2024-001 Lack of Documentation to Support Distribution of Wages (Significant Deficiency) Federal Agency: Department of Education Pass-through Agency: New Hampshire Department of Education Cluster/Program: COVID – 19 Education Stabilization Fund Assistance Listing Numbers: 84.425D/84.425U Passed-through Identification: #20220358 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Type of Finding: Internal Control over Compliance – Significant Deficiency Material Noncompliance Criteria or Specific Requirement: Federal regulations 2 CFR 200.303 states, the District, as a recipient of Federal funds, must establish and maintain effective internal controls over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. In addition, under 2 CFR 200.430, it states that charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must (1) be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, (2) be incorporated into the official records of the non-Federal entity, (3) reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities, and (4) support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award or a federal award and non-Federal award. Condition: During our review of payroll charged to the ESSER III (#20220358) grant it was noted the district gave out retention bonuses to all staff working at Haverhill Cooperative School District. Although a record of bonus recipients was maintained, it was not formally approved by the Superintendent and/or the School Board. Cause: Administrative oversight. Effect: The District did not have adequate documentation to support the distribution of the employee’s wages paid using grant funds. Questioned Costs: $33,557 Repeat Finding: No Recommendation: We recommend that if the district chooses to maintain a master spreadsheet for stipends or retention bonuses, the list should be formally reviewed and approved by both the School Board and the Superintendent. Views of Responsible Officials: Management’s views and corrective action plan is included at the end of this report.
Finding 2024-007: Time Accounting (50000) Repeat Finding? This is a partial repeat of Finding 2023-009. Program Identification: Federal Agency: U.S. Department of Education Pass‐through Entity: California Department of Education Program Names: Title I, Part A Grants: Title I, Part A, Basic Grants Local-Income and Neglected (AL No. 84.010) Criteria: 2 CFR, section 200.430 states, in part: (i) Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. 2 CFR, section 200.303 states, in part: The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. CSAM Procedure 905 states, in part: Periodic (Semiannual) Certification Employees who work solely on a single federal award or cost objective need only complete a periodic certification. The periodic certification must: Be prepared at least semiannually. Be signed by the employee or the supervisory official having firsthand knowledge of the work performed by the employee. State the employee worked solely on that single federal program or cost objective during the period covered by the certification. Where multiple employees work on the same cost objective, a blanket certification may be used as the documentation for all employees who worked on the cost objective. Personnel Activity Report Except as provided in “Substitute Systems for Time Accounting” … employees who work on multiple activities or cost objectives of which at least one is federal must complete a personnel activity report (PAR) or equivalent documentation. A PAR may be as detailed as a document that identifies the employee’s activity daily by hours, or it may be as simple as a report of the total hours or percentage of hours spent in each categorical program or cost objective. The level of detail can generally be determined by the diversity and variation of the employee’s work activities. The safest approach is to provide more documentation rather than less. Condition: Five employees that had complete PARs for time accounting had the following deficiencies: Salaries and benefits were charged 100% to Title I, Part A for these individuals, each month’s salary was not reconciled to reflect the percentage on their PARs. PARs were only provided for 4 months of the fiscal year, the remaining PAR reports requested were not provided. Context: Exceptions were identified for all five employees who were subject to PAR reporting. Questioned Costs: Auditor is estimating that Title I, Part A, was overcharged by $30,205 because the District did not modify each month’s charges to the actual percentage worked on the program. This overcharge was based on averaging the percentage for the four months of PARs we were provided. Cause: District lacks adequate controls to ensure that time certification documentation is prepared and maintained to support all employees who are paid with federal funds. Effect: Estimated cost questioned of $30,205 for the 2023-24 fiscal year. Recommendation: We recommend that the District comply with 2 CFR, section 200.303, and CSAM Procedure 905, which require that employee time certification forms be maintained for employees who charge time to federal program. Views of Responsible Officials: The District acknowledges this finding and is committed to strengthening internal controls to ensure compliance with federal time accounting requirements. The State and Federal Programs Department has received training on Time and Effort procedures, and additional training is being provided to school sites to reinforce accurate time certification and documentation for federal fund expenditures. To address the deficiencies, the District will shift from an annual to a monthly reconciliation process, ensuring that employee salaries charged to Title I accurately reflect actual work performed. The State and Federal Programs Department will collaborate with the Budget Department to systematically track employees funded through Title I and verify that all required PARs are completed and maintained. These corrective actions will enhance oversight, reduce the risk of discrepancies, and improve compliance with federal regulations. The District is committed to ongoing monitoring and training to prevent recurrence and ensure the integrity of financial reporting.
SIGNIFICANT DEFICIENCY 2024-001 – Allowed/Unallowed Activities/Costs Federal Program Information: Department of Education CFDA - 84.010A - Title I Criteria: The following CFR(s) apply to this finding: 2 CFR 200.303 and 2 CFR 200.430 g Condition: During audit procedures, it was identified that the Unit charged unallowable costs to the grant. It was also identified that the unit is incorrectly documenting wages. Cause: The Unit does not have the necessary internal controls over compliance. Effect: The Unit is not ensuring that staff has the appropriate compliance knowledge on allowable and unallowable costs to minimize the inherent risk of unallowable charges to the grant, which could result in return of funding. Of the 5 disbursements reviewed and tested 2 were for unallowable costs that had been charged to the grant. The unit is not consistent with wage documentation which can result in incorrect amounts being paid to personnel. Of the 25 samples reviewed, two staff did not have wage rates documented in the file of which one of them was paid according to the Collective Bargaining Agreement, however the amount paid was incorrect and there is no documentation for the employee who worked just for the summer. Another employee’s contract stated the incorrect salary but was correctly stated in the payroll system. Lastly one hourly employee’s pay was prorated when it shouldn’t have been resulting in an overpayment. Identification of Questioned Costs: None identified. Context: Of a population of 12 AP samples 5 were examined and tested and of a population of 56 payroll samples 25 were examined and tested. This is not a statistically valid sample. Repeat Finding: This is a repeat finding of 2023-002 Recommendation: It is recommended that the Unit implements internal control processes and procedures to ensure that the unit stays in compliance with allowable costs and activities and correct and accurate documentation is being maintained and recorded. Views of Responsible Officials and Corrective Action Plan: Please see the Corrective Action Plan.
SIGNIFICANT DEFICIENCY 2024-001 – Allowed/Unallowed Activities/Costs Federal Program Information: Department of Education CFDA - 84.010A - Title I Criteria: The following CFR(s) apply to this finding: 2 CFR 200.303 and 2 CFR 200.430 g Condition: During audit procedures, it was identified that the Unit charged unallowable costs to the grant. It was also identified that the unit is incorrectly documenting wages. Cause: The Unit does not have the necessary internal controls over compliance. Effect: The Unit is not ensuring that staff has the appropriate compliance knowledge on allowable and unallowable costs to minimize the inherent risk of unallowable charges to the grant, which could result in return of funding. Of the 5 disbursements reviewed and tested 2 were for unallowable costs that had been charged to the grant. The unit is not consistent with wage documentation which can result in incorrect amounts being paid to personnel. Of the 25 samples reviewed, two staff did not have wage rates documented in the file of which one of them was paid according to the Collective Bargaining Agreement, however the amount paid was incorrect and there is no documentation for the employee who worked just for the summer. Another employee’s contract stated the incorrect salary but was correctly stated in the payroll system. Lastly one hourly employee’s pay was prorated when it shouldn’t have been resulting in an overpayment. Identification of Questioned Costs: None identified. Context: Of a population of 12 AP samples 5 were examined and tested and of a population of 56 payroll samples 25 were examined and tested. This is not a statistically valid sample. Repeat Finding: This is a repeat finding of 2023-002 Recommendation: It is recommended that the Unit implements internal control processes and procedures to ensure that the unit stays in compliance with allowable costs and activities and correct and accurate documentation is being maintained and recorded. Views of Responsible Officials and Corrective Action Plan: Please see the Corrective Action Plan.
2024-008: U.S. Department of Interior Direct award and Pass-through Tahoe Resource Conservation District Southern Nevada Public Land Management, 15.235 Allowable Costs/Cost Principles Material Weakness in Internal Control over Compliance Grant Award Number: Affects all awards under assistance listing 15.235 on the Schedule of Expenditures of Federal Awards. Criteria: Title 2 U.S. Code of Federal Regulations (CFR) Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) states that charges for salaries and wages must be based on records that accurately reflect the work performed. In part, the records must be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that, in part, that the system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the federal award is accurate, allowable, and properly allocated. 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 provides that non-federal entities must establish and maintain effect internal control 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: Labor rates charged to the federal award did not agree to underlying support of payroll costs. In addition, labor rates were not reviewed prior to being charged to the federal award. Cause: Tahoe Douglas Fire Protection District (the District) did not have adequate internal controls to ensure payroll costs charged to the federal award were accurate. Effect: Inaccurate payroll costs were charged to the federal award, which resulted in an underbilling of actual payroll costs. Questioned Costs: None Context/Sampling: A nonstatistical sample of 60 ($50,798) out of a population of 433 ($420,962) payroll expenditures at the District was selected for testing. We noted 24 payroll transactions did not agree to underlying support for the employees payroll and fringe rate. These 24 payroll transactions totaled $20,798 and were underbilled to the federal award by $422. In addition, the labor rates charged to the federal award were not reviewed on any of the 60 transactions. Repeat Finding from Prior Year: No Recommendation: We recommend the District enhance internal controls to ensure payroll costs charged to the federal award are accurate. Views of Responsible Officials: Tahoe Douglas Fire Protection District agrees with this finding.
2024-009: U.S. Department of The Interior Direct award and Pass-through Tahoe Resource Conservation District Southern Nevada Public Land Management, 15.235 Cash Management Significant Deficiency in Internal Control over Compliance Grant Award Number: Potentially affects all grant awards included under assistance listing 15.235 on the Schedule of Expenditures of Federal Awards. Criteria: 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 provides that non-federal entities must establish and maintain effect internal control 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: There was no evidence of review and approval (segregation of duties) between the preparer and reviewer. Cause: Tahoe Douglas Fire Protection District (the District) did not have adequate internal controls to provide for the documented review and approval of Requests for Reimbursement. Effect: Inaccurate information may be reported and funds may not be drawn on a reimbursement basis. Questioned Costs: None Context/Sampling: A nonstatistical sample of 2 Requests for Reimbursement out of a population of 4 was selected for testing. We noted that there was no evidence of review on one of the Requests for Reimbursement. Repeat Finding from Prior Year: No Recommendation: We recommend the District enhance internal controls to provide for the documented review and approval of Requests for Reimbursement. Views of Responsible Officials: Tahoe Douglas Fire Protection District agrees with this finding.
2024-010: U.S. Department of Interior Direct award and Pass-through Tahoe Resource Conservation District Southern Nevada Public Land Management, 15.235 Reporting Material Weakness in Internal Control over Compliance and Material Noncompliance Grant Award Number: Affects all grant awards included under assistance listing 15.235 on the Schedule of Expenditures of Federal Awards. Criteria: 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 provides that non-federal entities must establish and maintain effect internal control 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. The grant awards require the submission of Federal Financial Reports (SF-425) and Performance Reports. Condition: There was no evidence of review and approval (segregation of duties) between the preparer and reviewer. Information reported did not agree to underlying supporting records. Cause: Tahoe Douglas Fire Protection District (the District) did not have adequate internal controls to provide for the documented review and approval of SF-425 reports or Performance Reports. Effect: Inaccurate information was reported to the federal agency on the SF-425 and inaccurate information was reported to the pass-through entity on the Performance Reports. Questioned Costs: None Context/Sampling: A non-statistical sample of two SF-425 reports out of a population of four was selected for testing. A non-statistical sample of two Performance Reports out of a population of four was selected for testing. We noted that there was no evidence of review on all four reports tested. Amounts reported on all four reports tested did not agree to underlying support. Errors are noted as follows: SF-425 for Quarter Ended 9/30/2023: SF-425 for Quarter Ended 3/31/2024: Performance Report to TRCD for Quarter End 9/30/2023: Performance Report to TRCD for Quarter End 12/31/2023: Repeat Finding from Prior Year: No Recommendation: We recommend the District enhance internal controls to provide for the documented review and approval of SF-425 reports and Performance Reports. Views of Responsible Officials: Tahoe Douglas Fire Protection District agrees with this finding.
2024-008: U.S. Department of Interior Direct award and Pass-through Tahoe Resource Conservation District Southern Nevada Public Land Management, 15.235 Allowable Costs/Cost Principles Material Weakness in Internal Control over Compliance Grant Award Number: Affects all awards under assistance listing 15.235 on the Schedule of Expenditures of Federal Awards. Criteria: Title 2 U.S. Code of Federal Regulations (CFR) Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) states that charges for salaries and wages must be based on records that accurately reflect the work performed. In part, the records must be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that, in part, that the system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the federal award is accurate, allowable, and properly allocated. 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 provides that non-federal entities must establish and maintain effect internal control 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: Labor rates charged to the federal award did not agree to underlying support of payroll costs. In addition, labor rates were not reviewed prior to being charged to the federal award. Cause: Tahoe Douglas Fire Protection District (the District) did not have adequate internal controls to ensure payroll costs charged to the federal award were accurate. Effect: Inaccurate payroll costs were charged to the federal award, which resulted in an underbilling of actual payroll costs. Questioned Costs: None Context/Sampling: A nonstatistical sample of 60 ($50,798) out of a population of 433 ($420,962) payroll expenditures at the District was selected for testing. We noted 24 payroll transactions did not agree to underlying support for the employees payroll and fringe rate. These 24 payroll transactions totaled $20,798 and were underbilled to the federal award by $422. In addition, the labor rates charged to the federal award were not reviewed on any of the 60 transactions. Repeat Finding from Prior Year: No Recommendation: We recommend the District enhance internal controls to ensure payroll costs charged to the federal award are accurate. Views of Responsible Officials: Tahoe Douglas Fire Protection District agrees with this finding.
2024-009: U.S. Department of The Interior Direct award and Pass-through Tahoe Resource Conservation District Southern Nevada Public Land Management, 15.235 Cash Management Significant Deficiency in Internal Control over Compliance Grant Award Number: Potentially affects all grant awards included under assistance listing 15.235 on the Schedule of Expenditures of Federal Awards. Criteria: 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 provides that non-federal entities must establish and maintain effect internal control 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: There was no evidence of review and approval (segregation of duties) between the preparer and reviewer. Cause: Tahoe Douglas Fire Protection District (the District) did not have adequate internal controls to provide for the documented review and approval of Requests for Reimbursement. Effect: Inaccurate information may be reported and funds may not be drawn on a reimbursement basis. Questioned Costs: None Context/Sampling: A nonstatistical sample of 2 Requests for Reimbursement out of a population of 4 was selected for testing. We noted that there was no evidence of review on one of the Requests for Reimbursement. Repeat Finding from Prior Year: No Recommendation: We recommend the District enhance internal controls to provide for the documented review and approval of Requests for Reimbursement. Views of Responsible Officials: Tahoe Douglas Fire Protection District agrees with this finding.
2024-010: U.S. Department of Interior Direct award and Pass-through Tahoe Resource Conservation District Southern Nevada Public Land Management, 15.235 Reporting Material Weakness in Internal Control over Compliance and Material Noncompliance Grant Award Number: Affects all grant awards included under assistance listing 15.235 on the Schedule of Expenditures of Federal Awards. Criteria: 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 provides that non-federal entities must establish and maintain effect internal control 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. The grant awards require the submission of Federal Financial Reports (SF-425) and Performance Reports. Condition: There was no evidence of review and approval (segregation of duties) between the preparer and reviewer. Information reported did not agree to underlying supporting records. Cause: Tahoe Douglas Fire Protection District (the District) did not have adequate internal controls to provide for the documented review and approval of SF-425 reports or Performance Reports. Effect: Inaccurate information was reported to the federal agency on the SF-425 and inaccurate information was reported to the pass-through entity on the Performance Reports. Questioned Costs: None Context/Sampling: A non-statistical sample of two SF-425 reports out of a population of four was selected for testing. A non-statistical sample of two Performance Reports out of a population of four was selected for testing. We noted that there was no evidence of review on all four reports tested. Amounts reported on all four reports tested did not agree to underlying support. Errors are noted as follows: SF-425 for Quarter Ended 9/30/2023: SF-425 for Quarter Ended 3/31/2024: Performance Report to TRCD for Quarter End 9/30/2023: Performance Report to TRCD for Quarter End 12/31/2023: Repeat Finding from Prior Year: No Recommendation: We recommend the District enhance internal controls to provide for the documented review and approval of SF-425 reports and Performance Reports. Views of Responsible Officials: Tahoe Douglas Fire Protection District agrees with this finding.
2024-005: U.S. Department of Homeland Security Assistance to Firefighters Grant, 97.044 Reporting Material Weakness in Internal Control over Compliance Grant Award Number: Affects all grant awards EMW-2022-FG-03975 under assistance listing 97.044 on the Schedule of Expenditures of Federal Awards. Criteria: 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 provides that non-federal entities must establish and maintain effective internal control 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. The grant awards require the submission of Federal Financial Reports (SF-425). Condition: Information reported did not agree to underlying supporting records. Cause: North Lake Tahoe Fire Protection District (the District) did not have adequate internal controls to provide for accurate reporting of the SF-425 report. Effect: Inaccurate information was reported to the federal agency. Questioned Costs: None Context/Sampling: A non-statistical sample of three SF-425 reports out of a population of eight was selected for testing. Amounts reported on one of the three reports tested did not agree to underlying support. An error was noted as follows: SF-425 for Quarter Ended 12/31/2023 for grant EMW-03975: Key Line Item Amount Reported Amount Supported Cash Disbursements $76,855.71 $0 Repeat Finding from Prior Year: No Recommendation: We recommend the District enhance internal controls to provide for accurate reporting of the SF-425 report. Views of Responsible Officials: North Lake Tahoe Fire Protection District agrees with this finding.
Program: Economic Development Initiative, Community Project Funding, and Miscellaneous Grants Financial Assistance Listing Number: 14.251 Federal Agency: U.S. Department of Housing and Urban Development Award Year: 2024 Grant Award Number: B-23-CP-CA-0240 Compliance Requirements: Special Tests and Provisions Type of Finding: Significant Deficiency in Internal Control over Compliance and Instance of Non- Compliance Criteria: Per 2 CFR 200.303, the non-Federal entity must establish and maintain effective internal control over the Federal awards in order to provide 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. Per the Economic Development Initiative Community Project Funding Grant Guide, the requirements of Section 3 of the Housing and Urban Development Act of 1968 found at 24 CFR Part 75 apply to all grant recipients that are awarded $200,000 or more for projects involving housing construction, rehabilitation, or other public construction. Condition: We identified one (1) project, “Courtplace”, in which Section 3 requirements are applicable to the City. The City was unable to provide supporting documentation to demonstrate that Section 3 requirements were communicated and followed by the applicable project contractor. Cause: The City did not have effective controls in place to ensure all compliance requirements were met. Effect: The City is not in compliance with Section 3 of the Housing and Urban Development Act of 1968 found at 24 CFR Part 75. Questioned Costs: No questioned costs were identified as a result of our audit procedures. Context/Sampling: A sample of one (1) out of one (1) applicable contractor was selected for testing. Repeat Finding from the Prior Year(s): No. Recommendation: We recommend that the City implement additional policies and procedures to ensure that Section 3 of the Housing and Urban Development Act of 1968 found at 24 CFR Part 75 requirements are complied with. Views of Responsible Official: Management agrees. See separately issued Corrective Action Plan.
Program: Economic Development Initiative, Community Project Funding, and Miscellaneous Grants Financial Assistance Listing Number: 14.251 Federal Agency: U.S. Department of Housing and Urban Development Award Year: 2024 Grant Award Number: B-23-CP-CA-0240 Compliance Requirements: Special Tests and Provisions Type of Finding: Significant Deficiency in Internal Control over Compliance and Instance of Non- Compliance Criteria: Per 2 CFR 200.303, the non-Federal entity must establish and maintain effective internal control over the Federal awards in order to provide 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. Per the Economic Development Initiative Community Project Funding Grant Guide, the requirements of Section 3 of the Housing and Urban Development Act of 1968 found at 24 CFR Part 75 apply to all grant recipients that are awarded $200,000 or more for projects involving housing construction, rehabilitation, or other public construction. Condition: We identified one (1) project, “Courtplace”, in which Section 3 requirements are applicable to the City. The City was unable to provide supporting documentation to demonstrate that Section 3 requirements were communicated and followed by the applicable project contractor. Cause: The City did not have effective controls in place to ensure all compliance requirements were met. Effect: The City is not in compliance with Section 3 of the Housing and Urban Development Act of 1968 found at 24 CFR Part 75. Questioned Costs: No questioned costs were identified as a result of our audit procedures. Context/Sampling: A sample of one (1) out of one (1) applicable contractor was selected for testing. Repeat Finding from the Prior Year(s): No. Recommendation: We recommend that the City implement additional policies and procedures to ensure that Section 3 of the Housing and Urban Development Act of 1968 found at 24 CFR Part 75 requirements are complied with. Views of Responsible Official: Management agrees. See separately issued Corrective Action Plan.
FINDING - Noncompliance with Grant Report Requirements Federal Agency: Department of Education Assistance Listing Numbers: 84.425F Program Names and Award Numbers: Education Stabilization Fund Under the Coronavirus Aid, Relief, And Economic Security Act [COVID-19 Higher Education Emergency Relief Fund: Institution Portion (P425F200852)] Program Expenditures: $2,160,298 Questioned Costs: None Northeastern Illinois University (University) did not have adequate procedures in place to ensure the Education Stabilization Fund - Higher Education Emergency Relief Fund (HEERF) reports were accurate and timely submitted to the U.S. Department of Education and posted to the University’s website. CONDITIONS FOUND & CRITERIA During our testing of the University’s compliance with the grant reporting requirements for HEERF, we noted the University did not review the required reports to ensure accuracy and compliance with the reporting requirements of the grant agreement. We noted the following: - Four of 4 (100%) Quarterly Public Reports improperly did not report the cumulative student aid disbursed for each undergraduate and graduate student. The Department of Education Quarterly Budget and Expenditure Reporting Form requires the posting of cumulative student aid disbursed by quarter for both undergraduate and graduate. - Two of 4 (50%) Quarterly Public Reports were posted 175 days and 84 days late to the University’s website. The Department of Education Quarterly Budget and Expenditure Reporting Form requires the University to post the Quarterly Public Reports covering each quarterly reporting period (September 30, December 31, March 31, June 30), no later than 10 days after the end of each calendar quarter. Uniform Guidance (2 CFR 200.303(a)) requires nonfederal entities receiving federal awards to establish and maintain effective internal control designed to reasonably ensure compliance with Federal laws, statutes, regulations, and the terms and conditions of the Federal award. CAUSE University officials stated required reports were not timely and accurately submitted due to turnover within the University resulting in staffing constraint. EFFECT Failure to meet grant reporting requirements is noncompliance with federal regulations and could result in loss of grant funding in future years. (Finding Code No. 2024-007, 2023-007, 2022-005, 2021-008, 2020-011) RECOMMENDATION We recommend the University improve its grant reporting and monitoring process to adhere with grant requests for reporting utilizing a calendar schedule and proper review before submission. UNIVERSITY RESPONSE The University agrees with the recommendation.
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 two instances where the Organization was unable to provide documentation that the request for payment was approved prior to the drawdown date. In both instances we also noted that a portion of the funds drawn down had yet to have costs incurred to support drawing down those funds. Effect: The auditor noted instances of noncompliance. Noncompliance results in federal funds being drawn down prior to the costs being incurred by the Organization. Questioned costs: None identified. Cause: The Organization does not have internal controls in place to ensure compliance with Federal regulations or the terms and conditions of the Federal award. Recommendation: We recommend that the Organization create effective internal controls and procedures over the cash management process and drawdowns of federal funds that allows for compliance with all applicable Federal laws, regulations, and compliance requirements of various Federal grants. Views of responsible officials: The Organization will review grant requirements and make sure that drawdown terms are followed and that a review will take place over any drawdowns prior to requesting the funds.
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 two instances where the Organization was unable to provide documentation that the request for payment was approved prior to the drawdown date. In both instances we also noted that a portion of the funds drawn down had yet to have costs incurred to support drawing down those funds. Effect: The auditor noted instances of noncompliance. Noncompliance results in federal funds being drawn down prior to the costs being incurred by the Organization. Questioned costs: None identified. Cause: The Organization does not have internal controls in place to ensure compliance with Federal regulations or the terms and conditions of the Federal award. Recommendation: We recommend that the Organization create effective internal controls and procedures over the cash management process and drawdowns of federal funds that allows for compliance with all applicable Federal laws, regulations, and compliance requirements of various Federal grants. Views of responsible officials: The Organization will review grant requirements and make sure that drawdown terms are followed and that a review will take place over any drawdowns prior to requesting the funds.
Criteria or specific requirement: According to § 2 CFR 200.303 Internal controls, 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. According to 2 CFR 200.1 Period of Performance is defined as the total estimated time interval between the start of an initial Federal award and the planned end date, which may include one or more funded portions, or budget periods. Condition and context: During our testing we noted three instances where the Organization allocated allowable expenses incurred outside of the period of performance dates. Effect: The auditor noted instances of noncompliance. Noncompliance results in federal funds being used outside of the grant period. Questioned costs: $53,077 Cause: The Organization does not have internal controls in place to ensure compliance with Federal regulations or the terms and conditions of the Federal award. Recommendation: We recommend the Organization update their method of allocating expenditures to federal awards based on invoice date to ensure the incurred date is within the proper period of performance. Views of responsible officials: The Organization will review grant requirements and make sure that allowable costs are incurred and allocated to the grant within the grant period.
Criteria or specific requirement: According to § 2 CFR 200.303 Internal controls, 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. According to 2 CFR 200.1 Period of Performance is defined as the total estimated time interval between the start of an initial Federal award and the planned end date, which may include one or more funded portions, or budget periods. Condition and context: During our testing we noted three instances where the Organization allocated allowable expenses incurred outside of the period of performance dates. Effect: The auditor noted instances of noncompliance. Noncompliance results in federal funds being used outside of the grant period. Questioned costs: $53,077 Cause: The Organization does not have internal controls in place to ensure compliance with Federal regulations or the terms and conditions of the Federal award. Recommendation: We recommend the Organization update their method of allocating expenditures to federal awards based on invoice date to ensure the incurred date is within the proper period of performance. Views of responsible officials: The Organization will review grant requirements and make sure that allowable costs are incurred and allocated to the grant within the grant period.
2024-031 Oregon Department of Education Implement controls to ensure FFATA reporting is completed for all required subawards Federal Awarding Agency: U.S. Department of Education Assistance Listing Number and Name: 10.582 Fresh Fruit and Vegetable Program (Child Nutrition Cluster) Federal Award Numbers and Years: 202322L160347, 2023; 202423L160347, 2024 Compliance Requirements: Reporting Type of Finding: Significant Deficiency; Noncompliance Prior Year Findings: N/A Questioned Costs: N/A Criteria: 2 CFR 170; 2 CFR 200.303 The Child Nutrition Cluster is subject to subaward reporting under the Federal Funding Accountability and Transparency Act (FFATA). Federal regulations require recipients of federal awards to report certain subaward information in the FFATA Subaward Reporting System (FSRS) for subawards meeting the criteria for reporting. Reports must be submitted no later than the end of the month following the month in which the obligation was made. Federal regulations also require recipients of federal awards to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. The department maintains written procedures that document the steps for completing the monthly FFATA reporting. For the Child Nutrition Program, only the Fresh Fruit and Vegetable program is subject to FFATA reporting. Our audit procedures included the testing of 20 Fresh Fruit and Vegetable subawards/subaward modifications totaling $647,311 in obligations. During our testing we noted 9 subawards were not reported to FSRS totaling $213,992. According to department management, it had initially overlooked FFATA reporting for the Fresh Fruit and Vegetable subaward so was still working on submitting the subaward in FSRS. We recommend department management strengthen controls to ensure the monthly FFATA reports are submitted.
2024-038 Oregon Business Development Department Implement controls over reporting Federal Awarding Agency: U.S. Department of the Treasury Assistance Listing Number and Name: 21.027 Coronavirus State and Local Fiscal Recovery Fund (COVID-19) Federal Award Numbers and Years: SLFRP4454, 2020 (COVID-19) Compliance Requirements: Reporting Type of Finding: Significant Deficiency Prior Year Findings: 2023-043 Questioned Costs: N/A Criteria: 2 CFR 200.303 Department management is responsible for establishing and maintaining effective internal controls that provide reasonable assurance the department is managing the federal award in compliance with the terms and conditions of the federal award. Recipients of Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) are required to provide quarterly project and expenditure reports to the Department of Administrative Services’ Coronavirus Fiscal Relief Team (DAS CFRT), who compiles the statewide report and submits it to the Department of the Treasury. The quarterly CSLFRF reports require several types of information and updates to be included each quarter, including project descriptions, completion status, and contracted entity details. The report also includes information on obligations and expenditures, provided by the fiscal staff. An Infrastructure Program Specialist works directly with the project management team assigned to the projects and compiles the information into a report spreadsheet. Once compiled, it is transmitted directly to DAS with no additional internal review. The report submitted for infrastructure projects under interagency agreement 6203 and 6252 for the quarter ending June 30, 2024, reported $46.7 million in cumulative expenditures, but $48.3 million were recorded in accounting records, resulting in an under-reporting of expenditures by $1.6 million, or 3.4%. CSLFRF awards must be used for costs incurred (obligated) by December 31, 2024, and expended for those incurred costs by December 31, 2026. Any funds not expended must be returned to the Department of the Treasury at the end of the grant. Because the department’s reporting process did not include a review by fiscal staff prior to submission to DAS to ensure the report included accurate expenditure and obligation information, the department risks the potential loss of CSLFRF funds. We recommend the department implement a review by fiscal staff of expenditure and obligation amounts on CSLFRF quarterly reports before submission to DAS CFRT to ensure the reports agree to the accounting records.
2024-043 Oregon Department of Veterans’ Affairs Ensure accuracy of per diem recalculations Federal Awarding Agency: U.S. Department of Veterans Affairs Assistance Listing Number and Name: 64.015 Veterans State Nursing Home Care Federal Award Numbers and Years: 648-Y37190, 2023; 648-Y37191, 2023; 648-Y47191, 2024; 648-Y48191, 2024 Compliance Requirements: Activities Allowed or Unallowed Type of Finding: Significant Deficiency Prior Year Findings: N/A Questioned Costs: N/A Criteria: 2 CFR 200.303; 38 CFR 51.40 Federal regulations allow for the department to request a per diem from the federal awarding agency each month for every day an eligible veteran resides in a veteran state nursing home. Federal regulations require the department establish, document, and maintain effective internal control over the federal award that provides reasonable assurance they are managing the federal award in compliance with federal statutes. The department performs a recalculation for each per diem to provide reasonable assurance they are managing the award in compliance with federal statutes. We selected a total of eight out of 24 per diem requests for review. Of the eight requests we reviewed, we identified four requests where the recalculation performed was not accurate. The recalculated per diem totals did not agree to the actual amount requested, due to differences in the number of resident per diem days or per diem amounts used in the recalculation. Department staff has indicated the recalculation has been updated over the past year as staff has become more familiar with the recalculation process, but additional updates are still needed. Without an appropriate recalculation, the department may request a per diem for ineligible individuals residing in the nursing home, or the per diem may be for an incorrect number of days. We recommend department management strengthen internal controls to ensure per diem requests are accurately recalculated.
2024-022 Oregon Department of Human Services Improve controls to ensure eligibility criteria are met Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.558 Temporary Assistance for Needy Families Federal Award Numbers and Years: 2301ORTANF, 2023; 2401ORTANF, 2024 Compliance Requirements: Eligibility; Special Tests and Provisions Type of Finding: Significant Deficiency, Noncompliance Prior Year Findings: 2023-027; 2022-039; 2022-040 Questioned Costs: $5,187 (known); $4,499,112 (likely) Criteria: 42 USC 602(a)(1)(A) & (B)(iii); 45 CFR 264.10; 2 CFR 200.303 Federal regulations state the department is responsible for creating and submitting a state plan that outlines how the program will be conducted to meet the objectives of the Temporary Assistance for Needy Families (TANF) program. This includes the criteria used to determine the eligibility of TANF applicants. Additionally, federal regulations require each state must meet the requirements of the Income Eligibility and Verification System (IEVS) and request certain information from the Internal Revenue Service, State Wage Information Collections Agency, Social Security Administration, and Immigration and Naturalization Service when making TANF eligibility determinations. Department management is responsible for establishing and maintaining effective internal controls to provide reasonable assurance the program is being operated in accordance with federal regulations. To help ensure eligibility determinations are made in accordance with the approved state plan, the department’s Program Integrity Unit (PIU) performs approximately 17 case eligibility reviews per month. These reviews confirm the appropriateness of eligibility determinations based on client information documented in the case management system. Identified errors are referred to the applicable branch office for correction and to determine if additional training is needed. We tested a random sample of 18 of 173 PIU case eligibility reviews performed during fiscal year 2024 specific to federally funded TANF cases to determine the effectiveness of the control. One case review identified an eligibility error which was not referred to the branch office. According to the department, this case review was on the schedule of findings; however, the communication to the branch office was not completed for unknown reasons. Failure to communicate issues identified during the case reviews reduces the control’s effectiveness in ensuring eligibility determinations are appropriately made and potential training opportunities are identified at the branch office. We also tested a random sample of 60 of 193,547 client benefit months (one client for one benefit month) during fiscal year 2024 to determine if the clients met the applicable eligibility requirements and the department performed the appropriate IEVS data checks in accordance with federal requirements. We identified the following errors, which were the result of caseworker errors in documenting the completion of the required eligibility steps in accordance with established enrollment procedures: • For one case, unearned income from an unemployment claim was not factored into the initial eligibility determination and subsequent benefit month calculations as required resulting in known questioned costs of $2,754. • For one case, the procedure regarding the non-financial eligibility requirement for pursuit of available assets was not followed to either obtain the client’s statement of intent to pursue unemployment or document good cause for the client’s non-pursuit of the asset resulting in known questioned costs of $2,433. • For one case, the department did not document the required IEVS check during the initial eligibility determination. However, we did not identify questioned costs associated with this case, as case documentation supported the applicant’s eligibility. The likely questioned costs total $4,499,112 based on the known questioned costs identified in our sample test. We recommend department management ensure case eligibility reviews are performed in accordance with the established procedures. We also recommend department management ensure caseworkers are adequately trained on TANF enrollment procedures to ensure all applicable requirements are met.
2024-023 Oregon Department of Human Services Strengthen controls over program expenditures Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.558 Temporary Assistance for Needy Families Federal Award Numbers and Years: 2301ORTANF, 2023; 2401ORTANF, 2024 Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles Type of Finding: Significant Deficiency, Noncompliance Prior Year Findings: N/A Questioned Costs: $2,962 (known); $415,856 (likely) Criteria: 2 CFR 200.303 The Temporary Assistance for Needy Families (TANF) program provides time limited cash assistance to eligible needy families with children. Department management is responsible for establishing and maintaining effective internal controls to provide reasonable assurance the program is being operated in accordance with federal regulations. We identified two instances during our testing where expenditures were inappropriately charged to the TANF program: • We tested a random sample of 60 of 193,547 client benefit months (one client for one benefit month) during fiscal year 2024 to determine if the payments made to the clients during those months were for allowable activities under the TANF program. One transaction was determined to be a duplicate payment for housing support services assistance. A check was issued to a participant for two months of rent and late fees to assist the family in maintaining stable housing. According to a case narrative in the case management system, the check was stated to have been lost and a second check was issued directly to the participant’s landlord. However, the original check was cashed prior to being canceled resulting in the duplicate expenditure for the same assistance payment. The duplicate payment resulted in known questioned costs of $2,419 and likely questioned costs of $415,856. • We tested a random sample of 25 of 37,987 child welfare TANF transactions during fiscal year 2024 to determine if the transactions were for allowable activities under the TANF program. One child welfare TANF transaction was determined to be a correction that did not refund the TANF program as intended. We identified known questioned costs of $543 due to the error. The known questioned costs were not projected to the population due to the uncommon nature of canceled and refunded transactions. We recommend department management strengthen controls to ensure program expenditures and corrections are properly recorded.
2024-033 Oregon Housing and Community Services Federal reports should contain accurate information Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.568 Low-Income Home Energy Assistance Program Federal Award Numbers and Years: 2302ORLIEI, 2023 Compliance Requirements: Reporting Type of Finding: Significant Deficiency; Noncompliance Prior Year Findings: N/A Questioned Costs: N/A Criteria: 2 CFR 200.302(b)(2); 2 CFR 200.303 Federal regulations require that federal reports are accurate and supported by applicable accounting records. Federal regulations also require management to establish and maintain effective internal control over the federal award. Based on our testing, we identified multiple reports where the amount of obligated funds for the Infrastructure Investment and Jobs Act (IIJA) was not appropriately reported. Funds for this grant were obligated through separate contracts, which differed from the department’s standard process of obligating funds through their grant management system application. At the time these reports were completed, the preparing staff did not have a summary of the IIJA obligations, which resulted in errors in the following September 2023 report line items: • SF-425, Federal Share of Unliquidated Obligations • LIHEAP Performance Data Form, Unobligated Infrastructure Act Funds Carried Over to next FFY • LIHEAP Carryover and Reallotment Report, Carryover Amount • LIHEAP Quarterly Performance and Management Report, Amount of Funds Obligated. Additionally, documentation was not retained to show this report was approved. Based on submitted reports, it appeared the department did not obligate at least 90% of the award by September 30, 2023, as required. However, based on our testing we determined the department had obligated over 90% of the award by September 30, 2023. We recommend department management strengthen internal controls to ensure the required LIHEAP reports contain accurate information.
2024-010 Oregon Health Authority Submit required Federal Funding Accountability and Transparency Act reports Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.788 Opioid STR 93.958 Block Grants for Community Mental Health Services 93.959 Block Grants for Prevention and Treatment of Substance Abuse Federal Award Numbers and Years: 93.788: H79TI085732, 2023; H79TI085732, 2024 93.958: B09SM086032, 2022; B09SM087383, 2023 93.959: B08TI084667, 2022; B08TI085829, 2023 Compliance Requirements: Reporting Type of Finding: Significant Deficiency; Noncompliance Prior Year Findings: 2022-045 Questioned Costs: N/A Criteria: 2 CFR 170 Appendix A; 2 CFR 200.303 Federal regulations require recipients of federal awards to report certain subaward information in the Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System for subawards meeting the criteria for reporting. Reports must be submitted no later than the end of the month following the month in which the subawards were made. Federal regulations also require recipients of federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. We identified and reviewed the reporting status of all the department’s new subawards subject to FFATA reporting during the audit period. We determined: • 12 of 12 Opioid STR subawards were not reported, totaling $750,000 in obligations. • 7 of 7 Block Grants for Mental Health Services subawards were not reported, totaling $4.4 million in obligations. • 13 of 13 Block Grants for Substance Use Prevention, Treatment, and Recovery Services subawards were not reported, totaling $2.8 million in obligations. The department utilizes a spreadsheet to track and maintain subaward information needed to comply with FFATA reporting requirements. However, we found the tracking spreadsheet had not been updated to include information for the majority of new contracts initiated during state fiscal year 2024. Per management, FFATA reporting was not completed due to the FFATA Reporting Coordinator position being vacant since July 2024. We recommend department management resume FFATA reporting as soon as feasible and ensure all necessary subawards are reported. We further recommend department management strengthen existing controls to ensure all subawards are appropriately tracked and reported.
2024-010 Oregon Health Authority Submit required Federal Funding Accountability and Transparency Act reports Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.788 Opioid STR 93.958 Block Grants for Community Mental Health Services 93.959 Block Grants for Prevention and Treatment of Substance Abuse Federal Award Numbers and Years: 93.788: H79TI085732, 2023; H79TI085732, 2024 93.958: B09SM086032, 2022; B09SM087383, 2023 93.959: B08TI084667, 2022; B08TI085829, 2023 Compliance Requirements: Reporting Type of Finding: Significant Deficiency; Noncompliance Prior Year Findings: 2022-045 Questioned Costs: N/A Criteria: 2 CFR 170 Appendix A; 2 CFR 200.303 Federal regulations require recipients of federal awards to report certain subaward information in the Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System for subawards meeting the criteria for reporting. Reports must be submitted no later than the end of the month following the month in which the subawards were made. Federal regulations also require recipients of federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. We identified and reviewed the reporting status of all the department’s new subawards subject to FFATA reporting during the audit period. We determined: • 12 of 12 Opioid STR subawards were not reported, totaling $750,000 in obligations. • 7 of 7 Block Grants for Mental Health Services subawards were not reported, totaling $4.4 million in obligations. • 13 of 13 Block Grants for Substance Use Prevention, Treatment, and Recovery Services subawards were not reported, totaling $2.8 million in obligations. The department utilizes a spreadsheet to track and maintain subaward information needed to comply with FFATA reporting requirements. However, we found the tracking spreadsheet had not been updated to include information for the majority of new contracts initiated during state fiscal year 2024. Per management, FFATA reporting was not completed due to the FFATA Reporting Coordinator position being vacant since July 2024. We recommend department management resume FFATA reporting as soon as feasible and ensure all necessary subawards are reported. We further recommend department management strengthen existing controls to ensure all subawards are appropriately tracked and reported.
2024-010 Oregon Health Authority Submit required Federal Funding Accountability and Transparency Act reports Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.788 Opioid STR 93.958 Block Grants for Community Mental Health Services 93.959 Block Grants for Prevention and Treatment of Substance Abuse Federal Award Numbers and Years: 93.788: H79TI085732, 2023; H79TI085732, 2024 93.958: B09SM086032, 2022; B09SM087383, 2023 93.959: B08TI084667, 2022; B08TI085829, 2023 Compliance Requirements: Reporting Type of Finding: Significant Deficiency; Noncompliance Prior Year Findings: 2022-045 Questioned Costs: N/A Criteria: 2 CFR 170 Appendix A; 2 CFR 200.303 Federal regulations require recipients of federal awards to report certain subaward information in the Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System for subawards meeting the criteria for reporting. Reports must be submitted no later than the end of the month following the month in which the subawards were made. Federal regulations also require recipients of federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. We identified and reviewed the reporting status of all the department’s new subawards subject to FFATA reporting during the audit period. We determined: • 12 of 12 Opioid STR subawards were not reported, totaling $750,000 in obligations. • 7 of 7 Block Grants for Mental Health Services subawards were not reported, totaling $4.4 million in obligations. • 13 of 13 Block Grants for Substance Use Prevention, Treatment, and Recovery Services subawards were not reported, totaling $2.8 million in obligations. The department utilizes a spreadsheet to track and maintain subaward information needed to comply with FFATA reporting requirements. However, we found the tracking spreadsheet had not been updated to include information for the majority of new contracts initiated during state fiscal year 2024. Per management, FFATA reporting was not completed due to the FFATA Reporting Coordinator position being vacant since July 2024. We recommend department management resume FFATA reporting as soon as feasible and ensure all necessary subawards are reported. We further recommend department management strengthen existing controls to ensure all subawards are appropriately tracked and reported.
2024-011 Oregon Health Authority Strengthen existing controls to ensure only those costs incurred during the period of performance are charged to the grant Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.959 Block Grants for Prevention and Treatment of Substance Abuse Federal Award Numbers and Years: B08TI084667, 2022 Compliance Requirements: Period of Performance Type of Finding: Significant Deficiency; Noncompliance Prior Year Findings: N/A Questioned Costs: $82,315 Criteria: 2 CFR 200.303; 42 USC 300x-62 Federal regulations provide for amounts awarded to the department be available for obligation and expenditure until the end of the fiscal year following the fiscal year for which the amounts were awarded. Federal regulations also require recipients of federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. During state fiscal year 2024, one grant award under the Block Grants for Substance Use Prevention, Treatment, and Recovery Services closed. The period of performance for this grant was October 1, 2021 through September 30, 2023. During the closeout process, the grant accountant reviews program expenditures recorded in the state accounting system and shifts expenditures incurred after the period of performance to a subsequent grant. During testing, we reviewed all grant expenditures recorded in the state accounting system after the period of performance. We found indirect expenditures for October and November 2023, totaling $82,315, had been charged to the closed grant. Upon inquiry, we learned the query used to identify transactions incurred after the period of performance was inadvertently filtered to identify only direct expenditures. As a result, some indirect expenditures were not identified in the query and were not appropriately moved to the subsequent grant. We recommend department management strengthen existing controls to ensure only those expenditures incurred during the period of performance are charged to the grant.
2024-017 Oregon Department of Human Services/Oregon Health Authority Strengthen internal controls over the ONE system Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.777, 93.778 Medicaid Cluster Federal Award Numbers and Years: 2305OR5MAP, 2023; 2305OR5ADM, 2023; 2405OR5MAP, 2024; 2405OR05ADM, 2024 Compliance Requirements: Activities Allowed or Unallowed; Eligibility; Special Tests and Provisions Type of Finding: Significant Deficiency; Noncompliance Prior Year Findings: N/A Questioned Costs: N/A Criteria: 2 CFR 200.303(a); 42 CFR 95.621; Oregon Accounting Manual 10.60.00.PR We noted the agency had not obtained a System and Organization Controls (SOC) 2 Type II report over the Oregon Eligibility System (ONE system). The ONE system determines and verifies the eligibility of over 1.4 million Medicaid clients in Oregon, which leads to over $12.4 billion in Medicaid federal expenditures each year. The ONE system is owned by the department but administered by an external service provider. Because the ONE system is administered by an external vendor, best practices would include procedures to verify the internal controls at the external service provider are adequate to meet the business needs of the department. Such assurances are typically provided through a SOC 2 Type II report. A Type II report provides assurance about whether the controls are functioning and effective. During the fiscal year the department obtained a SOC 2 Type I report; however, the Type I report only identifies and evaluates the design of controls and does not conclude on the operating effectiveness of controls. As a result, the department does not have assurance over the operating effectiveness of controls at the external service provider, which may affect the eligibility and allowability of Medicaid expenditures. We recommend department management obtain an annual SOC 2 Type II report over the service organization’s internal controls for the ONE application or perform other alternative procedures to ensure internal controls over the ONE system at the external service provider are sufficient to meet the business needs of the Medicaid program.
2024-019 Oregon Department of Human Services Improve controls and compliance over long-term care facility audits Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.777, 93.778 Medicaid Cluster Federal Award Numbers and Years: 2305OR5MAP, 2023; 2305OR5ADM, 2023; 2405OR5MAP, 2024; 2405OR05ADM, 2024 Compliance Requirements: Special Tests and Provisions Type of Finding: Significant Deficiency; Noncompliance Prior Year Findings: N/A Questioned Costs: N/A Criteria: 42 CFR 435.10; OAR 411-070-0315; OAR 411-070-0359(s); 2 CFR 200.303(a) The Oregon Medicaid state plan requires each long-term care facility to submit annual financial statements reporting actual costs to the Department of Human Services (department). Each statement is subject to a desk audit by the department. Procedures performed by the department include, but are not limited to, verifying administrator payroll costs do not exceed the maximum amount and legal costs are only related to Medicaid resident services. We selected a random sample of 11 out of 107 long-term care facilities. We identified 9 facilities where we were unable to determine if the administrator compensation for the year was greater than the maximum allowable compensation. Administrator paid time off hours were reported on a separate line with all other administrative staff paid time off, and were not factored into the calculation. The department’s current template does not require these costs to be separated for the administrator. We also identified 2 facilities where immaterial legal costs were unsupported and not adjusted. Current guidance for unallowable costs does not clearly describe how immaterial differences should be addressed. Excess costs that exceed the maximum compensation limit or are unallowable may result in the facility’s cost per resident per day being incorrectly calculated. We recommend department management strengthen controls to ensure the long-term care facility’s total administrator compensation is clearly identified and does not exceed the maximum allowed, and that unallowable costs are adjusted in line with applicable guidance.
2024-017 Oregon Department of Human Services/Oregon Health Authority Strengthen internal controls over the ONE system Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.777, 93.778 Medicaid Cluster Federal Award Numbers and Years: 2305OR5MAP, 2023; 2305OR5ADM, 2023; 2405OR5MAP, 2024; 2405OR05ADM, 2024 Compliance Requirements: Activities Allowed or Unallowed; Eligibility; Special Tests and Provisions Type of Finding: Significant Deficiency; Noncompliance Prior Year Findings: N/A Questioned Costs: N/A Criteria: 2 CFR 200.303(a); 42 CFR 95.621; Oregon Accounting Manual 10.60.00.PR We noted the agency had not obtained a System and Organization Controls (SOC) 2 Type II report over the Oregon Eligibility System (ONE system). The ONE system determines and verifies the eligibility of over 1.4 million Medicaid clients in Oregon, which leads to over $12.4 billion in Medicaid federal expenditures each year. The ONE system is owned by the department but administered by an external service provider. Because the ONE system is administered by an external vendor, best practices would include procedures to verify the internal controls at the external service provider are adequate to meet the business needs of the department. Such assurances are typically provided through a SOC 2 Type II report. A Type II report provides assurance about whether the controls are functioning and effective. During the fiscal year the department obtained a SOC 2 Type I report; however, the Type I report only identifies and evaluates the design of controls and does not conclude on the operating effectiveness of controls. As a result, the department does not have assurance over the operating effectiveness of controls at the external service provider, which may affect the eligibility and allowability of Medicaid expenditures. We recommend department management obtain an annual SOC 2 Type II report over the service organization’s internal controls for the ONE application or perform other alternative procedures to ensure internal controls over the ONE system at the external service provider are sufficient to meet the business needs of the Medicaid program.
2024-019 Oregon Department of Human Services Improve controls and compliance over long-term care facility audits Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.777, 93.778 Medicaid Cluster Federal Award Numbers and Years: 2305OR5MAP, 2023; 2305OR5ADM, 2023; 2405OR5MAP, 2024; 2405OR05ADM, 2024 Compliance Requirements: Special Tests and Provisions Type of Finding: Significant Deficiency; Noncompliance Prior Year Findings: N/A Questioned Costs: N/A Criteria: 42 CFR 435.10; OAR 411-070-0315; OAR 411-070-0359(s); 2 CFR 200.303(a) The Oregon Medicaid state plan requires each long-term care facility to submit annual financial statements reporting actual costs to the Department of Human Services (department). Each statement is subject to a desk audit by the department. Procedures performed by the department include, but are not limited to, verifying administrator payroll costs do not exceed the maximum amount and legal costs are only related to Medicaid resident services. We selected a random sample of 11 out of 107 long-term care facilities. We identified 9 facilities where we were unable to determine if the administrator compensation for the year was greater than the maximum allowable compensation. Administrator paid time off hours were reported on a separate line with all other administrative staff paid time off, and were not factored into the calculation. The department’s current template does not require these costs to be separated for the administrator. We also identified 2 facilities where immaterial legal costs were unsupported and not adjusted. Current guidance for unallowable costs does not clearly describe how immaterial differences should be addressed. Excess costs that exceed the maximum compensation limit or are unallowable may result in the facility’s cost per resident per day being incorrectly calculated. We recommend department management strengthen controls to ensure the long-term care facility’s total administrator compensation is clearly identified and does not exceed the maximum allowed, and that unallowable costs are adjusted in line with applicable guidance.
2024-039 Oregon Department of Emergency Management Continue FFATA reporting improvements and make inquiries on FSRS functionality Federal Awarding Agency: U.S. Department of Homeland Security Assistance Listing Number and Name: 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disasters) Federal Award Numbers and Years: FEMA-4258-DR-OR, 2016; FEMA-4296-DR-OR, 2017; FEMA-4432-DR-OR, 2019; FEMA-4452-DR-OR, 2019; FEMA-4499-DR-OR, 2020; FEMA-4519-DR-OR, 2020; FEMA-4562-DR-OR, 2020; FEMA-4599-DR-OR, 2021; FEMA-4768-DR-OR, 2024 Compliance Requirements: Reporting Type of Finding: Significant Deficiency; Noncompliance Prior Year Findings: 2023-033 Questioned Costs: N/A Criteria: 2 CFR 200.303(a)-(d); 2 CFR 170, Appendix A I(a) The Federal Funding Accountability and Transparency Act (FFATA) requires federal award recipients to submit key data elements for any subaward obligation that equals or exceeds $30,000 in the FFATA Subaward Reporting System (FSRS). Reports should be submitted no later than the end of the month following the month in which the subawards were made. Federal regulations also require recipients to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. The Oregon Department of Emergency Management (department) reported the prior year FFATA finding as partially corrected. We judgmentally selected 10 of 383 subaward obligations for review. • We found eight were submitted with the applicable data elements but were not submitted timely, as based on guidance from FEMA the department was catching up with past due reports from the previous year. • We found one obligation was on the department’s tracking sheet, but support was not retained and FSRS did not show evidence of the submission. • We found one obligation to be among 30 for which the agency stated FSRS prevented them from entering. We recommend department management continue with its improvement on the timeliness of FFATA submissions and also make inquiries to the operators of FSRS regarding the inability to enter certain submissions.
2024-031 Oregon Department of Education Implement controls to ensure FFATA reporting is completed for all required subawards Federal Awarding Agency: U.S. Department of Education Assistance Listing Number and Name: 10.582 Fresh Fruit and Vegetable Program (Child Nutrition Cluster) Federal Award Numbers and Years: 202322L160347, 2023; 202423L160347, 2024 Compliance Requirements: Reporting Type of Finding: Significant Deficiency; Noncompliance Prior Year Findings: N/A Questioned Costs: N/A Criteria: 2 CFR 170; 2 CFR 200.303 The Child Nutrition Cluster is subject to subaward reporting under the Federal Funding Accountability and Transparency Act (FFATA). Federal regulations require recipients of federal awards to report certain subaward information in the FFATA Subaward Reporting System (FSRS) for subawards meeting the criteria for reporting. Reports must be submitted no later than the end of the month following the month in which the obligation was made. Federal regulations also require recipients of federal awards to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. The department maintains written procedures that document the steps for completing the monthly FFATA reporting. For the Child Nutrition Program, only the Fresh Fruit and Vegetable program is subject to FFATA reporting. Our audit procedures included the testing of 20 Fresh Fruit and Vegetable subawards/subaward modifications totaling $647,311 in obligations. During our testing we noted 9 subawards were not reported to FSRS totaling $213,992. According to department management, it had initially overlooked FFATA reporting for the Fresh Fruit and Vegetable subaward so was still working on submitting the subaward in FSRS. We recommend department management strengthen controls to ensure the monthly FFATA reports are submitted.
2024-038 Oregon Business Development Department Implement controls over reporting Federal Awarding Agency: U.S. Department of the Treasury Assistance Listing Number and Name: 21.027 Coronavirus State and Local Fiscal Recovery Fund (COVID-19) Federal Award Numbers and Years: SLFRP4454, 2020 (COVID-19) Compliance Requirements: Reporting Type of Finding: Significant Deficiency Prior Year Findings: 2023-043 Questioned Costs: N/A Criteria: 2 CFR 200.303 Department management is responsible for establishing and maintaining effective internal controls that provide reasonable assurance the department is managing the federal award in compliance with the terms and conditions of the federal award. Recipients of Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) are required to provide quarterly project and expenditure reports to the Department of Administrative Services’ Coronavirus Fiscal Relief Team (DAS CFRT), who compiles the statewide report and submits it to the Department of the Treasury. The quarterly CSLFRF reports require several types of information and updates to be included each quarter, including project descriptions, completion status, and contracted entity details. The report also includes information on obligations and expenditures, provided by the fiscal staff. An Infrastructure Program Specialist works directly with the project management team assigned to the projects and compiles the information into a report spreadsheet. Once compiled, it is transmitted directly to DAS with no additional internal review. The report submitted for infrastructure projects under interagency agreement 6203 and 6252 for the quarter ending June 30, 2024, reported $46.7 million in cumulative expenditures, but $48.3 million were recorded in accounting records, resulting in an under-reporting of expenditures by $1.6 million, or 3.4%. CSLFRF awards must be used for costs incurred (obligated) by December 31, 2024, and expended for those incurred costs by December 31, 2026. Any funds not expended must be returned to the Department of the Treasury at the end of the grant. Because the department’s reporting process did not include a review by fiscal staff prior to submission to DAS to ensure the report included accurate expenditure and obligation information, the department risks the potential loss of CSLFRF funds. We recommend the department implement a review by fiscal staff of expenditure and obligation amounts on CSLFRF quarterly reports before submission to DAS CFRT to ensure the reports agree to the accounting records.
2024-043 Oregon Department of Veterans’ Affairs Ensure accuracy of per diem recalculations Federal Awarding Agency: U.S. Department of Veterans Affairs Assistance Listing Number and Name: 64.015 Veterans State Nursing Home Care Federal Award Numbers and Years: 648-Y37190, 2023; 648-Y37191, 2023; 648-Y47191, 2024; 648-Y48191, 2024 Compliance Requirements: Activities Allowed or Unallowed Type of Finding: Significant Deficiency Prior Year Findings: N/A Questioned Costs: N/A Criteria: 2 CFR 200.303; 38 CFR 51.40 Federal regulations allow for the department to request a per diem from the federal awarding agency each month for every day an eligible veteran resides in a veteran state nursing home. Federal regulations require the department establish, document, and maintain effective internal control over the federal award that provides reasonable assurance they are managing the federal award in compliance with federal statutes. The department performs a recalculation for each per diem to provide reasonable assurance they are managing the award in compliance with federal statutes. We selected a total of eight out of 24 per diem requests for review. Of the eight requests we reviewed, we identified four requests where the recalculation performed was not accurate. The recalculated per diem totals did not agree to the actual amount requested, due to differences in the number of resident per diem days or per diem amounts used in the recalculation. Department staff has indicated the recalculation has been updated over the past year as staff has become more familiar with the recalculation process, but additional updates are still needed. Without an appropriate recalculation, the department may request a per diem for ineligible individuals residing in the nursing home, or the per diem may be for an incorrect number of days. We recommend department management strengthen internal controls to ensure per diem requests are accurately recalculated.
2024-022 Oregon Department of Human Services Improve controls to ensure eligibility criteria are met Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.558 Temporary Assistance for Needy Families Federal Award Numbers and Years: 2301ORTANF, 2023; 2401ORTANF, 2024 Compliance Requirements: Eligibility; Special Tests and Provisions Type of Finding: Significant Deficiency, Noncompliance Prior Year Findings: 2023-027; 2022-039; 2022-040 Questioned Costs: $5,187 (known); $4,499,112 (likely) Criteria: 42 USC 602(a)(1)(A) & (B)(iii); 45 CFR 264.10; 2 CFR 200.303 Federal regulations state the department is responsible for creating and submitting a state plan that outlines how the program will be conducted to meet the objectives of the Temporary Assistance for Needy Families (TANF) program. This includes the criteria used to determine the eligibility of TANF applicants. Additionally, federal regulations require each state must meet the requirements of the Income Eligibility and Verification System (IEVS) and request certain information from the Internal Revenue Service, State Wage Information Collections Agency, Social Security Administration, and Immigration and Naturalization Service when making TANF eligibility determinations. Department management is responsible for establishing and maintaining effective internal controls to provide reasonable assurance the program is being operated in accordance with federal regulations. To help ensure eligibility determinations are made in accordance with the approved state plan, the department’s Program Integrity Unit (PIU) performs approximately 17 case eligibility reviews per month. These reviews confirm the appropriateness of eligibility determinations based on client information documented in the case management system. Identified errors are referred to the applicable branch office for correction and to determine if additional training is needed. We tested a random sample of 18 of 173 PIU case eligibility reviews performed during fiscal year 2024 specific to federally funded TANF cases to determine the effectiveness of the control. One case review identified an eligibility error which was not referred to the branch office. According to the department, this case review was on the schedule of findings; however, the communication to the branch office was not completed for unknown reasons. Failure to communicate issues identified during the case reviews reduces the control’s effectiveness in ensuring eligibility determinations are appropriately made and potential training opportunities are identified at the branch office. We also tested a random sample of 60 of 193,547 client benefit months (one client for one benefit month) during fiscal year 2024 to determine if the clients met the applicable eligibility requirements and the department performed the appropriate IEVS data checks in accordance with federal requirements. We identified the following errors, which were the result of caseworker errors in documenting the completion of the required eligibility steps in accordance with established enrollment procedures: • For one case, unearned income from an unemployment claim was not factored into the initial eligibility determination and subsequent benefit month calculations as required resulting in known questioned costs of $2,754. • For one case, the procedure regarding the non-financial eligibility requirement for pursuit of available assets was not followed to either obtain the client’s statement of intent to pursue unemployment or document good cause for the client’s non-pursuit of the asset resulting in known questioned costs of $2,433. • For one case, the department did not document the required IEVS check during the initial eligibility determination. However, we did not identify questioned costs associated with this case, as case documentation supported the applicant’s eligibility. The likely questioned costs total $4,499,112 based on the known questioned costs identified in our sample test. We recommend department management ensure case eligibility reviews are performed in accordance with the established procedures. We also recommend department management ensure caseworkers are adequately trained on TANF enrollment procedures to ensure all applicable requirements are met.
2024-023 Oregon Department of Human Services Strengthen controls over program expenditures Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.558 Temporary Assistance for Needy Families Federal Award Numbers and Years: 2301ORTANF, 2023; 2401ORTANF, 2024 Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles Type of Finding: Significant Deficiency, Noncompliance Prior Year Findings: N/A Questioned Costs: $2,962 (known); $415,856 (likely) Criteria: 2 CFR 200.303 The Temporary Assistance for Needy Families (TANF) program provides time limited cash assistance to eligible needy families with children. Department management is responsible for establishing and maintaining effective internal controls to provide reasonable assurance the program is being operated in accordance with federal regulations. We identified two instances during our testing where expenditures were inappropriately charged to the TANF program: • We tested a random sample of 60 of 193,547 client benefit months (one client for one benefit month) during fiscal year 2024 to determine if the payments made to the clients during those months were for allowable activities under the TANF program. One transaction was determined to be a duplicate payment for housing support services assistance. A check was issued to a participant for two months of rent and late fees to assist the family in maintaining stable housing. According to a case narrative in the case management system, the check was stated to have been lost and a second check was issued directly to the participant’s landlord. However, the original check was cashed prior to being canceled resulting in the duplicate expenditure for the same assistance payment. The duplicate payment resulted in known questioned costs of $2,419 and likely questioned costs of $415,856. • We tested a random sample of 25 of 37,987 child welfare TANF transactions during fiscal year 2024 to determine if the transactions were for allowable activities under the TANF program. One child welfare TANF transaction was determined to be a correction that did not refund the TANF program as intended. We identified known questioned costs of $543 due to the error. The known questioned costs were not projected to the population due to the uncommon nature of canceled and refunded transactions. We recommend department management strengthen controls to ensure program expenditures and corrections are properly recorded.
2024-033 Oregon Housing and Community Services Federal reports should contain accurate information Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.568 Low-Income Home Energy Assistance Program Federal Award Numbers and Years: 2302ORLIEI, 2023 Compliance Requirements: Reporting Type of Finding: Significant Deficiency; Noncompliance Prior Year Findings: N/A Questioned Costs: N/A Criteria: 2 CFR 200.302(b)(2); 2 CFR 200.303 Federal regulations require that federal reports are accurate and supported by applicable accounting records. Federal regulations also require management to establish and maintain effective internal control over the federal award. Based on our testing, we identified multiple reports where the amount of obligated funds for the Infrastructure Investment and Jobs Act (IIJA) was not appropriately reported. Funds for this grant were obligated through separate contracts, which differed from the department’s standard process of obligating funds through their grant management system application. At the time these reports were completed, the preparing staff did not have a summary of the IIJA obligations, which resulted in errors in the following September 2023 report line items: • SF-425, Federal Share of Unliquidated Obligations • LIHEAP Performance Data Form, Unobligated Infrastructure Act Funds Carried Over to next FFY • LIHEAP Carryover and Reallotment Report, Carryover Amount • LIHEAP Quarterly Performance and Management Report, Amount of Funds Obligated. Additionally, documentation was not retained to show this report was approved. Based on submitted reports, it appeared the department did not obligate at least 90% of the award by September 30, 2023, as required. However, based on our testing we determined the department had obligated over 90% of the award by September 30, 2023. We recommend department management strengthen internal controls to ensure the required LIHEAP reports contain accurate information.
2024-010 Oregon Health Authority Submit required Federal Funding Accountability and Transparency Act reports Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.788 Opioid STR 93.958 Block Grants for Community Mental Health Services 93.959 Block Grants for Prevention and Treatment of Substance Abuse Federal Award Numbers and Years: 93.788: H79TI085732, 2023; H79TI085732, 2024 93.958: B09SM086032, 2022; B09SM087383, 2023 93.959: B08TI084667, 2022; B08TI085829, 2023 Compliance Requirements: Reporting Type of Finding: Significant Deficiency; Noncompliance Prior Year Findings: 2022-045 Questioned Costs: N/A Criteria: 2 CFR 170 Appendix A; 2 CFR 200.303 Federal regulations require recipients of federal awards to report certain subaward information in the Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System for subawards meeting the criteria for reporting. Reports must be submitted no later than the end of the month following the month in which the subawards were made. Federal regulations also require recipients of federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. We identified and reviewed the reporting status of all the department’s new subawards subject to FFATA reporting during the audit period. We determined: • 12 of 12 Opioid STR subawards were not reported, totaling $750,000 in obligations. • 7 of 7 Block Grants for Mental Health Services subawards were not reported, totaling $4.4 million in obligations. • 13 of 13 Block Grants for Substance Use Prevention, Treatment, and Recovery Services subawards were not reported, totaling $2.8 million in obligations. The department utilizes a spreadsheet to track and maintain subaward information needed to comply with FFATA reporting requirements. However, we found the tracking spreadsheet had not been updated to include information for the majority of new contracts initiated during state fiscal year 2024. Per management, FFATA reporting was not completed due to the FFATA Reporting Coordinator position being vacant since July 2024. We recommend department management resume FFATA reporting as soon as feasible and ensure all necessary subawards are reported. We further recommend department management strengthen existing controls to ensure all subawards are appropriately tracked and reported.
2024-010 Oregon Health Authority Submit required Federal Funding Accountability and Transparency Act reports Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.788 Opioid STR 93.958 Block Grants for Community Mental Health Services 93.959 Block Grants for Prevention and Treatment of Substance Abuse Federal Award Numbers and Years: 93.788: H79TI085732, 2023; H79TI085732, 2024 93.958: B09SM086032, 2022; B09SM087383, 2023 93.959: B08TI084667, 2022; B08TI085829, 2023 Compliance Requirements: Reporting Type of Finding: Significant Deficiency; Noncompliance Prior Year Findings: 2022-045 Questioned Costs: N/A Criteria: 2 CFR 170 Appendix A; 2 CFR 200.303 Federal regulations require recipients of federal awards to report certain subaward information in the Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System for subawards meeting the criteria for reporting. Reports must be submitted no later than the end of the month following the month in which the subawards were made. Federal regulations also require recipients of federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. We identified and reviewed the reporting status of all the department’s new subawards subject to FFATA reporting during the audit period. We determined: • 12 of 12 Opioid STR subawards were not reported, totaling $750,000 in obligations. • 7 of 7 Block Grants for Mental Health Services subawards were not reported, totaling $4.4 million in obligations. • 13 of 13 Block Grants for Substance Use Prevention, Treatment, and Recovery Services subawards were not reported, totaling $2.8 million in obligations. The department utilizes a spreadsheet to track and maintain subaward information needed to comply with FFATA reporting requirements. However, we found the tracking spreadsheet had not been updated to include information for the majority of new contracts initiated during state fiscal year 2024. Per management, FFATA reporting was not completed due to the FFATA Reporting Coordinator position being vacant since July 2024. We recommend department management resume FFATA reporting as soon as feasible and ensure all necessary subawards are reported. We further recommend department management strengthen existing controls to ensure all subawards are appropriately tracked and reported.
2024-010 Oregon Health Authority Submit required Federal Funding Accountability and Transparency Act reports Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.788 Opioid STR 93.958 Block Grants for Community Mental Health Services 93.959 Block Grants for Prevention and Treatment of Substance Abuse Federal Award Numbers and Years: 93.788: H79TI085732, 2023; H79TI085732, 2024 93.958: B09SM086032, 2022; B09SM087383, 2023 93.959: B08TI084667, 2022; B08TI085829, 2023 Compliance Requirements: Reporting Type of Finding: Significant Deficiency; Noncompliance Prior Year Findings: 2022-045 Questioned Costs: N/A Criteria: 2 CFR 170 Appendix A; 2 CFR 200.303 Federal regulations require recipients of federal awards to report certain subaward information in the Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System for subawards meeting the criteria for reporting. Reports must be submitted no later than the end of the month following the month in which the subawards were made. Federal regulations also require recipients of federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. We identified and reviewed the reporting status of all the department’s new subawards subject to FFATA reporting during the audit period. We determined: • 12 of 12 Opioid STR subawards were not reported, totaling $750,000 in obligations. • 7 of 7 Block Grants for Mental Health Services subawards were not reported, totaling $4.4 million in obligations. • 13 of 13 Block Grants for Substance Use Prevention, Treatment, and Recovery Services subawards were not reported, totaling $2.8 million in obligations. The department utilizes a spreadsheet to track and maintain subaward information needed to comply with FFATA reporting requirements. However, we found the tracking spreadsheet had not been updated to include information for the majority of new contracts initiated during state fiscal year 2024. Per management, FFATA reporting was not completed due to the FFATA Reporting Coordinator position being vacant since July 2024. We recommend department management resume FFATA reporting as soon as feasible and ensure all necessary subawards are reported. We further recommend department management strengthen existing controls to ensure all subawards are appropriately tracked and reported.
2024-011 Oregon Health Authority Strengthen existing controls to ensure only those costs incurred during the period of performance are charged to the grant Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.959 Block Grants for Prevention and Treatment of Substance Abuse Federal Award Numbers and Years: B08TI084667, 2022 Compliance Requirements: Period of Performance Type of Finding: Significant Deficiency; Noncompliance Prior Year Findings: N/A Questioned Costs: $82,315 Criteria: 2 CFR 200.303; 42 USC 300x-62 Federal regulations provide for amounts awarded to the department be available for obligation and expenditure until the end of the fiscal year following the fiscal year for which the amounts were awarded. Federal regulations also require recipients of federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. During state fiscal year 2024, one grant award under the Block Grants for Substance Use Prevention, Treatment, and Recovery Services closed. The period of performance for this grant was October 1, 2021 through September 30, 2023. During the closeout process, the grant accountant reviews program expenditures recorded in the state accounting system and shifts expenditures incurred after the period of performance to a subsequent grant. During testing, we reviewed all grant expenditures recorded in the state accounting system after the period of performance. We found indirect expenditures for October and November 2023, totaling $82,315, had been charged to the closed grant. Upon inquiry, we learned the query used to identify transactions incurred after the period of performance was inadvertently filtered to identify only direct expenditures. As a result, some indirect expenditures were not identified in the query and were not appropriately moved to the subsequent grant. We recommend department management strengthen existing controls to ensure only those expenditures incurred during the period of performance are charged to the grant.
2024-017 Oregon Department of Human Services/Oregon Health Authority Strengthen internal controls over the ONE system Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.777, 93.778 Medicaid Cluster Federal Award Numbers and Years: 2305OR5MAP, 2023; 2305OR5ADM, 2023; 2405OR5MAP, 2024; 2405OR05ADM, 2024 Compliance Requirements: Activities Allowed or Unallowed; Eligibility; Special Tests and Provisions Type of Finding: Significant Deficiency; Noncompliance Prior Year Findings: N/A Questioned Costs: N/A Criteria: 2 CFR 200.303(a); 42 CFR 95.621; Oregon Accounting Manual 10.60.00.PR We noted the agency had not obtained a System and Organization Controls (SOC) 2 Type II report over the Oregon Eligibility System (ONE system). The ONE system determines and verifies the eligibility of over 1.4 million Medicaid clients in Oregon, which leads to over $12.4 billion in Medicaid federal expenditures each year. The ONE system is owned by the department but administered by an external service provider. Because the ONE system is administered by an external vendor, best practices would include procedures to verify the internal controls at the external service provider are adequate to meet the business needs of the department. Such assurances are typically provided through a SOC 2 Type II report. A Type II report provides assurance about whether the controls are functioning and effective. During the fiscal year the department obtained a SOC 2 Type I report; however, the Type I report only identifies and evaluates the design of controls and does not conclude on the operating effectiveness of controls. As a result, the department does not have assurance over the operating effectiveness of controls at the external service provider, which may affect the eligibility and allowability of Medicaid expenditures. We recommend department management obtain an annual SOC 2 Type II report over the service organization’s internal controls for the ONE application or perform other alternative procedures to ensure internal controls over the ONE system at the external service provider are sufficient to meet the business needs of the Medicaid program.
2024-019 Oregon Department of Human Services Improve controls and compliance over long-term care facility audits Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.777, 93.778 Medicaid Cluster Federal Award Numbers and Years: 2305OR5MAP, 2023; 2305OR5ADM, 2023; 2405OR5MAP, 2024; 2405OR05ADM, 2024 Compliance Requirements: Special Tests and Provisions Type of Finding: Significant Deficiency; Noncompliance Prior Year Findings: N/A Questioned Costs: N/A Criteria: 42 CFR 435.10; OAR 411-070-0315; OAR 411-070-0359(s); 2 CFR 200.303(a) The Oregon Medicaid state plan requires each long-term care facility to submit annual financial statements reporting actual costs to the Department of Human Services (department). Each statement is subject to a desk audit by the department. Procedures performed by the department include, but are not limited to, verifying administrator payroll costs do not exceed the maximum amount and legal costs are only related to Medicaid resident services. We selected a random sample of 11 out of 107 long-term care facilities. We identified 9 facilities where we were unable to determine if the administrator compensation for the year was greater than the maximum allowable compensation. Administrator paid time off hours were reported on a separate line with all other administrative staff paid time off, and were not factored into the calculation. The department’s current template does not require these costs to be separated for the administrator. We also identified 2 facilities where immaterial legal costs were unsupported and not adjusted. Current guidance for unallowable costs does not clearly describe how immaterial differences should be addressed. Excess costs that exceed the maximum compensation limit or are unallowable may result in the facility’s cost per resident per day being incorrectly calculated. We recommend department management strengthen controls to ensure the long-term care facility’s total administrator compensation is clearly identified and does not exceed the maximum allowed, and that unallowable costs are adjusted in line with applicable guidance.
2024-017 Oregon Department of Human Services/Oregon Health Authority Strengthen internal controls over the ONE system Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.777, 93.778 Medicaid Cluster Federal Award Numbers and Years: 2305OR5MAP, 2023; 2305OR5ADM, 2023; 2405OR5MAP, 2024; 2405OR05ADM, 2024 Compliance Requirements: Activities Allowed or Unallowed; Eligibility; Special Tests and Provisions Type of Finding: Significant Deficiency; Noncompliance Prior Year Findings: N/A Questioned Costs: N/A Criteria: 2 CFR 200.303(a); 42 CFR 95.621; Oregon Accounting Manual 10.60.00.PR We noted the agency had not obtained a System and Organization Controls (SOC) 2 Type II report over the Oregon Eligibility System (ONE system). The ONE system determines and verifies the eligibility of over 1.4 million Medicaid clients in Oregon, which leads to over $12.4 billion in Medicaid federal expenditures each year. The ONE system is owned by the department but administered by an external service provider. Because the ONE system is administered by an external vendor, best practices would include procedures to verify the internal controls at the external service provider are adequate to meet the business needs of the department. Such assurances are typically provided through a SOC 2 Type II report. A Type II report provides assurance about whether the controls are functioning and effective. During the fiscal year the department obtained a SOC 2 Type I report; however, the Type I report only identifies and evaluates the design of controls and does not conclude on the operating effectiveness of controls. As a result, the department does not have assurance over the operating effectiveness of controls at the external service provider, which may affect the eligibility and allowability of Medicaid expenditures. We recommend department management obtain an annual SOC 2 Type II report over the service organization’s internal controls for the ONE application or perform other alternative procedures to ensure internal controls over the ONE system at the external service provider are sufficient to meet the business needs of the Medicaid program.
2024-019 Oregon Department of Human Services Improve controls and compliance over long-term care facility audits Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.777, 93.778 Medicaid Cluster Federal Award Numbers and Years: 2305OR5MAP, 2023; 2305OR5ADM, 2023; 2405OR5MAP, 2024; 2405OR05ADM, 2024 Compliance Requirements: Special Tests and Provisions Type of Finding: Significant Deficiency; Noncompliance Prior Year Findings: N/A Questioned Costs: N/A Criteria: 42 CFR 435.10; OAR 411-070-0315; OAR 411-070-0359(s); 2 CFR 200.303(a) The Oregon Medicaid state plan requires each long-term care facility to submit annual financial statements reporting actual costs to the Department of Human Services (department). Each statement is subject to a desk audit by the department. Procedures performed by the department include, but are not limited to, verifying administrator payroll costs do not exceed the maximum amount and legal costs are only related to Medicaid resident services. We selected a random sample of 11 out of 107 long-term care facilities. We identified 9 facilities where we were unable to determine if the administrator compensation for the year was greater than the maximum allowable compensation. Administrator paid time off hours were reported on a separate line with all other administrative staff paid time off, and were not factored into the calculation. The department’s current template does not require these costs to be separated for the administrator. We also identified 2 facilities where immaterial legal costs were unsupported and not adjusted. Current guidance for unallowable costs does not clearly describe how immaterial differences should be addressed. Excess costs that exceed the maximum compensation limit or are unallowable may result in the facility’s cost per resident per day being incorrectly calculated. We recommend department management strengthen controls to ensure the long-term care facility’s total administrator compensation is clearly identified and does not exceed the maximum allowed, and that unallowable costs are adjusted in line with applicable guidance.
2024-039 Oregon Department of Emergency Management Continue FFATA reporting improvements and make inquiries on FSRS functionality Federal Awarding Agency: U.S. Department of Homeland Security Assistance Listing Number and Name: 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disasters) Federal Award Numbers and Years: FEMA-4258-DR-OR, 2016; FEMA-4296-DR-OR, 2017; FEMA-4432-DR-OR, 2019; FEMA-4452-DR-OR, 2019; FEMA-4499-DR-OR, 2020; FEMA-4519-DR-OR, 2020; FEMA-4562-DR-OR, 2020; FEMA-4599-DR-OR, 2021; FEMA-4768-DR-OR, 2024 Compliance Requirements: Reporting Type of Finding: Significant Deficiency; Noncompliance Prior Year Findings: 2023-033 Questioned Costs: N/A Criteria: 2 CFR 200.303(a)-(d); 2 CFR 170, Appendix A I(a) The Federal Funding Accountability and Transparency Act (FFATA) requires federal award recipients to submit key data elements for any subaward obligation that equals or exceeds $30,000 in the FFATA Subaward Reporting System (FSRS). Reports should be submitted no later than the end of the month following the month in which the subawards were made. Federal regulations also require recipients to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. The Oregon Department of Emergency Management (department) reported the prior year FFATA finding as partially corrected. We judgmentally selected 10 of 383 subaward obligations for review. • We found eight were submitted with the applicable data elements but were not submitted timely, as based on guidance from FEMA the department was catching up with past due reports from the previous year. • We found one obligation was on the department’s tracking sheet, but support was not retained and FSRS did not show evidence of the submission. • We found one obligation to be among 30 for which the agency stated FSRS prevented them from entering. We recommend department management continue with its improvement on the timeliness of FFATA submissions and also make inquiries to the operators of FSRS regarding the inability to enter certain submissions.
FINDING 2024-001 - RISK ASSESSMENT PROCESS RELATED TO COMPLIANCE REQUIREMENTS Material Weakness Federal Programs: Education Stabilization Fund – Assistance Listing Number 84.425 Repeat Finding: This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-001. Criteria 2 CFR 200.303 includes requirements related to internal controls for federal award programs, including that the Organization must, among other things, “establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 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 Unites States of the “Internal control Integrated Framework:, issued by the Committee of Sponsoring Organization of the Treadway Commission (COSO)”. Condition The Organization has not established a formal process related to federal awards to identify all key compliance requirements and changes in compliance requirements, evaluate risks of noncompliance with these requirements, and respond to such risks of noncompliance through establishing or changing processes and internal controls. The Organization also implements the use of federal funds through different departments. Certain individuals, within a department, responsible for the use of federal funds or maintenance and safeguard of assets acquired with federal funds lacked knowledge of the compliance requirements pertaining to the use of the funds or the maintenance and safeguard of the acquired assets. Cause and Effect The material weakness resulted in the noncompliance findings described in items 2024-002 and 2024-003. Recommendation We recommend additional resources be allocated to federal award compliance to review federal award provisions and requirements, evaluate risks of noncompliance, and respond to such risks through internal controls. The process should include methods to identify and communicate changes to federal award requirements to all key individuals within the Organization and to verify internal controls are implemented correctly and are operating effectively. Views of Responsible Officials and Planned Corrective Actions The Organization’s Corrective Action Plan is included on pages 42 through 44.
Criteria: According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the entity’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designated to reasonably ensure compliance with Federal laws and regulations. Effective internal controls should include procedures to ensure federal expenditures are accurately and completely reported on the SEFA. Condition and Context: The University did not have adequate controls relating to the reporting of expenditures on the SEFA for the Supplemental Nutrition Assistance Program Cluster (SNAP). The Sacramento campus confirmed with the Chancellor’s office that the final federal expenditures for the SNAP program in the current fiscal year were $6,206,313. It was determined subsequent to this notification that the actual federal expenditures for the SNAP program were $3,806,804. The University’s overall SEFA is compiled by the Chancellor’s office and relies on each campus to have internal controls that ensure completeness and accuracy of the SEFA. Cause and Effect: In discussing these conditions with the University, they stated the error was primarily due to not completing a final reconciliation and review of the SNAP federal expenditures before being provided to the Chancellor’s office. Additionally, management review controls at the campus over the completeness and accuracy of SEFA were not designed to detect the error. The inadequate review procedures over the SNAP federal expenditures resulted in an error on the SEFA for SNAP program expenditures in the amount of $2,399,509. Failure to establish effective internal controls regarding financial reporting for the preparation of the SEFA may prevent the University from completing an audit in accordance with the timelines of Uniform Guidance.