identify eligible children, issue Summer EBT benefits, record the participation activity for each household, and supply all information necessary to fulfill reporting requirements. Condition Our inquiry about the Summer EBT client eligibility population disclosed that DSS did not track which agency was responsible for each client’s eligibility determination. The DSS business systems division did not approve four out of seven benefit iterations, totaling $993,840, and did not maintain sufficient documentation to support that it did not need to make a change to the database change request. Context DSS issued Summer EBT benefits in seven iterations totaling $30,362,441 during the fiscal year ended June 30, 2025. Questioned Costs $0 Effect DSS has reduced assurance over the accuracy and reliability of client eligibility determinations and oversight of Summer EBT benefit iterations. Cause The department’s current methods of combining multiple sets of Summer EBT issuance data files lacked sufficient controls to determine the source of client eligibility. The business systems division relied on quality management’s approval and did not maintain documentation to confirm that it made no changes to some database change requests. Prior Audit Finding We have not previously reported this finding. Recommendation The Department of Social Services should strengthen internal controls to identify the agency responsible for each client’s eligibility determination and document benefit iteration approvals for the Summer Electronic Benefits Transfer Program for Children. Views of Responsible Officials “The Department disagrees with this finding. Condition #1: Eligibility for the Summer EBT program is established through multiple pathways: receipt of Supplemental Nutrition Assistance Program (SNAP) benefits, Temporary Family Assistance (TFA), or HUSKY A coverage, and through applying for and receiving an eligibility determination for either the National School Lunch Program or the Summer EBT program itself. Determining eligibility is a shared responsibility between DSS and the State Department of Education (SDE), and children qualify through multiple pathways simultaneously. DSS maintains a record within its eligibility system and compiles reports of all eligible children. When eligibility is established through any additional means, the child’s record is then analyzed against all previous issuances to ensure duplicate participation and double issuance does not occur. Title 7 CFR Part 292.16 (a)(5)(i) requires the Summer EBT agency to establish a master issuance file which contains all information needed to identify eligible children, issue Summer EBT benefits, record the participation activity for each household and supply all information necessary to fulfill reporting requirements. The agency is not required to specify which program(s) were used to determine eligibility, which is reasonable given that there may be multiple overlapping avenues of eligibility. The implication that DSS is somehow not compliant or able to identify the source of eligibility is inaccurate. DSS can identify this information on an individual basis through reviewing the child’s receipt of SNAP, TFA, HUSKY A, or through its ongoing coordination and communication with SDE. Condition #2: It is not a requirement of the business systems division to request approval for each issuance. Each year the Department issues benefits for this program in a consistent manner. Since there were no changes to the process during the audit period, approval was not sought for the issuances. Business systems would only seek approval if there was a change to the process.” Auditors’ Concluding Comments Eligibility data at the summary and individual levels are both critical for an effective and efficient review of the program. The department could not provide documentation to substantiate that it used existing database change request scripts and approval by the business systems division was not necessary.
Special Tests and Provisions – EBT Card Security Program Name: Summer Electronic Benefits Transfer Program for Children (Summer EBT) (Assistance Listing 10.646) Federal Award Agency: United States Department of Agriculture Award Years: Federal Fiscal Years 2024 and 2025 Federal Award Number: 244CT833N1175 Background The Department of Social Services (DSS) provides Summer Electronic Benefits Transfer (EBT) benefits through EBT cards. The department’s financial services division tracks the status of returned EBT cards. The department’s mailroom staff are responsible for EBT card destruction. Criteria Title 2 U.S. Code of Federal Regulations (CFR) Part 200.303 requires the non-federal entity to establish and maintain effective internal control over the federal award that provides reasonable assurance that it is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Title 7 CFR Part 292.16(h)(3)(i) requires the state Summer EBT agency to provide adequate security for EBT cards including secure storage, inventory control records, and periodic review and validation of inventory control records. Title 7 CFR Part 292.15(h)(1)(i) requires Summer EBT agencies to expunge Summer EBT benefits 122 calendar days after issuance. Condition Our review of the status of returned Summer EBT cards disclosed that DSS destroyed returned EBT cards and did not maintain a log to record client information, disposition date, and reason for destruction. Context DSS issued $7,243,933 in Summer EBT refunds during fiscal year 2025. The refund amount included lost, stolen, or damaged EBT cards as well as expunged benefits. DSS destroyed seven 500-card tubes of returned EBT cards. Questioned Costs We were unable to determine if there were questioned costs as DSS did not maintain disposition records for the returned EBT cards. Effect DSS has reduced assurance over the security and accountability of returned EBT cards. Cause DSS informed us that it did not maintain a log due to the large volume of returned EBT cards. Prior Audit Finding We have not previously reported this finding. Recommendation The Department of Social Services should strengthen internal controls to ensure that it consistently secures, tracks, and records returned cards for the Summer EBT program. Views of Responsible Officials “The Department agrees with this finding. However, the Department believes that there are proper internal controls to ensure the security of returned cards. There was no log maintained by the Department but the controls in place reduced the risk of benefits being used incorrectly to an acceptable level. The returned cards were destroyed, and all unused benefits were expunged.” Auditors’ Concluding Comments DSS did not implement sufficient internal controls for the Summer EBT card program compared to the department's other federal EBT card programs. DSS was unable to provide documentation to support which EBT cards it destroyed and that it expunged benefits on all cards prior to destruction.
Subrecipient Monitoring Program Name: Crime Victim Assistance (Assistance Listing 16.575) Federal Award Agency: Department of Justice Award Years: Federal Fiscal Years 2021, 2022, and 2023 Federal Award Numbers: 15POVC-21-GG-00615-ASSI, 15POVC-22-GG-00715-ASSI, and 15 POVC-23-GG-00433-ASSI Background The Crime Victim Assistance program provides financial support and various services and resources to crime victims, including crisis counseling, criminal justice support and advocacy, shelter, and therapy. The Judicial Branch provides grants to subrecipients to provide these services. Title 28 U.S Code of Federal Regulations (CFR) Part 94.118 provides that subrecipients shall contribute not less than 20% of the total cost of each project. Subrecipients shall derive these contributions from non-federal sources. Each subrecipient shall maintain records that clearly show the source and amount of the matching contributions.Criteria Title 2 CFR Part 200.303 requires the non-federal entity to establish and maintain effective internal control over federal awards that provides reasonable assurance that it is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Title 2 CFR Part 200.332(e) provides that the pass-through entity shall monitor subrecipient activities as necessary to ensure that they comply with federal statutes, regulations, and the terms and conditions of the subaward. Title 28 CFR Part 94.106 provides that the state administering agency shall conduct regular desk monitoring of all subrecipients as well as on-site monitoring of all subrecipients at least once every two years during the award period. The state shall maintain a copy of site visit results and other documents related to compliance. Title 2 CFR Part 200.306(b) provides that the pass-through entity must accept any cost sharing funds as part of the subrecipient’s contributions to a program when the funds are verifiable in the subrecipient’s records. Condition The Judicial Branch did not perform regular subrecipient desk reviews or site visits at least once every two years during the award period as required by federal regulations. The branch does not complete reviews until the award period ends. As a result, it did not promptly examine subrecipients’ underlying documentation such as invoices, timesheets, or support for expenditures or matching contributions. The branch’s monitoring process was limited to monthly reviews of budget-to-actual summaries. Context During the fiscal year ended June 30, 2025, the branch made $8,759,482 in reimbursements to 40 subrecipients.Questioned Costs $0Effect The Judicial Branch has limited assurance that subrecipients used federal funds for allowable activities and met the mandatory matching requirements. This could potentially lead to future disallowed costs and federal repayment obligations.Cause Due to a lack of adequate staffing, the Judicial Branch prioritized reviewing supporting documentation for prior award periods rather than the current period. Prior Audit Finding We have not previously reported this finding.Recommendation The Judicial Branch should strengthen internal controls to ensure it complies with federal subrecipient monitoring requirements for the Crime Victim Assistance program. Views of Responsible Officials “The Judicial Branch Office of Victim Services (OVS) agrees to strengthen its internal controls as described below to comply with federal subrecipient monitoring requirements for the Victims of Crime Act Assistance (VOCA) Program. In 2025, OVS performed site visits for four VOCA-funded programs and completed financial-desk reviews of monthly or quarterly financial reports for all programs. That year, OVS experienced personnel turnover in its three-employee Fiscal Services Unit, notably the separation from state service of a Program Manager and a Court Planner, who together performed OVS’ programmatic site visits of VOCA-funded programs. Also, there was a significant increase in workload resulting from OVS’ contributions to the 2024-2025 VOCA request-for-proposal process. In response, staff outside the unit contributed while managing other assigned duties, a Program Manager and Grants and Contract Specialist were hired to restore the unit to its three-employee configuration, the new employees received training on subrecipient monitoring policies and procedures, and a revised subrecipient site visit plan was developed and has begun being implemented. To strengthen internal controls, OVS has developed a revised site visit plan for the remaining VOCA-funded programs scheduled to receive site visits in 2025. April 15, 2026, is the anticipated date for OVS to complete the site visits. OVS has completed sending letters to the subrecipients operating the VOCA-funded programs. The letters request supporting documentation, which is programmatic and financial in nature, in accordance with OVS administrative policy and procedure. Also, the letters inform subrecipients that site visits will commence in accordance with a revised site visit plan.”
Activities Allowed or Unallowed – Individual Plans and Service Records Program Name: Money Follows the Person Rebalancing Demonstration (MFP) (Assistance Listing 93.791) Federal Award Agency: United States Department of Health and Human Services Award Years: Federal Fiscal Years 2024 and 2025 Federal Award Number: 1LICMS300142 Background The Department of Social Services (DSS) is the designated single state agency to administer the Money Follows the Person Rebalancing Demonstration (MFP) program. Connecticut administered certain aspects of MFP through several state agencies including the Department of Developmental Services (DDS). Criteria Title 2 U.S. Code of Federal Regulations (CFR) Part 200.403 provides that to be allowable under federal awards, costs should be adequately documented. Title 2 CFR Part 200.303 requires the non-federal entity to establish, document, and maintain effective internal controls over the federal award that provides reasonable assurance that it is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the award. Procedure No. I.C.1.PR.002.a. of the DDS Operation Manual states that DDS should obtain agreements and approvals for the individual plan during the planning process. The case manager should document who participated in the planning process and obtain signatures on the individual plan. Participants typically include the recipient, parent, guardian, advocate, case manager, support brokers, private agency designee, and other DDS staff. Condition Our review of 25 MFP benefit payments totaling $11,000, of which $8,250 was federally reimbursed, disclosed that DDS did not have signatures of agreement and approval for six individual plans. Additionally, DDS could not obtain service records from one medical provider to support one $46 payment, for which DSS received $35 in federal reimbursement. Context During the fiscal year ended June 30, 2025, DSS processed $4,978,654 in MFP benefit payments on behalf of 36 DDS recipients. DSS received $3,733,990 in federal reimbursement. The sample was not statistically valid. Questioned Costs $0 Effect The lack of signatures to indicate agreement and approval of an individual plan by relevant participants increases the risk of inadequate services for the recipient. DSS received federal reimbursement for an unallowed expenditure. Cause Lack of management oversight contributed to the condition. Prior Audit Finding We have not previously reported this finding. Recommendation The Department of Developmental Services should strengthen internal controls to ensure it obtains the required signatures for the individual plan for all Money Follows the Person Rebalancing Demonstration recipients. The Department of Social Services should conduct an audit of the medical provider in accordance with Section 17b-99 of the Connecticut General Statutes to ensure integrity of the Money Follows the Person Rebalancing Demonstration program. Views of Responsible Officials Response provided by the Department of Developmental Services: “DDS agrees with the finding. The errors were attributed to current manual processes and case management oversight regarding documenting signatures when individual plan (IP) meetings are held remotely rather than in-person. Most of the deficiencies (5 of 6) were isolated to one case manager. The MFP division is small with 3-4 case managers, causing a higher error rate when extrapolated against the sample size. The missing support service records have been forwarded to the Department of Administrative Services for research. There are plans to improve the individual plan process to enhance internal controls through automation. In the interim, case managers and case manager supervisors will be reminded of the IP signature requirements.” Response provided by the Department of Social Services: “The Department agrees with this finding and the response provided by the Department of Developmental Services. Additional research is needed to determine whether the missing documentation was the provider's responsibility or was due to a billing issue. The Department of Developmental Services is coordinating with the Department of Administrative Services to research this further.”
Eligibility Program Name: Money Follows the Person Rebalancing Demonstration (MFP) (Assistance Listing 93.791) Federal Award Agency: United States Department of Health and Human Services Award Years: Federal Fiscal Years 2024 and 2025 Federal Award Number: 1LICMS300142 Background The Department of Social Services (DSS) uses several systems to administer the Money Follows the Person Rebalancing Demonstration (MFP) program. The My Community Choices web portal is the primary system that maintains data about MFP applicants and participants, including client start and end dates. The DSS eligibility management system maintains client eligibility determinations for the program. The Medicaid Management Information System (MMIS) processes medical services payments and provides financial reports for federal reimbursement claims. Since the My Community Choices web portal does not interface with other systems, DSS staff must manually input client MFP program start and end dates into the DSS eligibility management system. The DSS eligibility management system interfaces with MMIS daily. Criteria Section 6071(b)(2) of Public Law 109-171 defines an eligible individual for the MFP demonstration project as a person who, immediately before beginning participation in the MFP demonstration project, resides in an inpatient facility, receives Medicaid benefits for inpatient services, continues to require the level of care provided in an inpatient facility, and who resides in a qualified residence beginning on the initial date of participation in the demonstration project. Section 6071(b)(7) of Public Law 109-171 defines qualified expenditures by the state under its MFP demonstration project as home and community-based long-term care services for an eligible individual participating in the MFP demonstration project. However, this is only with respect to services furnished during the 12-month period beginning with the individual's discharge date from an inpatient facility. Title 2 U.S. Code of Federal Regulations (CFR) Part 200.403 provides that to be allowable under federal awards, costs should conform to any limitations or exclusions set forth in the federal award. Title 2 CFR Part 200.303 requires the non-federal entity to establish and maintain effective internal controls over the federal award that provides reasonable assurance that it is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the award. Title 42 CFR Part 431.420 requires the state to comply with the terms and conditions of the MFP demonstration project. MFP terms and conditions require the state to ensure the availability of adequate resources for implementation and monitoring of the demonstration project including tracking participant enrollment, maintaining eligibility systems, and administering effective transition coordination. MFP terms and conditions require the state to develop and amend an operational protocol that details how the state will adhere to statutory and program requirements. Section B of the MFP Operational Protocol includes the following policies and procedures. • Determining MFP eligibility includes ensuring an individual’s annualized cost of care in the community is equal to or less than the annualized rate paid for residing in an institution. • The state will not provide an administrative hearing to an applicant for denied services due to the applicant’s care plan exceeding the allowable cost of care in the community. • The state will suspend MFP participation and services during any inpatient stay. Suspended MFP participants may continue MFP participation upon discharge from the inpatient facility. Condition We reviewed 40 MFP claims, totaling $49,144, of which $36,858 was federally reimbursed, to determine if DSS properly granted eligibility. Our review disclosed the following: 1. DSS did not terminate MFP participation for two clients. DSS processed $918 for the selected claims for these clients. DSS processed $184,088 in additional claims in fiscal year 2025 and $270,274 in claims in prior fiscal years for periods when these clients were no longer eligible under the MFP program. DSS should have ended participation on April 5, 2018, and July 30, 2020, respectively. 2. DSS processed $7,724 of ineligible MFP expenses for two clients during inpatient hospital or nursing facility stays ranging from 14 to 21 days. DSS did not properly track MFP participation dates for these clients in its systems. Additionally, DSS did not properly track participation dates for a third client for seven days of hospitalization. 3. DSS approved two applicant care plans that exceeded the cost of institutional care by $1,530 (19%) and $3,507 (39%) per month. 4. DSS did not perform or document a comparative cost analysis for one client to demonstrate that care plan costs did not exceed nursing facility costs. Context During the fiscal year ended June 30, 2025, DSS processed $18,243,599 in payments on behalf of 824 MFP clients and received $13,682,699 in federal reimbursement. The sample was not statistically valid. Questioned Costs We computed questioned cost of $347,253 by applying the applicable federal financial participation rate to the ineligible expenditures. Questioned costs were $144,548 for fiscal year 2025 and $202,705 for prior fiscal years. Effect DSS provided MFP benefits to ineligible individuals. DSS received federal reimbursement for unallowed expenditures. Cause The My Community Choices web portal did not interface with DSS eligibility and financial systems. DSS relied on staff to manually input client participation start and end dates in multiple systems. Management oversight did not identify input errors of client participation dates. DSS management overrode applicant care plan costs. The MFP Operational Protocol has no written procedures to override program policies or federal regulations. Prior Audit Finding We have not previously reported this finding. Recommendation The Department of Social Services should strengthen internal controls to ensure that only eligible recipients receive Money Follows the Person Rebalancing Demonstration services in accordance with federal laws, award terms and conditions, and the Money Follows the Person Operational Protocol. Views of Responsible Officials “The Department agrees in part with this finding. Condition #1: DSS agrees that participation end dates were not updated timely due to cross-system manual entry limitations. Reconciliation procedures and supervisory oversight will be strengthened. Condition #2: DSS agrees that participation suspensions were not consistently reflected across systems due to timing delays. Monitoring and real-time reconciliation controls will be enhanced. Condition #3: DSS agrees approved costs exceeded institutional thresholds in limited cases. Variances were clinically justified, reviewed, and authorized. DSS will strengthen documentation and internal protocols to ensure clearer policy alignment. Condition #4: DSS agrees that the documentation was incomplete in one instance. Internal review standards will be reinforced to ensure comparative cost analyses are consistently documented. Please note, the Department will not be returning the questioned costs associated with this finding. According to federal regulations, recoveries based on eligibility errors can only be pursued when identified by programs operating under Centers for Medicare and Medicaid Services’ (CMS) Payment Error Rate Measurement program, per section 1903(u) of the Social Security Act and regulations at Title 42 CFR Part 431, Subpart Q.” Auditors’ Concluding Comments The Department of Social Services should amend its MFP Operational Protocol and seek approval from the Centers of Medicare and Medicaid Services if the department plans to continue to use management overrides of care plan costs.
Performance Reporting – Semi-Annual Progress Report and Special Reporting – MFP Work Plan Program Name: Money Follows the Person Rebalancing Demonstration (MFP) (Assistance Listing 93.791) Federal Award Agency: United States Department of Health and Human Services Award Years: Federal Fiscal Years 2024 and 2025 Federal Award Number: 1LICMS300142 Criteria The Money Follows the Person (MFP) Rebalancing Demonstration federal award requires the state to provide programmatic reports in accordance with Title 2 U.S. Code of Federal Regulations (CFR) Part 200.301. Title 2 CFR Part 200.301 requires the state to correlate financial data to performance accomplishments of the federal award. The state should also measure performance in a way that will help the United States Department of Health and Human Services (DHHS) and other non-federal entities to improve program outcomes, share lessons learned, and spread the adoption of promising practices. Title 2 CFR Part 200.303 requires the non-federal entity to establish and maintain effective internal controls over the federal award that provides reasonable assurance that it is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the award. MFP terms and conditions require the state to submit a work plan that documents its progress on the use of initiatives designed to increase the use of home and community-based services rather than institutional long-term services and supports. MFP terms and conditions require the state to submit semi-annual progress reports that present the state’s analysis and the status of various operational areas in reaching the objectives of the demonstration. The semi-annual progress report documents the state’s progress in meeting MFP operational procedures and processes, transition benchmarks, and program goals for expanding and enhancing home and community-based services. Title 2 CFR Part 200.334 requires the state to retain financial and programmatic records to support reported information for three years from the date of submission. Condition Our review of the MFP work plan and semi-annual progress report for July 1 to December 31, 2024, disclosed that the Department of Social Services (DSS) did not maintain MFP program data to support figures reported for seven performance objectives in the work plan and 11 performance measures in the semi-annual progress report. Context DSS submitted two semi-annual progress reports and two work plans to DHHS during fiscal year 2025. The sample was not statistically valid. Questioned Costs $0 Effect DSS may have submitted an inaccurate work plan and progress report. DHHS may be using unreliable data to identify promising practices and make future federal program decisions. Cause DSS lacked adequate controls to document and retain MFP data. Prior Audit Finding We have not previously reported this finding. Recommendation The Department of Social Services should strengthen internal controls over performance and special reporting for the Money Follows the Person Rebalancing Demonstration to ensure it maintains data to support figures reported to the Department of Health and Human Services. Views of Responsible Officials “The Department agrees with this finding and is taking steps to strengthen internal controls over performance monitoring and special reporting for the Money Follows the Person (MFP) Rebalancing Demonstration. DSS is implementing a secure SharePoint repository to centrally maintain, organize, and track all documentation supporting the MFP Work Plan and the MFP Semi-Annual Report.”
Cash Management Program Name: HIV Care Formula Grants (Ryan White HIV/AIDS Program Part B) (Assistance Listing 93.917) Federal Award Agency: United States Department of Health and Human Services Award Years: Federal Fiscal Years 2024 and 2025 Federal Award Number: 6 X07HA00022-34-01 Background The Department of Public Health (DPH) receives rebates for pharmaceuticals and records them as revenue for the Ryan White HIV/AIDS Program Part B to reduce the program’s cash needs. DPH uses a drawdown tool to determine the timing and amount of its federal drawdowns. Criteria Title 31 U.S. Code of Federal Regulations (CFR) Part 205.11(a) provides that a state must minimize the time elapsing between the transfer of funds from the United States Treasury and the state's payout of funds for federal assistance program purposes, whether the transfer occurs before or after the payout of funds. Title 2 CFR Part 200.303 requires the non-federal entity to establish and maintain effective internal control over federal awards that provides reasonable assurance that it is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition We reviewed DPH’s drawdown tool and determined that it was not effective in monitoring the department’s cash needs. The tool understated expenditures by $29,208,717. As a result, the cash-on-hand amounts were not reliable. Context DPH drew down $8,881,530 for expenditures during the audited period. Questioned Costs $0 Effect Ineffective monitoring of cash needs increases the risk that federal drawdowns will not occur in accordance with the department’s immediate cash requirements to administer the program. Cause A lack of management oversight contributed to the condition. Prior Audit Finding We previously reported this as finding 2024-200. Recommendation The Department of Public Health should strengthen internal controls over cash management to ensure that federal drawdowns align with the immediate cash needs to administer the program. Views of Responsible Officials “We agree with this finding. The Fiscal Department, in collaboration with Management Assurance, has implemented enhanced internal controls to strengthen oversight of cash management activities. Together, the teams developed and formalized enhanced control measures within the Drawdown Tool. These enhancements include daily transaction-level monitoring, integration of rebate offsets, application of a multi-SID tiered allocation structure, and the addition of 90-day liquidation period. The controls have been clearly documented to address identified gaps in operational effectiveness and ensure a balanced approach between automation and manual oversight. This framework provides increased transparency and reliability in managing the timely and accurate drawdown of Ryan White Part B funds while ensuring strong standards and best practices.”
Reporting – Federal Funding Accountability and Transparency Act Program Name: Disaster Grants – Public Assistance (Presidentially Declared Disasters) (Assistance Listing 97.036) Federal Award Agency: United States Department of Homeland Security Award Years: Federal Fiscal Years 2020 - 2025 Federal Award Numbers: 4087DRCTP00000001, 4500DRCTP00000001, and 4820DRCTP00000001 Background The Disaster Grants – Public Assistance program provides funding to state and local governments and certain types of private nonprofit organizations so that communities can quickly respond to and recover from presidentially declared disasters and emergencies. The Department of Emergency Services and Public Protection (DESPP) is the primary recipient for the State of Connecticut and is responsible for working with the Federal Emergency Management Agency (FEMA) throughout the disaster response and recovery process. In coordination with FEMA, DESPP receives and distributes funding to subrecipients for all projects within the state. Criteria Title 2 U.S. Code of Federal Regulations (CFR) Part 200.303 requires the non-federal entity to establish and maintain effective internal control over the federal award that provides reasonable assurance that it is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Title 2 CFR Part 170 Appendix A requires that states report any action that obligates $30,000 or more in federal funds for a subaward to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS) no later than the end of the following month after making the obligation. Recipients are to accurately report key data elements such as subaward numbers, amounts, and obligation dates. As of March 8, 2025, FSRS was retired and all subaward reporting data and functionality are now on the System for Award Management (SAM.gov). Condition DESPP did not establish effective internal controls over Federal Funding Accountability and Transparency Act (FFATA) reporting. The same individual entered subawards into FSRS and SAM.gov and reviewed the entries for accuracy and completeness. There was no documented management review process to verify the accuracy, completeness, and timeliness of FFATA reporting. We randomly selected ten subawards of $30,000 or more, totaling $12,224,700, and identified the following conditions: • DESPP entered two subawards, totaling $435,831, into FSRS 18 and 580 days late. • DESPP did not maintain adequate documentation to support the date it reported two subawards, totaling $9,556,735. As a result, we could not determine if DESPP reported the subawards on time. Transactions Tested Subaward Not Reported Report Not Timely Subaward Amount Incorrect Subaward Missing Key Elements 10 0 2 0 0 Dollar Amount of Tested Transactions Subaward Not Reported Report Not Timely Subaward Amount Incorrect Subaward Missing Key Elements $12,224,700 $0 $435,831 $0 $0 Context During the fiscal year ended June 30, 2025, DESPP made 68 subawards of $30,000 or more, totaling $38,215,595. The sample was not statistically valid. Questioned Costs $0 Effect There is an increased risk for inaccurate, incomplete, and untimely FFATA reporting. Additionally, DESPP decreased its public transparency regarding its spending of federal awards. Cause Management did not adequately monitor the internal control system or promptly remediate internal control deficiencies identified during prior audits, which contributed to the identified conditions. Prior Audit Finding We previously reported this as finding 2024-350 and in three prior audits. Recommendation The Department of Emergency Services and Public Protection should strengthen internal controls and promptly report subawards in compliance with the Federal Funding Accountability and Transparency Act. Views of Responsible Officials “DESPP does not agree with this finding. DESPP utilizes the federally designated FFATA reporting system (SAM.gov) for all FFATA reporting. This system does not possess the capability for any layered review or approval of information prior to upload or post submission. The system has no reporting mechanism to review information input into this system. Further, the system does not maintain capability to track the dates of changes and it records over upload dates at future submission timeframes. These issues have been repeatedly brought to the attention of both SAM.gov administrators at the federal level and DESPP’s FEMA funding agencies. In response to a similar finding by FEMA, DESPP provided the attached information, after which FEMA closed the DESPP finding. DESPP will continue to attempt to work with SAM.gov administrators to advocate for modifications to the FFATA reporting system to address these concerns, but is unable to address them unilaterally without federal agency intervention.” Auditors’ Concluding Comments DESPP should maintain sufficient documentation outside of SAM.gov to demonstrate compliance with reporting requirements and approvals by agency personnel.
Allowable Costs/Cost Principles – Assistance Payments Program Names: COVID-19 Section 8 Housing Choice Vouchers (Assistance Listing 14.871) Section 8 Housing Choice Vouchers (Assistance Listing 14.871) Federal Award Agency: United States Department of Housing and Urban Development Award Years: Federal Fiscal Years 2024 and 2025 Federal Award Number: ACC CT 901 VO Program Name: Mainstream Vouchers (Assistance Listing 14.879) Federal Award Agency: United States Department of Housing and Urban Development Award Years: Federal Fiscal Years 2024 and 2025 Federal Award Number: ACC CT 901 DVO Background The United States Department of Housing and Urban Development’s (HUD) Section 8 Housing Choice Vouchers Program provides rental assistance to help very low-income families afford decent, safe, and sanitary housing. Section 3202 of the American Rescue Plan Act of 2021 provided for new incremental Emergency Housing Vouchers. Office of Public and Indian Housing (PIH) notice PIH 2021-25 provides that public housing agencies (PHA) should report Emergency Housing Vouchers under the Section 8 Housing Choice Vouchers Program. The Mainstream Vouchers Program enables families to lease affordable private housing when the head, spouse, or co-head is a person with disabilities. Public housing agencies are authorized to administer the programs locally and make housing assistance payments on behalf of eligible families directly to landlords for the lease of suitable program-eligible rental housing. In Connecticut, the programs are administered locally by over 40 public housing agencies and statewide by the Department of Housing (DOH) and its contracted vendor. DOH advances program funds to its contractor that disburses the funds to landlords and participants. Criteria Title 2 U.S. Code of Federal Regulations (CFR) Part 200.303 requires the non-federal entity to establish and maintain effective internal control over the federal award that provides reasonable assurance that it is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Title 24 CFR Part 982.158 provides that the PHA must maintain complete and accurate accounts and other records for the program in accordance with HUD requirements, in a manner that permits a prompt and effective audit. Title 24 CFR Part 982.305 provides that the PHA must execute a HAP contract no later than 60 calendar days from the beginning of the lease term. The PHA must not pay any housing assistance payment to the owner until it has executed the contract. If the PHA executes the HAP contract during the period of 60 calendar days from the beginning of the lease term, it will pay housing assistance payments after the execution of the HAP contract. Any HAP contract executed after the 60-day period is void, and the PHA may not pay any housing assistance payment to the owner. Title 24 CFR Part 982.503 requires the PHA to adopt a payment standard schedule that establishes voucher payment standard amounts for each fair market rent area in the PHA jurisdiction. For each fair market rent area, the PHA must establish payment standard amounts for each unit size. Unit size is measured by the number of bedrooms. Title 24 CFR Part 982.505 states that a payment standard is used to calculate the monthly housing assistance payment for a family. The payment standard for the family is the lower of the payment standard amount for the family unit size or the payment standard amount for the size of the dwelling unit rented by the family. Title 24 CFR Part 982.516 requires the PHA to conduct a reexamination of family income and composition at least annually. The PHA must obtain and document in the tenant file third-party verifications of reported family annual income, the value of assets, expenses related to deductions from annual income, and other factors that affect the determination of adjusted income, or must document why third-party verification was not available. At the effective date of a regular or interim reexamination, the PHA must make appropriate adjustments in the HAP. Title 24 CFR Part 982.517 requires the PHA to maintain a utility allowance schedule for all tenant-paid utilities (except telephone), for tenant supplied refrigerators and ranges, and for other tenant paid housing services (e.g., trash collection). The utility allowance schedule must be determined based on the typical cost of utilities and services paid by energy-conservative households that occupy housing of similar size and type in the same locality. The PHA must review its schedule each year and must revise its allowance for a utility category if there has been a change of ten percent or more in the utility rate since the last time the utility schedule was revised. Condition Our review of 60 housing assistance payments and utility reimbursements, totaling $99,286 and $2,813, respectively, disclosed that in 14 cases, payments were incorrectly calculated. Some cases had multiple errors. • In two cases, the PHA incorrectly calculated the tenant’s total annual adjusted income. • In eight cases, the PHA incorrectly calculated the tenant’s total annual income. • In three cases, the PHA did not use the correct payment standard. • In two cases, the PHA incorrectly calculated the utility allowance or did not use the correct utility allowance schedule. These errors resulted in $1,211 in housing assistance and utility reimbursement overpayments and $49 in underpayments for the tested benefit months. Further review noted an additional $8,495 in housing assistance and utility reimbursement overpayments, and $379 in underpayments during the audited period. We also noted that in two cases, the PHA paid $37,233 under housing assistance payment contracts that were void because they were not executed within 60 calendar days from the beginning of the lease term. Context During the fiscal year ended June 30, 2025, housing assistance payment transactions and utility reimbursements for the Section 8 Housing Choice Vouchers and Mainstream Vouchers programs totaled $127,656,361. The sample was not statistically valid. Questioned Costs Our review identified questioned costs totaling $41,491 for the Section 8 Housing Choice Vouchers program. Effect DOH has reduced assurance of the accuracy of housing assistance payments and utility reimbursements. Cause The conditions are due to a lack of management oversight. Prior Audit Finding We have not previously reported this finding. Recommendation The Department of Housing should strengthen internal controls to ensure that it properly calculates Section 8 Housing Choice Vouchers and Mainstream Vouchers housing assistance and utility benefit payments. Views of Responsible Officials “We agree with the finding. DOH did contract with a third-party entity to provide these services; however, DOH retains overall responsibility for the program. Recently, DOH established a Section 8 division within DOH to provide more oversight over the program and the contactor. We are working closely with the contractor to strengthen their internal control, develop policies and procedures. DOH will continue collaborating with the contractor to enhance system controls and minimize the risk of future issues. All identified errors in this finding have been corrected including the questionable cost, and the software now includes a new feature designed to prevent similar problems going forward. DOH remains committed to continuous improvement and effective oversight of the program and contractor.”
Eligibility Program Names: COVID-19 Section 8 Housing Choice Vouchers (Assistance Listing 14.871) Section 8 Housing Choice Vouchers (Assistance Listing 14.871) Federal Award Agency: United States Department of Housing and Urban Development Award Years: Federal Fiscal Years 2024 and 2025 Federal Award Number: ACC CT 901 VO Program Name: Mainstream Vouchers (Assistance Listing 14.879) Federal Award Agency: United States Department of Housing and Urban Development Award Years: Federal Fiscal Years 2024 and 2025 Federal Award Number: ACC CT 901 DVO Background The United States Department of Housing and Urban Development’s (HUD) Section 8 Housing Choice Vouchers Program provides rental assistance to help very low-income families afford decent, safe, and sanitary housing. Section 3202 of the American Rescue Plan Act of 2021 provided for new incremental Emergency Housing Vouchers. Office of Public and Indian Housing (PIH) notice PIH 2021-25 provides that public housing agencies (PHA) should report Emergency Housing Vouchers under the Section 8 Housing Choice Vouchers Program. The Mainstream Vouchers Program enables families to lease affordable private housing when the head, spouse, or co-head is a person with disabilities. Public housing agencies are authorized to administer the programs locally and make housing assistance payments on behalf of eligible families directly to landlords for the lease of suitable program-eligible rental housing. In Connecticut, the programs are administered locally by over 40 public housing agencies and statewide by the Department of Housing (DOH) and its contracted vendor. DOH advances program funds to its contractor that disburses the funds to landlords and participants. Criteria Title 2 U.S. Code of Federal Regulations (CFR) Part 200.303 requires the non-federal entity to establish and maintain effective internal control over the federal award that provides reasonable assurance that it is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Title 24 CFR Part 982.158 provides that the PHA must maintain complete and accurate accounts and other records for the program in accordance with HUD requirements, in a manner that permits a prompt and effective audit. Title 24 CFR Part 5.233 requires PHAs to use the Enterprise Income Verification system in its entirety as a third-party source to verify tenant employment and income information during mandatory reexaminations of family compositions and income. Office of Public and Indian Housing (PIH) notice PIH 2018-18 provides that PHAs maintain the report and documentation of any follow up in the tenant file. The PHAs are also required to maintain copies of the Enterprise Income Verification income and Income Validation Tool reports used to confirm family reported income within 120 days of the Inventory Management Public and Indian Housing Information Center submission date. Office of Public and Indian Housing (PIH) notice PIH 2012-28 provides that PHAs adopt procedures at admission and at annual recertification/reexamination to prevent lifetime registered sex offenders from receiving federal housing assistance. If the tenant or a member of the tenant’s household engages in criminal activity (including sex offenses) while living in HUD-assisted housing, the PHA should pursue eviction or termination. Condition Our review of 60 housing assistance payments and utility reimbursements, totaling $99,286 and $2,813, respectively, disclosed the following: · In four cases, the PHA did not have Income Validation Tool reports on file to support tenant employment and income. · In two cases, the PHA did not receive all required source documents prior to completing the initial/annual reexaminations. · In one case, the PHA did not verify the tenant’s employment and income noted on the Income Validation Tool. · In one case, the PHA did not verify household members were not lifetime registered sex offenders or check their criminal record during the annual reexamination. Context During the fiscal year ended June 30, 2025, housing assistance payment transactions and utility reimbursements for the Section 8 Housing Choice Vouchers and Mainstream Vouchers programs totaled $127,656,361. The sample was not statistically valid. Questioned Costs $0 Effect There is an increased risk that DOH provides financial assistance to ineligible individuals. Cause The conditions are due to a lack of management oversight. Prior Audit Finding We previously reported this as finding 2024-727 and in two prior audits. Recommendation The Department of Housing should properly monitor its contractor to ensure that it only awards benefits to eligible recipients. Views of Responsible Officials “We agree with the finding. DOH did contract with a third-party entity to provide these services. The contractor has been experiencing technical difficulties accessing the HUD system. We are aware of this current situation, and we are working with HUD to resolve this issue as soon as possible. “
Special Tests and Provisions – Housing Assistance Payments Program Names: COVID-19 Section 8 Housing Choice Vouchers (Assistance Listing 14.871) Section 8 Housing Choice Vouchers (Assistance Listing 14.871) Federal Award Agency: United States Department of Housing and Urban Development Award Years: Federal Fiscal Years 2024 and 2025 Federal Award Number: ACC CT 901 VO Program Name: Mainstream Vouchers (Assistance Listing 14.879) Federal Award Agency: United States Department of Housing and Urban Development Award Years: Federal Fiscal Years 2024 and 2025 Federal Award Number: ACC CT 901 DVO Background The United States Department of Housing and Urban Development’s (HUD) Section 8 Housing Choice Vouchers Program provides rental assistance to help very low-income families afford decent, safe, and sanitary housing. Section 3202 of the American Rescue Plan Act of 2021 provided for new incremental Emergency Housing Vouchers. Office of Public and Indian Housing (PIH) notice PIH 2021-25 provides that public housing agencies (PHA) should report Emergency Housing Vouchers under the Section 8 Housing Choice Vouchers Program. The Mainstream Vouchers Program enables families to lease affordable private housing when the head, spouse, or co-head is a person with disabilities. Public housing agencies are authorized to administer the programs locally and make housing assistance payments on behalf of eligible families directly to landlords for the lease of suitable program-eligible rental housing. In Connecticut, the programs are administered locally by over 40 public housing agencies and statewide by the Department of Housing (DOH) and its contracted vendor. DOH advances program funds to its contractor that disburses the funds to landlords and participants. Criteria Title 2 U.S. Code of Federal Regulations (CFR) Part 200.303 requires the non-federal entity to establish and maintain effective internal control over the federal award that provides reasonable assurance that it is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Title 24 CFR Part 982.158 provides that the PHA must maintain complete and accurate accounts and other records for the program in accordance with HUD requirements, in a manner that permits a prompt and effective audit. Title 24 CFR Part 982.516 requires the PHA to conduct a reexamination of family income and composition at least annually. The PHA must obtain and document in the tenant file third-party verifications of reported family annual income, the value of assets, expenses related to deductions from annual income, and other factors that affect the determination of adjusted income, or must document why third-party verification was not available. At the effective date of a regular or interim reexamination, the PHA must make appropriate adjustments in the HAP. Condition Our review of ten housing assistance payments and utility reimbursements totaling $17,721 and $351, respectively, disclosed that in one case, the PHA incorrectly calculated the payment. The PHA incorrectly calculated the tenant’s total annual income and total allowance/deductions. These errors resulted in an overpayment of $49 for the tested benefit month. Context During the fiscal year ended June 30, 2025, housing assistance payment transactions and utility reimbursements for the Section 8 Housing Choice Vouchers and Mainstream Vouchers programs totaled $127,656,361. The sample was not statistically valid. Questioned Costs Our review identified questioned costs totaling $49 for the Section 8 Housing Choice Vouchers program. Effect DOH has reduced assurance of the accuracy of housing assistance payments and utility reimbursements. Cause The condition was due to a lack of management oversight. Prior Audit Finding We have not previously reported this finding. Recommendation The Department of Housing should strengthen internal controls to ensure that it properly calculates and supports Section 8 Housing Choice Vouchers and Mainstream Vouchers housing assistance and utility benefit payments. Views of Responsible Officials “We agree with the finding. DOH did contract with a third-party entity to provide these services; however, DOH retains overall responsibility for the program. Recently, DOH established a Section 8 division within DOH to provide more oversight over the program and contactor. We are working closely with the contractor to strengthen their internal control, develop policies and procedures. DOH will continue collaborating with the contractor to enhance system controls and minimize the risk of future issues. All identified errors in this finding have been corrected including the questionable cost. DOH remains committed to continuous improvement and effective oversight of the program and contractor. “
Allowable Costs/Cost Principles – Evidence of Services Provided by Part-Time and Extension Credit Lecturers Program Name: Coronavirus State and Local Fiscal Recovery Funds (Assistance Listing 21.027) Federal Award Agency: Department of the Treasury Award Year: Federal Fiscal Year 2025 Federal Award Number: N/A Background The Office of Policy and Management (OPM) was designated as the primary state agency responsible for overseeing the Coronavirus State and Local Fiscal Recovery Funds and reporting to the federal government. OPM allocated funds to the CT State Community College and other state agencies to assist with carrying out the program’s objectives. CT State Community College contracts with part-time and extension credit lecturers who teach a term or class at a flat rate. The college pays them in equal installments based on the terms of individual contracts. Criteria Title 2 U.S. Code of Federal Regulations (CFR) Part 200.303 requires the non-federal entity to establish and maintain effective internal control over the federal award that provides reasonable assurance that it is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Title 2 CFR Part 200.430(g) provides that charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. Such records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, and comply with the established accounting policies and procedures of the recipient. Sections 3-117(b) and 3-119(a) of the Connecticut General Statutes require state entities to certify services are received and documented before paying contractors and state employees. Condition CT State Community College made $70,175,519 in salary and fringe benefit payments for 2,796 part-time and extension credit lecturers without verifying the lecturers provided the contractual services or documenting supervisory approval. Context During the fiscal year ended June 30, 2025, CT State Community College charged $70,624,749 in payroll and fringe benefit costs to Coronavirus State and Local Fiscal Recovery Funds, of which $70,175,519 was attributed to contracted faculty members. Questioned Costs $0 Effect CT State Community College could pay part-time and extension lecturers for services they did not provide. Cause CT State Community College lacks policies and procedures to ensure compensation for part-time and extension credit lecturers is contingent on fulfillment of contractual obligations. Prior Audit Finding We previously reported this as finding 2024-400. Recommendation CT State Community College should strengthen internal controls to ensure that part-time and extension credit lecturer payroll and fringe benefits costs are based on actual time worked and are properly approved. Views of Responsible Officials Response provided by CT State Community College: “Management agrees with this finding and work towards a viable long-term solution for workload review at the campus level is underway. As noted in previous audits, controls were implemented in Banner as part of the Payroll Exception review process that was initiated by the Audit Advisory Committee. These reports are currently unavailable due to limitations that will be resolved soon. Once resolved, the reports will be shared with the appropriate academic reviewer for confirmation of services received.” Views of Responsible Officials Response provided by the Office of Policy and Management: “The Office of Policy and Management has no additional response beyond that offered by the CT State Community College.”
Eligibility Program Names: COVID-19 Medical Assistance Program (Medicaid, Title XIX) (Assistance Listing 93.778) Medical Assistance Program (Medicaid, Title XIX) (Assistance Listing 93.778) Federal Award Agency: United States Department of Health and Human Services Award Years: Federal Fiscal Years 2024 and 2025 Federal Award Numbers: 2405CT5MAP and 2505CT5MAP Criteria Title 42 U.S. Code of Federal Regulations (CFR) Part 435.603 requires the state Medicaid agency to determine a household’s financial eligibility for Medicaid based on the sum of the modified adjusted gross income (MAGI) of every individual in the household. Title 42 United States Code Section 1396b(v) provides that aliens who meet certain requirements are eligible for Medicaid only if such care and services are necessary for the treatment of an emergency medical condition. Title 2 CFR Part 200.303 requires the non-federal entity to establish and maintain effective internal control over the federal award that provides reasonable assurance that it is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. The CFR requires the non-federal entity to take prompt action when it identifies instances of noncompliance, including noncompliance identified in audit findings. Condition We reviewed 60 Medicaid cases to determine if the Department of Social Services (DSS) properly granted eligibility. Our review included 40 MAGI cases totaling $12,386, of which $6,367 was federally reimbursed and 20 non-MAGI cases totaling $41,480, of which $21,029 was federally reimbursed. Our review disclosed that DSS granted Medicaid eligibility to one MAGI recipient upon denial of their renewal application in June 2023. DSS improperly continued eligibility for 30 months until notification of our review. DSS paid $7 in Medicaid benefits for the selected claim. Furthermore, our review disclosed that DSS paid an additional $10,587 in Medicaid benefits for the ineligible recipient during fiscal year 2025. We reviewed the status of prior audit findings to determine if DSS took appropriate steps to resolve and prevent identified conditions. Our review of 18 non-qualified aliens who received non-emergency medical services in prior audits disclosed that DSS issued $12,443 in payments for non-emergency medical services provided to one non-qualified alien who was ineligible to receive services in fiscal year 2025. Context DSS provided us with a detailed listing of fee-for-service benefit payments issued during the fiscal year ended June 30, 2025. We stratified the data into two eligibility determination groups based on MAGI and non-MAGI determinations (e.g., Aged, Blind and Disabled). During the fiscal year ended June 30, 2025, DSS issued $5,978,762,480 in payments on behalf of 2,379,288 MAGI recipients and received $3,038,953,956 in federal reimbursement. In addition, DSS issued $5,158,976,619 in payments on behalf of 772,464 non-MAGI recipients and received $2,598,909,828 in federal reimbursement. We further stratified the payment data for recipients without a Social Security number who were over three years old. DSS issued $91,099,447 in payments on behalf of 20,125 MAGI recipients and received $46,371,061 in federal reimbursement. In addition, DSS issued $36,001,833 in payments on behalf of 7,812 non-MAGI recipients and received $18,046,253 in federal reimbursement. Of these 27,937 recipients, we could not determine the number of non-qualified aliens without reviewing each case. The samples were not statistically valid. Questioned Costs We computed $11,518 in questioned costs by applying the applicable federal financial participation rate to the benefit payments associated with the ineligible recipients. Effect DSS received federal reimbursement for unallowed expenditures. Cause DSS implemented system overrides during COVID-19 that prevented case closure for recipients determined ineligible after the pandemic. DSS eligibility workers granted eligibility to a non-qualified alien without proper documentation or authority. Prior Audit Finding We previously reported this as finding 2024-012. Recommendation The Department of Social Services should strengthen internal controls to ensure that only eligible recipients receive Medicaid services in accordance with federal laws and the Medicaid State Plan. Views of Responsible Officials “The Department agrees with this finding. The Department identified cases where overrides that were applied during the public health emergency were not removed. This resulted in individuals remaining enrolled inappropriately. Our Business Systems Division is implementing a tiered resolution approach, beginning with individuals enrolled in the Medicare Savings Program and HUSKY-C coverage. Please note: The Department will not be returning the questioned costs associated with this finding. According to federal regulations, recoveries based on eligibility errors can only be pursued when identified by programs operating under CMS’ Payment Error Rate Measurement program, per section 1903(u) of the Social Security Act and regulations at Title 42 CFR Part 431, Subpart Q.”
Identification of the Federal Program: Assistance Listing Number: 14.218 Assistance Listing Title: Community Development Block Grants Cluster - Entitlement/Special Purpose Federal Agency: U.S. Department of the Housing and Urban Development Pass-through Entity: County of Orange Community Resources Department Pass-through Identification Number: J2JWJVWQBEA6 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): For federally funded programs, recipients are required to establish and maintain effective internal control over compliance in accordance with 2 CFR §200.303. These controls should provide reasonable assurance that federal awards are managed in compliance with applicable laws, regulations, and the provisions of contracts or grant agreements. Pursuant to 2 CFR §§200.403 through 200.405, costs charged to federal programs must be allowable, reasonable, necessary, and adequately documented. Recipients must maintain sufficient documentation to support the nature of expenditures, vendor selection, and cost reasonableness to ensure compliance with allowable cost principles. Additionally, pursuant to 2 CFR §200.318, non-Federal entities are required to use documented procurement procedures that reflect applicable federal, state, and local requirements. These procedures must ensure that procurement activities are conducted in a manner providing for full and open competition, use appropriate procurement methods, and include adequate documentation to support vendor selection and cost reasonableness. Recipients are responsible for ensuring that procurement activities performed by employees, consultants, or contractors on their behalf comply with these requirements. Failure to follow these procedures may result in costs that are not adequately supported as allowable under federal requirements. Further, pursuant to 24 CFR §570.506, when CDBG funds are used for rehabilitation activities, recipients must ensure that work is completed in accordance with applicable laws, codes, and requirements related to housing safety, quality, and habitability. This includes ensuring that required permits are obtained and inspections are performed in accordance with local building and safety requirements prior to and throughout construction activities. Condition: During our audit of the CDBG program, we identified the following deficiencies related to internal control and compliance over compliance requirements: Allowable Costs/Cost Principles: The City did not maintain sufficient documentation to support compliance with federal requirements related to CDBG-funded rehabilitation activities. Specifically, the City did not maintain adequate documentation to support vendor selection, cost reasonableness, or the basis for contractor procurement. In addition, the City did not maintain evidence demonstrating that procurement-related activities performed by a consultant on its behalf were conducted in accordance with established procedures. Special Tests and Provisions – Rehabilitation: During our testing of nine CDBG-funded rehabilitation projects, we noted that one project had a building permit on file that expired in 2008 and was not renewed prior to or during construction. Additionally, five projects had building permits that were issued after construction activities had already commenced, indicating that required permits were not obtained prior to the start of rehabilitation work. Cause: The City has not established and implemented effective internal controls and monitoring procedures over its CDBG program to ensure compliance with all federal requirements. Effect or Potential Effect: The City did not maintain sufficient documentation to support expenditures, limiting its ability to demonstrate that costs charged to the program are allowable, reasonable, and adequately supported in accordance with federal requirements. As a result, there is an increased risk that costs may be questioned or disallowed. Additionally, failure to obtain and maintain valid permits prior to construction increases the risk of noncompliance with rehabilitation requirements and may result in ineligible activities. Questioned Costs: None. Context: See condition above for the context of the finding. Recommendation: We recommend that the City strengthen its internal control system over the CDBG program by implementing and documenting formal policies and procedures to ensure compliance with federal requirements. This includes maintaining sufficient documentation to support vendor selection, cost reasonableness, and overall allowability of costs, as well as ensuring appropriate oversight of consultants performing activities on the City’s behalf. Additionally, the City should enhance its monitoring procedures over rehabilitation activities by maintaining sufficient documentation to support that work was performed in accordance with program requirements, including evidence of inspections and completion of approved work; permits or local approvals alone should not be relied upon as sole evidence of compliance. The City should provide training to staff involved in program administration and implement ongoing monitoring procedures to ensure compliance with federal requirements. Views of Responsible Officials: Management concurs with the finding and agrees to implement necessary corrective procedures.
Criteria: Per 2 CFR 200.302(a) and 2 CFR 200.303, non-Federal entities must maintain adequate records supporting Federal program transactions and implement internal controls to ensure compliance. The OMB Compliance Supplement (2025), Part 4 – HHS, for the CCDF program requires documentation supporting eligibility determinations, including documentation to support applicable health and safety standards, and maintain compliance to remain eligible for payment. Condition: During testing, the Organization was unable to provide required eligibility documentation for four children, representing two unique families. In addition, two providers were noted who were deficient in meeting the health and safety requirements of the Program and were subsequently terminated as participating providers. Despite the termination status, these providers later received additional program payments. The Organization was unable to provide documentation demonstrating that the providers corrected deficiencies or were re-approved prior to receiving subsequent payments. Because supporting documentation was not retained, we could not determine whether the providers met requirements to resume participation. The Organization explained that eligibility and health and safety documentation historically resided within a system of record that has been transferred entirely to the State following a transition of the program’s administration to the State. The Organization no longer retains access to that system or copies of all documentation contained therein. Cause: As part of the transition of program responsibilities back to the State, the Organization returned program records and no longer retained access to the State-managed system that housed eligibility information. The Organization did not maintain its own copies of all eligibility or health and safety documentation needed to support future audits. Effect: The Organization cannot demonstrate compliance with Federal eligibility documentation requirements for the affected participants. In addition, the Organization could not demonstrate that payments totaling $34,018 were made to providers who met health and safety requirements of the Program at the time services were delivered. These costs are considered questioned due to lack of supporting documentation. Questioned Costs: $34,018 Recommendations: The Organization should establish procedures to ensure eligibility documentation is retained by the Organization, even when a third-party system serves as the primary repository. Future programs should include a documented record-retention plan ensuring audit-ready records remain accessible.
Finding 2025-011 – Lack of Internal Controls Over Major Federal Program – Coronavirus State and Local Fiscal Recovery Funds (Repeat Finding – 2023-011, 2024-011) PASS-THROUGH GRANTOR: Direct Grant FEDERAL AGENCY: U.S. Department of Treasury ASSISTANCE LISTING: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Procurement, Suspension and Debarment; Reporting; Subrecipient Monitoring QUESTIONED COSTS: $-0- Condition: During the process of documenting the County’s internal controls regarding federal disbursements, we noted that the County has not established procedures to ensure compliance with the following compliance requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Procurement and Suspension and Debarment; Reporting; Subrecipient Monitoring. Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal expenditures are made in accordance with federal compliance requirements. Effect of Condition: This condition could result in noncompliance with grant requirements and could result in a loss of federal funds to the County. Recommendation: OSAI recommends the County gain an understanding of requirements for this program and implement internal control procedures to ensure compliance with requirements. Management Response: Chairman of the Board of County Commissioners: The Board of County Commissioners will work with all County Officials to inform them of all grants and federal monies that Pottawatomie County receives to ensure that proper internal controls are implemented. Criteria: 2 CFR § 200.303 Internal Controls (a) reads as follows: The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Further, accountability and stewardship should be overall goals in management's accounting of federal funds. Internal controls should be designed to monitor compliance with laws and regulations pertaining to grant contracts.
Finding 2025-013 – Noncompliance with Reporting Over Major Federal Program - Coronavirus State and Local Fiscal Recovery Funds (Repeat Finding – 2023-013, 2024-013) PASS-THROUGH GRANTOR: Direct Grant FEDERAL AGENCY: U.S. Department of Treasury ASSISTANCE LISTING: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Reporting QUESTIONED COSTS: $-0- Condition: During the test of 100% of expenditures for the Coronavirus State and Local Fiscal Recovery Funds, totaling $5,176,520, thirty (32) expenditures totaling $2,780,668, were not accurately reported in the proper period on the quarterly reports, and two expenditures to subrecipients totaling $121,362, were improperly classified as “Revenue Replacement” expense instead of using the “Infrastructure” expense category as required by the Reporting compliance requirement. Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal expenditures are made in accordance with federal compliance requirements. Effect of Condition: This condition resulted in noncompliance with grant requirements. Recommendation: OSAI recommends the County design and implement a system of internal controls to ensure the accuracy and completeness of reports and to ensure compliance with federal requirements. Management Response: Chairman of the Board of County Commissioners: The Board of County Commissioners will take measures to ensure future compliance with all requirements of federal grants. Criteria: Accountability and stewardship should be overall goals in management’s accounting of federal funds. Internal controls should be designed to monitor compliance with laws and regulations pertaining to grant contracts. 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. Further, 2 CFR § 200.329 Monitoring and Reporting Program Performance (c)(1) reads as follows The non-Federal entity must submit performance reports at the interval required by the Federal awarding agency or pass-through entity to best inform improvements in program outcomes and productivity. Intervals must be no less frequent than annually nor more frequent than quarterly except in unusual circumstances, for example where more frequent reporting is necessary for the effective monitoring of the Federal award or could significantly affect program outcomes. Reports submitted annually by the non-Federal entity and/or pass-through entity must be due no later than 90 calendar days after the reporting period. Reports submitted quarterly or semiannually must be due no later than 30 calendar days after the reporting period. Alternatively, the Federal awarding agency or pass-through entity may require annual reports before the anniversary dates of multiple year Federal awards. The final performance report submitted by the non-Federal entity and/or pass-through entity must be due no later than 120 calendar days after the period of performance end date. A subrecipient must submit to the pass-through entity, no later than 90 calendar days after the period of performance end date, all final performance reports as required by the terms and conditions of the Federal award. See also § 200.344. If a justified request is submitted by a non-Federal entity, the Federal agency may extend the due date for any performance report.
Federal Agency: Department of Health and Human Services Federal Program: Family Planning Services – Title X Federal Assistance Listing Number(s): 93.217 Award Period: July 1, 2024 to June 30, 2025 Type of Finding: • Material weakness in Internal Control over Compliance • Compliance – Other Matters Criteria or Specific Requirement: The Code of Federal Regulations, 2 CFR Part 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. In addition, the federal financial reporting (FFR) instructions specify the requirements for accurate reporting. Condition: During our testing, there were multiple inaccuracies identified on the FFR submitted to the funder. Specifically, the Organization was not accurately reporting the federal share of expenditures, its non-federal share requirement and reporting on its program income on its quarterly FFR for the period ending March 31, 2025. Questioned Costs: None Context: The Notice of Awards specified the federal and recipient share of expenditures, and use of program income. This information is required to be reported on the Organization’s federal financial report, but amounts were not reported correctly based on the cumulative award totals. Cause: The Organization was not fully aware of the FFR reporting requirements. It also appears the Organization was completing the FFR based on the cash basis rather than the accrual basis as indicated on the FFR. Effect: The Organization did not report the correct amounts for federal share of expenditures, recipient share of expenditures or program income on its required FFR reporting. Repeat Finding: The finding is a repeat of a finding in the immediately prior year. Prior year finding number was 2024-001. Recommendation: We recommend management review the FFR instructions and develop procedures to ensure the required reporting submitted to the funder is complete and accurate. Additionally, systems should be put in place to both track and report its progress on the non-federal share requirement and any program income. Views of Responsible Official: Management agrees with the finding. Management will review its reporting policies and procedures.
Finding 2025-007 – Lack of Internal Controls Over Major Federal Program – Coronavirus State and Local Fiscal Recovery Funds (Repeat Finding – 2022-007, 2023-007, 2024-007) PASS THROUGH GRANTOR: Direct Grant FEDERAL AGENCY: U.S. Department of Treasury ASSISTANCE LISTING: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Procurement and Suspension and Debarment; Reporting; and Subrecipient Monitoring QUESTIONED COSTS: $0 Condition: During the process of documenting the County’s internal controls regarding federal disbursements, we noted that Comanche County has not established procedures to ensure compliance with the following compliance requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Procurement and Suspension and Debarment; Reporting; and Subrecipient Monitoring. Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal expenditures are made in accordance with federal compliance requirements. Effect of Condition: This condition could result in noncompliance to grant requirements and could lead to a loss of federal funds to the County. Recommendation: OSAI recommends the County gain an understanding of requirements for this program and implement internal control procedures to ensure compliance with requirements. Management Response: Chairman of the Board of County Commissioners: The Board of County Commissioners will work with all County Officials to go over all grants and federal monies that Comanche County receives to ensure that proper internal controls are implemented. Criteria: 2 CFR § 200.303 Internal Controls (a) reads as follows: The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Further, accountability and stewardship should be overall goals in management's accounting of federal funds. Internal controls should be designed to monitor compliance with laws and regulations pertaining to grant contracts.
Finding 2025-014 – Noncompliance with Reporting Over Major Federal Program – Coronavirus State and Local Fiscal Recovery Funds (Repeat Finding – 2022-014, 2023-014, 2024-014) PASS-THROUGH GRANTOR: Direct Grant FEDERAL AGENCY: U.S. Department of Treasury ASSISTANCE LISTING: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Reporting QUESTIONED COSTS: $0 Condition: During the test of sixty-five (65) expenditures for the Coronavirus State and Local Fiscal Recovery Funds, totaling $4,254,839, seventeen (17) expenditures, totaling $1,280,024, were not accurately reported in the proper period on the quarterly reports as required by the program. Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal expenditures are properly reported in accordance with federal compliance requirements. Effect of Condition: This condition resulted in noncompliance with grant requirements. Recommendation: OSAI recommends the County design and implement a system of internal controls to ensure the accuracy and completeness of reports and to ensure compliance with federal requirements. Management Response: Chairman of the Board of County Commissioners: The Board of County Commissioners have hired a grant administrator to assist with the reporting process. We will ensure that the reports are accurate and reported in the proper period. Criteria: GAO Standards – Section 2 – Establishing an Effective Internal Control System – OV2.23 states in part: Objectives of an Entity – Compliance Objectives Management conducts activities in accordance with applicable laws and regulations. As part of specifying compliance objectives, the entity determines which laws and regulations apply to the entity. Management is expected to set objectives that incorporate these requirements. 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 Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Additionally, Compliance and Reporting Guidance, State and Local Fiscal Recovery Funds (10. Reporting.) reads as follows: 10. Reporting. 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. See Part 2 of this guidance for a full overview of recipient reporting responsibilities. Further, 2 CFR § 200.329 Monitoring and Reporting Program Performance (c)(1) reads as follows: The non-Federal entity must submit performance reports at the interval required by the Federal awarding agency or pass-through entity to best inform improvements in program outcomes and productivity. Intervals must be no less frequent than annually nor more frequent than quarterly except in unusual circumstances, for example where more frequent reporting is necessary for the effective monitoring of the Federal award or could significantly affect program outcomes. Reports submitted annually by the non-Federal entity and/or pass-through entity must be due no later than 90 calendar days after the reporting period. Reports submitted quarterly or semiannually must be due no later than 30 calendar days after the reporting period. Alternatively, the Federal awarding agency or pass-through entity may require annual reports before the anniversary dates of multiple year Federal awards. The final performance report submitted by the non-Federal entity and/or pass-through entity must be due no later than 120 calendar days after the period of performance end date. A subrecipient must submit to the pass-through entity, no later than 90 calendar days after the period of performance end date, all final performance reports as required by the terms and conditions of the Federal award. See also § 200.344. If a justified request is submitted by a non-Federal entity, the Federal agency may extend the due date for any performance report.
2 CFR § 400.1 gives regulatory effect to the Department of Agriculture for 2 CFR § 200.302(b)(3) which provides that the financial management system of each non-Federal entity must provide for records that sufficiently identify the amount, source and expenditure of funds for federally-funded activities. These records must contain information necessary to identify federal awards, authorizations, obligations, unobligated balances, assets, expenditures, income and interest and must be supported by source documentation. 2 CFR § 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish, document and maintain effective internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 7 CFR §§ 210.7(c), 210.8(c), and 225.9(d)) provide that at a minimum, a claim must include the number of reimbursable meals/snacks served by category and type during the period (generally a month) covered by the claim. All meals/snacks claimed for reimbursement must (a) be of types authorized by the school food authority’s, institution’s, or sponsor’s administering agency; (b) be served to eligible children; and (c) be supported by accurate meal/snack counts and records indicating the number of meals served by category and type. 100% percent of the site claim forms that were prepared by the Nutrition Group and provided to the Treasurer for submission during fiscal year 2025 were not reviewed for accuracy of information before submitting for reimbursement. During the first half of the fiscal year, the School District completed manual counts of snacks served. An over-reimbursement related to snacks in the amount of $179 in 1 month of the 2 months (50%) tested for compliance. This error occurred due to a weakness in internal controls which failed to ensure site claim forms for reimbursable meals and snacks served at each building and submitted to the Ohio Department of Education were entered correctly. The School District should implement policies and procedures to help ensure that monthly site claim forms prepared and provided by the Nutrition Group are reviewed prior to submission to reflect actual counts for reimbursable meals and snacks served.
Program: Impact Aid Federal Assistance Listing Number: 84.041 Federal Agency: U.S. Department of Education Pass-Through Agency: Direct award Grantor Number: Not applicable Questioned Costs: $-0- Type of Finding: Noncompliance (Other Matter), significant deficiency in internal control Compliance Requirement: N. Special Tests and Provisions – Wage Rate Requirements Repeat Finding: Yes. Same as finding 2024-001 and 2023-002. Criteria or Specific Requirement: Federal regulations require that contractors and subcontractors performing work on federally funded construction projects pay laborers and mechanics wages at rates not less than those prevailing on similar projects in the locality. These requirements are established under the Davis-Bacon Act and incorporated into federal grant compliance requirements under 2 CFR Part 200. Adequate monitoring of compliance with these wage requirements is required to ensure that workers are being paid correctly per 29 CFR 5.5 compliance provisions. Per 2 CFR section 200.303(a), a non-Federal entity must establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in 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: During our testing for one of 2 contractors that were tested and funded under the Impact Aid program, we noted that the District did not obtain or review certified payroll reports from contractors to verify compliance with federal prevailing wage requirements. As a result, the District could not demonstrate that contractors complied with required wage provisions for the sampled projects. Cause: The District did not have established procedures to ensure that certified payroll documentation was obtained and reviewed for federally funded construction projects. District personnel were not aware that federal wage requirements applied to the project. Effect: Failure to ensure compliance with federal prevailing wage requirements may result in laborers and mechanics being paid less than required wage rates. This noncompliance could result in questioned costs, repayment of federal funds, or other sanctions by the awarding agency. Recommendation: We recommend the District implement policies and procedures to ensure effective monitoring of compliance with Federal wage rate requirements. This includes obtaining required wage determinations prior to project commencement, including wage requirements in contract documents, and collecting certified payroll reports from contractors. Views of Responsible Officials: The District concurs with this recommendation and will review its procedures over compliance with wage rate requirements under the Davis Bacon Act.
Federal Agency: U.S. Department of Agriculture Federal Program Name: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555 Pass-through Agency: Pennsylvania Department of Education Pass-through Entity Number: N/A Federal Award Identification Number and Year: 241PA305N1199, 251PA305N1199 Award Period: 7/1/2024 to 6/30/2025 Compliance Requirement: Reporting Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: Internal 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 District was unable to provide evidence of independent review and approval for three of three reporting samples tested. Questioned Costs: None Context: The District did not properly review and approve three of three SNP Claim for Reimbursement Summary reports. Cause: The District did not have internal controls established to ensure proper review and approval of the SNP Claim for Reimbursement Summary report. Effect: There is a risk that meals submitted for reimbursement were overstated or understated. Repeat Finding: No Recommendation: We recommend that the District implement procedures to ensure that SNP Claim for Reimbursement Summary reports are independently reviewed and approved prior to submission to Program Electronic Application and Reimbursement System (PEARS). This review should be performed by an individual who is not involved in the preparation of the reports and evidence of the review should be documented. Views of Responsible Officials: The District will implement formal internal control procedures requiring review and documented approval of all SNP Claim for Reimbursement Summary reports prior to submission in PEARS. The following procedures will be implemented: 1. The Director of Food Services will prepare the monthly SNP Claim for Reimbursement Summary report and compile all supporting meal count documentation. 2. Prior to submission, the Administrative Assistant to the Director of Food Services or another designated individual independent of the preparation process will: a. Review the claim for mathematical accuracy; b. Verify meal counts against supporting documentation; c. Confirm claims are submitted within required timelines; and 3. Evidence of the review and approval will be documented through: a. Signature or electronic approval on the reimbursement summary report; and b. Retention of supporting documentation in accordance with federal and state record retention requirements. 4. A written standard operating procedure (SOP) outlining these review and approval responsibilities will be developed and communicated to applicable personnel. 5. The Chief of Finance and Operations will periodically monitor compliance with the procedure to ensure controls remain effective.
U.S. Department of Agriculture 2025-007 Weakness in Internal Controls Over Compliance of Allowable Costs/Cost Principles of Payroll Disbursements Federal Program: Child Nutrition Cluster — USDA Commodities (15.550), School Breakfast Program (10.553), National School Lunch Program (10.555), Summer Food Service Program for Children (10.559) Grant Period: Year Ended June 30, 2025; Pass-through Entity: Louisiana Department of Education Condition: During payroll disbursement control testing and Single Audit compliance procedures, the auditors identified weaknesses in internal controls over compliance of allowable costs/cost principles of payroll disbursements in the Child Nutrition Cluster. Specifically, controls were not sufficient to consistently prevent or detect AESOP schedule mismatches, unsupported payroll master file entries, and timekeeping system interface discrepancies. As a result, minor payroll errors were not identified or corrected on a timely basis and minor improper payments charged to the Child Nutrition Cluster occurred. Criteria: Uniform Guidance requires non‑Federal entities to establish and maintain effective internal control over Federal awards that provides reasonable assurance that the entity is managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award (2 CFR § 200.303(a)). Effective internal controls over compliance of allowable costs/cost principles of payroll disbursements to Federal programs includes controls to ensure employee schedules, payroll master file changes, and time and attendance data are accurate, supported, and appropriately reviewed to prevent or detect improper payments. Cause of Condition: Control testing and Single Audit compliance procedures on payroll disbursements indicated that internal controls were not adequately designed or implemented to ensure compliance with requirements of allowable costs/cost principles that Federal award costs must be allowable, reasonable, and necessary for the performance of the Federal program. Potential Effect of Condition: As a result, the School Board did not have adequate internal controls over compliance related to allowable costs and cost principles for payroll disbursements charged to the Child Nutrition Cluster. Essentially controls were not properly designed and implemented to provide reasonable assurance that payroll expenditures were accurate, allowable, and adequately supported. The identified misstatements included $2.11 related to GAP pay errors and $116.96 of unsupported substitute pay. Although these amounts were individually immaterial, a per‑item projection of the identified errors to the full payroll population of approximately 974 transactions resulted in an estimated maximum projected exposure of approximately $2,800. While this projected amount was determined to be trivial and not expected to result in questioned costs, the control deficiencies increased the risk that improper payroll payments would not be prevented or detected on a timely basis and that unallowable payroll costs could remain charged to Federal programs. Recommendation: Management should design, implement, and maintain effective internal controls over compliance of allowable costs/cost principles of payroll disbursements to Federal programs to provide reasonable assurance that payroll expenditures comply with Uniform Guidance requirements. In addition, management should establish and enforce procedures to ensure employee schedules, payroll master file changes, and time and attendance records are accurate, supported, and appropriately reviewed prior to payroll processing, and that payroll costs charged to the Child Nutrition Cluster represent compensation for actual services performed. Review procedures should be formalized and consistently evidenced through signatures, initials, electronic timestamps, dates, checklists or system audit trails. Management’s Response: Management agrees with the finding and has reviewed the payroll items identified during the audit and has taken corrective action to address schedule discrepancies and unsupported payroll entries. Management has conducted a review of employee schedules within the timekeeping system to ensure alignment with payroll records and has corrected errors identified. Management plans to continue performing periodic reviews of payroll data to identify potential discrepancies and to take corrective action as needed. Management will also evaluate identified payroll discrepancies on a case‑by‑case basis to determine whether recovery or adjustment is appropriate.
2025-002 - Equipment/Real Property Management Federal Program Information: Department of Education – Special Education Cluster (IDEA) CFDA – 84.027/84.173 Criteria: The following CFR(s) apply to this finding: 2 CFR 200.303 Internal Controls; 2 CFR 200.313(d)(1)(2)(3). Condition: During audit procedures, it was identified that the Supervisory Union did not have internal controls in place to ensure that all appropriate equipment and real property management requirements were in place. Cause: Unknown Effect: The Supervisory Union may not be consistently following all appropriate equipment and real property management standards and procedures. There was an instance where the asset purchased equipment did not have a property record and was not recorded in the asset list. Identification of Questioned Costs: None identified. Context: Of the one, and only equipment purchase identified during FY25, there was no property record and it was not recorded on the asset list. Repeat Finding: This is not a repeat finding. Recommendation: It is recommended that the Supervisory Union implements controls to ensure that it follows all appropriate equipment and real property management standards and procedures. We also recommend that the Supervisory Union review its equipment and property policy to ensure that it is updated and complete.
2025-003 - Controls Over Disbursements Federal Program Information: Department of Education - Special Education Cluster (IDEA) CFDA - 84.027/84.173 Department of Education - Child Nutrition Cluster CFDA – 10.553/10.555/10.559 pf/10.582 Criteria: 2 CFR 200.303 Internal Controls Condition: During audit procedures, it was identified that the Supervisory Union did not have internal controls in place to ensure that invoices were properly approved and paid in a timely manner. Cause: Unknown Effect: The Supervisory Union did not always properly approve invoices, could not always locate invoices, and paid invoices beyond the due date. Identification of Questioned Costs: None identified. Context: Between both programs, a total of 43 disbursements were chosen for testing. 11 were adjusting entries. Of the remaining 32, 4 were not paid in a timely manner; 21 were missing either invoices or PO’s or not properly approved. Repeat Finding: This is a repeat finding of 2024-003. Recommendation: It is recommended that the Supervisory Union implement controls to ensure that invoices are managed and paid appropriately. Views of Responsible Officials and Corrective Action Plan: Client agrees with finding, and the unabridged version of their response can be found in the Corrective Action Plan. Please see the Corrective Action Plan issued by the Grand Isle Supervisory Union.
2025-002 – Significant Deficiency – Internal Control over Compliance Program: WIOA Cluster (ALN 17.258; ALN 17.259; ALN 17.278) Criteria: Per 2 CFR 200.303, recipients must 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. These internal controls should align with the 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: During our testing of compliance with requirements applicable to major federal programs, we noted that the entity did not have formal, consistently applied review and approval controls over key compliance areas. Specifically, evidence of supervisory review and approval was not consistently documented for compliance-related transactions. As a result, review procedures appear to be informal, inconsistent, or reliant on individual practices rather than standardized, documented controls. Cause: This condition appears to be the result of a lack of internal controls designed to ensure compliance with Uniform Guidance. Effect: The absence of formal and consistently documented review and approval procedures increases the risk that noncompliance with federal program requirements could occur and not be prevented or detected on a timely basis. Recommendation: We recommend that the Organization formalize policies and procedures by developing and documenting standardized procedures for review and approval of key compliance activities across all major federal programs, implement documented review controls, and enhance monitoring and oversight. View of Responsible Officials: Management agrees with the recommendation and has developed a much more stringent review and approval process.
FA 2025-001 Improve Controls over Procurement and Suspension and Debarment Compliance Requirement: Procurement and Suspension and Debarment Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Agriculture Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: 10.553 – School Breakfast Program; 10.555 – National School Lunch Program Federal Award Numbers: 255GA324N1199 (Year: 2025) Questioned Costs: $7,536 Description: A review of expenditures charged to the Child Nutrition Cluster revealed that the School District’s internal control procedures were not operating appropriately to ensure that the School District’s procurement and suspension and debarment procedures were followed. 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 secondary schools and encourages the domestic consumption of nutritious agricultural commodities. CNC funding is granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Agriculture, and GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the various CNC programs. CNC funds totaling $2,718,778.68 were expended and reported on the Jeff Davis County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2025. Criteria: As a recipient of federal awards, the School District 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 200.318 – General Procurement Standards state, “(a)… the recipient or subrecipient must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services. These documented procurement procedures must be consistent with State, local, and tribal laws and regulations… (b) Recipients and subrecipients must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders.” In addition, provisions included in the Uniform Guidance, Section 200.320 – Procurement Methods provide guidance for informal procurement methods and state “If simplified acquisition procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources.” Furthermore, Title 2 CFR Section 180.300 states in part that the recipient or subrecipient must “verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM.gov Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person.” Condition: A sample of 40 procurement transactions was randomly selected for testing using a nonstatistical sampling approach. These transactions were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. The following deficiencies were noted: • For twenty expenditures, documentation maintained to support the entity’s verification that the vendors were not suspended or debarred or otherwise excluded from participating in the transaction lacked evidence of supervisory review as required by the School District’s policies and procedures. • The School District could not provide evidence that an adequate number of rate or price quotations were obtained from qualified sources for two small purchase expenditures reviewed. Questioned Costs: Upon testing a sample of $82,497 in procurement transactions, known questioned costs of $7,536 were identified for expenditures that did not follow the School District’s procurement procedures. Using the total population of $1,613,491 in procurement transactions, we project the likely questioned costs to be approximately $147,385. The following Assistance Listing Numbers were affected by known and likely questioned costs: 10.553 and 10.555. Cause: In discussing these deficiencies with the School District, they believe these issues are primarily due to the lack of proper documentation and not following its policies and procedures that govern the procurement process for federal programs. Effect: The School District was not in compliance with the Uniform Guidance and GaDOE guidance. Failure to appropriately implement procedures to address procurement and suspension and debarment compliance requirements exposes the School District to unnecessary risk of error and misuse of federal funds and could result in the expenditure of federal funds with unqualified vendors. In addition, this deficiency could lead to the return of federal funds associated with unallowable expenditures. Recommendation: The School District should evaluate and improve internal control procedures to ensure that required procurement methods are properly identified and followed and required procurement and suspension and debarment documentation is properly identified, safeguarded, and retained. In addition, management should develop a monitoring process to ensure that these procedures are operating appropriately. Views of Responsible Officials: We concur with this finding.
2025-003 Allowable Costs – Payroll, Fringe, and General Disbursements Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Child Care and Development Block Grant Operation of a Child Care Resource Center – Baltimore, Harford, and Cecil Counties; Professional Development/Quality (688) Operation of a Child Care Resource Center – Baltimore, Harford, and Cecil Counties; Infants and Toddlers (689) Specialized Training for Caregivers and Child Care Providers (707) Operation of a Child Care Resource Center - Baltimore, Harford, and Cecil Counties; Professional Development/ Quality (788) Operation of a Child Care Resource Center - Baltimore, Harford, and Cecil Counties; Infants and Toddlers (789) Pass-Through Agencies: Maryland State Department of Education (707) Maryland Family Network (688, 689, 788, 789) Pass-Through Numbers: 2201MDCCDD (688, 689, 707) 2401MDCCDD (788, 789) Award Periods: July 1, 2023 – September 30, 2024 (688, 689) August 15, 2022 – June 30, 2025 (707) July 1, 2024 – June 30, 2025 (788, 789) Type of Finding: Material Weakness in Internal Control over Compliance and Material Non-Compliance Criteria: Recipients of federal funds are required to establish and maintain effective internal controls over federal funds received, per 2 CFR section 200.303. Allowable costs must be approved by the awarding agency (2 CFR section 200.407) and necessary and reasonable for the performance of the federal award and allocable under the principles of 2 CFR, Subpart E. Additionally, costs must be adequately documented. Condition: Direct costs incurred were allocated through journal entries to the grant without support of an allocation methodology. Management was unable to provide an understanding of how to trace the allocated amounts to a consistent methodology or to original source documentation. Additionally, credit card costs did not have proper evidence of approval maintained. Lastly, evidence of review for time and effort was not consistently maintained and could not be provided to support selections made. Context: Of the general disbursement population, $44,115 general disbursements were booked via unsupported journal entry (allocated). Of the payroll and fringe benefit disbursement population, $21,319 were booked via unsupported journal entry (allocated). Additionally, one out of one credit card transactions selected did not have evidence of approval. Lastly, forty out of forty payroll transactions tested did not have proper evidence of the review for time and effort. Questioned Costs: $66,995 Cause: Internal controls surrounding allocations were not properly designed and implemented and an audit trail for allocation journal entries/source documentation was not maintained. Effect: The lack of evidence for audit trail and lack of effective internal controls over allocations provides an opportunity for noncompliance and errors. Repeat Finding: Yes; prior year finding 2024-003 Recommendation: We recommend that the Organization design, implement and monitor internal controls over allocations as well as maintain source documentation to support amounts charged to the grant. Views of Responsible Officials of the Auditee: There is no disagreement with the audit finding.
Period of Performance Federal Agency: U.S. Department of Health and Human Services Operation of a Child Care Resource Center – Baltimore, Harford and Cecil Counties; Professional Development/Quality (688) Specialized Training for Caregivers and Child Care Providers (707) Operation of a Child Care Resource Center - Baltimore, Harford and Cecil Counties; Professional Development/ Quality (788) Operation of a Child Care Resource Center - Baltimore, Harford and Cecil Counties; Infants and Toddlers (789) Assistance Listing Number: 93.575 Pass-Through Agencies: Maryland State Department of Education (707) Maryland Family Network (688, 788, 789) Pass-Through Numbers: 2201MDCCDD (688, 707) 2401MDCCDD (788, 789) Award Periods: July 1, 2023 – September 30, 2024 (688) August 15, 2022 – June 30, 2025 (707) July 1, 2024 – June 30, 2025 (788, 789) Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria: Recipients of federal funds are required to establish and maintain effective internal controls over federal funds received, per 2 CFR section 200.303. Additionally, charges must be incurred during the approved period of performance, per 2 CFR 200.309. Condition: The Organization did not maintain evidence to support approval of payroll allocation journal entries. Additionally, one transaction did not occur within the period of performance. Context: Auditors tested five payroll journal entry allocations out of a total sample of 75 period of performance transactions, and all lacked evidence of appropriate approval to support that the disbursements were recorded within the proper period of performance. Additionally, one out of 75 transactions did not occur within the period of performance. Questioned Costs: None Cause: Internal controls over the approval of payroll journal entries and general disbursements were not adequately designed and implemented to ensure supporting documentation was maintained. Effect: The absence of effective internal controls over period of performance increases the risk of noncompliance with federal award requirements and the potential for errors. Repeat Finding: Yes; prior year finding 2024-004 Recommendation: We recommend that the Organization design, implement, and monitor effective internal controls over credit card disbursements and maintain appropriate documentation evidencing review and approval to ensure compliance with period of performance requirements. Views of Responsible Officials of the Auditee: There is no disagreement with the audit finding.
FINDING 2025-003 Subject: Special Education Cluster (IDEA) - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Program: Special Education Grants to States Assistance Listings Number: 84.027 Federal Award Numbers and Years (or Other identifying Numbers): 22611-133-PN01, 23611-133-PN01, 24611-133-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 19 LEWIS CASS SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The internal control system in place at the School Corporation was not effective in ensuring compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement - Small Purchases Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a nonfederal entity. As Indiana Code has set a more restrictive threshold of $150,000, the informal procurement method is permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds: micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. A total of two vendors were determined to require small purchase procedures, totaling $123,078. For the two vendors tested, the School Corporation did not obtain price or rate quotations. Additionally, documentation detailing the history of procurement, which must include the reason for the procurement method used, was absent for those two vendors. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the System for Award Management (SAM) Excluded Parties List System (EPLS), collecting a certification from that person or entity, or adding a clause or condition to the covered transaction with that person or entity. A population of two covered transactions for goods or services totaling $123,078, both of which equaled or exceeded the $25,000 threshold paid from the special education funds during the audit period, were identified and selected for testing. For both transactions, the School Corporation did not verify that the vendor was not suspended, debarred, or otherwise excluded from or eligible for participation in federal assistance programs or activities prior to issuing payment. The lack of effective internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 20 LEWIS CASS SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.214 states: "Non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. The regulations in 2 CFR part 180 restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases— (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Cause The School Corporation did not have adequate internal controls to ensure compliance with procurement and suspension and debarment requirements. Effect The lack of an effective internal control system enabled material noncompliance to occur and remain undetected. Noncompliance with the Procurement and Suspension and Debarment compliance requirement could enable small purchases made by the School Corporation to be uncompetitive and could lead to contracting with vendors who are suspended or debarred from receiving federal grant funding. INDIANA STATE BOARD OF ACCOUNTS 21 LEWIS CASS SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the management of the School Corporation develop policies and procedures to ensure there are appropriate procurement procedures for goods and services and contractors and subrecipients, as appropriate, are verified to not be suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding 2025-003 - Internal Control Deficiencies Over Financial Reporting and Audit Readiness (Significant Deficiency) Information on Federal Programs – U.S. Department of Health and Human Services — Health Resources and Services Administration (HRSA), FALN 93.224 Health Center Program (and other HRSA programs, as applicable) Compliance Requirement Financial Management / Reporting (2 CFR 200.302; 2 CFR 200.303) Criteria – 1. Under 2 CFR 200.302 (Financial Management), non-Federal entities must maintain financial records that: • Accurately reflect financial transactions, and • Are supported by source documentation sufficient for audit purposes. 2. Under 2 CFR 200.303 (Internal Controls), non-Federal entities must establish and maintain effective internal controls to provide reasonable assurance that: • Financial reporting is reliable, and • Federal awards are managed in compliance with applicable requirements. Federal awarding agencies, including HRSA, and auditing standards further expect timely preparation of financial statements and adequate documentation supporting material account balances. Condition – During the audit of the financial statements and the Single Audit for the year ended June 30, 2025, we identified deficiencies in the Organization’s internal controls related to financial reporting timeliness, documentation, and audit readiness. Specifically: • The year-end financial close process was significantly delayed, with the fiscal year ended June 30, 2025 not substantially completed until May 2026. • Turnover in key accounting and finance personnel during the audit period adversely affected continuity in financial reporting and audit preparation. • The Organization experienced difficulty reconciling and substantiating beginning balances carried forward from the predecessor auditor, including limited supporting documentation. • The Organization was unable to timely provide sufficient supporting documentation for: - Property and equipment balances, including historical cost, additions, and accumulated depreciation, and - Lease accounting balances, including lease amortization schedules and related calculations. • As a result, audit completion required multiple follow-up requests and alternative audit procedures to obtain sufficient audit evidence. Cause – The deficiencies appear to be the result of a combination of factors, including: • Turnover in key accounting personnel, resulting in loss of institutional knowledge. • Inadequate transition documentation during the change in audit firms, leading to insufficient support for opening balances. • Lack of fully documented policies and procedures governing: - Fixed asset accounting and reconciliation, - Lease accounting and amortization tracking, and - Period-end financial close processes. • Insufficient supervisory review controls to ensure timely reconciliation and documentation of significant balances. Effect – These deficiencies increase the risk that: • Financial information used to support federal awards may be incomplete, inaccurate, or unsupported. • Audit completion timelines may be significantly delayed, increasing administrative burden and audit costs. • Management’s ability to rely on timely financial information for compliance and decision-making may be impaired. Auditor’s Perspective – From the auditor’s perspective, these deficiencies affected audit efficiency and timeliness, but did not prevent the auditor from ultimately obtaining sufficient and appropriate audit evidence to support the financial statements and the Schedule of Expenditures of Federal and State Grant Awards. No material misstatements were identified in the financial statements or in federal award amounts reported, and no questioned costs were noted. Accordingly, the deficiencies relate primarily to audit readiness, documentation, and governance processes, rather than a systemic failure of controls over financial reporting or federal compliance. Based on the nature of the deficiencies and the audit evidence obtained, the finding is appropriately classified as a significant deficiency and does not rise to the level of a material weakness. Questioned Costs – None. Auditor’s Recommendations – From an internal control and audit-readiness perspective, we recommend that management strengthen controls over financial reporting and documentation by implementing the following actions: • Formal Financial Close Process - Implement a documented monthly and year-end financial close process that includes defined timelines, assigned responsibilities, and required supervisory review and approval. • Fixed Asset and Lease Accounting Support - Establish and maintain complete supporting schedules for material asset-related balances, including: - A fixed asset subsidiary ledger reconciled to the general ledger, and - Lease accounting and amortization schedules prepared and reviewed in accordance with applicable accounting standards. • Balance-Sheet Reconciliations - Perform and document timely reconciliations of all significant balance-sheet accounts, including explicit reconciliation of beginning balances following changes in auditors or accounting personnel. • Documentation Retention Practices - Enhance documentation retention procedures to ensure that all material balances are supported by verifiable source records that are readily available for audit and management review. • Personnel and Auditor Transition Procedures - Develop and implement formal transition procedures for changes in key accounting personnel or external auditors to promote continuity of financial records and institutional knowledge. • Supervisory Review Controls - Strengthen supervisory review controls by requiring documented evidence of review and approval of account reconciliations and key supporting schedules. • Training and Technical Expertise Provide targeted internal training and/or obtain external technical support, as needed, to ensure adequate expertise in complex accounting areas such as fixed assets and leases. Implementation of these actions is expected to improve the timeliness and reliability of financial reporting, reduce audit delays, and strengthen compliance with Uniform Guidance and HRSA financial-management expectations. Views of Responsible Officials – Management concurs with the finding. OIC experienced turnover in key finance positions, delayed year-end close activities, and documentation challenges during the auditor transition; management will strengthen close, documentation, and audit readiness controls.
Finding 2025-006 Revenue Recognition, Contractual Allowances, Accounts Receivable, and Billing System Reconciliations (Material Weakness) Information on Federal Programs – HHS–HRSA Section 330 Health Center Program, June 30, 2025; U.S. Department of Labor Workforce Development Awards, June 30, 2025 Criteria – Under 2 CFR § 200.302 and § 200.303, non-Federal entities must maintain financial management systems and internal controls that provide reasonable assurance that federal funds are properly managed, financial results are accurately reported, and assets are safeguarded. These controls must align with GAAP and recognized internal control frameworks (COSO). GAAP (ASC 606) requires patient service revenue to be recognized at net realizable value, reflecting contractual allowances, sliding-fee discounts, and implicit price concessions at the time revenue is recorded. Accounts receivable must be evaluated for collectability, supported by an allowance for doubtful accounts, and written off only through documented and approved processes. HRSA Section 330 financial management requirements further require health centers to maintain accurate billing, accounts receivable, and reconciliation processes to support fiscal integrity and compliance with federal award conditions. Condition – OIC’s revenue-cycle processes exhibit multiple, interrelated control deficiencies that collectively impair the accuracy and reliability of patient service revenue and accounts receivable reporting: 1. Revenue Recognition Methodology • Patient revenue recorded in the general ledger is based on an estimated flat per-encounter rate multiplied by total encounters, rather than at net realizable value. • Contractual allowances, payer-specific discounts, and implicit price concessions are not estimated or recognized at the time revenue is initially recorded. 2. Accounts Receivable Valuation and Write-Off Controls • Patient receivables are written off within the EPIC billing system without documented review of collectability, allowance analysis, or documented approval by Executive Management. • Write-offs processed in EPIC do not consistently result in corresponding adjustments to general ledger accounts receivable. 3. Billing System and General Ledger Reconciliations • EPIC and eClinicalWorks billing systems are not integrated with the Sage MIP general ledger. • Patient revenue and accounts receivable balances are recorded through manual journal entries. • Formal, consistent, and documented reconciliations between billing system activity (gross charges, contractual adjustments, collections) and the general ledger are not performed as part of the monthly close. 4. Revenue Cycle Oversight and Monitoring • Patient statements are generated only when a patient balance is due, limiting an independent verification mechanism over gross charges and third-party payment processing. • Given the absence of system integration and reliance on manual processes, compensating oversight controls are insufficient to mitigate the combined risks noted above. Cause – Management has not implemented a comprehensive, GAAP-aligned revenue-cycle control framework that integrates revenue recognition, contractual allowance estimation, accounts receivable management, billing system reconciliation, and write-off governance. System limitations, reliance on historical estimation practices, and incomplete documentation of review and approval controls have contributed to the deficiencies. Effect – The combined effect of these deficiencies is an increased risk that patient service revenue and accounts receivable are materially overstated and not reflective of amounts expected to be collected. This condition: • Impairs the reliability and auditability of financial statements • Weakens internal control over federal program financial reporting • Increases the likelihood that material misstatements could occur and not be prevented or detected timely • Creates elevated compliance risk under Uniform Guidance, HRSA Section 330 financial management standards, and Single Audit reporting requirements Given the materiality of patient service revenue and accounts receivable to the financial statements, this condition constitutes a material weakness in internal control over financial reporting. Perspective – This material weakness reflects pervasive deficiencies across OIC’s revenue cycle that affect the accuracy, integrity, and auditability of patient service revenue and accounts receivable, which represent significant components of the financial statements and federal program reporting. The absence of GAAP-aligned revenue recognition, effective accounts receivable oversight, and reliable reconciliation between billing systems and the general ledger limits management’s and the Board’s ability to rely on reported financial results for decision-making and program oversight. Given the reliance on federal funding, particularly under the HRSA Section 330 Health Center Program, these deficiencies elevate compliance risk under Uniform Guidance and increase exposure to adverse Single Audit outcomes if not timely remediated. The Board and Audit Committee should view this matter as a high-priority governance issue requiring active oversight of management’s remediation efforts, including clear timelines, accountability, and validation that revised controls are designed and operating effectively. Prompt and sustained corrective action is necessary to restore confidence in financial reporting, demonstrate stewardship of federal resources, and reduce the risk of recurring audit findings. Questioned Costs – None identified. Recommendation – Management should implement a coordinated remediation strategy to strengthen the revenue cycle and restore compliance with GAAP and Uniform Guidance requirements. At a minimum, management should: • Discontinue or substantially revise the flat per-encounter revenue estimation methodology. • Record patient revenue at net realizable value at initial recognition, including estimated contractual allowances and implicit price concessions. 1. Accounts Receivable and Write-Off Governance • Perform documented monthly reviews of accounts receivable aging and collectability. • Maintain and review an allowance for doubtful accounts prior to any write-off activity. • Require documented CFO or Executive Management approval for all write-offs impacting the general ledger. • Ensure all billing-system write-offs are fully reconciled to the general ledger. 2. Billing System and General Ledger Reconciliations • Evaluate the feasibility of implementing automated interfaces between EPIC, eClinicalWorks, and the general ledger. • Establish formal, timely, and documented reconciliations between billing system reports and general ledger balances, reviewed by personnel independent of preparation. 3. Oversight and Compensating Controls • Enhance revenue-cycle oversight through expanded management review reports, reconciliation procedures, or other compensating controls that provide visibility into gross charges, adjustments, collections, and zero-balance accounts. 4. Oversight and Compensating Controls • Enhance revenue-cycle oversight through expanded management review reports, reconciliation procedures, or other compensating controls that provide visibility into gross charges, adjustments, collections, and zero-balance accounts. Implementing these actions will improve financial reporting accuracy, strengthen internal control over federal programs, and reduce audit and compliance risk. View of Responsible Officials – Management concurs with the finding. OIC will strengthen revenue cycle controls to improve patient service revenue recognition, accounts receivable valuation, write-off governance, and billing system reconciliations.
Failure to comply with the grant agreement's terms and applicable regulations: 2 CFR section 200.512(a) requires the reporting package and data collection form be submitted to the Federal Audit Clearinghouse the earlier of 30 calendar days after the reports are received from auditors or nine months after the end of the audit period. Further, 2 CFR 200.303 requires the Organization to establish and maintain effective internal control over compliance for timely preparation and submission of required reports.
Federal Agency: U.S. Department of Education Federal Program Title: Student Financial Assistance Cluster ALN Numbers: 84.268, 84.063, 84.007 Federal Award Identification Number and Year: P268K257727, P063P247727, P007A249116 Award Period: July 1, 2024 - June 30, 2025 Type of Finding: Material Weakness in Internal Control Over Compliance Criteria or specific requirement: 2 CFR part 200 section 200.303 requires that non-Federal entities receiving federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the federal award. The Code of federal Regulations, 34 CFR 688.164, requires any Title IV federal funds disbursed to a student or parent that are not received or negotiated must be returned to the appropriate federal financial aid program no later than 240 days after the check or electronic fund transfer (EFT) was issued. If a check or an EFT is returned, the College may make additional attempts to deliver the funds, provided that those attempts are made no later than 45 days after the funds were returned or rejected. In cases where the College does not make another attempt, the funds must be returned before the end of the initial 45-day period. The College must cease all attempts to disburse the funds and return them no later than 240 days after the date it issued the first check. Unclaimed Title IV FSA funds must not escheat to the state, revert to the College, or be transferred to any other third party. Condition: The College does not have a control in place to specifically monitor outstanding Title IV federal funded checks issued to students. This absence of oversight prevents the College from ensuring that these funds are returned within 240 days of check issuance. Questioned Costs: N/A. Context: During our testing, it was noted the College did not have a control in place to ensure the return of outstanding Title IV federally funded checks that were old and needed to be returned to the U.S. Department of Education prior to 240 days after issuance. Cause: The College did not have a control in place to ensure outstanding Title IV checks over 240 days are sent back to the Department of Education. Effect: The College is not in compliance with Department of Education requirements to establish internal controls over outstanding checks and refunds of disbursements to students. Repeat Finding: Yes, 2024-003. Recommendation: We recommend the College review the requirements and implement a control to specifically monitor the outstanding Title IV funded checks. Views of responsible officials: There is no disagreement with the finding.
Federal Agency: U.S. Department of Education Federal Program Title: Student Financial Assistance Cluster ALN Numbers: 84.268, 84.063, 84.007, 84.033 Federal Award Identification Number and Year: P268K257727, P063P247727, P007A249116, P033A249116 Award Period: July 1, 2024 - June 30, 2025 Type of Finding: Material Weakness in Internal Control Over Compliance; Compliance, Other Matter Criteria or specific requirement: The Code of Federal Regulations, 34 CFR 682.610, states that institutions must accurately report the enrollment status of all students regardless of whether they receive aid from the institution or not. This includes the enrollment effective date and related enrollment status, which must be reporting for both the Campus-Level and the Program-Level, as well as the program begin date. 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. In addition, Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Condition: The College did not properly report student enrollment changes for students who received federal student aid to the National Student Loan Data System (NSLDS). Additionally, the College did not have a control process in place to ensure timely and accurate reporting. Questioned Costs: None. Context: In our sample of 60 students selected for National Student Loan Data System (NSLDS) enrollment reporting testing, we identified 7 students had campus enrollment status reported incorrectly, 15 students had an enrollment effective date that did not match NSLDS, 60 students were reported past the 60-day reporting timeframe, 60 students were not certified every 60 days, 5 students where NSLDS Program enrollment effective date did not match the institutions records, 4 students where the students NSLDS Program enrollment status did not match the institutions records. Additionally, there was no observable review process to ensure timely and accurate reporting to NSLDS. Cause: The College did not have proper controls or procedures in place to verify student’s status in NSLDS matched the institution’s records in a timely manner. Effect: The College 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. Repeat Finding: Yes. 2024-002. Recommendation: We recommend the College review current processes and procedures for NSLDS enrollment reporting and implement an internal control that ensures reporting is both timely and accurate as well as retaining evidence of this control being performed. Views of responsible officials: There is no disagreement with the finding.
Federal Agency: U.S. Department of Education Federal Program Title: Student Financial Assistance Cluster ALN Numbers: 84.268, 84.063, 84.007, 84.033 Federal Award Identification Number and Year: P268K257727, P063P247727, P007A249116, P033A249116 Award Period: July 1, 2024 - June 30, 2025 Type of Finding: Material Weakness in Internal Control Over Compliance Criteria or specific requirement: Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Condition: The College does not review the work or internal control reports of its third-party servicer who performs its monthly reconciliations for Title IV funds. Questioned Costs: N/A. Context: The College uses a third-party to perform its monthly reconciliations. The College did not review internal controls reports, such as SOC1 reports or perform other documented reviews of the third-party servicers work. Cause: The College did not have a control in place to review the controls and accuracy of the thirdparty servicers work. Effect: The College is not in compliance with Department of Education requirements to establish internal controls over the direct loan, Pell, FSEOG, and FWS reconciliations. Repeat Finding: Yes, 2024-004. Recommendation: We recommend the College review internal control reports and implement review controls for work performed by third-party servicers. Views of responsible officials: There is no disagreement with the finding.
Federal Agency: U.S. Department of Education Federal Program Title: Student Financial Assistance Cluster ALN Numbers: 84.268, 84.063, 84.007, 84.033 Federal Award Identification Number and Year: P268K257727, P063P247727, P007A249116, P033A249116 Award Period: July 1, 2024 - June 30, 2025 Type of Finding: Significant Deficiency in Internal Control Over Compliance; Compliance, Other Matter Criteria or specific requirement: 34 CFR 668.22(a)(1) states that when a recipient of Title IV grant or loan assistance withdraws from an institution during a period of enrollment that the recipient began attendance in, the institution must determine the amount of Title IV assistance that the student earned in accordance with 34 CFR 668.22(e) which states that the calculation to determine this is equal to the percentage of the period of enrollment that the student completed as of the withdrawal date if this date occurs before completion of 60% of the period of enrollment. The amount unearned by the student is the complement of this percentage and is required to be returned as soon as possible but no later than 45 days after the date of the institution’s determination that the student withdrew as described in 34 CFR 668.22(j)(1). The withdrawal date is the date by which the student began the withdrawal process or provided official notification to the institution of intent to withdraw. If the student ceased attendance without providing notification to the institution the midpoint of the period of enrollment should be used. If the student’s ceasing attendance is due to illness, accident, or other circumstance beyond the students control the withdrawal date is date the institution becomes aware of these circumstances, as described in 668.22(c). Further (j)(2) states an institution not required to take attendance must determine the withdraw date for students who withdraw without providing notification to the institution no later than 30 days after the end of the earlier of the period of enrollment, academic year in which withdrawal occurred, or education program for which the student withdrew. Additionally, per 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain effective internal controls designed to reasonably ensure compliance with federal laws, regulations, and program requirements related to these awards. Condition: The College did not accurately calculate Return of Title IV (R2T4) calculations. The College also did not maintain documentation of the internal controls to ensure the R2T4 process complied with federal regulations and guidelines. Questioned Costs: $5,458. Context: During our testing, it was noted out of our sample of 15, 2 students R2T4 calculation was not performed or not mechanically performed correctly. Additionally, the College does not have a formal review process in place to ensure compliance with federal laws, regulations, and program compliance requirements. Cause: The College does not have proper procedures in place to ensure R2T4 calculations are performed accurately and did not maintain documentation of the controls in place to ensure compliance with federal laws, regulation and program compliance requirements over R2T4. Effect: Failure to properly calculate R2T4 could result in the student returning an incorrect amount of aid. Further the lack of evidence of an internal control in place to ensure compliance with federal requirements could result in errors going undetected by the College. Repeat Finding: Yes, 2024-005. Recommendation: We recommend the College review its current procedures for Title IV funds and implement a control that prevents and detects errors in this process. We also recommend the College maintain evidence of the formal review process that ensures Return of Title IV calculations are being performed timely and correctly to minimize the likelihood that errors may go undetected and not corrected in a timely manner. Views of responsible officials: There is no disagreement with the finding.
Federal Agency: U.S. Department of Education Federal Program Title: Student Financial Assistance Cluster ALN Numbers: 84.268, 84.063, 84.007, 84.033 Federal Award Identification Number and Year: P268K257727, P063P247727, P007A249116, P033A249116 Award Period: July 1, 2024 - June 30, 2025 Type of Finding: Material Weakness in Internal Control Over Compliance; Compliance, Other Matters Criteria or specific requirement: The Code of Federal Regulations (34 CFR § 682.604) states a school must ensure that exit counseling is conducted with each Stafford Loan borrower and graduate or professional student PLUS Loan borrower either in person, by audiovisual presentation, or by interactive electronic means. In each case, the school must ensure that this counseling is conducted shortly before the student borrower ceases at least half-time study at the school, and that an individual with expertise in the title IV programs is reasonably available shortly after the counseling to answer the student borrower's questions. As an alternative, in the case of a student borrower enrolled in a correspondence program or a study-abroad program that the home institution approves for credit, written counseling materials may be provided by mail within 30 days after the student borrower completes the program. If a student borrower withdraws from school without the school's prior knowledge or fails to complete an exit counseling session as required, the school must, within 30 days after learning that the student borrower has withdrawn from school or failed to complete the exit counseling as required, ensure that exit counseling is provided through interactive electronic means, by mailing written counseling materials to the student borrower at the student borrower's last known address, or by sending written counseling materials to an email address provided by the student borrower that is not an email address associated with the school sending the counseling materials. Additionally, uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Condition: The College did not send exit counseling notifications to students who graduated or withdrew during the fiscal year. Questioned Costs: None Context: During our eligibility testing, it was noted 6 of 6 students who were in our eligibility sample and either graduated or withdrew did not receive exit counseling notifications. Cause: The College did have a process within its system to send out exit counseling notifications, but it was not set up properly and students were not being notified of exit counseling requirements. The College did not have proper controls in place ensure exit counseling notifications were being sent out. Effect: The College is not in compliance with Department of Education requirements over exit counseling. Repeat Finding: No. Recommendation: We recommend the College changes its process and controls to ensure exit counseling emails are sent to graduate/withdraw students throughout the year. Views of responsible officials: There is no disagreement with the finding.
Federal Agency: U.S. Department of Education Federal Program Title: Student Financial Assistance Cluster ALN Numbers: 84.268, 84.063, 84.007, 84.033 Federal Award Identification Number and Year: P268K257727, P063P247727, P007A249116, P033A249116 Award Period: July 1, 2024 - June 30, 2025 Type of Finding: Significant Deficiency in Internal Control Over Compliance; Compliance, Other Matter Criteria or specific requirement: The Code of Federal Regulations (34 CFR § 668.34(a)) requires institutions to establish a reasonable satisfactory academic progress (SAP) policy for determining whether an otherwise eligible student is making satisfactory academic progress in his or her educational program and may receive assistance under Title IV, HEA programs. Per 2 CFR 200.303, nonfederal entities receiving federal awards must establish and maintain effective internal control designed to reasonably ensure compliance with federal laws, regulations, and the terms and conditions of the award. Condition: The College did not properly identify students on satisfactory academic progress (SAP) suspension, resulting in disbursement of aid to ineligible students. Questioned Costs: $5,530 Context: During our testing of 60 students, we identified 4 students who were not meeting Satisfactory Academic Progress (SAP) requirements and were not placed on SAP suspension and received aid they were ineligible for. Cause: The college does not have a proper process to ensure students not meeting SAP requirements are not disbursed aid. Effect: Ineligible students received Title IV funds. Repeat Finding: 2024-006. Recommendation: We recommend that the College review its processes and internal controls related to SAP and ensure procedures are in place to ensure students who are not meeting SAP requirements are properly identified and disbursed aid in accordance with the institutions SAP policy. Views of responsible officials: There is no disagreement with the finding.
Criteria or Specific Requirement According to §200.303 Internal Controls of 2 CFR Part 200, 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. Condition and Context During our testing, we noted the Organization was unable to provide documentation to support management review and approval of the eight drawdown requests selected for testing prior to the drawdowns occurring. Effect The incorrect amount of federal funds may be requested to be drawn down. Questioned Costs None identified. Cause Management Oversight. Drawdowns were prepared and submitted without secondary review. Recommendation We recommend the Organization to review internal controls in regards to the approval of federal fund drawdown requests. Views of Responsible Officials The Organization is in agreement with finding. The control issue was due to turnover in finance staff during fiscal year 2025. Under the direction of the Organization’s new CFO, the following revised procedures for cash management have been implemented for fiscal year 2026: • Payroll Documentation: A staff accountant or the controller will compile payroll expense details along with supporting documentation for each drawdown. • Review and Approval: This documentation is submitted to the CFO for review prior to any fund transfer. • Drawdown Execution: Upon approval, the CFO will initiate the drawdown from PMS. • Frequency: Drawdowns are processed on a biweekly basis and reflect expenses from the preceding payroll cycle. Upon completion of the drawdown, the CFO will save a copy of the drawdown request to the internal drive. • This drawdown receipt is reviewed by a second staff member, either the controller or senior accountant. • Drawdowns are also reviewed during monthly bank reconciliations.