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.
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.
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.
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.
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.
Finding No. 2024-034 Federal Awarding Agency: U.S. Department of Defense (USDOD) Impact: Significant Deficiency, Noncompliance AL Number and Title: 12.401 National Guard Military Operations and Maintenance Projects (NGMOMP) Federal Award Number: W91ZRU-20-2-1001, W91ZRU-21-2-1001, W91ZRU-22-2-1001, W91ZRU-23-2-1001, W91ZRU-24-2-1001 Applicable Compliance Requirement: Matching, Level of Effort, Earmarking Condition: The State’s accounting system was not updated for changes to the FFY 24 federally certified Facilities Inventory and Support Plan (FISP), which is used to allocate costs to the NGMOMP program. Context: The FISP is USDOD’s federal registry of real property inventory and includes detailed information of all federal/state owned and state operated Army National Guard (ARNG) facilities within the state. All ARNG facilities are owned by, leased for, or licensed to the State. As a result, the State operates and maintains all ARNG facilities. The FISP identifies the level of federal reimbursement authorized for each real property facility through support codes. National Guard Regulations (NGR) Pamphlet 420-10, Chapter 7, provides the support codes with the corresponding federal funding level percentage (i.e. 100 percent, 75 percent, 50 percent, or no support provided). The FISP is annually updated and certified to identify new facilities, changes in funding support, or facilities no longer supported by USDOD. The certified FISP is provided to DMVA management for tracking of ARNG facilities and determining the appropriate funding levels. DMVA management tracks the facilities using location codes in the State’s accounting system. The appropriate federal and State funding level is assigned to each location code. In FY 24 there were expenditures for 139 facility location codes. The audit reviewed all 139 facilities and found 11 (eight percent) had expenditures allocated at a higher federal rate than authorized in the FISP and one of the 11 locations was not listed on the FISP. Cause: DMVA’s procedures were insufficient to ensure the FISP was reviewed annually to identify changes in the facility support codes that require coding changes in the State’s accounting system. DMVA management also applied a higher reimbursement rate based on misinterpretation of multi-use facilities. 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 federal awards. Title 2 CFR 200.403 requires costs to be necessary, reasonable, and allocable to the federal award, and to conform to any limitations or exclusions in the federal awards as to types or amount of cost items. NGR 5-1 Section 5-4, dated May 28, 2010, states that when there is an identified cost share in an agreement, the grantor shall reimburse the grantee only for the grantor’s percentage share of the total allowable costs. NGR 420-10, Policy and Guidance for ARNG Facilities Program, dated September 2019, states the rate of reimbursement to the State for all authorized charges shall be based on the FISP support codes for the facility generating the expenditure. Effect: Failing to update the State’s accounting system resulted in DMVA management overcharging expenditures to the federal program. Noncompliance with federal regulations may result in the federal awarding agency imposing additional conditions or taking corrective action, including withholding/terminating funding. Questioned Costs: AL 12.401: $88,984 Recommendation: DMVA’s Division of Administrative Services (DAS) director and the Army Guard Facilities Maintenance director should strengthen procedures to ensure the State’s accounting system is updated annually based on revisions to the certified FISP and ensure the proper codes are used for multi-use facilities. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2024-035 Federal Awarding Agency: USDOD Impact: Significant Deficiency, Noncompliance AL Number and Title: 12.401 NGMOMP Federal Award Number: W91ZRU-23-2-1001, W91ZRU-23-2-1004, W91ZRU-23-2-1005, W91ZRU-23-2-1010, W91ZRU-23-2-1021E, W91ZRU-23-2-1021K, W91ZRU-23-2-1040 Applicable Compliance Requirement: Period of Performance Condition: Six of seven award extensions for the NGMOMP program were untimely. Additionally, one award was not closed timely. Context: National Guard Bureau Grants and Cooperative Agreement Policy Letter 21-07, effective date July 19, 2021, revised the program period of performance requirements for extension requests to be submitted no later than 10 days prior to the end of the 120-day award closeout period. Award extension requests were required to be submitted no later than January 21, 2024. Three of the six extension requests were submitted on January 30, 2024 (nine days late); two were submitted on January 25, 2024 (six days late); and one was submitted on January 22, 2024 (one day late). The policy letter also revised the timeframe for award closeout requiring the grantee to conduct closeout within 120 calendar days from the end of the period of performance. Two awards closed during FY 24, of which one did not have a final accounting submitted within the 120 days. Award closeout was submitted approximately 200 days after the end of the period of performance or approximately 80 days late. Cause: DMVA has written procedures for federal extension requests and award closure. However, competing priorities resulted in untimely submission of extension requests. The final reimbursement requests were submitted to USDOD on January 25, 2024, six days before the end of the closeout period. Federal payment was not received until March 19, 2024. Due, in part, to the untimely receipt of the payments, closeout documentation was not signed by all necessary parties until April 13, 2024. Criteria: Per Title 2 CFR 200.308(e)(2) all requests for one-time extension should be submitted at least 10 calendar days before the conclusion of the period of performance. Title 2 CFR 200.344 prescribes the pass-through entity must close out the federal award when it determines that all administrative actions and required work of the federal award have been completed. A recipient must submit all reports and liquidate all financial obligations no later than 120 days after the conclusion of the period of performance. Title 2 CFR 200.303(a) requires the State to establish and maintain effective internal controls over federal awards that provide reasonable assurance that the State is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Effect: Untimely award extension requests and award closeouts may result in unallowable program expenditures. Questioned Costs: None Recommendation: DMVA’s DAS director should follow procedures to ensure cooperative award extensions and award closeout documents are submitted timely, including requesting final payments timely, given the extended timeframe for federal reimbursement. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2024-043 Federal Awarding Agency: United States Department of the Interior (USDOI) Impact: Significant Deficiency, Noncompliance AL Number and Title: 15.605,15.611 Fish and Wildlife Cluster (FWC) Federal Award Number: F22AF02164, F22AF01666 and F22AF01963 Applicable Compliance Requirement: Activities Allowed or Unallowed Allowable Costs/Cost Principles Condition: Testing a random sample of 60 FY 24 non-personal service expenditures charged to the FWC identified two expenditures that lacked proper approval, and one that charged unallowable costs to the FWC. Context: DFG’s primary internal control over financial transactions is knowledgeable DFG staff review of invoices or other supporting documentation to ensure the costs are allowable, supported, coded to the correct program, and within the period of performance. This review is demonstrated by the approver’s signature on the invoice or other supporting documentation authorizing payment. In FY 22, the processing of DFG transactions transitioned to the Department of Administration’s (DOA) centralized Shared Services of Alaska (SSoA). DFG submits invoices with coding and approval to SSoA to initiate processing. According to SSoA procedures, a final verification of coding and approval by departmental administrative services staff prior to SSoA processing is optional. The audit tested a random sample of 60 non-personal services expenditure transactions. Auditors identified two transactions that lacked DFG staff signature authorization. In addition, one transaction approved by DFG staff totaling $206.24 was not allowable due to the costs being for advertising a big game hunt permit raffle. Cause: DFG management attributed the errors to changes in the internal control environment, specifically the shift in non-personal service expenditure input and certification in the accounting system from DFG staff to SSoA staff. Furthermore, management noted that this transition weakened the control processes and emphasized that unauthorized payments should not have been processed by SSoA staff. DFG management also cited DFG staff turnover and inadequate training as a contributing factor. Criteria: Title 2 CFR 200.303 requires the State to establish and maintain effective internal controls over federal awards that provide reasonable assurance that a state is managing federal awards in compliance with federal statutes, regulations, and terms and conditions of the grant awards. Per Title 50 CFR 80.54, ineligible activities include those conducted for the primary purpose of producing income. Per Title 2 CFR 200.421, the only allowable advertising costs are those which are solely for: staff recruitment, goods and services for the performance of a federal award, disposal of materials acquired in the performance of a federal award, and program outreach (such as recruiting project participants) and other specific purposes necessary to meet federal award requirements. Effect: Inadequate internal controls increase the risk that expenditures may be unallowable, unsupported, or miscoded. Furthermore, noncompliance with federal regulations may result in the federal awarding agency imposing additional conditions or taking corrective action, including adding reporting requirements or withholding/terminating funding. Questioned Costs: ALN 15.611: $206 Recommendation: DFG’s Division of Administrative Service (DAS) director and Division of Wildlife Conservation director should work together to improve training for DFG staff to ensure expenditures charged to FWC are allowable and properly authorized prior to processing by SSoA staff. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2024-044 Federal Awarding Agency: USDOI Impact: Material Weakness AL Number and Title: 15.605, 15.611 FWC Federal Award Number: Multiple Applicable Compliance Requirement: Equipment and Real Property Management Condition: Auditors could not obtain sufficient and appropriate evidence to verify compliance with FWC’s equipment and real property management requirements. Context: DFG is responsible for ensuring equipment, real property, and capital improvements, acquired with FWC funds, are used for an authorized purpose, sufficiently tracked, and appropriately disposed of in accordance with federal regulations. In FY 24, DFG staff did not maintain sufficient evidence to demonstrate compliance with equipment and real property management requirements. DFG equipment and real property records did not reliably catalog the universe of equipment, real property, and capital improvements funded with FWC grant monies. Equipment records were incomplete and not trackable by funding source in the accounting system. As a result, the audit was unable to determine the extent of equipment purchased with FWC funds. Real property records had not been reconciled since 2019 and could not be matched with DFG site visit logs. The audit could not identify the FWC assets to be monitored and the extent of site visits conducted during the audit period, and whether the site visits included monitoring for authorized uses. Cause: DFG management attributed the deficiencies to a lack of department-wide procedures, staff turnover, and insufficient training. Criteria: Title 2 CFR 200.303 requires the State to establish and maintain effective internal controls over the federal award that provides reasonable assurance that the State is managing the federal awards in compliance with federal statutes, regulations, and terms and conditions of the federal award. Title 2 CFR 200.311 and Title 50 CFR 80.134 requires the State to use real property for the purpose authorized in the grant for as long as it is needed for that purpose. When real property is no longer needed for the originally authorized purpose, property must be disposed of in accordance with federal requirements. Title 2 CFR 200.313 requires the State to use, manage and dispose of equipment acquired under a federal award in accordance with State laws and procedures. Such equipment must be used for the project or program for which it was acquired and for as long as needed. The State agency must maintain equipment property records, perform physical inventory of equipment, develop a control system, and perform regular maintenance of equipment. Title 50 CFR 80.133 requires the State to maintain acquired or completed capital improvements under FWC grants to ensure that each capital improvement continues to serve its authorized purpose during its useful life. Effect: The lack of department-wide procedures increases the risk that FWC funded assets are not used for authorized purposes and properly disposed of when no longer needed. Inadequate equipment tracking increases the risk of loss or theft. Further, noncompliance with federal regulations may result in the federal awarding agency imposing additional conditions or taking corrective action, including additional reporting requirements or withholding/terminating funding. Questioned Costs: Indeterminate Recommendation: DFG’s commissioner should ensure procedures are developed and training is implemented so that FWC funded equipment, real property and capital improvements are managed in compliance with federal requirements. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2024-043 Federal Awarding Agency: United States Department of the Interior (USDOI) Impact: Significant Deficiency, Noncompliance AL Number and Title: 15.605,15.611 Fish and Wildlife Cluster (FWC) Federal Award Number: F22AF02164, F22AF01666 and F22AF01963 Applicable Compliance Requirement: Activities Allowed or Unallowed Allowable Costs/Cost Principles Condition: Testing a random sample of 60 FY 24 non-personal service expenditures charged to the FWC identified two expenditures that lacked proper approval, and one that charged unallowable costs to the FWC. Context: DFG’s primary internal control over financial transactions is knowledgeable DFG staff review of invoices or other supporting documentation to ensure the costs are allowable, supported, coded to the correct program, and within the period of performance. This review is demonstrated by the approver’s signature on the invoice or other supporting documentation authorizing payment. In FY 22, the processing of DFG transactions transitioned to the Department of Administration’s (DOA) centralized Shared Services of Alaska (SSoA). DFG submits invoices with coding and approval to SSoA to initiate processing. According to SSoA procedures, a final verification of coding and approval by departmental administrative services staff prior to SSoA processing is optional. The audit tested a random sample of 60 non-personal services expenditure transactions. Auditors identified two transactions that lacked DFG staff signature authorization. In addition, one transaction approved by DFG staff totaling $206.24 was not allowable due to the costs being for advertising a big game hunt permit raffle. Cause: DFG management attributed the errors to changes in the internal control environment, specifically the shift in non-personal service expenditure input and certification in the accounting system from DFG staff to SSoA staff. Furthermore, management noted that this transition weakened the control processes and emphasized that unauthorized payments should not have been processed by SSoA staff. DFG management also cited DFG staff turnover and inadequate training as a contributing factor. Criteria: Title 2 CFR 200.303 requires the State to establish and maintain effective internal controls over federal awards that provide reasonable assurance that a state is managing federal awards in compliance with federal statutes, regulations, and terms and conditions of the grant awards. Per Title 50 CFR 80.54, ineligible activities include those conducted for the primary purpose of producing income. Per Title 2 CFR 200.421, the only allowable advertising costs are those which are solely for: staff recruitment, goods and services for the performance of a federal award, disposal of materials acquired in the performance of a federal award, and program outreach (such as recruiting project participants) and other specific purposes necessary to meet federal award requirements. Effect: Inadequate internal controls increase the risk that expenditures may be unallowable, unsupported, or miscoded. Furthermore, noncompliance with federal regulations may result in the federal awarding agency imposing additional conditions or taking corrective action, including adding reporting requirements or withholding/terminating funding. Questioned Costs: ALN 15.611: $206 Recommendation: DFG’s Division of Administrative Service (DAS) director and Division of Wildlife Conservation director should work together to improve training for DFG staff to ensure expenditures charged to FWC are allowable and properly authorized prior to processing by SSoA staff. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2024-044 Federal Awarding Agency: USDOI Impact: Material Weakness AL Number and Title: 15.605, 15.611 FWC Federal Award Number: Multiple Applicable Compliance Requirement: Equipment and Real Property Management Condition: Auditors could not obtain sufficient and appropriate evidence to verify compliance with FWC’s equipment and real property management requirements. Context: DFG is responsible for ensuring equipment, real property, and capital improvements, acquired with FWC funds, are used for an authorized purpose, sufficiently tracked, and appropriately disposed of in accordance with federal regulations. In FY 24, DFG staff did not maintain sufficient evidence to demonstrate compliance with equipment and real property management requirements. DFG equipment and real property records did not reliably catalog the universe of equipment, real property, and capital improvements funded with FWC grant monies. Equipment records were incomplete and not trackable by funding source in the accounting system. As a result, the audit was unable to determine the extent of equipment purchased with FWC funds. Real property records had not been reconciled since 2019 and could not be matched with DFG site visit logs. The audit could not identify the FWC assets to be monitored and the extent of site visits conducted during the audit period, and whether the site visits included monitoring for authorized uses. Cause: DFG management attributed the deficiencies to a lack of department-wide procedures, staff turnover, and insufficient training. Criteria: Title 2 CFR 200.303 requires the State to establish and maintain effective internal controls over the federal award that provides reasonable assurance that the State is managing the federal awards in compliance with federal statutes, regulations, and terms and conditions of the federal award. Title 2 CFR 200.311 and Title 50 CFR 80.134 requires the State to use real property for the purpose authorized in the grant for as long as it is needed for that purpose. When real property is no longer needed for the originally authorized purpose, property must be disposed of in accordance with federal requirements. Title 2 CFR 200.313 requires the State to use, manage and dispose of equipment acquired under a federal award in accordance with State laws and procedures. Such equipment must be used for the project or program for which it was acquired and for as long as needed. The State agency must maintain equipment property records, perform physical inventory of equipment, develop a control system, and perform regular maintenance of equipment. Title 50 CFR 80.133 requires the State to maintain acquired or completed capital improvements under FWC grants to ensure that each capital improvement continues to serve its authorized purpose during its useful life. Effect: The lack of department-wide procedures increases the risk that FWC funded assets are not used for authorized purposes and properly disposed of when no longer needed. Inadequate equipment tracking increases the risk of loss or theft. Further, noncompliance with federal regulations may result in the federal awarding agency imposing additional conditions or taking corrective action, including additional reporting requirements or withholding/terminating funding. Questioned Costs: Indeterminate Recommendation: DFG’s commissioner should ensure procedures are developed and training is implemented so that FWC funded equipment, real property and capital improvements are managed in compliance with federal requirements. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2024-003 Federal Awarding Agency: U.S. Department of the Treasury (US Treasury) Impact: Significant Deficiency, Noncompliance AL Number and Title: 21.027 Coronavirus State and Local Fiscal Recovery Funds (SLFRF) – COVID-19 Federal Award Number: SLFRP0006, SLFRP2633, SLFRP4544 Applicable Compliance Requirement: Reporting Condition: OMB staff submitted the quarter ended December 31, 2023, FY 24 SLFRF program project and expenditure report to US Treasury with material errors. Context: The SLFRF program project and expenditure reports are filed quarterly. Key line items include current period and cumulative obligations and expenditures for all projects exceeding $50,000. Under an agreed-upon process between OMB and DOF, OMB staff prepared the quarterly report and the DOF state accountant reviewed, certified, and submitted the report in the US Treasury report portal. The audit found that OMB staff submitted the quarter ending December 31, 2023, report directly to US Treasury without review, certification, and submission by the DOF state accountant. The report overstated five projects current period obligations and four projects current period expenditures by $47,668,558 and $47,375,062, respectively. Cause: Auditors noted OMB lacked written procedures for report preparation, review, and submission. OMB staff turnover at the beginning of FY 24 resulted in a lack of understanding of the agreed-upon process for report submission. According to OMB staff, the quarter ending December 31, 2023, report errors were due to a misunderstanding of changes to the US Treasury reporting portal. Criteria: Title 2 CFR 200.303 requires the State to establish and maintain effective internal controls over federal awards that provide reasonable assurance that the State is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Title 31 CFR 35.4(c) requires the State to submit periodic reports providing detailed accounting of the use of funds and other information that may be required by the Secretary. Effect: Incorrect reports reduce transparency and may impair decision-making. Questioned Costs: None Recommendation: OMB’s director should develop written procedures that outline the process for preparation, review, certification, and submission of federal reports required under the SLFRF program and work with the federal oversight agency to correct errors as needed. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2024-032 Federal Awarding Agency: U.S. Department of the Treasury Impact: Material Weakness, Material Noncompliance AL Number and Title: 21.027 Coronavirus State and Local Fiscal Recovery Funds (SLFRF) – COVID-19 Federal Award Number: SLFRP0006, SLFRP2633, SLFRP4544 Applicable Compliance Requirement: Subrecipient Monitoring Condition: During FY 24, DCCED staff did not sufficiently monitor the subrecipient tasked with administering the SLFRF Tourism and Other Businesses program. Furthermore, DCCED management did not take action with respect to the subrecipient’s noncompliance with requirements to obtain a single audit. Context: One of the purposes of the federal SLFRF program was to provide funding to address the negative economic impacts of the pandemic. For this purpose, DCCED entered into a contract with a subrecipient to administer $90 million in grants to tourism and other businesses. The contract required the subrecipient to determine eligibility, send payments to eligible businesses, and provide disbursement reports to DCCED for monitoring. This activity created a subrecipient relationship. The audit determined that DCCED’s monitoring of the subrecipient was insufficient on two grounds. 1. DCCED staff did not perform monitoring activities to verify that the subrecipient was correctly determining eligibility, calculating award amounts, or correctly disbursing funds. DCCED staff reviewed reports and participated in meetings regarding issues raised by the subrecipient or participating businesses. However, DCCED staff did not obtain and review detailed FY 24 disbursement reports, or perform a desk review or onsite visit, to verify the subrecipients compliance with SLFRF program requirements. DCCED staff did not reconcile the total amount of funds DCCED advanced to the subrecipient with the total funds disbursed by the subrecipient. 2. Furthermore, DCCED staff did not ensure that the subrecipient obtained a single or program-specific audit. In FY 22 and FY 23 DCCED advanced a total of $77 million to the subrecipient. The Department of Administration, Division of Finance (DOF) compiles the amount of pass-through funds by subrecipient in order to identify and track subrecipients that must obtain a single audit. DOF sent the subrecipient single audit noncompliance letters for FY 22 and FY 23 and added the subrecipient to the State’s “Delinquent Audits” tracking log, which is posted on DOF’s webpage. However, DCCED staff did not verify the subrecipient’s single audit status and took no action to address the noncompliance. The subrecipient did not obtain a single audit for FY 22 and FY 23. Cause: DCCED lacked resources in its Division of Community and Regional Affairs to administer the SLFRF program. As a result, the program was administered by staff within the Commissioner’s Office that lacked adequate training, knowledge, and experience to administer a federal pass-through program. Consequently, DCCED staff administering the program were not fully aware of federal subrecipient monitoring requirements. Criteria: Title 2 CFR 200.303 requires the State to establish and maintain effective internal controls over federal awards that provide reasonable assurance that the State is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Title 2 CFR 200.332(d) requires pass-through entities to monitor the activities of a subrecipient as necessary to ensure that the subrecipient complies with statutes, regulations, and the terms and conditions of the subaward. The amount of monitoring should be commensurate with the subrecipient’s fraud risk and risk of noncompliance. Title 2 CFR 200.332(f) requires pass-through entities to verify that a subrecipient is audited as required by Uniform Guidance Subpart F - Audit. When a subrecipient is noncompliant with the single audit requirement, Title 2 CFR 200.505 states that pass-through entities "must take appropriate action." Authorized action includes withholding payments from the subrecipient or terminating the grant per Title 2 CFR 200.339. Effect: Inadequate subrecipient monitoring increases the risk of subrecipient noncompliance with federal statutes, regulations, and the terms and conditions of a program. Subrecipient noncompliance with the terms and conditions of the federal award could result in the State having to repay SLFRF monies to the federal government. Questioned Costs: None Recommendation: DCCED’s commissioner should ensure compliance with federal subrecipient monitoring requirements through adoption of written procedures and staff training. Furthermore, the commissioner should ensure the SLFRF subrecipient obtains single or program-specific audits for all required fiscal years. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2024-003 Federal Awarding Agency: U.S. Department of the Treasury (US Treasury) Impact: Significant Deficiency, Noncompliance AL Number and Title: 21.027 Coronavirus State and Local Fiscal Recovery Funds (SLFRF) – COVID-19 Federal Award Number: SLFRP0006, SLFRP2633, SLFRP4544 Applicable Compliance Requirement: Reporting Condition: OMB staff submitted the quarter ended December 31, 2023, FY 24 SLFRF program project and expenditure report to US Treasury with material errors. Context: The SLFRF program project and expenditure reports are filed quarterly. Key line items include current period and cumulative obligations and expenditures for all projects exceeding $50,000. Under an agreed-upon process between OMB and DOF, OMB staff prepared the quarterly report and the DOF state accountant reviewed, certified, and submitted the report in the US Treasury report portal. The audit found that OMB staff submitted the quarter ending December 31, 2023, report directly to US Treasury without review, certification, and submission by the DOF state accountant. The report overstated five projects current period obligations and four projects current period expenditures by $47,668,558 and $47,375,062, respectively. Cause: Auditors noted OMB lacked written procedures for report preparation, review, and submission. OMB staff turnover at the beginning of FY 24 resulted in a lack of understanding of the agreed-upon process for report submission. According to OMB staff, the quarter ending December 31, 2023, report errors were due to a misunderstanding of changes to the US Treasury reporting portal. Criteria: Title 2 CFR 200.303 requires the State to establish and maintain effective internal controls over federal awards that provide reasonable assurance that the State is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Title 31 CFR 35.4(c) requires the State to submit periodic reports providing detailed accounting of the use of funds and other information that may be required by the Secretary. Effect: Incorrect reports reduce transparency and may impair decision-making. Questioned Costs: None Recommendation: OMB’s director should develop written procedures that outline the process for preparation, review, certification, and submission of federal reports required under the SLFRF program and work with the federal oversight agency to correct errors as needed. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2024-032 Federal Awarding Agency: U.S. Department of the Treasury Impact: Material Weakness, Material Noncompliance AL Number and Title: 21.027 Coronavirus State and Local Fiscal Recovery Funds (SLFRF) – COVID-19 Federal Award Number: SLFRP0006, SLFRP2633, SLFRP4544 Applicable Compliance Requirement: Subrecipient Monitoring Condition: During FY 24, DCCED staff did not sufficiently monitor the subrecipient tasked with administering the SLFRF Tourism and Other Businesses program. Furthermore, DCCED management did not take action with respect to the subrecipient’s noncompliance with requirements to obtain a single audit. Context: One of the purposes of the federal SLFRF program was to provide funding to address the negative economic impacts of the pandemic. For this purpose, DCCED entered into a contract with a subrecipient to administer $90 million in grants to tourism and other businesses. The contract required the subrecipient to determine eligibility, send payments to eligible businesses, and provide disbursement reports to DCCED for monitoring. This activity created a subrecipient relationship. The audit determined that DCCED’s monitoring of the subrecipient was insufficient on two grounds. 1. DCCED staff did not perform monitoring activities to verify that the subrecipient was correctly determining eligibility, calculating award amounts, or correctly disbursing funds. DCCED staff reviewed reports and participated in meetings regarding issues raised by the subrecipient or participating businesses. However, DCCED staff did not obtain and review detailed FY 24 disbursement reports, or perform a desk review or onsite visit, to verify the subrecipients compliance with SLFRF program requirements. DCCED staff did not reconcile the total amount of funds DCCED advanced to the subrecipient with the total funds disbursed by the subrecipient. 2. Furthermore, DCCED staff did not ensure that the subrecipient obtained a single or program-specific audit. In FY 22 and FY 23 DCCED advanced a total of $77 million to the subrecipient. The Department of Administration, Division of Finance (DOF) compiles the amount of pass-through funds by subrecipient in order to identify and track subrecipients that must obtain a single audit. DOF sent the subrecipient single audit noncompliance letters for FY 22 and FY 23 and added the subrecipient to the State’s “Delinquent Audits” tracking log, which is posted on DOF’s webpage. However, DCCED staff did not verify the subrecipient’s single audit status and took no action to address the noncompliance. The subrecipient did not obtain a single audit for FY 22 and FY 23. Cause: DCCED lacked resources in its Division of Community and Regional Affairs to administer the SLFRF program. As a result, the program was administered by staff within the Commissioner’s Office that lacked adequate training, knowledge, and experience to administer a federal pass-through program. Consequently, DCCED staff administering the program were not fully aware of federal subrecipient monitoring requirements. Criteria: Title 2 CFR 200.303 requires the State to establish and maintain effective internal controls over federal awards that provide reasonable assurance that the State is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Title 2 CFR 200.332(d) requires pass-through entities to monitor the activities of a subrecipient as necessary to ensure that the subrecipient complies with statutes, regulations, and the terms and conditions of the subaward. The amount of monitoring should be commensurate with the subrecipient’s fraud risk and risk of noncompliance. Title 2 CFR 200.332(f) requires pass-through entities to verify that a subrecipient is audited as required by Uniform Guidance Subpart F - Audit. When a subrecipient is noncompliant with the single audit requirement, Title 2 CFR 200.505 states that pass-through entities "must take appropriate action." Authorized action includes withholding payments from the subrecipient or terminating the grant per Title 2 CFR 200.339. Effect: Inadequate subrecipient monitoring increases the risk of subrecipient noncompliance with federal statutes, regulations, and the terms and conditions of a program. Subrecipient noncompliance with the terms and conditions of the federal award could result in the State having to repay SLFRF monies to the federal government. Questioned Costs: None Recommendation: DCCED’s commissioner should ensure compliance with federal subrecipient monitoring requirements through adoption of written procedures and staff training. Furthermore, the commissioner should ensure the SLFRF subrecipient obtains single or program-specific audits for all required fiscal years. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2024-084 Federal Awarding Agency: NASA and USDHHS Impact: Significant Deficiency, Noncompliance AL Number and Title: 43.001, 93.859 RDC Federal Award Number: 80NSSC22K0579, P20GM103395 Applicable Compliance Requirement: Procurement and Suspension and Debarment Condition: Two of the sampled 40 covered transactions did not have checks for suspension or debarment with the external parties prior to entering the contract. Context: During the testing of suspension and debarment, two grants from the UAF campus had covered transactions, one a subrecipient and another a procurement transaction, that did not have evidence federal excluded parties list system checks were performed prior to entering into the covered transaction. Cause: UAF did not perform timely review of suspension and debarment listings prior to entering into a covered transaction. Criteria: Per Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Per 2 CFR 180.300 nonfederal entities entering into a covered transaction are required to verify the entity whom they intend to do business with are not excluded or disqualified. Effect: Potentially suspended or debarred vendor may have been contracted by the University for a covered transaction. Questioned Costs: None Recommendation: UAF management should perform suspension and debarment checks on all covered transactions paid with federal funds. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2024-083 Prior Year Finding: Federal Awarding Agency: National Science Foundation Impact: Significant Deficiency AL Number and Title: 47.076 RDC Federal Award Number: 1839290 Applicable Compliance Requirement: Period of Performance Condition: One of 40 sampled transactions were coded incorrectly to the wrong grant. Context: During testing of period of performance, one transaction was observed that appeared to have been liquidated beyond 120 days after the end of the period of performance. Upon further inspection, we concluded that the transaction was coded to the incorrect grant. The correct grant was still within the 120-day liquidation period after the end of the period of performance. Cause: UAF did not perform timely close out procedures on the grant which resulted in incorrectly coded expenditures to go undetected. Criteria: Per Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Effect: One transaction was incorrectly coded to the wrong grant. Questioned Costs: None Recommendation: UAF management should adhere to their existing requirements for timely grant close out procedures. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2024-085 Federal Awarding Agency: U.S. Department of Education Impact: Significant Deficiency, Noncompliance AL Number and Title: 84.031 Higher Education Institutional Aid Federal Award Number: P031R210002-23 Applicable Compliance Requirement: Matching, Level of Effort, Earmarking Condition: One sample of five grants with level of effort provisions in the grant award notification did not meet the level of effort for key personnel required by the federal agency. Context: During testing of special tests and provisions one grant of a sample of five from UAF was observed to not have met level of effort requirements as stipulated in the award documents. The campus had inadvertently submitted an incorrect budget with different key personnel to the agency and did not correct this with the federal agency upon receipt of the award documents stipulating the incorrect key personnel. Cause: An incorrect budget was submitted with the grant proposal to the Federal agency. Criteria: Per 2 CFR 200.308(f)(3) the Federal Government required a recipient of federal awards must receive prior written approval from the Federal agency for the disengagement of key personnel from a project for more than three months, or a 25% reduction in time and effort devoted to the Federal award. Per Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Effect: Key personnel listed in the award documents did not have time and effort tracked towards the grant project. Questioned Costs: None Recommendation: UAF management should continue to review budgets and key personnel submitted with grant proposals to Federal agencies. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2024-028 Federal Awarding Agency: U.S. Department of Education Impact: Material Weakness, Material Noncompliance AL Number and Title: 84.425 Education Stabilization Fund – COVID-19 Federal Award Number: S425U210020 Applicable Compliance Requirement: Reporting Condition: The Elementary and Secondary School Emergency Relief fund (ESSER) annual report filed by DEED in May 2024 was submitted with incomplete subrecipient expenditure data for key line item 3b.1. Context: ESSER funding is broken out into three different groups: ESSER I, ESSER II and American Rescue Plan (ARP) ESSER. Over 75% of total Education Stabilization Fund expenditures incurred in FY 23 for reporting in FY 24 were grants to subrecipients from ARP ESSER funding. State education agencies are to report on line 3b.1 subaward information, including which agencies received subawards and the funds allocated for and incurred by expenditure category. DEED staff submitted the ARP ESSER amounts awarded to grantees as part of the annual report; however subrecipient expenditure fields were submitted with zeros. Cause: According to DEED management, subrecipients were unresponsive to requests for information and staff assigned to prepare the report had competing priorities and insufficient time. In addition, management reviewed and submitted the report with known errors. 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 34 CFR 76.720 requires states to submit reports required for monitoring and continuous improvement and other reports required by the Secretary and approved by the US Office of Management and Budget (OMB). State education agencies are required by the Secretary to submit an annual performance report (OMB No. 1810-0749) with data on subrecipients, state education agencies and subrecipient expenditures, planned expenditures, and uses of funds. Grant Award Notification S425U210020 Attachment T: Grant Conditions: Part A 13. The state education agencies will comply with, and ensure that local education agencies comply with, all reporting requirements at such time and in such manner and containing such information as the Secretary may reasonably require. Effect: Inaccurate federal reporting reduces transparency and may impair the federal oversight agency’s ability to properly oversee the program. Questioned Costs: None Recommendation: DEED's Innovation and Education Excellence division director should allocate sufficient staff resources to prepare the ESSER annual report and strengthen report review and approval controls to ensure compliance with annual reporting requirements. Views of Responsible Officials: The department partially disagrees with Finding 2024-028. While it is true that the department did initially report zeros in the LEA portion of ESSER III reporting it is untrue that the effect was a reduction in transparency or impaired the federal agency’s oversight ability. No ESSER annual reporting can be submitted if all entered answers do not conform to implemented data validations requirements. Relevant in this instance is that if district level data reported does not match, to the penny, between different reporting categories, data validation errors occur. Including zeros, when accurate data conforming to data validation checks was not able to be entered, allowed the department to enter the data accurately during the first reporting reopen period. Had the department not entered zeros, data validation errors would have prevented the department from submitting the entire FY2023 ESSER annual report. If no report had been entered as of the initial due date the department would not have been allowed to submit any report at all, which would be less accurate than temporary partial inaccuracy. Auditor’s Concluding Remarks: Management’s response did not persuade the auditor to revise the finding. DEED is responsible for timely and accurate submission of federal reports and should allocate sufficient resources and strengthen controls to ensure compliance with federal reporting requirements.