Reference Number: 2024-034 Prior Year Finding: 2023-029 Federal Agency: U.S. Department of Health and Human Services State Agency: Executive Office of Health and Human Services Federal Program: Medicaid Cluster, COVID-19 – Medicaid Cluster Assistance Listing Number: 93.775, 93.777, 93.778 Award Number and Year: XIX-MAP23, XIX-MAP24 Compliance Requirement: Allowable Activities/Allowable Costs Special Tests and Provisions – Provider Eligibility and Provider Health and Safety Standards Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: To be allowable, Medicaid costs for medical services must be (1) covered by the state plan or CMS approved waivers/demonstrations; (2) reviewed by the state consistent with the state’s documented procedures and system for determining medical necessity of claims; (3) properly coded; and (4) paid at the rate allowed by the state plan. Furthermore, beneficiaries must be eligible (or presumptively eligible) at the time of service, whether covered under fee-for-service or managed care. Additionally, Medicaid costs must be net of beneficiary cost-sharing obligations and applicable credits (e.g., insurance, recoveries from other third parties who are responsible for covering the Medicaid costs, and drug rebates), paid to eligible providers, and only provided on behalf of eligible individuals. In order to receive Medicaid payments, providers must: (1) be licensed in accordance with federal, state, and local laws and regulations to participate in the Medicaid program (42 CFR 431.107 and 447.10; and Section 1902(a)(9) of the Act (42 USC 1396a(a)(9)); (2) screened and enrolled in accordance with 42 CFR Part 455, Subpart E (sections 455.400 through 455.470); and make certain disclosures to the state (42 CFR Part 455, Subpart B, sections 455.100 through 455.106). Medicaid managed care network providers are subject to the same disclosure, screening, enrollment, and termination requirements that apply to Medicaid fee-for-service providers in accordance with 42 CFR Part 438, Subpart H. States must also follow guidance issued in the Medicaid Provider Enrollment Compendium (MPEC) to enroll providers into their Medicaid programs. Providers must meet the prescribed health and safety standards for hospital, nursing facilities, and ICF/IID (42 CFR Part 442). The standards may be modified in the state plan. Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Executive Office of Health and Human Services (Department) did not properly monitor a provider that was determined to be high risk and, therefore, it failed to ensure the provider was eligible to provide services under the program. Context: One of sixty providers selected for testing was designated as high-risk on 9/30/2017. This provider was terminated on 10/3/2017 and was reinstated on 10/17/2017. The Department’s procedures require a site visit for high-risk providers; however, the scheduled site visit was canceled following the provider’s termination. After reinstatement, the site visit should have been rescheduled, but the Department has not yet performed a site visit for this provider. Therefore, the Department is unable to provide documentation that the provider is eligible to perform services under the program. Cause: The Department’s procedures were not sufficient to ensure it performed site visits for high-risk providers and ensure that it maintained documentation that all providers were eligible to perform services under the program. Internal controls did not prevent or detect the errors. Effect: Claims were paid to a provider whose eligibility was not properly documented. Questioned costs: Undetermined. Due to a lack of information, auditors were unable to determine if the provider was eligible or if ineligible costs were incurred. Recommendation: The Department should enhance its procedures and internal controls to ensure it properly monitors high-risk providers and that it maintains documentation that claims are paid only to eligible providers. Views of Responsible Officials: There is no disagreement with the finding.
Reference Number: 2024-034 Prior Year Finding: 2023-029 Federal Agency: U.S. Department of Health and Human Services State Agency: Executive Office of Health and Human Services Federal Program: Medicaid Cluster, COVID-19 – Medicaid Cluster Assistance Listing Number: 93.775, 93.777, 93.778 Award Number and Year: XIX-MAP23, XIX-MAP24 Compliance Requirement: Allowable Activities/Allowable Costs Special Tests and Provisions – Provider Eligibility and Provider Health and Safety Standards Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: To be allowable, Medicaid costs for medical services must be (1) covered by the state plan or CMS approved waivers/demonstrations; (2) reviewed by the state consistent with the state’s documented procedures and system for determining medical necessity of claims; (3) properly coded; and (4) paid at the rate allowed by the state plan. Furthermore, beneficiaries must be eligible (or presumptively eligible) at the time of service, whether covered under fee-for-service or managed care. Additionally, Medicaid costs must be net of beneficiary cost-sharing obligations and applicable credits (e.g., insurance, recoveries from other third parties who are responsible for covering the Medicaid costs, and drug rebates), paid to eligible providers, and only provided on behalf of eligible individuals. In order to receive Medicaid payments, providers must: (1) be licensed in accordance with federal, state, and local laws and regulations to participate in the Medicaid program (42 CFR 431.107 and 447.10; and Section 1902(a)(9) of the Act (42 USC 1396a(a)(9)); (2) screened and enrolled in accordance with 42 CFR Part 455, Subpart E (sections 455.400 through 455.470); and make certain disclosures to the state (42 CFR Part 455, Subpart B, sections 455.100 through 455.106). Medicaid managed care network providers are subject to the same disclosure, screening, enrollment, and termination requirements that apply to Medicaid fee-for-service providers in accordance with 42 CFR Part 438, Subpart H. States must also follow guidance issued in the Medicaid Provider Enrollment Compendium (MPEC) to enroll providers into their Medicaid programs. Providers must meet the prescribed health and safety standards for hospital, nursing facilities, and ICF/IID (42 CFR Part 442). The standards may be modified in the state plan. Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Executive Office of Health and Human Services (Department) did not properly monitor a provider that was determined to be high risk and, therefore, it failed to ensure the provider was eligible to provide services under the program. Context: One of sixty providers selected for testing was designated as high-risk on 9/30/2017. This provider was terminated on 10/3/2017 and was reinstated on 10/17/2017. The Department’s procedures require a site visit for high-risk providers; however, the scheduled site visit was canceled following the provider’s termination. After reinstatement, the site visit should have been rescheduled, but the Department has not yet performed a site visit for this provider. Therefore, the Department is unable to provide documentation that the provider is eligible to perform services under the program. Cause: The Department’s procedures were not sufficient to ensure it performed site visits for high-risk providers and ensure that it maintained documentation that all providers were eligible to perform services under the program. Internal controls did not prevent or detect the errors. Effect: Claims were paid to a provider whose eligibility was not properly documented. Questioned costs: Undetermined. Due to a lack of information, auditors were unable to determine if the provider was eligible or if ineligible costs were incurred. Recommendation: The Department should enhance its procedures and internal controls to ensure it properly monitors high-risk providers and that it maintains documentation that claims are paid only to eligible providers. Views of Responsible Officials: There is no disagreement with the finding.
Reference Number: 2024-034 Prior Year Finding: 2023-029 Federal Agency: U.S. Department of Health and Human Services State Agency: Executive Office of Health and Human Services Federal Program: Medicaid Cluster, COVID-19 – Medicaid Cluster Assistance Listing Number: 93.775, 93.777, 93.778 Award Number and Year: XIX-MAP23, XIX-MAP24 Compliance Requirement: Allowable Activities/Allowable Costs Special Tests and Provisions – Provider Eligibility and Provider Health and Safety Standards Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: To be allowable, Medicaid costs for medical services must be (1) covered by the state plan or CMS approved waivers/demonstrations; (2) reviewed by the state consistent with the state’s documented procedures and system for determining medical necessity of claims; (3) properly coded; and (4) paid at the rate allowed by the state plan. Furthermore, beneficiaries must be eligible (or presumptively eligible) at the time of service, whether covered under fee-for-service or managed care. Additionally, Medicaid costs must be net of beneficiary cost-sharing obligations and applicable credits (e.g., insurance, recoveries from other third parties who are responsible for covering the Medicaid costs, and drug rebates), paid to eligible providers, and only provided on behalf of eligible individuals. In order to receive Medicaid payments, providers must: (1) be licensed in accordance with federal, state, and local laws and regulations to participate in the Medicaid program (42 CFR 431.107 and 447.10; and Section 1902(a)(9) of the Act (42 USC 1396a(a)(9)); (2) screened and enrolled in accordance with 42 CFR Part 455, Subpart E (sections 455.400 through 455.470); and make certain disclosures to the state (42 CFR Part 455, Subpart B, sections 455.100 through 455.106). Medicaid managed care network providers are subject to the same disclosure, screening, enrollment, and termination requirements that apply to Medicaid fee-for-service providers in accordance with 42 CFR Part 438, Subpart H. States must also follow guidance issued in the Medicaid Provider Enrollment Compendium (MPEC) to enroll providers into their Medicaid programs. Providers must meet the prescribed health and safety standards for hospital, nursing facilities, and ICF/IID (42 CFR Part 442). The standards may be modified in the state plan. Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Executive Office of Health and Human Services (Department) did not properly monitor a provider that was determined to be high risk and, therefore, it failed to ensure the provider was eligible to provide services under the program. Context: One of sixty providers selected for testing was designated as high-risk on 9/30/2017. This provider was terminated on 10/3/2017 and was reinstated on 10/17/2017. The Department’s procedures require a site visit for high-risk providers; however, the scheduled site visit was canceled following the provider’s termination. After reinstatement, the site visit should have been rescheduled, but the Department has not yet performed a site visit for this provider. Therefore, the Department is unable to provide documentation that the provider is eligible to perform services under the program. Cause: The Department’s procedures were not sufficient to ensure it performed site visits for high-risk providers and ensure that it maintained documentation that all providers were eligible to perform services under the program. Internal controls did not prevent or detect the errors. Effect: Claims were paid to a provider whose eligibility was not properly documented. Questioned costs: Undetermined. Due to a lack of information, auditors were unable to determine if the provider was eligible or if ineligible costs were incurred. Recommendation: The Department should enhance its procedures and internal controls to ensure it properly monitors high-risk providers and that it maintains documentation that claims are paid only to eligible providers. Views of Responsible Officials: There is no disagreement with the finding.
Reference Number: 2024-034 Prior Year Finding: 2023-029 Federal Agency: U.S. Department of Health and Human Services State Agency: Executive Office of Health and Human Services Federal Program: Medicaid Cluster, COVID-19 – Medicaid Cluster Assistance Listing Number: 93.775, 93.777, 93.778 Award Number and Year: XIX-MAP23, XIX-MAP24 Compliance Requirement: Allowable Activities/Allowable Costs Special Tests and Provisions – Provider Eligibility and Provider Health and Safety Standards Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: To be allowable, Medicaid costs for medical services must be (1) covered by the state plan or CMS approved waivers/demonstrations; (2) reviewed by the state consistent with the state’s documented procedures and system for determining medical necessity of claims; (3) properly coded; and (4) paid at the rate allowed by the state plan. Furthermore, beneficiaries must be eligible (or presumptively eligible) at the time of service, whether covered under fee-for-service or managed care. Additionally, Medicaid costs must be net of beneficiary cost-sharing obligations and applicable credits (e.g., insurance, recoveries from other third parties who are responsible for covering the Medicaid costs, and drug rebates), paid to eligible providers, and only provided on behalf of eligible individuals. In order to receive Medicaid payments, providers must: (1) be licensed in accordance with federal, state, and local laws and regulations to participate in the Medicaid program (42 CFR 431.107 and 447.10; and Section 1902(a)(9) of the Act (42 USC 1396a(a)(9)); (2) screened and enrolled in accordance with 42 CFR Part 455, Subpart E (sections 455.400 through 455.470); and make certain disclosures to the state (42 CFR Part 455, Subpart B, sections 455.100 through 455.106). Medicaid managed care network providers are subject to the same disclosure, screening, enrollment, and termination requirements that apply to Medicaid fee-for-service providers in accordance with 42 CFR Part 438, Subpart H. States must also follow guidance issued in the Medicaid Provider Enrollment Compendium (MPEC) to enroll providers into their Medicaid programs. Providers must meet the prescribed health and safety standards for hospital, nursing facilities, and ICF/IID (42 CFR Part 442). The standards may be modified in the state plan. Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Executive Office of Health and Human Services (Department) did not properly monitor a provider that was determined to be high risk and, therefore, it failed to ensure the provider was eligible to provide services under the program. Context: One of sixty providers selected for testing was designated as high-risk on 9/30/2017. This provider was terminated on 10/3/2017 and was reinstated on 10/17/2017. The Department’s procedures require a site visit for high-risk providers; however, the scheduled site visit was canceled following the provider’s termination. After reinstatement, the site visit should have been rescheduled, but the Department has not yet performed a site visit for this provider. Therefore, the Department is unable to provide documentation that the provider is eligible to perform services under the program. Cause: The Department’s procedures were not sufficient to ensure it performed site visits for high-risk providers and ensure that it maintained documentation that all providers were eligible to perform services under the program. Internal controls did not prevent or detect the errors. Effect: Claims were paid to a provider whose eligibility was not properly documented. Questioned costs: Undetermined. Due to a lack of information, auditors were unable to determine if the provider was eligible or if ineligible costs were incurred. Recommendation: The Department should enhance its procedures and internal controls to ensure it properly monitors high-risk providers and that it maintains documentation that claims are paid only to eligible providers. Views of Responsible Officials: There is no disagreement with the finding.
Reference Number: 2024-035 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Agency: Executive Office of Health and Human Services Federal Program: Medicaid Cluster, COVID-19 – Medicaid Cluster Assistance Listing Number: 93.775, 93.777, 93.778 Award Number and Year: XIX-MAP23, XIX-MAP24 Compliance Requirement: Eligibility Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: States verify the financial and nonfinancial factors of eligibility, per federal requirements at 42 CFR 435.948 through 435.956 and state requirements (as documented in the state plan, verification plan, and eligibility manual). States must monitor the accuracy of eligibility determinations by establishing a Medicaid Eligibility Quality Control (MEQC) program to reduce erroneous expenditures in conjunction with the Payment Error Rate Measurement (PERM) Program. Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Executive Office of Health and Human Services (Department) did not properly resolve a case after MEQC review identified one or more errors in the eligibility determination. Context: The eligibility review for one of sixty participants identified errors in the eligibility determination. The Department did not send an outreach letter to the participant to resolve the issue. Cause: The Department’s procedures were not sufficient to ensure it followed up when its MEQC program identified errors in participant eligibility determination. Effect: Claims may have been paid to an ineligible participant. Questioned costs: Undetermined. Recommendation: The Department should enhance its procedures and internal controls to ensure it promptly follows up with participants whose eligibility review identifies errors and that ineligible participants are terminated from the program. Views of Responsible Officials: There is no disagreement with the finding.
Reference Number: 2024-035 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Agency: Executive Office of Health and Human Services Federal Program: Medicaid Cluster, COVID-19 – Medicaid Cluster Assistance Listing Number: 93.775, 93.777, 93.778 Award Number and Year: XIX-MAP23, XIX-MAP24 Compliance Requirement: Eligibility Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: States verify the financial and nonfinancial factors of eligibility, per federal requirements at 42 CFR 435.948 through 435.956 and state requirements (as documented in the state plan, verification plan, and eligibility manual). States must monitor the accuracy of eligibility determinations by establishing a Medicaid Eligibility Quality Control (MEQC) program to reduce erroneous expenditures in conjunction with the Payment Error Rate Measurement (PERM) Program. Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Executive Office of Health and Human Services (Department) did not properly resolve a case after MEQC review identified one or more errors in the eligibility determination. Context: The eligibility review for one of sixty participants identified errors in the eligibility determination. The Department did not send an outreach letter to the participant to resolve the issue. Cause: The Department’s procedures were not sufficient to ensure it followed up when its MEQC program identified errors in participant eligibility determination. Effect: Claims may have been paid to an ineligible participant. Questioned costs: Undetermined. Recommendation: The Department should enhance its procedures and internal controls to ensure it promptly follows up with participants whose eligibility review identifies errors and that ineligible participants are terminated from the program. Views of Responsible Officials: There is no disagreement with the finding.
Reference Number: 2024-035 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Agency: Executive Office of Health and Human Services Federal Program: Medicaid Cluster, COVID-19 – Medicaid Cluster Assistance Listing Number: 93.775, 93.777, 93.778 Award Number and Year: XIX-MAP23, XIX-MAP24 Compliance Requirement: Eligibility Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: States verify the financial and nonfinancial factors of eligibility, per federal requirements at 42 CFR 435.948 through 435.956 and state requirements (as documented in the state plan, verification plan, and eligibility manual). States must monitor the accuracy of eligibility determinations by establishing a Medicaid Eligibility Quality Control (MEQC) program to reduce erroneous expenditures in conjunction with the Payment Error Rate Measurement (PERM) Program. Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Executive Office of Health and Human Services (Department) did not properly resolve a case after MEQC review identified one or more errors in the eligibility determination. Context: The eligibility review for one of sixty participants identified errors in the eligibility determination. The Department did not send an outreach letter to the participant to resolve the issue. Cause: The Department’s procedures were not sufficient to ensure it followed up when its MEQC program identified errors in participant eligibility determination. Effect: Claims may have been paid to an ineligible participant. Questioned costs: Undetermined. Recommendation: The Department should enhance its procedures and internal controls to ensure it promptly follows up with participants whose eligibility review identifies errors and that ineligible participants are terminated from the program. Views of Responsible Officials: There is no disagreement with the finding.
Reference Number: 2024-035 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Agency: Executive Office of Health and Human Services Federal Program: Medicaid Cluster, COVID-19 – Medicaid Cluster Assistance Listing Number: 93.775, 93.777, 93.778 Award Number and Year: XIX-MAP23, XIX-MAP24 Compliance Requirement: Eligibility Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: States verify the financial and nonfinancial factors of eligibility, per federal requirements at 42 CFR 435.948 through 435.956 and state requirements (as documented in the state plan, verification plan, and eligibility manual). States must monitor the accuracy of eligibility determinations by establishing a Medicaid Eligibility Quality Control (MEQC) program to reduce erroneous expenditures in conjunction with the Payment Error Rate Measurement (PERM) Program. Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Executive Office of Health and Human Services (Department) did not properly resolve a case after MEQC review identified one or more errors in the eligibility determination. Context: The eligibility review for one of sixty participants identified errors in the eligibility determination. The Department did not send an outreach letter to the participant to resolve the issue. Cause: The Department’s procedures were not sufficient to ensure it followed up when its MEQC program identified errors in participant eligibility determination. Effect: Claims may have been paid to an ineligible participant. Questioned costs: Undetermined. Recommendation: The Department should enhance its procedures and internal controls to ensure it promptly follows up with participants whose eligibility review identifies errors and that ineligible participants are terminated from the program. Views of Responsible Officials: There is no disagreement with the finding.
Reference Number: 2024-036 Prior Year Finding: 2023-025 Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Public Health (DPH), Executive Office of Housing and Livable Communities (EOHLC) Federal Program: Opioid-STR Assistance Listing Number: 93.788 Award Number and Year: 6H79TI083328 (9/30/2021 – 9/29/2023) 1H79TI085778 (9/30/2021 – 9/29/2024) Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: 2 CFR section 200.332(a) - Requirements for Pass-Through Entities states, in part, that all pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Department of Public Health (DPH) and the Executive Office of Housing and Livable Communities (EOHLC) omitted required federal award information from subawards issued from the program. Context: Twenty subawards issued to thirteen subrecipients were selected for testing for DPH. Twenty of twenty subawards were missing required federal award information. Specifically, we noted the following: • 20 of 20 subawards were missing the Federal Award Identification Number (FAIN) and the Federal Award Date. • 6 of 20 subawards were missing the clause stating that the Federal Award must be used in accordance with Federal statutes, regulations and the terms and conditions of the Federal Award. • 5 of 20 subawards were missing the Indirect Cost Rate for the Federal Award. • 3 of 20 subawards were missing the Name of the Federal Awarding Agency, the contact information for the awarding official of the pass-through entity, the Assistance Listing Number and Program Name. • 1 of 20 subawards was missing the following: o Amount of Federal Funds Obligated by this action o Total Amount of Federal Funds Obligated o Total Amount of the Federal Award o Federal Award Project Description • 1 of 20 subawards was missing the subrecipient’s unique entity identifier. Five subawards issued to five subrecipients were selected for testing for EOHLC. Five of five subawards were missing the following required federal award information: • Federal Award Identification Number (FAIN) • Federal Award Date • Name of the Federal Awarding Agency and contact information for awarding official of the pass-through entity • Assistance Listing Number and Name Cause: Per discussion with the Department, it has not implemented its corrective action plan from the prior year and intends to include all required federal award information beginning with its federal fiscal year 2025 contracts. Effect: Excluding required federal grant award information at the time of the subaward may cause subrecipients and their auditors to be uninformed about specific program and other regulations that apply to the funds they receive. There is also the potential for subrecipients to have incomplete Schedules of Expenditures of Federal Awards (SEFA) in their Single Audit reports, and federal funds may not be properly audited at the subrecipient level in accordance with the Uniform Guidance. Questioned costs: None. Recommendation: We recommend the Department complete its corrective action plan from the prior year. It should ensure its internal controls and procedures are sufficient to ensure that required information is included in its subawards. Views of Responsible Officials: There is no disagreement with the finding.
Reference Number: 2024-037 Prior Year Finding: 2023-033 Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Public Health (DPH) Federal Program: Opioid-STR Assistance Listing Number: 93.788 Award Number and Year: 6H79TI083328 (9/30/2021 – 9/29/2023) 1H79TI085778 (9/30/2021 – 9/29/2024) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Department of Public Health (Department) did not report subaward information to FSRS within thirty days after subaward issuance. Context: Thirteen subawards were selected for testing and the following exceptions were noted: • Twelve of thirteen subawards were not reported timely to FSRS. The subawards were issued 7/1/2023 and were not reported to FSRS until 3/28/2024, or seven months after the due date. • One of thirteen subawards was not reported to FSRS. The subaward was issued on 7/1/2023 but it has not been reported to FSRS. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Department has not completed implementation of its corrective action plan from the prior audit year. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the Department complete implementation of its corrective action plan from the prior audit year. It should establish procedures and internal controls to ensure that all required subawards are reported timely and accurately to FSRS no later than the end of the month following the month of issuance of each subaward. Views of Responsible Officials: There is no disagreement with the finding.
Reference Number: 2024-038 Prior Year Finding: No Federal Agency: U.S. Department of Homeland Security State Agency: Massachusetts Emergency Management Agency Federal Program: Disaster Grants – Public Assistance (Presidentially Declared Disasters), COVID-19 - Disaster Grants – Public Assistance (Presidentially Declared Disasters) Assistance Listing Number: 97.036 Award Number and Year: FEMA-4496-DR (2020) FEMA-4651-DR (2022) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Section III – Findings and Questioned Costs – Major Federal Programs (Continued) Condition: The Massachusetts Emergency Management Agency (Department) did not report subaward information to FSRS in accordance with FFATA requirements. Context: Thirty of the forty subawards selected for testing were not reported to the FSRS in accordance with FFATA requirements. The following exceptions were noted: • 4 of 40 subawards were inaccurately reported. The total of the subawards was $14,652,284, but $29,265,187 was reported. • 3 of 40 subawards, totaling $6,245,292, were not reported to FSRS. • 22 of 40 subawards, totaling $47,614,805, were not reported timely. The reports were submitted from one day to one year late. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Department’s procedures and controls were not sufficient to ensure that subawards were reported to FSRS. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the Department review and enhance its procedures and internal controls to ensure that all required subawards are reported timely and accurately to FSRS no later than the end of the month following the month of issuance of each subaward. Views of Responsible Officials: There is no disagreement with the finding.
Reference Number: 2024-038 Prior Year Finding: No Federal Agency: U.S. Department of Homeland Security State Agency: Massachusetts Emergency Management Agency Federal Program: Disaster Grants – Public Assistance (Presidentially Declared Disasters), COVID-19 - Disaster Grants – Public Assistance (Presidentially Declared Disasters) Assistance Listing Number: 97.036 Award Number and Year: FEMA-4496-DR (2020) FEMA-4651-DR (2022) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Section III – Findings and Questioned Costs – Major Federal Programs (Continued) Condition: The Massachusetts Emergency Management Agency (Department) did not report subaward information to FSRS in accordance with FFATA requirements. Context: Thirty of the forty subawards selected for testing were not reported to the FSRS in accordance with FFATA requirements. The following exceptions were noted: • 4 of 40 subawards were inaccurately reported. The total of the subawards was $14,652,284, but $29,265,187 was reported. • 3 of 40 subawards, totaling $6,245,292, were not reported to FSRS. • 22 of 40 subawards, totaling $47,614,805, were not reported timely. The reports were submitted from one day to one year late. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Department’s procedures and controls were not sufficient to ensure that subawards were reported to FSRS. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the Department review and enhance its procedures and internal controls to ensure that all required subawards are reported timely and accurately to FSRS no later than the end of the month following the month of issuance of each subaward. Views of Responsible Officials: There is no disagreement with the finding.
Reference Number: 2024-039 Prior Year Finding: No Federal Agency: U.S. Department of Homeland Security State Agency: Massachusetts Emergency Management Agency (Agency) Federal Program: COVID-19 - Disaster Grants – Public Assistance (Presidentially Declared Disasters) Assistance Listing Number: 97.036 Award Number and Year: FEMA-4496-DR (1/20/2020 and continuing) Compliance Requirement: Allowable Costs / Cost Principles Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: 2 CFR section 200.403 states, in part, except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. (g) Be adequately documented. Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Agency was unable to provide documentation to support the allowability, approval, and proper accounting of expenditures charged to the program. Context: Forty invoices were selected for testing and the following exceptions were noted: • For 4 of 40 invoices, support could not be provided to verify that the invoices had been charged to the correct general ledger codes and that the costs were allowable under the program. • For 3 of 40 invoices, payment details could not be verified because support did not include the check amount or the check date. • For 5 of 40 invoices, there was no evidence of approval of the purchase order or invoice. Cause: The Agency’s procedures were not sufficient to ensure that expenditures charged to the program were allowable, approved, and accounted for properly in the Commonwealth’s accounting system. Internal controls did not detect or prevent the errors. Effect: Unallowable costs could be charged to the program. Questioned costs: Undetermined. Recommendation: We recommend the Agency review and enhance procedures and controls to ensure that costs charged to the program are allowable, approved, and accounted for properly in the Commonwealth’s accounting system. Views of Responsible Officials: There is no disagreement with the finding.
Reference Number: 2024-039 Prior Year Finding: No Federal Agency: U.S. Department of Homeland Security State Agency: Massachusetts Emergency Management Agency (Agency) Federal Program: COVID-19 - Disaster Grants – Public Assistance (Presidentially Declared Disasters) Assistance Listing Number: 97.036 Award Number and Year: FEMA-4496-DR (1/20/2020 and continuing) Compliance Requirement: Allowable Costs / Cost Principles Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: 2 CFR section 200.403 states, in part, except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. (g) Be adequately documented. Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Agency was unable to provide documentation to support the allowability, approval, and proper accounting of expenditures charged to the program. Context: Forty invoices were selected for testing and the following exceptions were noted: • For 4 of 40 invoices, support could not be provided to verify that the invoices had been charged to the correct general ledger codes and that the costs were allowable under the program. • For 3 of 40 invoices, payment details could not be verified because support did not include the check amount or the check date. • For 5 of 40 invoices, there was no evidence of approval of the purchase order or invoice. Cause: The Agency’s procedures were not sufficient to ensure that expenditures charged to the program were allowable, approved, and accounted for properly in the Commonwealth’s accounting system. Internal controls did not detect or prevent the errors. Effect: Unallowable costs could be charged to the program. Questioned costs: Undetermined. Recommendation: We recommend the Agency review and enhance procedures and controls to ensure that costs charged to the program are allowable, approved, and accounted for properly in the Commonwealth’s accounting system. Views of Responsible Officials: There is no disagreement with the finding.
2024-004 Compliance and Significant Deficiency in Internal Control over compliance with Activities Allowed or Unallowed, Allowable Cost/Cost Principles U.S. Department of Education Passed through NYS Department of Education Program Name: Education Stabilization Fund AL#: 84.425U Condition: In accordance with C.R. 170.2 of the Commissioner’s Regulations, the District requires Purchase Orders to be established to encumber the approved budget items for each expenditure code. The complete bill packet including the Purchase Order, receiving slip, and invoice is submitted for authorization of payment. For the ARP Summer Enrichment Grant, Purchase Orders were created after the dates of service. Criteria: As a recipient of federal awards, the District is required to establish and maintain effective internal controls over federal awards in accordance with 2CFR Part 200, Uniform Administrative Requirements, Costs Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Section 200.303 – Internal Controls. Provisions included in section 200.403 – Factors Affecting Allowability of Costs states that costs must meet the following general criteria in order to be allowable under Federal awards:(a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles.(b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items.(c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost.(e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part.(f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. (g) Be adequately documented. (h) Cost must be incurred during the approved budget period. Context: 1 item representing the total population was selected for testing. A Purchase Order was initiated on 1/25/24 for an invoice dated 8/9/23 Questioned Costs are $19,960. Cause: The District did not have sufficient internal controls in place to ensure that Purchase Orders are created in accordance C.R. 170.2 of the Commissioner’s Regulations. When the invoices were received, a Purchase Order was required to be able to pay the vendor. Effect: The District is not in compliance with the requirements of the Education Stabilization Fund program with respect to Activities Allowed or Unallowed and Allowable Costs. Identification of a Repeat Finding This is a repeat finding from the immediate previous audit, 2023-007 Recommendation: We recommend that the District’s written procedures addressing internal controls with respect to program requirements be followed to ensure the District is in compliance at all times. View of Responsible Officials: Highland Falls-Fort Montgomery Central School District’s management concurs with this finding. The District is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan .
Finding 2024-002 – Procurement, Suspension, and Debarment Identification of the federal program: Federal Grantor: United States Department of Health and Human Services Assistance Listing No.: 93.493, Congressional Directives Federal Award Number: 1 CE1HS52357‐01‐00 Federal Award Period of Performance: 09/30/2023–09/29/2026 Criteria or specific requirement (including statutory, regulatory, or other citation): Section 200.303 of the Uniform Guidance states the following regarding internal control: “The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Condition: Procurement policies required by 2 CFR 200.318-326 were not formally documented. Documentation was not consistently retained evidencing the review and approval of new vendors for suspension and debarment prior to adding them into PeopleSoft, CFNI’s vendor management platform. Management represented that they performed a monthly reconciliation of the number of vendors screened and the number of vendors submitted to the third-party, however, management did not retain evidence of the reviews in fiscal year 2024. CFNI’s third-party contractor for suspension and debarment does not have a SOC 1 (System and Organization Controls Report) report that covers the controls over suspension and debarment services provided. Management did not perform testing over the results of the third-party contractor to assess the accuracy of its procedures. Effect or potential effect: Suspension and debarment results provided by the third-party contractor may not be accurate. As a result, federal funds may be used to pay a contractor that is suspended or debarred. Questioned costs: None. Context: For three of 40 new vendors sampled during the fiscal year, the documentation evidencing the review of new vendors for suspension and debarment was not retained. For Assistance Listing No. 93.493, the federal portion of procurement expenditures subject to suspension and debarment review totaled $1,441,622, which represents approximately 61.5% of total federal expenditures of $2,341,797 reported in the SEFA for the year ended June 30, 2024. Identification as a repeat finding, if applicable: This is not a repeat finding from the prior year. Recommendation: CFNI should revise its procurement policies to be in compliance with 2 CFR 200.318-326. CFNI should implement procedures to reperform the testing for a sample of vendors from the third-party suspension and debarment results to ensure the accuracy of the results received. CFNI should formalize the documentation of the reconciliation of the number of vendors screened and the number of vendors submitted to the third-party. CFNI should update its policies and procedures over the new vendor setup process to require supporting documentation related to the suspension and debarment search performed be maintained. Views of responsible officials: The audit identified three instances out of 40 sampled where CFNI did not retain documentation verifying that suspension and debarment reviews were conducted during the onboarding of new suppliers. Although CFNI has an established vetting process, it recognizes the need for consistent documentation to evidence compliance. CFNI will implement formalized procedures to ensure all suspension and debarment reviews are documented and retained for audit purposes. CFNI engages a third-party contractor to monitor its supplier list against suspension and debarment databases. While the vendor provided a SOC 1 report, it did not specifically cover the suspension and debarment services provided. Additionally, CFNI did not conduct testing to validate the accuracy of the third-party's results. CFNI will revise its vendor management practices to ensure the SOC 1 reports cover the relevant services, and it will establish testing procedures to confirm the reliability of the vendor's outputs. Although CFNI utilizes two processes to monitor active suppliers against suspension and debarment lists, no reconciliation was documented to confirm that the supplier lists provided to and received from the third party were complete and accurate. Additionally, no testing was conducted to validate the third party’s work. CFNI will implement a reconciliation process to verify the completeness and accuracy of supplier lists before and after third-party reviews. Furthermore, it will establish a sampling and testing procedure to validate the results provided by external vendors.
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 84.425, Department of Education, Education Stabilization Fund Federal Award Identification Number and Year: 213713 Pass-through Entity – Michigan Department of Education Finding Type – Material weakness in internal control over compliance Repeat Finding - No Criteria – Per 2 CFR § 200.303, The non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition – During our testing for Cash Management, it was noted that 4 out of 4 drawdown requests selected for testing did not have evidence of review and approval. Identification of How Questioned Costs Were Computed – N/A Questioned Costs – None Cause – Management did not fully implement their internal control policies and procedures as there was no evidence of review and approvals, nor was documentation retained. Effect – Drawdown requests did not have evidence of review and approval. Recommendation – We recommend that management review its procedures and controls in place to ensure that reports and supporting documentation are retained and have proper evidence of review and approval. View of Responsible Officials and Corrective Action Plan – Management agrees with the finding. See corrective action plan.
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 84.425, Department of Education, Education Stabilization Fund Federal Award Identification Number and Year: 213713 Pass-through Entity – Michigan Department of Education Finding Type – Material weakness in internal control over compliance Repeat Finding – No Criteria – Per 2 CFR § 200.303, The non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition – During our testing for Reporting, it was noted that 1 out of 1 report selected for testing did not have evidence of review and approval. In addition, the report was not submitted within the required time frame as required by the grant agreement. Identification of How Questioned Costs Were Computed – N/A Questioned Costs – None Cause – Management did not fully implement their internal control policies and procedures as there was no evidence of review and approvals, nor was documentation retained. Effect – Report did not have evidence of review and approval. Recommendation – We recommend that management review its procedures and controls in place to ensure that reports and supporting documentation are retained and have proper evidence of review and approval. View of Responsible Officials and Corrective Action Plan – Management agrees with the finding. See corrective action plan.
Finding Type – Material weakness in internal control over compliance Repeat Finding - No Criteria – Per 2 CFR § 200.303, The non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition – During our testing for Activities Allowed or Unallowed, Allowable Costs/Cost Principles, it was noted that 7 out of 17 personnel selected for payroll testing were not included in the Academy’s – Grant Funded Staff Listing. In addition, we noted that for 8 out of 17 personnel selected for testing, there was no evidence of review or approval of colleague assignment letter. Identification of How Questioned Costs Were Computed – N/A Questioned Costs – None Cause – Management did not fully implement their internal control policies and procedures as there was no evidence of review and approvals, nor was documentation retained. Effect – Reports did not have evidence of review and approval. Recommendation – We recommend that management review its procedures and controls in place to ensure that reports and supporting documentation are retained and have proper evidence of review and approval. View of Responsible Officials and Corrective Action Plan – Management agrees with the finding. See corrective action plan.
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 84.425, Department of Education, Education Stabilization Fund Federal Award Identification Number and Year: 213713 Pass-through Entity – Michigan Department of Education Finding Type – Material weakness in internal control over compliance Repeat Finding - No Criteria – Per 2 CFR § 200.303, The non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition – During our testing for Cash Management, it was noted that 4 out of 4 drawdown requests selected for testing did not have evidence of review and approval. Identification of How Questioned Costs Were Computed – N/A Questioned Costs – None Cause – Management did not fully implement their internal control policies and procedures as there was no evidence of review and approvals, nor was documentation retained. Effect – Drawdown requests did not have evidence of review and approval. Recommendation – We recommend that management review its procedures and controls in place to ensure that reports and supporting documentation are retained and have proper evidence of review and approval. View of Responsible Officials and Corrective Action Plan – Management agrees with the finding. See corrective action plan.
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 84.425, Department of Education, Education Stabilization Fund Federal Award Identification Number and Year: 213713 Pass-through Entity – Michigan Department of Education Finding Type – Material weakness in internal control over compliance Repeat Finding – No Criteria – Per 2 CFR § 200.303, The non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition – During our testing for Reporting, it was noted that 1 out of 1 report selected for testing did not have evidence of review and approval. In addition, the report was not submitted within the required time frame as required by the grant agreement. Identification of How Questioned Costs Were Computed – N/A Questioned Costs – None Cause – Management did not fully implement their internal control policies and procedures as there was no evidence of review and approvals, nor was documentation retained. Effect – Report did not have evidence of review and approval. Recommendation – We recommend that management review its procedures and controls in place to ensure that reports and supporting documentation are retained and have proper evidence of review and approval. View of Responsible Officials and Corrective Action Plan – Management agrees with the finding. See corrective action plan.
Finding Type – Material weakness in internal control over compliance Repeat Finding - No Criteria – Per 2 CFR § 200.303, The non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition – During our testing for Activities Allowed or Unallowed, Allowable Costs/Cost Principles, it was noted that 7 out of 17 personnel selected for payroll testing were not included in the Academy’s – Grant Funded Staff Listing. In addition, we noted that for 8 out of 17 personnel selected for testing, there was no evidence of review or approval of colleague assignment letter. Identification of How Questioned Costs Were Computed – N/A Questioned Costs – None Cause – Management did not fully implement their internal control policies and procedures as there was no evidence of review and approvals, nor was documentation retained. Effect – Reports did not have evidence of review and approval. Recommendation – We recommend that management review its procedures and controls in place to ensure that reports and supporting documentation are retained and have proper evidence of review and approval. View of Responsible Officials and Corrective Action Plan – Management agrees with the finding. See corrective action plan.
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 84.425, Department of Education, Education Stabilization Fund Federal Award Identification Number and Year: 213713 Pass-through Entity – Michigan Department of Education Finding Type – Material weakness in internal control over compliance Repeat Finding - No Criteria – Per 2 CFR § 200.303, The non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition – During our testing for Cash Management, it was noted that 4 out of 4 drawdown requests selected for testing did not have evidence of review and approval. Identification of How Questioned Costs Were Computed – N/A Questioned Costs – None Cause – Management did not fully implement their internal control policies and procedures as there was no evidence of review and approvals, nor was documentation retained. Effect – Drawdown requests did not have evidence of review and approval. Recommendation – We recommend that management review its procedures and controls in place to ensure that reports and supporting documentation are retained and have proper evidence of review and approval. View of Responsible Officials and Corrective Action Plan – Management agrees with the finding. See corrective action plan.
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 84.425, Department of Education, Education Stabilization Fund Federal Award Identification Number and Year: 213713 Pass-through Entity – Michigan Department of Education Finding Type – Material weakness in internal control over compliance Repeat Finding – No Criteria – Per 2 CFR § 200.303, The non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition – During our testing for Reporting, it was noted that 1 out of 1 report selected for testing did not have evidence of review and approval. In addition, the report was not submitted within the required time frame as required by the grant agreement. Identification of How Questioned Costs Were Computed – N/A Questioned Costs – None Cause – Management did not fully implement their internal control policies and procedures as there was no evidence of review and approvals, nor was documentation retained. Effect – Report did not have evidence of review and approval. Recommendation – We recommend that management review its procedures and controls in place to ensure that reports and supporting documentation are retained and have proper evidence of review and approval. View of Responsible Officials and Corrective Action Plan – Management agrees with the finding. See corrective action plan.
Finding Type – Material weakness in internal control over compliance Repeat Finding - No Criteria – Per 2 CFR § 200.303, The non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition – During our testing for Activities Allowed or Unallowed, Allowable Costs/Cost Principles, it was noted that 7 out of 17 personnel selected for payroll testing were not included in the Academy’s – Grant Funded Staff Listing. In addition, we noted that for 8 out of 17 personnel selected for testing, there was no evidence of review or approval of colleague assignment letter. Identification of How Questioned Costs Were Computed – N/A Questioned Costs – None Cause – Management did not fully implement their internal control policies and procedures as there was no evidence of review and approvals, nor was documentation retained. Effect – Reports did not have evidence of review and approval. Recommendation – We recommend that management review its procedures and controls in place to ensure that reports and supporting documentation are retained and have proper evidence of review and approval. View of Responsible Officials and Corrective Action Plan – Management agrees with the finding. See corrective action plan.
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 84.425, Department of Education, Education Stabilization Fund Federal Award Identification Number and Year: 213713 Pass-through Entity – Michigan Department of Education Finding Type – Material weakness in internal control over compliance Repeat Finding - No Criteria – Per 2 CFR § 200.303, The non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition – During our testing for Cash Management, it was noted that 4 out of 4 drawdown requests selected for testing did not have evidence of review and approval. Identification of How Questioned Costs Were Computed – N/A Questioned Costs – None Cause – Management did not fully implement their internal control policies and procedures as there was no evidence of review and approvals, nor was documentation retained. Effect – Drawdown requests did not have evidence of review and approval. Recommendation – We recommend that management review its procedures and controls in place to ensure that reports and supporting documentation are retained and have proper evidence of review and approval. View of Responsible Officials and Corrective Action Plan – Management agrees with the finding. See corrective action plan.
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 84.425, Department of Education, Education Stabilization Fund Federal Award Identification Number and Year: 213713 Pass-through Entity – Michigan Department of Education Finding Type – Material weakness in internal control over compliance Repeat Finding – No Criteria – Per 2 CFR § 200.303, The non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition – During our testing for Reporting, it was noted that 1 out of 1 report selected for testing did not have evidence of review and approval. In addition, the report was not submitted within the required time frame as required by the grant agreement. Identification of How Questioned Costs Were Computed – N/A Questioned Costs – None Cause – Management did not fully implement their internal control policies and procedures as there was no evidence of review and approvals, nor was documentation retained. Effect – Report did not have evidence of review and approval. Recommendation – We recommend that management review its procedures and controls in place to ensure that reports and supporting documentation are retained and have proper evidence of review and approval. View of Responsible Officials and Corrective Action Plan – Management agrees with the finding. See corrective action plan.
Finding Type – Material weakness in internal control over compliance Repeat Finding - No Criteria – Per 2 CFR § 200.303, The non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition – During our testing for Activities Allowed or Unallowed, Allowable Costs/Cost Principles, it was noted that 7 out of 17 personnel selected for payroll testing were not included in the Academy’s – Grant Funded Staff Listing. In addition, we noted that for 8 out of 17 personnel selected for testing, there was no evidence of review or approval of colleague assignment letter. Identification of How Questioned Costs Were Computed – N/A Questioned Costs – None Cause – Management did not fully implement their internal control policies and procedures as there was no evidence of review and approvals, nor was documentation retained. Effect – Reports did not have evidence of review and approval. Recommendation – We recommend that management review its procedures and controls in place to ensure that reports and supporting documentation are retained and have proper evidence of review and approval. View of Responsible Officials and Corrective Action Plan – Management agrees with the finding. See corrective action plan.
Finding 2024-007: Reporting – Significant Deficiency over Internal Control over Reporting Assistance Listing Program Title and Number- Coronavirus State and Local Fiscal Recovery Funds 21.027 Federal Agency- Department of Treasury Pass-through Entity- N/A Criteria: 2 CFR 200.303 Internal controls requires the recipient to establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: During our audit, we noted that the City did not have documentation to support that the control over the submission of the quarterly reports operated during fiscal year 2024. Questioned Cost: None Context: See “Condition” above. There was no documentation available for 2 out of the 2 reports selected. However, reports were submitted timely. Effect: No direct effect can be determined. Cause: While the department noted there was segregation of duties in terms of who prepared and reviewed the reports prior to submission, it does not maintain formal documentation that this occurred. Repeat Finding: No Recommendation: We recommend that the City implement a policy to formally document the controls they are performing. Management’s Response/Views of Responsible Officials: Management agrees with the finding and recommendation.
Finding 2024-007: Reporting – Significant Deficiency over Internal Control over Reporting Assistance Listing Program Title and Number- Coronavirus State and Local Fiscal Recovery Funds 21.027 Federal Agency- Department of Treasury Pass-through Entity- N/A Criteria: 2 CFR 200.303 Internal controls requires the recipient to establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: During our audit, we noted that the City did not have documentation to support that the control over the submission of the quarterly reports operated during fiscal year 2024. Questioned Cost: None Context: See “Condition” above. There was no documentation available for 2 out of the 2 reports selected. However, reports were submitted timely. Effect: No direct effect can be determined. Cause: While the department noted there was segregation of duties in terms of who prepared and reviewed the reports prior to submission, it does not maintain formal documentation that this occurred. Repeat Finding: No Recommendation: We recommend that the City implement a policy to formally document the controls they are performing. Management’s Response/Views of Responsible Officials: Management agrees with the finding and recommendation.
Finding 2024-007: Reporting – Significant Deficiency over Internal Control over Reporting Assistance Listing Program Title and Number- Coronavirus State and Local Fiscal Recovery Funds 21.027 Federal Agency- Department of Treasury Pass-through Entity- N/A Criteria: 2 CFR 200.303 Internal controls requires the recipient to establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: During our audit, we noted that the City did not have documentation to support that the control over the submission of the quarterly reports operated during fiscal year 2024. Questioned Cost: None Context: See “Condition” above. There was no documentation available for 2 out of the 2 reports selected. However, reports were submitted timely. Effect: No direct effect can be determined. Cause: While the department noted there was segregation of duties in terms of who prepared and reviewed the reports prior to submission, it does not maintain formal documentation that this occurred. Repeat Finding: No Recommendation: We recommend that the City implement a policy to formally document the controls they are performing. Management’s Response/Views of Responsible Officials: Management agrees with the finding and recommendation.
Finding 2024-007: Reporting – Significant Deficiency over Internal Control over Reporting Assistance Listing Program Title and Number- Coronavirus State and Local Fiscal Recovery Funds 21.027 Federal Agency- Department of Treasury Pass-through Entity- N/A Criteria: 2 CFR 200.303 Internal controls requires the recipient to establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: During our audit, we noted that the City did not have documentation to support that the control over the submission of the quarterly reports operated during fiscal year 2024. Questioned Cost: None Context: See “Condition” above. There was no documentation available for 2 out of the 2 reports selected. However, reports were submitted timely. Effect: No direct effect can be determined. Cause: While the department noted there was segregation of duties in terms of who prepared and reviewed the reports prior to submission, it does not maintain formal documentation that this occurred. Repeat Finding: No Recommendation: We recommend that the City implement a policy to formally document the controls they are performing. Management’s Response/Views of Responsible Officials: Management agrees with the finding and recommendation.
Finding 2024-007: Reporting – Significant Deficiency over Internal Control over Reporting Assistance Listing Program Title and Number- Coronavirus State and Local Fiscal Recovery Funds 21.027 Federal Agency- Department of Treasury Pass-through Entity- N/A Criteria: 2 CFR 200.303 Internal controls requires the recipient to establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: During our audit, we noted that the City did not have documentation to support that the control over the submission of the quarterly reports operated during fiscal year 2024. Questioned Cost: None Context: See “Condition” above. There was no documentation available for 2 out of the 2 reports selected. However, reports were submitted timely. Effect: No direct effect can be determined. Cause: While the department noted there was segregation of duties in terms of who prepared and reviewed the reports prior to submission, it does not maintain formal documentation that this occurred. Repeat Finding: No Recommendation: We recommend that the City implement a policy to formally document the controls they are performing. Management’s Response/Views of Responsible Officials: Management agrees with the finding and recommendation.
Finding 2024-007: Reporting – Significant Deficiency over Internal Control over Reporting Assistance Listing Program Title and Number- Coronavirus State and Local Fiscal Recovery Funds 21.027 Federal Agency- Department of Treasury Pass-through Entity- N/A Criteria: 2 CFR 200.303 Internal controls requires the recipient to establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: During our audit, we noted that the City did not have documentation to support that the control over the submission of the quarterly reports operated during fiscal year 2024. Questioned Cost: None Context: See “Condition” above. There was no documentation available for 2 out of the 2 reports selected. However, reports were submitted timely. Effect: No direct effect can be determined. Cause: While the department noted there was segregation of duties in terms of who prepared and reviewed the reports prior to submission, it does not maintain formal documentation that this occurred. Repeat Finding: No Recommendation: We recommend that the City implement a policy to formally document the controls they are performing. Management’s Response/Views of Responsible Officials: Management agrees with the finding and recommendation.
Finding 2024-007: Reporting – Significant Deficiency over Internal Control over Reporting Assistance Listing Program Title and Number- Coronavirus State and Local Fiscal Recovery Funds 21.027 Federal Agency- Department of Treasury Pass-through Entity- N/A Criteria: 2 CFR 200.303 Internal controls requires the recipient to establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: During our audit, we noted that the City did not have documentation to support that the control over the submission of the quarterly reports operated during fiscal year 2024. Questioned Cost: None Context: See “Condition” above. There was no documentation available for 2 out of the 2 reports selected. However, reports were submitted timely. Effect: No direct effect can be determined. Cause: While the department noted there was segregation of duties in terms of who prepared and reviewed the reports prior to submission, it does not maintain formal documentation that this occurred. Repeat Finding: No Recommendation: We recommend that the City implement a policy to formally document the controls they are performing. Management’s Response/Views of Responsible Officials: Management agrees with the finding and recommendation.
Finding 2024-007: Reporting – Significant Deficiency over Internal Control over Reporting Assistance Listing Program Title and Number- Coronavirus State and Local Fiscal Recovery Funds 21.027 Federal Agency- Department of Treasury Pass-through Entity- N/A Criteria: 2 CFR 200.303 Internal controls requires the recipient to establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: During our audit, we noted that the City did not have documentation to support that the control over the submission of the quarterly reports operated during fiscal year 2024. Questioned Cost: None Context: See “Condition” above. There was no documentation available for 2 out of the 2 reports selected. However, reports were submitted timely. Effect: No direct effect can be determined. Cause: While the department noted there was segregation of duties in terms of who prepared and reviewed the reports prior to submission, it does not maintain formal documentation that this occurred. Repeat Finding: No Recommendation: We recommend that the City implement a policy to formally document the controls they are performing. Management’s Response/Views of Responsible Officials: Management agrees with the finding and recommendation.
Finding 2024-007: Reporting – Significant Deficiency over Internal Control over Reporting Assistance Listing Program Title and Number- Coronavirus State and Local Fiscal Recovery Funds 21.027 Federal Agency- Department of Treasury Pass-through Entity- N/A Criteria: 2 CFR 200.303 Internal controls requires the recipient to establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: During our audit, we noted that the City did not have documentation to support that the control over the submission of the quarterly reports operated during fiscal year 2024. Questioned Cost: None Context: See “Condition” above. There was no documentation available for 2 out of the 2 reports selected. However, reports were submitted timely. Effect: No direct effect can be determined. Cause: While the department noted there was segregation of duties in terms of who prepared and reviewed the reports prior to submission, it does not maintain formal documentation that this occurred. Repeat Finding: No Recommendation: We recommend that the City implement a policy to formally document the controls they are performing. Management’s Response/Views of Responsible Officials: Management agrees with the finding and recommendation.
Finding 2024-007: Reporting – Significant Deficiency over Internal Control over Reporting Assistance Listing Program Title and Number- Coronavirus State and Local Fiscal Recovery Funds 21.027 Federal Agency- Department of Treasury Pass-through Entity- N/A Criteria: 2 CFR 200.303 Internal controls requires the recipient to establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: During our audit, we noted that the City did not have documentation to support that the control over the submission of the quarterly reports operated during fiscal year 2024. Questioned Cost: None Context: See “Condition” above. There was no documentation available for 2 out of the 2 reports selected. However, reports were submitted timely. Effect: No direct effect can be determined. Cause: While the department noted there was segregation of duties in terms of who prepared and reviewed the reports prior to submission, it does not maintain formal documentation that this occurred. Repeat Finding: No Recommendation: We recommend that the City implement a policy to formally document the controls they are performing. Management’s Response/Views of Responsible Officials: Management agrees with the finding and recommendation.
Finding 2024-007: Reporting – Significant Deficiency over Internal Control over Reporting Assistance Listing Program Title and Number- Coronavirus State and Local Fiscal Recovery Funds 21.027 Federal Agency- Department of Treasury Pass-through Entity- N/A Criteria: 2 CFR 200.303 Internal controls requires the recipient to establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: During our audit, we noted that the City did not have documentation to support that the control over the submission of the quarterly reports operated during fiscal year 2024. Questioned Cost: None Context: See “Condition” above. There was no documentation available for 2 out of the 2 reports selected. However, reports were submitted timely. Effect: No direct effect can be determined. Cause: While the department noted there was segregation of duties in terms of who prepared and reviewed the reports prior to submission, it does not maintain formal documentation that this occurred. Repeat Finding: No Recommendation: We recommend that the City implement a policy to formally document the controls they are performing. Management’s Response/Views of Responsible Officials: Management agrees with the finding and recommendation.
Finding 2024-007: Reporting – Significant Deficiency over Internal Control over Reporting Assistance Listing Program Title and Number- Coronavirus State and Local Fiscal Recovery Funds 21.027 Federal Agency- Department of Treasury Pass-through Entity- N/A Criteria: 2 CFR 200.303 Internal controls requires the recipient to establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: During our audit, we noted that the City did not have documentation to support that the control over the submission of the quarterly reports operated during fiscal year 2024. Questioned Cost: None Context: See “Condition” above. There was no documentation available for 2 out of the 2 reports selected. However, reports were submitted timely. Effect: No direct effect can be determined. Cause: While the department noted there was segregation of duties in terms of who prepared and reviewed the reports prior to submission, it does not maintain formal documentation that this occurred. Repeat Finding: No Recommendation: We recommend that the City implement a policy to formally document the controls they are performing. Management’s Response/Views of Responsible Officials: Management agrees with the finding and recommendation.
Finding 2024-007: Reporting – Significant Deficiency over Internal Control over Reporting Assistance Listing Program Title and Number- Coronavirus State and Local Fiscal Recovery Funds 21.027 Federal Agency- Department of Treasury Pass-through Entity- N/A Criteria: 2 CFR 200.303 Internal controls requires the recipient to establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: During our audit, we noted that the City did not have documentation to support that the control over the submission of the quarterly reports operated during fiscal year 2024. Questioned Cost: None Context: See “Condition” above. There was no documentation available for 2 out of the 2 reports selected. However, reports were submitted timely. Effect: No direct effect can be determined. Cause: While the department noted there was segregation of duties in terms of who prepared and reviewed the reports prior to submission, it does not maintain formal documentation that this occurred. Repeat Finding: No Recommendation: We recommend that the City implement a policy to formally document the controls they are performing. Management’s Response/Views of Responsible Officials: Management agrees with the finding and recommendation.
Finding 2024-007: Reporting – Significant Deficiency over Internal Control over Reporting Assistance Listing Program Title and Number- Coronavirus State and Local Fiscal Recovery Funds 21.027 Federal Agency- Department of Treasury Pass-through Entity- N/A Criteria: 2 CFR 200.303 Internal controls requires the recipient to establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: During our audit, we noted that the City did not have documentation to support that the control over the submission of the quarterly reports operated during fiscal year 2024. Questioned Cost: None Context: See “Condition” above. There was no documentation available for 2 out of the 2 reports selected. However, reports were submitted timely. Effect: No direct effect can be determined. Cause: While the department noted there was segregation of duties in terms of who prepared and reviewed the reports prior to submission, it does not maintain formal documentation that this occurred. Repeat Finding: No Recommendation: We recommend that the City implement a policy to formally document the controls they are performing. Management’s Response/Views of Responsible Officials: Management agrees with the finding and recommendation.
Department of Health and Human Services Federal Financial Assistance Listing #93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution (PRF) Applicable Federal Award Number and Year – Period 6 TIN #205330283 Reporting Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. The Care Center selected Option I to calculate lost revenue which consists of comparing actual quarterly revenues in calendar years 2020, 2021, 2022, and January through June 2023 to actual quarterly revenues in calendar year 2019. Condition: The Care Center does not have an internal control system designed to ensure the amounts reported in the HHS Period 6 Special Report agreed to supporting documentation for each of those quarters. In addition, there was no evidence of review of either the supporting documentation or the HHS Period 6 Special Report by someone other than the preparer. Cause: The Care Center did not have adequate internal controls to ensure the lost revenue calculation agreed with the supporting documentation prior to submission to HHS. Effect: Revenue information for eighteen quarters (starting January 1, 2019, through June 30, 2023) was submitted on the HHS Period 6 Special Report. The revenue information for three quarters during that timeframe did not agree to the supporting documentation provided. The quarters with significant differences are as follows: Quarter 2, 2021 (April through June) Variance of $27,885 Quarter 1, 2023 (January through March) Variance of $22,236 Quarter 2, 2023 (April through June) Variance of $688,293 In these three quarters, the revenue submitted on the HHS Period 6 Special Report exceeded the amount of revenue supported by the financial information. The total variance for these three quarters was $738,397. Questioned Costs: None reported, as the Care Center used qualifying expenditures to support the provider relief funding received and not lost revenue. Context: Key line items were tested on the HHS Period 6 Special Report. Repeat Finding from Prior Years: No Recommendation: We recommend management enhance internal controls to ensure the revenue calculation agrees to the supporting documentation prior to submission. In addition, we recommend that there is a review of both the supporting documentation and any reports submitted by a person other than the preparer prior to submission. View of Responsible Officials: Management agrees with the finding.
Department of Health and Human Services Federal Financial Assistance Listing #93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution (PRF) Applicable Federal Award Number and Year – Period 6 TIN #205330283 Activities Allowed or Unallowed and Allowable Costs/Cost Principles Material Weakness in Internal Control over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. The Care Center claimed expenses based on specifically identified COVID related expenses. Condition: During our testing, we noted there was no formal review or approval of the expenditure spreadsheet used to calculate the expenditures claimed for the federal program outside of the preparer. In addition, we noted the individual transactions were also not reviewed or approved by someone outside of the business office manager. Cause: The Care Center did not have adequate internal controls to ensure review and approval over the expenditure spreadsheet or individual transactions was completed and retained. Effect: The lack of adequate policies governing review and approval increases the risk that employees participating in the federal award administration may not be able to detect and correct noncompliance in a timely manner. Questioned Costs: None reported. Context: Detail testing was performed over eligible expenditures which included a population of 162 expenditures which totaled $211,843. A sample of 33 of the 162 expenditures was tested and the total of the items tested was $35,345. Repeat Finding from Prior Years: No Recommendation: We recommend management enhance internal controls to ensure that formal documentation of reviews is present for all supporting documentation. View of Responsible Officials: Management agrees with the finding.
Finding No. 2024-026 Federal Awarding Agency: U.S Department of Agriculture (USDA) Impact: Significant Deficiency, Noncompliance AL Number and Title: 10.542 Pandemic Electronic Benefit Transfer Food Benefits (P-EBT) – COVID-19 Federal Award Number: Summer 2021 Applicable Compliance Requirement: Activities Allowed or Unallowed, Eligibility Condition: DEED’s child nutrition services (CNS) management authorized Summer 2021 P-EBT benefits for ineligible children. Context: The Families First Coronavirus Response Act (P. L. 116-127), as amended by the Continuing Appropriations Act, 2021 and Other Extensions Act (P.L 116-159), the Consolidated Appropriations Act, 2021 (P.L. 116-260), and the American Rescue Plan Act, 2021 (P.L 117-2) authorized a temporary assistance program for households with children without access to meals in school during the public health emergency declared January 27, 2020. The Families First Coronavirus Response Act, Section 1101 required P-EBT benefits to be issued in accordance with the State’s federally approved plan. DEED’s CNS staff and the Department of Health’s Division of Public Assistance developed a joint plan to issue P-EBT benefits to eligible children for the summer of 2021. The plan, approved by USDA in August 2021, required DEED’s CNS staff to determine eligibility for school age children. Pursuant to the approved plan, school children who were eligible to receive free or reduced-price National School Lunch Program meals as of the end of school year 2020–2021 were eligible for Summer 2021 P-EBT benefits. Auditors found DEED’s CNS staff authorized P-EBT benefits totaling $62,816 to 104 ineligible children. This included 46 children enrolled in an ineligible institution and 58 children that were not verified as being eligible at the end of the 2020-2021 school year. Cause: DEED’s CNS management attributed the issuance of unauthorized benefits to human error. Internal controls implemented by DEED management were inadequate to ensure benefits were only authorized for eligible children. Criteria: Title 2 CFR 200.303(a) requires the State to establish and maintain effective internal controls over federal awards that provide reasonable assurance that the State is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the grant awards. The Families First Coronavirus Response Act, Pub. L. 116-127, Section 1101 and federal program guidance requires that P-EBT benefits be issued in accordance with the State's approved plan. Alaska’s State Plan for P-EBT Children in School and Child Care, Summer 2021, section 3(f), established the framework for payments to eligible school-aged children. The plan provides that summer P-EBT benefits were to be issued to students identified as eligible for National School Lunch Program meals at the conclusion of school year 2020–2021. Effect: Inadequate internal controls increase the risk that expenditures may be unallowable, unsupported, or inaccurate. Noncompliance with federal regulations may result in the federal awarding agency imposing additional conditions or taking corrective action, including additional reporting requirements or withholding or terminating funding. Questioned Costs: AL 10.542: $62,816 Recommendation: Although the P-EBT program has concluded, if relevant in the future, DEED’s Child Nutrition Programs manager should improve controls to ensure compliance with federal summer free lunch program requirements. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2024-052 Prior Year Finding: Federal Awarding Agency: 2023-032 U.S. Department of Agriculture (USDA) Impact: Material Weakness, Material Noncompliance AL Number and Title: 10.542 Pandemic Electronic Benefit Transfer Food Benefits (P-EBT) – COVID-19 Federal Award Number: School Year 2020–2021, Summer 2021 Applicable Compliance Requirement: Activities Allowed or Unallowed, Eligibility Condition: DOH’s DPA did not determine or distribute benefits to school children or children in child care in accordance with the process and timeframes in the federally approved state plan. The audit identified the following deficiencies in FY 24: • The children in child care beneficiaries were not identified as required by the school year 2020–2021 state plan. • The per child benefit amount paid to the 15,697 children in child care was understated by $6.21 and 125 children were included in both the student and the child care benefit eligibility lists. • Issuance records provided by DPA’s Electronic Benefits Transfer (EBT) contractor, Fidelity National Information Services (FIS), were $795,659 more than DPA reported issuances. Furthermore, the FIS report included $28,992 in duplicate summer 2021 benefit issuances to school children. • School year 2020–2021 student beneficiaries paid in FY 24 received benefits at least two years late and the children in child care beneficiaries were paid benefits at least 20 months late. Summer of 2021 beneficiaries paid in FY 24 received benefits at least 20 months late. Context: The Families First Coronavirus Response Act (FFCRA) (P. L. 116-127) authorized a temporary assistance program for households with children without access to meals in school and to certain Supplemental Nutrition Assistance Program (SNAP)-enrolled children in child care during the public health emergency declared January 27, 2020. Under the P-EBT program school children were eligible for benefits if the child would have received free or reduced-price meals at a school through the National School Lunch Program if not for a school’s closure, or reduced attendance or hours, for at least five consecutive days due to the COVID-19 pandemic. Children enrolled in a child care facility were also eligible for the program if the child was a member of a household that received SNAP benefits after October 1, 2020. P-EBT benefits were to be issued in accordance with a federally approved state plan. DPA and the Department of Education and Early Development, Child Nutrition Services (CNS) section, developed joint plans to issue P-EBT benefits to eligible school children and children in child care for the school year 2020–2021 and summer 2021. The school year 2020–2021 plan was approved by USDA in June 2021 and the summer 2021 plan was approved by USDA in August 2021. The approved plans required CNS to determine eligibility for school age children and DPA to determine eligibility for children in child care. CNS staff determined school children eligibility and calculated benefits using operating and enrollment information obtained from school districts. DPA staff determined children in child care eligibility for school year 2020–2021 using data from the Eligibility Information System (EIS). DPA issued children in child care benefits to all SNAP eligible children that were under the age of six at any time between October 2020 and June 2021. All children determined eligible at the end of school year 2020–2021 were deemed eligible for summer 2021 benefits. The school year 2020–21 plan outlined that P-EBT benefits for the period August 2020 through December 2020 were to be issued beginning July 2021 and benefits for the period January 2021 through August 2021 were to be issued beginning in August 2021. Additionally, the plan outlined that benefit issuances to children in child care were to begin September 22, 2021. The summer 2021 plan outlined that benefits to students and children in child care were to be issued in September 2021 and October 2021, respectively. The approved plans also required the State to ensure that children did not receive a child care benefit and a school benefit for the same month. Additionally, the State was to confirm monthly eligibility for SNAP-enrolled children under the age of six living in the area of a school that was closed or operating at reduced attendance. Benefit levels for these children were to be set at the same rate as the average P-EBT benefit for school children in the same area. Furthermore, the State was to identify areas that did not have a school operating at reduced attendance or hours, but were experiencing a reduction in child care access each month using Child and Adult Care Food Program meal claim data provided by CNS. The State was to identify facilities with a 25 percent reduction in meal claims and provide benefits equal to the statewide average P-EBT benefit for school children. DPA was to gather demographic data from the child care facilities to match against SNAP EIS data to identify eligible children. The status of the facilities was to be examined each quarter to determine benefit levels. As noted above, the approved process was not followed and all SNAP-enrolled children under the age of six were determined eligible and received benefits. USDA’s memo approving Alaska’s P-EBT 2020–2021 state plan outlines that any significant impairment in the ability to implement the approved P-EBT plan or substantive changes should be communicated to USDA as soon as possible. No substantive changes regarding the eligibility determination process were communicated by DPA to USDA in FY 24. DPA staff alerted USDA in June 2023 that P-EBT issuances would extend to December 31, 2023. Between July 2023 and April 2024 DPA issued P-EBT benefits (per FIS data) totaling approximately $43.2 million. Cause: DPA management asserted that the children in child care population could not be identified as originally agreed upon under the school year 2020–2021 state plan and that a deviation from the plan was necessary to provide the benefits. The understated benefit amount was due to a calculation error. DPA lacked supervisory review procedures to ensure the accuracy of the benefit calculation and to prevent children from appearing on both student and child care eligibility lists. DPA management and FIS staff could not explain the variance between FIS reported issuance amounts and the amounts reported by DPA staff to USDA. DPA management asserted that benefit issuance delays were attributable to untimely receipt of eligibility data from CNS and system limitations that prevented the division from utilizing EIS to issue benefits. Delayed payments to SNAP-enrolled school children in child care were ascribed to competing priorities and difficulty identifying child care facility closures. Criteria: Title 2 CFR 200.303(a) requires the State to establish and maintain effective internal controls over federal awards that provide reasonable assurance that the State is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the grant awards. FFCRA, Pub. L. 116-127, Section 1101 and federal program guidance required that P-EBT benefits be issued in accordance with the State's approved plan. Alaska’s State Plan for P-EBT Children in School and Child Care, 2020–2021, section 5, describes how the State will identify eligible children in child care and calculate benefits. Alaska’s State Plan for P-EBT Children in School and Child Care, 2020–2021, section 7, establishes the framework for initial retroactive payment to eligible children from the beginning of the school year to June 2021. The plan outlines that benefits for the period of August 2020 through December 2020 would be issued beginning July 2021 and benefits for January 2021 through June 2021 would be issued beginning August 2021. Alaska’s State Plan for P-EBT Children in School and/or Child care, Summer 2021, section 3 establishes a tentative issuance schedule as September 2021 for school children and October 2021 for children in child care, and USDA encouraged the State to distribute benefits in two or three issuances across the summer of 2021, to the extent practical. Section 3 also outlines the framework for identifying eligible school children and children in child care for summer 2021 P-EBT benefits. USDA Memo, P-EBT Approval of Alaska’s State Plan for Summer 2021, Plan Timetable and Revisions section provides that Alaska will distribute benefits to households consistent with the timeframes identified in the state plan. If any challenges or delays significantly impair the State’s ability to implement the approved plan or require substantive changes to the plan, the State must notify USDA’s Food and Nutrition Services (FNS) regional office as soon as possible. Effect: The delayed P-EBT payment processing reduced access to food benefits. Significant delays in issuing benefits increased the risk that eligibility data had grown stale and intended recipients did not receive the benefits. DPA management’s noncompliance with the federally approved plans may result in the federal awarding agency issuing sanctions or disallowances. Questioned costs were indeterminate due to the unreliability of FIS data. Questioned Costs: AL 10.542: Indeterminate Recommendation: DOH’s commissioner should allocate the resources necessary to ensure effective systems are in place to properly administer federal programs. Views of Responsible Officials: The department partially agrees with the finding. The Division of Public Assistance disagrees with the finding regarding issuance timelines. The division communicated with FNS regarding manual benefit issuance for Alaska expressing timelines would be affected and FNS did not request an updated timeline. Communication with FNS regarding issuance remained consistent, with no indication to alter our issuance plan. Auditor’s Concluding Remarks: Management’s response did not persuade the auditor to revise the finding. DOH management states that the division consistently communicated with FNS regarding procedural delays affecting the payment timeline and that FNS did not request an updated timeline; however, DPA management could not provide evidence that FNS waived the requirement to submit an updated timeline.
Finding No. 2024-053 Prior Year Finding: 2023-034 Federal Awarding Agency: USDA Impact: Material Weakness, Material Noncompliance AL Number and Title: 10.551, 10.561 SNAP Cluster Federal Award Number: 23AK35050292301, 24AK35050292301 Applicable Compliance Requirement: Allowable Costs/Cost Principles, Special Tests and Provisions Condition: The amount of FY 24 SNAP benefits reported to USDA as issued by the State’s EBT contractor, FIS, was $2,628,951 more than the amount of authorized benefits reported in data from DPA’s EIS. Furthermore, FIS could not provide a reliable audit trail of issuances. Context: DPA relies on the legacy eligibility system, EIS, to determine eligibility for SNAP and calculate monthly benefit amounts. Benefit amounts are calculated based on household size, income, and other financial resources of all qualifying members of a household, less specific allowable deductions. Each day EIS transmits an issuance batch file, including authorized beneficiaries and benefit amounts, to the State’s EBT contractor, FIS, which maintains accounts for each beneficiary. When an EBT card is utilized by a beneficiary, FIS functions as the intermediary between the State’s U.S. Treasury benefit account and the retailers by settling SNAP benefit transactions with retailers before drawing down federal reimbursement. The State is required to ensure its automated data processing systems accurately and completely process and store all case file information for eligibility determinations and benefit calculations and provide the data necessary to meet federal issuance and reconciliation reporting requirements. A reconciliation of FIS issuance records with EIS authorized beneficiaries and benefit amounts demonstrates the completeness and accuracy of the EBT process. In FY 24 the EIS benefit data provided by DPA could not be reconciled to the amount of SNAP benefits issued per FIS data or the amounts reported by DPA to USDA. Furthermore, FIS could not provide a detailed list of issuances to support the monthly amounts reconciled by DPA staff and reported to USDA. As a result, the audit could not verify the accuracy and completeness of benefit calculations. Cause: DPA management and FIS staff could not identify the cause of the variances. DPA’s outdated legacy information system and the lack of daily reconciliations (see Finding No. 2024-055) contributed to the deficiencies. Criteria: Title 7 CFR 274.1(h) requires that the State agency create and maintain a master issuance file that consolidates records of all certified SNAP households, record participation activity for each household, and supply all information necessary to fulfill the reporting requirements outlined in Title 7 CFR 274.4. Title 7 CFR 274.4(a) requires the State to reconcile benefits posted to household accounts on the central computer against benefits on the issuance authorization file. Title 2 CFR 200.303(a) requires the State to establish and maintain effective internal controls over federal awards that provide reasonable assurance that the State is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the grant awards. Effect: Significant discrepancies between EIS benefit data and the EBT contractor’s issuance records undermines confidence in the eligibility system and may be indicative of significant unidentified processing errors. Inadequate system processing increases the risk of incorrect or ineligible benefits. Questioned Costs: AL 10.551: $2,628,951 Recommendation: DPA’s director should identify the cause of the discrepancies between EBT contractor issuance data and the State’s eligibility system and take action necessary to ensure SNAP benefit payments are supported by eligibility and benefit data. Views of Responsible Officials: The department agrees with the finding, but not the questioned cost. The Division of Public Assistance performs monthly reconciliations and balancing efforts to ensure accuracy with routine FIS reports, EIS authorization and issuance reports, and federal reporting. However, the division agrees that a new ad hoc report created for this audit by the EBT contractor, FIS, does not match with issuances and reporting. Auditor’s Concluding Remarks: Management’s response did not persuade the auditor to revise the finding. DOH management states the monthly reconciliations of FIS, EIS, and federal reports ensures the accuracy of issuance data; however, DPA management could not provide evidence that eligibility determinations in EIS supported FIS benefit issuances. Furthermore, FIS payment issuance details did not support the summary data used in the monthly reconciliations.
Finding No. 2024-054 Federal Awarding Agency: USDA Impact: Material Weakness, Material Noncompliance AL Number and Title: 10.551, 10.561 SNAP Cluster Federal Award Number: 23AK35050292301, 24AK35050292301 Applicable Compliance Requirement: Allowable Costs/Cost Principles, Special Tests and Provisions Condition: Testing of 42 SNAP recipient cases to verify the completeness and accuracy of benefit calculations found 37 (88 percent) were incorrect or unsupported, including 24 (57 percent) in which the recipients’ application or reports of changes were not processed within federally required timeframes. Testing of 42 SNAP recipient cases to verify the adequacy of case information stored in EIS and DOH’s document management system, ILINX, found 18 (43 percent) had inadequate verifications of required information. Context: The State is required to ensure only eligible households receive supplemental nutrition assistance. Benefit amounts are calculated based on household size, income, and other financial resources of all qualifying members of a household, less specific allowable deductions. The State is required to ensure its automated data processing systems accurately and completely process and store all case file information for eligibility determinations and benefit calculations; automatically cut off households at the end of a certification period unless recertified; and provide the data necessary to meet federal issuance and reconciliation reporting requirements. DPA eligibility technicians (ET) review applications, verify income and resources, and make a determination whether a household is eligible to receive benefits. ETs obtain and upload source documentation into ILINX and manually update EIS with information from source documentation. As part of determining benefit eligibility, the State is required to coordinate the exchange of data with other agencies, such as the federal Social Security Administration, State employment security agency, and current employers, to verify the household’s identity, income, resources, and other eligibility criteria. ET actions taken, verifications performed, and contacts made are recorded using the EIS’s case note screen. Source documentation supporting the eligibility determination is retained in ILINX. To help ensure the accuracy and completeness of EIS information, DPA conducts training and requires supervisors to perform quality control reviews. On November 3, 2023, DOH management submitted a request to FNS to waive federally required interviews and certain verifications of SNAP household eligibility criteria in order to address the ongoing backlog of SNAP cases that built up during the COVID-19 public health emergency. FNS denied the waiver request on November 22, 2023. Disregarding the denial, DOH management informed FNS of the State’s intent to streamline the verification process, whereby ETs, when verifications are not available, authorized SNAP benefits without performing federally required verifications. The EIS legacy system relies on manual processes to adequately support the eligibility and benefit determinations, and ensure the determinations are accurate. Of the 42 SNAP cases tested the following errors were identified, and some cases had multiple errors: • Twenty-two SNAP households’ (52 percent) monthly allotment could not be corroborated by the information in EIS and/or ILINX. • Twenty-four SNAP applications (57 percent) were not processed timely. Fifteen of the 24 were processed 100 or more days after receipt by DPA, including one application that was processed after 295 days. • Nine SNAP applications (21 percent) were certified eligible without an interview at initial application or recertification. Cause: To resolve DPA’s backlog of SNAP applications and recertifications, on December 8, 2023, DOH’s Commissioner directed ETs to process all applications, recertifications and renewals without verifying federally required eligibility information. DPA management informed FNS that the State would reassess these temporary processing procedures after six months or earlier. Furthermore, due to competing priorities, quality control reviews were not consistently performed during FY 24. Criteria: Title 2 CFR 200.303(a) requires the State to establish and maintain effective internal controls over federal awards that provide reasonable assurance that the State is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the grant award. Title 7 CFR 272.10(b) requires the State to use an automated data processing system for SNAP. The system is to be used to determine eligibility and calculate benefits or validate eligibility workers’ calculations by processing and storing all case file information necessary for the eligibility determinations and benefit computations including, but not limited to, all household members’ names, addresses, dates of birth, social security numbers, individual household members’ earned and unearned income by source, deductions, resources, and household size. Also, the system must be used to redetermine or revalidate eligibility and benefits based on notices of change in households’ circumstances. Title 7 CFR 272.8(a)(1) requires the State maintain and use an income and eligibility verification system to request wage and benefit information from various agencies and use that information to verify eligibility for, and the amount of, SNAP benefits due to eligible households. Title 7 CFR 273.2(f)(1) requires the State to verify certain household income, expenses, and circumstances necessary to determine eligibility prior to certifying a household for SNAP benefits. Title 7 CFR 273.2(f)(6) requires that case files be documented to support eligibility, ineligibility, and benefit level determinations. Documentation shall be in sufficient detail to permit a reviewer to determine the reasonableness and accuracy of the determination. Effect: Inadequate, outdated, or unsupported case file information increases the risk of incorrect or ineligible benefits. Errors in SNAP determinations could result in further sanctions and/or penalties imposed on DOH. Questioned Costs: AL 10.551: $59,073 Recommendation: DOH’s commissioner should allocate the resources necessary to administer SNAP in accordance with federal regulations. DPA’s director should increase staff training and quality control reviews to help ensure procedures are followed for determining SNAP eligibility and retaining required documentation, including the documentation to support compliance with verifications of income through required data exchanges. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2024-055 Prior Year Finding: 2023-035 Federal Awarding Agency: USDA Impact: Material Weakness, Material Noncompliance AL Number and Title: 10.551, 10.561 SNAP Cluster Federal Award Number: 23AK35050292301, 24AK35050292301 Applicable Compliance Requirement: Special Tests and Provisions Condition: Daily SNAP EBT reconciliations were not performed in FY 24. Context: A state must have a system in place to reconcile, on a daily basis, all of the funds entering into, exiting from, and remaining in the system each day with a state’s U.S. Treasury benefit account and FIS’s records. States must also have systems in place to reconcile retailer credit activity as reported into the banking system to client transactions maintained by the processor and to the funds drawn down from the EBT benefit account with the U.S. Treasury. The reconciliation process ensures that a state only draws federal funds for authorized transactions. In FY 24, required daily reconciliations were not performed. Cause: According to DPA management, daily reconciliations were not performed due to staff turnover, inadequate procedures, and the lack of trained staff. Criteria: Title 2 CFR 200.303(a) requires the State to establish and maintain effective internal controls over federal awards that provide reasonable assurance that the State is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the grant award. Title 7 CFR 274.4(a) requires that State agencies account for all issuance through a reconciliation process. The EBT system must provide reports and documentation pertaining to reconciliation. Reconciliations must be conducted and records kept as follows: • Verification of retailer’s credits against deposit information entered into the automated clearinghouse network; and • Reconciliation of total funds entered into, exiting from, and remaining in the system each day. Effect: The lack of daily reconciliations increases the risk of unidentified processing errors and unallowable costs, including potential non-federal liabilities. States are responsible for efficiently and effectively administering SNAP in accordance with federal laws, regulations, and FNS approved Plan of Operations. A determination by FNS that the State has failed to comply with any of these requirements may result in a suspension or disallowance of the federal share of the State’s administrative funds. Questioned Costs: None Recommendation: DPA’s director should develop and implement daily reconciliation and monitoring procedures and train staff to ensure daily reconciliations are conducted in accordance with federal regulations. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2024-027 Federal Awarding Agency: USDA Impact: Significant Deficiency, Noncompliance AL Number and Title: 10.553, 10.555, 10.559, 10.582 Child Nutrition Cluster (CNC) Federal Award Number: 237AKA3N1099, 247AKA3N1099, 237AKAK3N1199, 247AKAK3N1199, 237AKAK3N8903, 237AKAK1L1603 247AKAK1L1603 Applicable Compliance Requirement: Reporting Condition: DEED did not comply with Federal Funding Accountability and Transparency Act (FFATA) reporting requirements applicable to CNC FY 24 subawards. Context: FFATA requires information on federal awards be made available to the public through a single searchable website (www.usaspending.gov). The FFATA Subaward Reporting System (FSRS) is the reporting tool federal awardees, such as the State of Alaska, use to report subaward and executive compensation data for first-tier subawards. A DEED accountant is responsible for preparing and filing monthly FSRS submissions. No CNC FFATA reports were submitted in FY 24. CNC subawards totaling $49,364,912 were subject to FFATA reporting requirements. Cause: According to DEED management, the FSRS help desk was unresponsive in resolving issues with FFATA reporting. In addition, due to turnover within the department, other projects were prioritized over FFATA reporting. Internal controls were not in place to ensure FFATA reports were filed timely. Criteria: Title 2 CFR 200.303 requires the State to establish and maintain effective internal control over the federal award that provides reasonable assurance that the State is managing the federal award in compliance with federal statutes, regulations, and terms and conditions of the grant award. Title 2 CFR 170 states federal award recipients are required to report each subaward that obligates $30,000 or more in federal funds. This information must be reported no later than the end of the month following the month in which the obligation was made; include information about each obligating action in accordance with submission instructions; and include the names and total compensation of each of the subrecipient’s five most highly compensated executives if revenue thresholds are met and the executive compensation is not available to the public. Effect: Failure to comply with FFATA reporting requirements reduces transparency, impairs decision-making, and may potentially jeopardize future federal funding. Questioned Costs: None Recommendation: DEED's Administrative Services director should allocate sufficient staff resources to comply with FFATA reporting requirements, complete outstanding reporting submissions, and implement controls to ensure FFATA reports are filed timely. Views of Responsible Officials: The department partially agrees with Finding 2024-027. While it is accurate that no FFATA reporting was accomplished for the Child Nutrition Cluster in FY2024, the department disagrees with the specific dollar amount. The methodology used for determining the dollar amount is overly simplistic and does not take each award into account, as specified in 2CFR170.220. The methodology also excludes awards to other State agencies when 2CFR170.300 specifically includes State entities. Auditor’s Concluding Remarks: Management’s response did not persuade the auditor to revise the finding. DEED is responsible for submission of federal reports and should allocate sufficient resources and implement controls to ensure compliance with federal reporting requirements.