FINDING 2024-007 Subject: Special Education Cluster (IDEA) - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: COVID-19 - Special Education Grants to States, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 22611-042-ARP, 22619-042-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation is a member of the Northeast Indiana Special Education Cooperative (Cooperative). During fiscal years 2022-2023 and 2023-2024, the Cooperative operated the special education program and spent the federal money on behalf of all its members. As the grant agreement was between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the procurement and the suspension and debarment requirements. The Cooperative did not have adequate procedures in place to ensure that the requirements for the simplified acquisition threshold and for small purchases were met for each applicable procured good or service or to ensure that vendors were not suspended or debarred prior to entering into a covered transaction. INDIANA STATE BOARD OF ACCOUNTS 29 EAST NOBLE SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Procurement When the value of the procurement for property or services exceeds the simplified acquisition threshold (SAT), or a lower threshold established by a nonfederal entity, formal procurement methods are required. The SAT is typically set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold. Therefore, the SAT threshold is set at $150,000. Formal procurement methods require adherence to documented procedures and formal methods such as sealed bids or proposals. When the purchase value exceeds the micro-purchase threshold but is less than the simplified acquisition threshold, a small purchase occurs. Small purchases require documented full and open competition or a documented rationale for limited competition. For 2023, the Cooperative had one vendor, with disbursements totaling $379,313, which exceeded the SAT threshold of $150,000. The Cooperative did not obtain sealed bids or competitive proposals nor was there documentation detailing the history of the procurement, which must include the reason for the procurement method used. For 2023, the Cooperative had one vendor with disbursements in the amount of $55,374, which were less than the SAT threshold of $150,000 but exceeded the $50,000 micro-purchase threshold and was selected for testing. The Cooperative did not obtain price or rate quotes nor was there documentation detailing the history of the procurement, which must include the reason for the procurement method used. For 2024, three vendors with disbursements totaling $175,125 were identified as being less than the simplified acquisition threshold of $150,000 but exceeding the $50,000 micropurchase threshold and were selected for testing. The Cooperative did not obtain price or rate quotes for two of the three vendors, and there was no documentation detailing the history of the procurement, which must include the reason for the procurement method used. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAM exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. Upon inquiry of the Cooperative in order to review the procedures in place for verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the Cooperative disclosed there were not any documented internal controls or procedures. Nine covered transactions were identified. The covered transactions totaling $803,836 were selected for testing. The Cooperative did not verify the suspension and debarment status of the tested vendors prior to payment. The lack of internal controls and noncompliance were systemic throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 30 EAST NOBLE SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases– (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . (b) Formal Procurement Methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: . . . (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. . . . INDIANA STATE BOARD OF ACCOUNTS 31 EAST NOBLE SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM.gov Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause The Cooperative noted that ARP portion of the Special Education grant was new for 2022-2023 and 2023-2024. The ARP funding gave opportunity for types of expenditures that do not typically get expensed using Special Education funding. The transactions noted within the Condition and Context were from the ARP portion of the grant, which provided property or services that exceeded the micro-purchase threshold. Management of the Cooperative was unaware of the procurement requirements when property or services exceed the micro-purchase threshold. In addition, management of the Cooperative was unaware of the Suspension and Debarment requirements when a covered transaction is expected to equal or exceed $25,000. Effect Without the proper implementation of an effectively designed system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Without following the required methods for procurement, the Cooperative could be overpaying for services. Unverified vendors to whom payments equal to or in excess of $25,000 could be suspended, debarred, or otherwise excluded. Noncompliance with the provisions of federal statutes, regulations, and terms and conditions of the federal award could result in the reduction of future federal funding to the Cooperative. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the Cooperative's management design and implement a system of internal controls related to procurement and suspension and debarment procedures to ensure procurement requirements are met and to ensure entities are neither suspended nor debarred or otherwise excluded or disqualified prior to entering into any covered transactions. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-007 Subject: Special Education Cluster (IDEA) - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: COVID-19 - Special Education Grants to States, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 22611-042-ARP, 22619-042-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation is a member of the Northeast Indiana Special Education Cooperative (Cooperative). During fiscal years 2022-2023 and 2023-2024, the Cooperative operated the special education program and spent the federal money on behalf of all its members. As the grant agreement was between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the procurement and the suspension and debarment requirements. The Cooperative did not have adequate procedures in place to ensure that the requirements for the simplified acquisition threshold and for small purchases were met for each applicable procured good or service or to ensure that vendors were not suspended or debarred prior to entering into a covered transaction. INDIANA STATE BOARD OF ACCOUNTS 29 EAST NOBLE SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Procurement When the value of the procurement for property or services exceeds the simplified acquisition threshold (SAT), or a lower threshold established by a nonfederal entity, formal procurement methods are required. The SAT is typically set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold. Therefore, the SAT threshold is set at $150,000. Formal procurement methods require adherence to documented procedures and formal methods such as sealed bids or proposals. When the purchase value exceeds the micro-purchase threshold but is less than the simplified acquisition threshold, a small purchase occurs. Small purchases require documented full and open competition or a documented rationale for limited competition. For 2023, the Cooperative had one vendor, with disbursements totaling $379,313, which exceeded the SAT threshold of $150,000. The Cooperative did not obtain sealed bids or competitive proposals nor was there documentation detailing the history of the procurement, which must include the reason for the procurement method used. For 2023, the Cooperative had one vendor with disbursements in the amount of $55,374, which were less than the SAT threshold of $150,000 but exceeded the $50,000 micro-purchase threshold and was selected for testing. The Cooperative did not obtain price or rate quotes nor was there documentation detailing the history of the procurement, which must include the reason for the procurement method used. For 2024, three vendors with disbursements totaling $175,125 were identified as being less than the simplified acquisition threshold of $150,000 but exceeding the $50,000 micropurchase threshold and were selected for testing. The Cooperative did not obtain price or rate quotes for two of the three vendors, and there was no documentation detailing the history of the procurement, which must include the reason for the procurement method used. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAM exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. Upon inquiry of the Cooperative in order to review the procedures in place for verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the Cooperative disclosed there were not any documented internal controls or procedures. Nine covered transactions were identified. The covered transactions totaling $803,836 were selected for testing. The Cooperative did not verify the suspension and debarment status of the tested vendors prior to payment. The lack of internal controls and noncompliance were systemic throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 30 EAST NOBLE SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases– (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . (b) Formal Procurement Methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: . . . (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. . . . INDIANA STATE BOARD OF ACCOUNTS 31 EAST NOBLE SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM.gov Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause The Cooperative noted that ARP portion of the Special Education grant was new for 2022-2023 and 2023-2024. The ARP funding gave opportunity for types of expenditures that do not typically get expensed using Special Education funding. The transactions noted within the Condition and Context were from the ARP portion of the grant, which provided property or services that exceeded the micro-purchase threshold. Management of the Cooperative was unaware of the procurement requirements when property or services exceed the micro-purchase threshold. In addition, management of the Cooperative was unaware of the Suspension and Debarment requirements when a covered transaction is expected to equal or exceed $25,000. Effect Without the proper implementation of an effectively designed system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Without following the required methods for procurement, the Cooperative could be overpaying for services. Unverified vendors to whom payments equal to or in excess of $25,000 could be suspended, debarred, or otherwise excluded. Noncompliance with the provisions of federal statutes, regulations, and terms and conditions of the federal award could result in the reduction of future federal funding to the Cooperative. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the Cooperative's management design and implement a system of internal controls related to procurement and suspension and debarment procedures to ensure procurement requirements are met and to ensure entities are neither suspended nor debarred or otherwise excluded or disqualified prior to entering into any covered transactions. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-007 Subject: Special Education Cluster (IDEA) - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: COVID-19 - Special Education Grants to States, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 22611-042-ARP, 22619-042-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation is a member of the Northeast Indiana Special Education Cooperative (Cooperative). During fiscal years 2022-2023 and 2023-2024, the Cooperative operated the special education program and spent the federal money on behalf of all its members. As the grant agreement was between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the procurement and the suspension and debarment requirements. The Cooperative did not have adequate procedures in place to ensure that the requirements for the simplified acquisition threshold and for small purchases were met for each applicable procured good or service or to ensure that vendors were not suspended or debarred prior to entering into a covered transaction. INDIANA STATE BOARD OF ACCOUNTS 29 EAST NOBLE SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Procurement When the value of the procurement for property or services exceeds the simplified acquisition threshold (SAT), or a lower threshold established by a nonfederal entity, formal procurement methods are required. The SAT is typically set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold. Therefore, the SAT threshold is set at $150,000. Formal procurement methods require adherence to documented procedures and formal methods such as sealed bids or proposals. When the purchase value exceeds the micro-purchase threshold but is less than the simplified acquisition threshold, a small purchase occurs. Small purchases require documented full and open competition or a documented rationale for limited competition. For 2023, the Cooperative had one vendor, with disbursements totaling $379,313, which exceeded the SAT threshold of $150,000. The Cooperative did not obtain sealed bids or competitive proposals nor was there documentation detailing the history of the procurement, which must include the reason for the procurement method used. For 2023, the Cooperative had one vendor with disbursements in the amount of $55,374, which were less than the SAT threshold of $150,000 but exceeded the $50,000 micro-purchase threshold and was selected for testing. The Cooperative did not obtain price or rate quotes nor was there documentation detailing the history of the procurement, which must include the reason for the procurement method used. For 2024, three vendors with disbursements totaling $175,125 were identified as being less than the simplified acquisition threshold of $150,000 but exceeding the $50,000 micropurchase threshold and were selected for testing. The Cooperative did not obtain price or rate quotes for two of the three vendors, and there was no documentation detailing the history of the procurement, which must include the reason for the procurement method used. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAM exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. Upon inquiry of the Cooperative in order to review the procedures in place for verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the Cooperative disclosed there were not any documented internal controls or procedures. Nine covered transactions were identified. The covered transactions totaling $803,836 were selected for testing. The Cooperative did not verify the suspension and debarment status of the tested vendors prior to payment. The lack of internal controls and noncompliance were systemic throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 30 EAST NOBLE SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases– (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . (b) Formal Procurement Methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: . . . (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. . . . INDIANA STATE BOARD OF ACCOUNTS 31 EAST NOBLE SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM.gov Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause The Cooperative noted that ARP portion of the Special Education grant was new for 2022-2023 and 2023-2024. The ARP funding gave opportunity for types of expenditures that do not typically get expensed using Special Education funding. The transactions noted within the Condition and Context were from the ARP portion of the grant, which provided property or services that exceeded the micro-purchase threshold. Management of the Cooperative was unaware of the procurement requirements when property or services exceed the micro-purchase threshold. In addition, management of the Cooperative was unaware of the Suspension and Debarment requirements when a covered transaction is expected to equal or exceed $25,000. Effect Without the proper implementation of an effectively designed system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Without following the required methods for procurement, the Cooperative could be overpaying for services. Unverified vendors to whom payments equal to or in excess of $25,000 could be suspended, debarred, or otherwise excluded. Noncompliance with the provisions of federal statutes, regulations, and terms and conditions of the federal award could result in the reduction of future federal funding to the Cooperative. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the Cooperative's management design and implement a system of internal controls related to procurement and suspension and debarment procedures to ensure procurement requirements are met and to ensure entities are neither suspended nor debarred or otherwise excluded or disqualified prior to entering into any covered transactions. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-008 Subject: Title I Grants to Local Educational Agencies - Eligibility Federal Agency: Department of Education Federal Program: Title I Grants to Local Educational Agencies Assistance Listings Number: 84.010 Federal Award Numbers and Years (or Other Identifying Numbers): S010A220014, S010A230014 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Eligibility Audit Finding: Material Weakness Condition and Context The School Corporation had not designed or implemented an effective internal control system over the Eligibility compliance requirement. Eligibility for Title I is determined on the Eligible School Summary of the Title I application. Enrollment and Poverty numbers are automatically pulled from the Indiana Department of Education's (IDOE) Official Pupil Enrollment (PE) count for each school into the Eligible School Summary page of the Title I application. These counts that are prepopulated should be based on the School Corporation's records as of October of the prior fiscal year. There was no review by the School Corporation of the enrollment and poverty counts that were prepopulated into the School Corporation's Title I grant application. The lack of internal controls was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 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). . . ." Cause Management did not develop a system of internal controls that segregated key functions over reporting student enrollment and poverty status to the IDOE via the Title I, Part A grant application. Effect Without an effective internal control system, including segregation of duties, the School Corporation is at risk for noncompliance with the grant agreement and the Eligibility compliance requirement. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 33 EAST NOBLE SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that the School Corporation's management establish a system of internal controls, including segregation of duties, related to the grant agreement and the Eligibility compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-008 Subject: Title I Grants to Local Educational Agencies - Eligibility Federal Agency: Department of Education Federal Program: Title I Grants to Local Educational Agencies Assistance Listings Number: 84.010 Federal Award Numbers and Years (or Other Identifying Numbers): S010A220014, S010A230014 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Eligibility Audit Finding: Material Weakness Condition and Context The School Corporation had not designed or implemented an effective internal control system over the Eligibility compliance requirement. Eligibility for Title I is determined on the Eligible School Summary of the Title I application. Enrollment and Poverty numbers are automatically pulled from the Indiana Department of Education's (IDOE) Official Pupil Enrollment (PE) count for each school into the Eligible School Summary page of the Title I application. These counts that are prepopulated should be based on the School Corporation's records as of October of the prior fiscal year. There was no review by the School Corporation of the enrollment and poverty counts that were prepopulated into the School Corporation's Title I grant application. The lack of internal controls was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 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). . . ." Cause Management did not develop a system of internal controls that segregated key functions over reporting student enrollment and poverty status to the IDOE via the Title I, Part A grant application. Effect Without an effective internal control system, including segregation of duties, the School Corporation is at risk for noncompliance with the grant agreement and the Eligibility compliance requirement. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 33 EAST NOBLE SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that the School Corporation's management establish a system of internal controls, including segregation of duties, related to the grant agreement and the Eligibility compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
2024-001 Federal agency: U.S. Department of Treasury Federal program name: Coronavirus State and Local Fiscal Recovery Relief Funds Assistance listing number: 21.027 Federal Award Identification Number and Year: Pass-through agency: Anne Arundel County, Maryland Pass-through number: STLT-0698 Award Period: September 1,2022 through December 31, 2024 Compliance Requirement: Procurement and Suspension and Debarment Type of Findings: Material Weakness in Internal Control over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Nonfederal entities must follow the procurement standards set out at 2 CFR sections 200.318through 200.327. 2 CFR section 200.318 states the grant recipient or subrecipient must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services. These documented procurement procedures must be consistent with State, local, and tribal laws and regulations and the standards identified in sections 200.317 through 200.327. Compliance: Non-federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. “Covered transactions” include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220. All non-procurement transactions entered into by a pass-through entity (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR section 180.215. When a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA), (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR section 180.300). Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition The Corporation did not have written procurement procedures which reflect applicable State, local, and tribal laws and regulations which also conform to the applicable federal law and standards identified in the Uniform Guidance. The Corporation could not provide documentation that it ensured contractors were not suspended or debarred before issuing subawards to the entities. Questioned Costs Amounts paid to the two contractors for the fiscal year ended June 30, 2024 was $165,000. Context Supporting documentation for the procurement process and suspension and debarment status for two of the two contractors selected for testing was not documented. Cause The Corporation has not historically received federal funding so a written procurement policy and suspension and debarment documentation was not deemed necessary. Effect A lack of documented procurement standards for the Corporation could increase the risk of goods and services being procured through a method which is not in accordance with applicable State, local, and tribal law as well as federal regulations including the Uniform Guidance. If the suspension and debarment status is not verified when entering into covered transactions, it is possible that a subaward could be issued to an ineligible entity. Repeat Finding No Recommendation We recommend that management develop and implement written procurement policies and implement controls and procedures to ensure it maintains documentation of suspension and debarments checks and that the documentation is available for audit. Views of Responsible Officials Management agrees with finding. See corrective action plan for additional information.
2024-002. FINDING (Enrollment Reporting) Federal Department: U.S. Department of Education Assistance Listing Number: 84.268 Cluster Name: Student Financial Assistance Cluster Program Name: Federal Direct Student Loans Award Numbers: P268K240567, P268K230567 Questioned Cost: None Program Expenditures: $21,113,430 Cluster Expenditures: $32,781,904 Governors State University (University) did not timely and accurately report student enrollment information to the U.S. Department of Education’s National Student Loan Data System (NSLDS). CONDITION During testing of 40 enrollment status changes, we noted the following: • Seven of 40 (18%) enrollment status changes were not reported timely to the NSLDS. These enrollment status changes were reported 1 to 228 days late after the date of occurrence. In addition, 2 of the 7 enrollment status changes pertain to students with direct loans who ceased to be enrolled on at least a half-time basis for the period for which the loan was intended. • Ten of 40 (25%) enrollment status changes data had discrepancies in Program Begin Date ranging from 1,254 days early to 2 days late when compared to their official program start dates. The sample was not intended to be, and was not, a statistically valid sample. CRITERIA The Code of Federal Regulations (34 CFR 685.309) requires the University, upon the receipt of an enrollment report from the Secretary of the Department of Education (ED), to update all information included in the report and return the report to the ED within the timeframe prescribed by the ED. It further requires the University to report enrollment changes within 30 days unless a roster file is expected within 60 days, in which case the enrollment data may be updated on that roster file changes. This report should include changes such as when a Direct Loan was made to or on behalf of a student who was enrolled or accepted for enrollment at the University, and the student has ceased to be enrolled on at least a half-time basis or failed to enroll on at least a half-time basis for the period for which the loan was intended. The NSLDS Enrollment Reporting Guide states the University is responsible for accurately reporting all Program-Level Record and Campus-Level Record data elements. The Program Begin Date is the date the student first began attending the program being reported. Typically, this would be the first day of the term in which the student began enrollment in the program, unless the student enrolled in the program on an earlier date. The Uniform Guidance (2 CFR 200.303) requires nonfederal entities receiving federal awards to establish and maintain internal controls designed to reasonably ensure compliance with federal statutes, regulations, and terms and conditions of the federal award. Effective internal controls should include procedures to ensure accurate and timely student enrollment status reports are submitted to NSLDS. CAUSE University officials stated the delay in reporting status changes was attributable to challenges within the reporting protocols to the NSLDS for various status change scenarios occurring after the term end date and delays in the internal reporting process. The University reports enrollment status changes to NSLDS through the National Student Clearinghouse (NSC), a third-party servicer. As part of the enrollment reporting process, system-generated files are uploaded to the NSC, which then provides the data to NSLDS. Upon review of the system-generated files, there are various dates contained within the files, which may have caused inaccurate Program Begin Dates reflected in the NSLDS’ Program-Level Record. EFFECT Accurate, timely, and complete enrollment information is critical for effective and proper administration of the student financial aid programs. Noncompliance with enrollment reporting regulations may result in a loss of future federal funding. (Finding Code No. 2024-002, 2023-002, 2022-002, 2021-003) RECOMMENDATION We recommend the University improve its procedures to ensure timely and accurate reporting of student enrollment status to the NSLDS both in Program-Level Record and Campus-Level Record. UNIVERSITY RESPONSE The University agrees with this finding and accepts the recommendation. Following consultation with the NSC, guidelines were provided for handling various status change scenarios. These guidelines will enhance the accuracy of enrollment status change reporting, particularly for students with changes occurring before or after the subsequent enrollment file submission. Status changes are now being reported to the NSLDS in a timely and accurate manner, in accordance with the NSC guidelines. The University has also implemented a reporting timeline and review protocols to ensure status changes are reported to the NSLDS in a timely manner. Additionally, the University will collaborate with its Information Technology Services and representatives from the NSC and NSLDS to verify the accuracy of the file layouts and the data flow of the information provided.
2024-003. FINDING (Noncompliance with Gramm-Leach-Bliley Act) Federal Department: U.S. Department of Education, U.S. Department of Health and Human Services Assistance Listing Number: 84.268, 84.063, 84.038, 84.033, 84.007, 84.379, 93.925, 93.264 Cluster Name: Student Financial Assistance Cluster Program Name: Federal Direct Student Loans, Federal Pell Grant Program, Federal Perkins Loan Program, Federal Work-Study Program, Federal Supplemental Educational Opportunity Grants, Teacher Education Assistance for College and Higher Education Grants, Scholarships for Health Professions Students from Disadvantaged Backgrounds, and Nurse Faculty Loan Program Award Numbers: P268K240567, P268K230567, P063P230567, P063P220567, P033A231156, P033A221156, P007A231156, P007A221156, P379T240567, 5 T08HP39308‐04‐00, and E01HP27019 Questioned Cost: None Program Expenditures: $21,113,430; $7,760,752; $1,938,618; $512,881; $227,850; $31,236; $576,000; $621,137 Cluster Expenditures: $32,781,904 Governors State University (University) did not establish a written incident response plan designed to promptly respond to, and recover from, any security event materially affecting the confidentiality, integrity, or availability of customer information in their control. CONDITION During our audit, we noted the University was unable to complete the development of the written incident response plan as of the end of the audit period. CRITERIA On December 9, 2021, the Federal Trade Commission issued final regulations to amend the Standards for Safeguarding Customer Information (Safeguards Rule), an important component of the Gramm-Leach-Bliley Act’s (GLBA) requirements for protecting the privacy and personal information of consumers. The Code of Federal Regulations (16 CFR 314.4(h)) requires the University to develop, implement and maintain an information security program which includes establishing a written incident response plan designed to promptly respond to, and recover from, any security event materially affecting the confidentiality, integrity, or availability of customer information in its control. At a minimum, such incident response plan shall address the following areas: • the goals of the incident response plan; • the internal processes for responding to a security event; • the definition of clear roles, responsibilities, and levels of decision-making authority; • external and internal communications and information sharing; • identification of requirements for the remediation of any identified weaknesses in information systems and associated controls; • documentation and reporting regarding security events and related incident response activities; and • the evaluation and revision as necessary of the incident response plan following a security event. Additionally, the Uniform Guidance (2 CFR 200.303(a)) requires nonfederal entities receiving federal awards to establish and maintain effective internal control designed to reasonably ensure compliance with federal laws, statutes, regulations, and the terms and conditions of the federal award. CAUSE University officials stated the University has been actively engaged in the development of a written incident response plan; however, the plan was not completed by the end of Fiscal Year 2024 due to the extensive range of tasks required for its completion. EFFECT The intent of the GLBA Safeguards Rule is to enhance security over confidential information. Without a documented response to all applicable requirements, the University is more susceptible to vulnerabilities as it relates to protecting the privacy and personal information of students than it will be following full implementation. (Finding Code No. 2024-003, 2023-003) RECOMMENDATION We recommend the University continue towards completion and full implementation of the written incident response plan. UNIVERSITY RESPONSE The University agrees with this finding and accepts the recommendation. The University has recently completed the development of the written incident response plan during Fiscal Year 2025.
2024-003. FINDING (Noncompliance with Gramm-Leach-Bliley Act) Federal Department: U.S. Department of Education, U.S. Department of Health and Human Services Assistance Listing Number: 84.268, 84.063, 84.038, 84.033, 84.007, 84.379, 93.925, 93.264 Cluster Name: Student Financial Assistance Cluster Program Name: Federal Direct Student Loans, Federal Pell Grant Program, Federal Perkins Loan Program, Federal Work-Study Program, Federal Supplemental Educational Opportunity Grants, Teacher Education Assistance for College and Higher Education Grants, Scholarships for Health Professions Students from Disadvantaged Backgrounds, and Nurse Faculty Loan Program Award Numbers: P268K240567, P268K230567, P063P230567, P063P220567, P033A231156, P033A221156, P007A231156, P007A221156, P379T240567, 5 T08HP39308‐04‐00, and E01HP27019 Questioned Cost: None Program Expenditures: $21,113,430; $7,760,752; $1,938,618; $512,881; $227,850; $31,236; $576,000; $621,137 Cluster Expenditures: $32,781,904 Governors State University (University) did not establish a written incident response plan designed to promptly respond to, and recover from, any security event materially affecting the confidentiality, integrity, or availability of customer information in their control. CONDITION During our audit, we noted the University was unable to complete the development of the written incident response plan as of the end of the audit period. CRITERIA On December 9, 2021, the Federal Trade Commission issued final regulations to amend the Standards for Safeguarding Customer Information (Safeguards Rule), an important component of the Gramm-Leach-Bliley Act’s (GLBA) requirements for protecting the privacy and personal information of consumers. The Code of Federal Regulations (16 CFR 314.4(h)) requires the University to develop, implement and maintain an information security program which includes establishing a written incident response plan designed to promptly respond to, and recover from, any security event materially affecting the confidentiality, integrity, or availability of customer information in its control. At a minimum, such incident response plan shall address the following areas: • the goals of the incident response plan; • the internal processes for responding to a security event; • the definition of clear roles, responsibilities, and levels of decision-making authority; • external and internal communications and information sharing; • identification of requirements for the remediation of any identified weaknesses in information systems and associated controls; • documentation and reporting regarding security events and related incident response activities; and • the evaluation and revision as necessary of the incident response plan following a security event. Additionally, the Uniform Guidance (2 CFR 200.303(a)) requires nonfederal entities receiving federal awards to establish and maintain effective internal control designed to reasonably ensure compliance with federal laws, statutes, regulations, and the terms and conditions of the federal award. CAUSE University officials stated the University has been actively engaged in the development of a written incident response plan; however, the plan was not completed by the end of Fiscal Year 2024 due to the extensive range of tasks required for its completion. EFFECT The intent of the GLBA Safeguards Rule is to enhance security over confidential information. Without a documented response to all applicable requirements, the University is more susceptible to vulnerabilities as it relates to protecting the privacy and personal information of students than it will be following full implementation. (Finding Code No. 2024-003, 2023-003) RECOMMENDATION We recommend the University continue towards completion and full implementation of the written incident response plan. UNIVERSITY RESPONSE The University agrees with this finding and accepts the recommendation. The University has recently completed the development of the written incident response plan during Fiscal Year 2025.
2024-003. FINDING (Noncompliance with Gramm-Leach-Bliley Act) Federal Department: U.S. Department of Education, U.S. Department of Health and Human Services Assistance Listing Number: 84.268, 84.063, 84.038, 84.033, 84.007, 84.379, 93.925, 93.264 Cluster Name: Student Financial Assistance Cluster Program Name: Federal Direct Student Loans, Federal Pell Grant Program, Federal Perkins Loan Program, Federal Work-Study Program, Federal Supplemental Educational Opportunity Grants, Teacher Education Assistance for College and Higher Education Grants, Scholarships for Health Professions Students from Disadvantaged Backgrounds, and Nurse Faculty Loan Program Award Numbers: P268K240567, P268K230567, P063P230567, P063P220567, P033A231156, P033A221156, P007A231156, P007A221156, P379T240567, 5 T08HP39308‐04‐00, and E01HP27019 Questioned Cost: None Program Expenditures: $21,113,430; $7,760,752; $1,938,618; $512,881; $227,850; $31,236; $576,000; $621,137 Cluster Expenditures: $32,781,904 Governors State University (University) did not establish a written incident response plan designed to promptly respond to, and recover from, any security event materially affecting the confidentiality, integrity, or availability of customer information in their control. CONDITION During our audit, we noted the University was unable to complete the development of the written incident response plan as of the end of the audit period. CRITERIA On December 9, 2021, the Federal Trade Commission issued final regulations to amend the Standards for Safeguarding Customer Information (Safeguards Rule), an important component of the Gramm-Leach-Bliley Act’s (GLBA) requirements for protecting the privacy and personal information of consumers. The Code of Federal Regulations (16 CFR 314.4(h)) requires the University to develop, implement and maintain an information security program which includes establishing a written incident response plan designed to promptly respond to, and recover from, any security event materially affecting the confidentiality, integrity, or availability of customer information in its control. At a minimum, such incident response plan shall address the following areas: • the goals of the incident response plan; • the internal processes for responding to a security event; • the definition of clear roles, responsibilities, and levels of decision-making authority; • external and internal communications and information sharing; • identification of requirements for the remediation of any identified weaknesses in information systems and associated controls; • documentation and reporting regarding security events and related incident response activities; and • the evaluation and revision as necessary of the incident response plan following a security event. Additionally, the Uniform Guidance (2 CFR 200.303(a)) requires nonfederal entities receiving federal awards to establish and maintain effective internal control designed to reasonably ensure compliance with federal laws, statutes, regulations, and the terms and conditions of the federal award. CAUSE University officials stated the University has been actively engaged in the development of a written incident response plan; however, the plan was not completed by the end of Fiscal Year 2024 due to the extensive range of tasks required for its completion. EFFECT The intent of the GLBA Safeguards Rule is to enhance security over confidential information. Without a documented response to all applicable requirements, the University is more susceptible to vulnerabilities as it relates to protecting the privacy and personal information of students than it will be following full implementation. (Finding Code No. 2024-003, 2023-003) RECOMMENDATION We recommend the University continue towards completion and full implementation of the written incident response plan. UNIVERSITY RESPONSE The University agrees with this finding and accepts the recommendation. The University has recently completed the development of the written incident response plan during Fiscal Year 2025.
2024-003. FINDING (Noncompliance with Gramm-Leach-Bliley Act) Federal Department: U.S. Department of Education, U.S. Department of Health and Human Services Assistance Listing Number: 84.268, 84.063, 84.038, 84.033, 84.007, 84.379, 93.925, 93.264 Cluster Name: Student Financial Assistance Cluster Program Name: Federal Direct Student Loans, Federal Pell Grant Program, Federal Perkins Loan Program, Federal Work-Study Program, Federal Supplemental Educational Opportunity Grants, Teacher Education Assistance for College and Higher Education Grants, Scholarships for Health Professions Students from Disadvantaged Backgrounds, and Nurse Faculty Loan Program Award Numbers: P268K240567, P268K230567, P063P230567, P063P220567, P033A231156, P033A221156, P007A231156, P007A221156, P379T240567, 5 T08HP39308‐04‐00, and E01HP27019 Questioned Cost: None Program Expenditures: $21,113,430; $7,760,752; $1,938,618; $512,881; $227,850; $31,236; $576,000; $621,137 Cluster Expenditures: $32,781,904 Governors State University (University) did not establish a written incident response plan designed to promptly respond to, and recover from, any security event materially affecting the confidentiality, integrity, or availability of customer information in their control. CONDITION During our audit, we noted the University was unable to complete the development of the written incident response plan as of the end of the audit period. CRITERIA On December 9, 2021, the Federal Trade Commission issued final regulations to amend the Standards for Safeguarding Customer Information (Safeguards Rule), an important component of the Gramm-Leach-Bliley Act’s (GLBA) requirements for protecting the privacy and personal information of consumers. The Code of Federal Regulations (16 CFR 314.4(h)) requires the University to develop, implement and maintain an information security program which includes establishing a written incident response plan designed to promptly respond to, and recover from, any security event materially affecting the confidentiality, integrity, or availability of customer information in its control. At a minimum, such incident response plan shall address the following areas: • the goals of the incident response plan; • the internal processes for responding to a security event; • the definition of clear roles, responsibilities, and levels of decision-making authority; • external and internal communications and information sharing; • identification of requirements for the remediation of any identified weaknesses in information systems and associated controls; • documentation and reporting regarding security events and related incident response activities; and • the evaluation and revision as necessary of the incident response plan following a security event. Additionally, the Uniform Guidance (2 CFR 200.303(a)) requires nonfederal entities receiving federal awards to establish and maintain effective internal control designed to reasonably ensure compliance with federal laws, statutes, regulations, and the terms and conditions of the federal award. CAUSE University officials stated the University has been actively engaged in the development of a written incident response plan; however, the plan was not completed by the end of Fiscal Year 2024 due to the extensive range of tasks required for its completion. EFFECT The intent of the GLBA Safeguards Rule is to enhance security over confidential information. Without a documented response to all applicable requirements, the University is more susceptible to vulnerabilities as it relates to protecting the privacy and personal information of students than it will be following full implementation. (Finding Code No. 2024-003, 2023-003) RECOMMENDATION We recommend the University continue towards completion and full implementation of the written incident response plan. UNIVERSITY RESPONSE The University agrees with this finding and accepts the recommendation. The University has recently completed the development of the written incident response plan during Fiscal Year 2025.
2024-003. FINDING (Noncompliance with Gramm-Leach-Bliley Act) Federal Department: U.S. Department of Education, U.S. Department of Health and Human Services Assistance Listing Number: 84.268, 84.063, 84.038, 84.033, 84.007, 84.379, 93.925, 93.264 Cluster Name: Student Financial Assistance Cluster Program Name: Federal Direct Student Loans, Federal Pell Grant Program, Federal Perkins Loan Program, Federal Work-Study Program, Federal Supplemental Educational Opportunity Grants, Teacher Education Assistance for College and Higher Education Grants, Scholarships for Health Professions Students from Disadvantaged Backgrounds, and Nurse Faculty Loan Program Award Numbers: P268K240567, P268K230567, P063P230567, P063P220567, P033A231156, P033A221156, P007A231156, P007A221156, P379T240567, 5 T08HP39308‐04‐00, and E01HP27019 Questioned Cost: None Program Expenditures: $21,113,430; $7,760,752; $1,938,618; $512,881; $227,850; $31,236; $576,000; $621,137 Cluster Expenditures: $32,781,904 Governors State University (University) did not establish a written incident response plan designed to promptly respond to, and recover from, any security event materially affecting the confidentiality, integrity, or availability of customer information in their control. CONDITION During our audit, we noted the University was unable to complete the development of the written incident response plan as of the end of the audit period. CRITERIA On December 9, 2021, the Federal Trade Commission issued final regulations to amend the Standards for Safeguarding Customer Information (Safeguards Rule), an important component of the Gramm-Leach-Bliley Act’s (GLBA) requirements for protecting the privacy and personal information of consumers. The Code of Federal Regulations (16 CFR 314.4(h)) requires the University to develop, implement and maintain an information security program which includes establishing a written incident response plan designed to promptly respond to, and recover from, any security event materially affecting the confidentiality, integrity, or availability of customer information in its control. At a minimum, such incident response plan shall address the following areas: • the goals of the incident response plan; • the internal processes for responding to a security event; • the definition of clear roles, responsibilities, and levels of decision-making authority; • external and internal communications and information sharing; • identification of requirements for the remediation of any identified weaknesses in information systems and associated controls; • documentation and reporting regarding security events and related incident response activities; and • the evaluation and revision as necessary of the incident response plan following a security event. Additionally, the Uniform Guidance (2 CFR 200.303(a)) requires nonfederal entities receiving federal awards to establish and maintain effective internal control designed to reasonably ensure compliance with federal laws, statutes, regulations, and the terms and conditions of the federal award. CAUSE University officials stated the University has been actively engaged in the development of a written incident response plan; however, the plan was not completed by the end of Fiscal Year 2024 due to the extensive range of tasks required for its completion. EFFECT The intent of the GLBA Safeguards Rule is to enhance security over confidential information. Without a documented response to all applicable requirements, the University is more susceptible to vulnerabilities as it relates to protecting the privacy and personal information of students than it will be following full implementation. (Finding Code No. 2024-003, 2023-003) RECOMMENDATION We recommend the University continue towards completion and full implementation of the written incident response plan. UNIVERSITY RESPONSE The University agrees with this finding and accepts the recommendation. The University has recently completed the development of the written incident response plan during Fiscal Year 2025.
2024-003. FINDING (Noncompliance with Gramm-Leach-Bliley Act) Federal Department: U.S. Department of Education, U.S. Department of Health and Human Services Assistance Listing Number: 84.268, 84.063, 84.038, 84.033, 84.007, 84.379, 93.925, 93.264 Cluster Name: Student Financial Assistance Cluster Program Name: Federal Direct Student Loans, Federal Pell Grant Program, Federal Perkins Loan Program, Federal Work-Study Program, Federal Supplemental Educational Opportunity Grants, Teacher Education Assistance for College and Higher Education Grants, Scholarships for Health Professions Students from Disadvantaged Backgrounds, and Nurse Faculty Loan Program Award Numbers: P268K240567, P268K230567, P063P230567, P063P220567, P033A231156, P033A221156, P007A231156, P007A221156, P379T240567, 5 T08HP39308‐04‐00, and E01HP27019 Questioned Cost: None Program Expenditures: $21,113,430; $7,760,752; $1,938,618; $512,881; $227,850; $31,236; $576,000; $621,137 Cluster Expenditures: $32,781,904 Governors State University (University) did not establish a written incident response plan designed to promptly respond to, and recover from, any security event materially affecting the confidentiality, integrity, or availability of customer information in their control. CONDITION During our audit, we noted the University was unable to complete the development of the written incident response plan as of the end of the audit period. CRITERIA On December 9, 2021, the Federal Trade Commission issued final regulations to amend the Standards for Safeguarding Customer Information (Safeguards Rule), an important component of the Gramm-Leach-Bliley Act’s (GLBA) requirements for protecting the privacy and personal information of consumers. The Code of Federal Regulations (16 CFR 314.4(h)) requires the University to develop, implement and maintain an information security program which includes establishing a written incident response plan designed to promptly respond to, and recover from, any security event materially affecting the confidentiality, integrity, or availability of customer information in its control. At a minimum, such incident response plan shall address the following areas: • the goals of the incident response plan; • the internal processes for responding to a security event; • the definition of clear roles, responsibilities, and levels of decision-making authority; • external and internal communications and information sharing; • identification of requirements for the remediation of any identified weaknesses in information systems and associated controls; • documentation and reporting regarding security events and related incident response activities; and • the evaluation and revision as necessary of the incident response plan following a security event. Additionally, the Uniform Guidance (2 CFR 200.303(a)) requires nonfederal entities receiving federal awards to establish and maintain effective internal control designed to reasonably ensure compliance with federal laws, statutes, regulations, and the terms and conditions of the federal award. CAUSE University officials stated the University has been actively engaged in the development of a written incident response plan; however, the plan was not completed by the end of Fiscal Year 2024 due to the extensive range of tasks required for its completion. EFFECT The intent of the GLBA Safeguards Rule is to enhance security over confidential information. Without a documented response to all applicable requirements, the University is more susceptible to vulnerabilities as it relates to protecting the privacy and personal information of students than it will be following full implementation. (Finding Code No. 2024-003, 2023-003) RECOMMENDATION We recommend the University continue towards completion and full implementation of the written incident response plan. UNIVERSITY RESPONSE The University agrees with this finding and accepts the recommendation. The University has recently completed the development of the written incident response plan during Fiscal Year 2025.
2024-003. FINDING (Noncompliance with Gramm-Leach-Bliley Act) Federal Department: U.S. Department of Education, U.S. Department of Health and Human Services Assistance Listing Number: 84.268, 84.063, 84.038, 84.033, 84.007, 84.379, 93.925, 93.264 Cluster Name: Student Financial Assistance Cluster Program Name: Federal Direct Student Loans, Federal Pell Grant Program, Federal Perkins Loan Program, Federal Work-Study Program, Federal Supplemental Educational Opportunity Grants, Teacher Education Assistance for College and Higher Education Grants, Scholarships for Health Professions Students from Disadvantaged Backgrounds, and Nurse Faculty Loan Program Award Numbers: P268K240567, P268K230567, P063P230567, P063P220567, P033A231156, P033A221156, P007A231156, P007A221156, P379T240567, 5 T08HP39308‐04‐00, and E01HP27019 Questioned Cost: None Program Expenditures: $21,113,430; $7,760,752; $1,938,618; $512,881; $227,850; $31,236; $576,000; $621,137 Cluster Expenditures: $32,781,904 Governors State University (University) did not establish a written incident response plan designed to promptly respond to, and recover from, any security event materially affecting the confidentiality, integrity, or availability of customer information in their control. CONDITION During our audit, we noted the University was unable to complete the development of the written incident response plan as of the end of the audit period. CRITERIA On December 9, 2021, the Federal Trade Commission issued final regulations to amend the Standards for Safeguarding Customer Information (Safeguards Rule), an important component of the Gramm-Leach-Bliley Act’s (GLBA) requirements for protecting the privacy and personal information of consumers. The Code of Federal Regulations (16 CFR 314.4(h)) requires the University to develop, implement and maintain an information security program which includes establishing a written incident response plan designed to promptly respond to, and recover from, any security event materially affecting the confidentiality, integrity, or availability of customer information in its control. At a minimum, such incident response plan shall address the following areas: • the goals of the incident response plan; • the internal processes for responding to a security event; • the definition of clear roles, responsibilities, and levels of decision-making authority; • external and internal communications and information sharing; • identification of requirements for the remediation of any identified weaknesses in information systems and associated controls; • documentation and reporting regarding security events and related incident response activities; and • the evaluation and revision as necessary of the incident response plan following a security event. Additionally, the Uniform Guidance (2 CFR 200.303(a)) requires nonfederal entities receiving federal awards to establish and maintain effective internal control designed to reasonably ensure compliance with federal laws, statutes, regulations, and the terms and conditions of the federal award. CAUSE University officials stated the University has been actively engaged in the development of a written incident response plan; however, the plan was not completed by the end of Fiscal Year 2024 due to the extensive range of tasks required for its completion. EFFECT The intent of the GLBA Safeguards Rule is to enhance security over confidential information. Without a documented response to all applicable requirements, the University is more susceptible to vulnerabilities as it relates to protecting the privacy and personal information of students than it will be following full implementation. (Finding Code No. 2024-003, 2023-003) RECOMMENDATION We recommend the University continue towards completion and full implementation of the written incident response plan. UNIVERSITY RESPONSE The University agrees with this finding and accepts the recommendation. The University has recently completed the development of the written incident response plan during Fiscal Year 2025.
2024-003. FINDING (Noncompliance with Gramm-Leach-Bliley Act) Federal Department: U.S. Department of Education, U.S. Department of Health and Human Services Assistance Listing Number: 84.268, 84.063, 84.038, 84.033, 84.007, 84.379, 93.925, 93.264 Cluster Name: Student Financial Assistance Cluster Program Name: Federal Direct Student Loans, Federal Pell Grant Program, Federal Perkins Loan Program, Federal Work-Study Program, Federal Supplemental Educational Opportunity Grants, Teacher Education Assistance for College and Higher Education Grants, Scholarships for Health Professions Students from Disadvantaged Backgrounds, and Nurse Faculty Loan Program Award Numbers: P268K240567, P268K230567, P063P230567, P063P220567, P033A231156, P033A221156, P007A231156, P007A221156, P379T240567, 5 T08HP39308‐04‐00, and E01HP27019 Questioned Cost: None Program Expenditures: $21,113,430; $7,760,752; $1,938,618; $512,881; $227,850; $31,236; $576,000; $621,137 Cluster Expenditures: $32,781,904 Governors State University (University) did not establish a written incident response plan designed to promptly respond to, and recover from, any security event materially affecting the confidentiality, integrity, or availability of customer information in their control. CONDITION During our audit, we noted the University was unable to complete the development of the written incident response plan as of the end of the audit period. CRITERIA On December 9, 2021, the Federal Trade Commission issued final regulations to amend the Standards for Safeguarding Customer Information (Safeguards Rule), an important component of the Gramm-Leach-Bliley Act’s (GLBA) requirements for protecting the privacy and personal information of consumers. The Code of Federal Regulations (16 CFR 314.4(h)) requires the University to develop, implement and maintain an information security program which includes establishing a written incident response plan designed to promptly respond to, and recover from, any security event materially affecting the confidentiality, integrity, or availability of customer information in its control. At a minimum, such incident response plan shall address the following areas: • the goals of the incident response plan; • the internal processes for responding to a security event; • the definition of clear roles, responsibilities, and levels of decision-making authority; • external and internal communications and information sharing; • identification of requirements for the remediation of any identified weaknesses in information systems and associated controls; • documentation and reporting regarding security events and related incident response activities; and • the evaluation and revision as necessary of the incident response plan following a security event. Additionally, the Uniform Guidance (2 CFR 200.303(a)) requires nonfederal entities receiving federal awards to establish and maintain effective internal control designed to reasonably ensure compliance with federal laws, statutes, regulations, and the terms and conditions of the federal award. CAUSE University officials stated the University has been actively engaged in the development of a written incident response plan; however, the plan was not completed by the end of Fiscal Year 2024 due to the extensive range of tasks required for its completion. EFFECT The intent of the GLBA Safeguards Rule is to enhance security over confidential information. Without a documented response to all applicable requirements, the University is more susceptible to vulnerabilities as it relates to protecting the privacy and personal information of students than it will be following full implementation. (Finding Code No. 2024-003, 2023-003) RECOMMENDATION We recommend the University continue towards completion and full implementation of the written incident response plan. UNIVERSITY RESPONSE The University agrees with this finding and accepts the recommendation. The University has recently completed the development of the written incident response plan during Fiscal Year 2025.
2024-005. FINDING (Failure to Retain Adequate Documentation of Internal Direct Loans Reconciliation) Federal Department: U.S. Department of Education Assistance Listing Number: 84.268 Cluster Name: Student Financial Assistance Cluster Program Name: Federal Direct Student Loans Award Numbers: P268K240567, P268K230567 Questioned Cost: None Program Expenditures: $21,113,430 Cluster Expenditures: $32,781,904 Governors State University (University) did not retain documentation of its internal monthly Direct Loans reconciliation to demonstrate timely completion. CONDITION During testing of Direct Loans, we were unable to verify whether the University completed the monthly internal reconciliation in a timely manner due to the absence of supporting documentation. CRITERIA The Federal Student Aid (FSA) issued Electronic Announcement General-22-86 covering reconciliation requirements for all Title IV programs between Department of Education’s G5 system records and the University’s internal records. It further requires the University to reconcile internally, disbursement data between Financial Services and Comptroller Office and Financial Aid Office. Additionally, the Uniform Guidance (2 CFR 200.303(a)) requires nonfederal entities receiving federal awards to establish and maintain effective internal control designed to reasonably ensure compliance with federal laws, statutes, regulations, and the terms and conditions of the federal award. CAUSE University officials stated the University performs the monthly internal reconciliation process. However, the monthly internal reconciliation spreadsheet is updated each month without retaining the prior versions. EFFECT Failure to properly document internal monthly reconciliations between the Financial Services and Comptroller Office and Financial Aid Office may result in inaccurate and incomplete financial information. (Finding Code No. 2024-005) RECOMMENDATION We recommend the University improve its procedures to ensure documentation is retained to demonstrate timely completion of reconciliations. UNIVERSITY RESPONSE The University agrees with this finding and accepts the recommendation. Existing procedures have been revised to require the retention of internal reconciliation records on a monthly basis.
2024-007. FINDING (Noncompliance with Activities Allowed or Unallowed and Allowable Costs and Cost Principles Requirements) Federal Department: U.S. Department of Education Assistance Listing Number: 84.425D Cluster Name: Education Stabilization Fund Program Name: Elementary and Secondary School Emergency Relief Fund Award Number: S425D210041 Questioned Cost: None Program Expenditures: $1,222,010 Cluster Expenditures: $1,466,030 Governors State University (University) did not comply with activities allowed or unallowed and allowable costs and cost principles requirements. CONDITION During our review of the Illinois Tutoring Initiative program under the Elementary and Secondary School Emergency Relief (ESSER) Fund which had total expenditures of $1,222,010, we identified 1 of 25 (4%) expenditures was inappropriately charged to the grant. The University inadvertently charged Central Management Services (CMS) insurance of $414 for an employee who did not work on the program. The sample was not intended to be, and was not, a statistically valid sample. CRITERIA The Code of Federal Regulations (2 CFR 200.431(c)) requires the University to allocate fringe benefits to federal awards and all other activities in a manner consistent with the pattern of benefits attributable to the individuals or group(s) of employees whose salaries and wages are chargeable to such federal awards and other activities, and charged as direct or indirect costs following the University's accounting practices. Additionally, the Uniform Guidance (2 CFR 200.303(a)) requires nonfederal entities receiving federal awards to establish and maintain effective internal control designed to reasonably ensure compliance with federal laws, statutes, regulations, and the terms and conditions of the federal award. CAUSE University officials stated the charge was meant for a different federal grant, but was inadvertently assigned to the ESSER grant due to a formula error in the supporting spreadsheet. EFFECT Failure to accurately charge the correct grant may result in disallowance of federal expenditures and questioned costs, and could jeopardize future federal funding. (Finding Code No. 2024-007) RECOMMENDATION We recommend the University improve its procedures to ensure fringe benefits allocated to the grant align consistently with the salaries and wages charged to the grant. UNIVERSITY RESPONSE The University agrees with this finding and accepts the recommendation. More stringent review procedures have been implemented to prevent the recurrence of this issue.
Finding Number: 2024-002 Significant Deficiency – Internal Controls over Compliance and Compliance of: Activities Allowed or Unallowed and Allowable Costs/Cost Principles, Matching, and Program Income Federal Award: Aging Cluster, No. 93.045, Special Programs for the Aging, Title III, Part C Federal Agency: Department of Health and Human Services Pass-Through Entity: Monterey County Area Agency on Aging Criteria or Specific Requirement: 2 CFR section 200.302, Financial Management, states that the recipient’s financial management system must provide for the following: Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, as well as expenditures and income. All records must be supported by source documentation. There must be written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award. 2 CFR section 200.303, Internal Controls, states grant recipient must: establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Cause: The organization does not have an effective reconciliation and review process required to track compliance requirements that adhere to Uniform Guidance and the grant terms. Match expenditures could not be reconciled to the Service Invoice Summaries. In addition, the methodology used to allocate program income, matching, and non-payroll expenditures was not consistently applied. Effect or Potential Effect: Potential for unallowable activities and unallowable costs, not meeting matching requirements per grant terms, and potential for program income to be understated or overstated. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem. Recommendation: We recommend the Organization implement policies and procedures to ensure proper reconciliation and review of Service Invoice Summaries are effective and specific to grant View of Responsible Officials: In response to finding number 2024-002, there is no disagreement with the audit finding. Management is in the process of drafting new policies and procedures to ensure that the amount, source, and expenditure of Federal funds for all Federal awards is identified; and will track and verify expenditures and income. In addition, Management is developing a process and procedures to verify compliance with Federal statues, regulations, and the terms and conditions of each Federal award. Management will complete the Corrective Action Plan by February 28, 2025 and these procedures will be in full effect for the fiscal year 2025.
Finding Number: 2024-002 Significant Deficiency – Internal Controls over Compliance and Compliance of: Activities Allowed or Unallowed and Allowable Costs/Cost Principles, Matching, and Program Income Federal Award: Aging Cluster, No. 93.045, Special Programs for the Aging, Title III, Part C Federal Agency: Department of Health and Human Services Pass-Through Entity: Monterey County Area Agency on Aging Criteria or Specific Requirement: 2 CFR section 200.302, Financial Management, states that the recipient’s financial management system must provide for the following: Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, as well as expenditures and income. All records must be supported by source documentation. There must be written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award. 2 CFR section 200.303, Internal Controls, states grant recipient must: establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Cause: The organization does not have an effective reconciliation and review process required to track compliance requirements that adhere to Uniform Guidance and the grant terms. Match expenditures could not be reconciled to the Service Invoice Summaries. In addition, the methodology used to allocate program income, matching, and non-payroll expenditures was not consistently applied. Effect or Potential Effect: Potential for unallowable activities and unallowable costs, not meeting matching requirements per grant terms, and potential for program income to be understated or overstated. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem. Recommendation: We recommend the Organization implement policies and procedures to ensure proper reconciliation and review of Service Invoice Summaries are effective and specific to grant View of Responsible Officials: In response to finding number 2024-002, there is no disagreement with the audit finding. Management is in the process of drafting new policies and procedures to ensure that the amount, source, and expenditure of Federal funds for all Federal awards is identified; and will track and verify expenditures and income. In addition, Management is developing a process and procedures to verify compliance with Federal statues, regulations, and the terms and conditions of each Federal award. Management will complete the Corrective Action Plan by February 28, 2025 and these procedures will be in full effect for the fiscal year 2025.
Finding Number: 2024-002 Significant Deficiency – Internal Controls over Compliance and Compliance of: Activities Allowed or Unallowed and Allowable Costs/Cost Principles, Matching, and Program Income Federal Award: Aging Cluster, No. 93.045, Special Programs for the Aging, Title III, Part C Federal Agency: Department of Health and Human Services Pass-Through Entity: Monterey County Area Agency on Aging Criteria or Specific Requirement: 2 CFR section 200.302, Financial Management, states that the recipient’s financial management system must provide for the following: Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, as well as expenditures and income. All records must be supported by source documentation. There must be written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award. 2 CFR section 200.303, Internal Controls, states grant recipient must: establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Cause: The organization does not have an effective reconciliation and review process required to track compliance requirements that adhere to Uniform Guidance and the grant terms. Match expenditures could not be reconciled to the Service Invoice Summaries. In addition, the methodology used to allocate program income, matching, and non-payroll expenditures was not consistently applied. Effect or Potential Effect: Potential for unallowable activities and unallowable costs, not meeting matching requirements per grant terms, and potential for program income to be understated or overstated. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem. Recommendation: We recommend the Organization implement policies and procedures to ensure proper reconciliation and review of Service Invoice Summaries are effective and specific to grant View of Responsible Officials: In response to finding number 2024-002, there is no disagreement with the audit finding. Management is in the process of drafting new policies and procedures to ensure that the amount, source, and expenditure of Federal funds for all Federal awards is identified; and will track and verify expenditures and income. In addition, Management is developing a process and procedures to verify compliance with Federal statues, regulations, and the terms and conditions of each Federal award. Management will complete the Corrective Action Plan by February 28, 2025 and these procedures will be in full effect for the fiscal year 2025.
Finding Number: 2024-002 Significant Deficiency – Internal Controls over Compliance and Compliance of: Activities Allowed or Unallowed and Allowable Costs/Cost Principles, Matching, and Program Income Federal Award: Aging Cluster, No. 93.045, Special Programs for the Aging, Title III, Part C Federal Agency: Department of Health and Human Services Pass-Through Entity: Monterey County Area Agency on Aging Criteria or Specific Requirement: 2 CFR section 200.302, Financial Management, states that the recipient’s financial management system must provide for the following: Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, as well as expenditures and income. All records must be supported by source documentation. There must be written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award. 2 CFR section 200.303, Internal Controls, states grant recipient must: establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Cause: The organization does not have an effective reconciliation and review process required to track compliance requirements that adhere to Uniform Guidance and the grant terms. Match expenditures could not be reconciled to the Service Invoice Summaries. In addition, the methodology used to allocate program income, matching, and non-payroll expenditures was not consistently applied. Effect or Potential Effect: Potential for unallowable activities and unallowable costs, not meeting matching requirements per grant terms, and potential for program income to be understated or overstated. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem. Recommendation: We recommend the Organization implement policies and procedures to ensure proper reconciliation and review of Service Invoice Summaries are effective and specific to grant View of Responsible Officials: In response to finding number 2024-002, there is no disagreement with the audit finding. Management is in the process of drafting new policies and procedures to ensure that the amount, source, and expenditure of Federal funds for all Federal awards is identified; and will track and verify expenditures and income. In addition, Management is developing a process and procedures to verify compliance with Federal statues, regulations, and the terms and conditions of each Federal award. Management will complete the Corrective Action Plan by February 28, 2025 and these procedures will be in full effect for the fiscal year 2025.
Finding Number: 2024-002 Significant Deficiency – Internal Controls over Compliance and Compliance of: Activities Allowed or Unallowed and Allowable Costs/Cost Principles, Matching, and Program Income Federal Award: Aging Cluster, No. 93.045, Special Programs for the Aging, Title III, Part C Federal Agency: Department of Health and Human Services Pass-Through Entity: Monterey County Area Agency on Aging Criteria or Specific Requirement: 2 CFR section 200.302, Financial Management, states that the recipient’s financial management system must provide for the following: Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, as well as expenditures and income. All records must be supported by source documentation. There must be written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award. 2 CFR section 200.303, Internal Controls, states grant recipient must: establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Cause: The organization does not have an effective reconciliation and review process required to track compliance requirements that adhere to Uniform Guidance and the grant terms. Match expenditures could not be reconciled to the Service Invoice Summaries. In addition, the methodology used to allocate program income, matching, and non-payroll expenditures was not consistently applied. Effect or Potential Effect: Potential for unallowable activities and unallowable costs, not meeting matching requirements per grant terms, and potential for program income to be understated or overstated. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem. Recommendation: We recommend the Organization implement policies and procedures to ensure proper reconciliation and review of Service Invoice Summaries are effective and specific to grant View of Responsible Officials: In response to finding number 2024-002, there is no disagreement with the audit finding. Management is in the process of drafting new policies and procedures to ensure that the amount, source, and expenditure of Federal funds for all Federal awards is identified; and will track and verify expenditures and income. In addition, Management is developing a process and procedures to verify compliance with Federal statues, regulations, and the terms and conditions of each Federal award. Management will complete the Corrective Action Plan by February 28, 2025 and these procedures will be in full effect for the fiscal year 2025.
Finding Number: 2024-002 Significant Deficiency – Internal Controls over Compliance and Compliance of: Activities Allowed or Unallowed and Allowable Costs/Cost Principles, Matching, and Program Income Federal Award: Aging Cluster, No. 93.045, Special Programs for the Aging, Title III, Part C Federal Agency: Department of Health and Human Services Pass-Through Entity: Monterey County Area Agency on Aging Criteria or Specific Requirement: 2 CFR section 200.302, Financial Management, states that the recipient’s financial management system must provide for the following: Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, as well as expenditures and income. All records must be supported by source documentation. There must be written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award. 2 CFR section 200.303, Internal Controls, states grant recipient must: establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Cause: The organization does not have an effective reconciliation and review process required to track compliance requirements that adhere to Uniform Guidance and the grant terms. Match expenditures could not be reconciled to the Service Invoice Summaries. In addition, the methodology used to allocate program income, matching, and non-payroll expenditures was not consistently applied. Effect or Potential Effect: Potential for unallowable activities and unallowable costs, not meeting matching requirements per grant terms, and potential for program income to be understated or overstated. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem. Recommendation: We recommend the Organization implement policies and procedures to ensure proper reconciliation and review of Service Invoice Summaries are effective and specific to grant View of Responsible Officials: In response to finding number 2024-002, there is no disagreement with the audit finding. Management is in the process of drafting new policies and procedures to ensure that the amount, source, and expenditure of Federal funds for all Federal awards is identified; and will track and verify expenditures and income. In addition, Management is developing a process and procedures to verify compliance with Federal statues, regulations, and the terms and conditions of each Federal award. Management will complete the Corrective Action Plan by February 28, 2025 and these procedures will be in full effect for the fiscal year 2025.
2024 – 002: Special Tests and Provisions Federal Agency: U.S Department Education Federal Program Name: Education Stabilization Funds Assistance Listing Number: 84.425D, 84.425U Pass-Through Agency: Indiana Department of Education Pass-Through Numbers: S425D210013, S425U210013 Award Period: July 1, 2023 – June 30, 2024 Type of Finding: Material Weakness in Internal Control over Compliance Other Matters Criteria or specific requirement: Per 2 CFR 200.303, "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ‘Standards for Internal Control in the Federal Government’ issued by the Comptroller General of the United States or the ‘Internal Control Integrated Framework’ issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). If governors, SEAs, and or subrecipients propose to use ESF funds for construction they must also comply with applicable requirements in 34 CFR section 76.600 and 34 CFR sections 75.600–617. Approved construction projects must comply with all other applicable Uniform Guidance requirements, as well as the ED’s regulations regarding construction, as applicable, at 34 CFR section 76.600. As is the case with all construction contracts using laborers and mechanics financed by federal education funds, recipients and subrecipients that use ESF funds for construction contracts over $2,000 must meet Davis-Bacon prevailing wage requirements. Condition: PLA did not verify compliance with prevailing wage requirements with subcontractors for construction projects financed by federal education funds. Questioned costs: $365,489. Context: 1 of 1 construction projects financed by federal education funds were subject to prevailing wage requirements. Cause: PLA was not familiar with using federal education funds for construction costs and were not aware of the prevailing wage requirements Effect: Laborers and mechanics paid by subcontractors may have been paid below prevailing wage rates. Repeat Finding: Yes – 2023-002. Recommendation: We recommend that for future construction contracts financed by federal education funds PLA verify that subcontractors comply with prevailing wage requirements. Views of responsible officials: There is no disagreement with the audit finding.
2024 – 002: Special Tests and Provisions Federal Agency: U.S Department Education Federal Program Name: Education Stabilization Funds Assistance Listing Number: 84.425D, 84.425U Pass-Through Agency: Indiana Department of Education Pass-Through Numbers: S425D210013, S425U210013 Award Period: July 1, 2023 – June 30, 2024 Type of Finding: Material Weakness in Internal Control over Compliance Other Matters Criteria or specific requirement: Per 2 CFR 200.303, "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ‘Standards for Internal Control in the Federal Government’ issued by the Comptroller General of the United States or the ‘Internal Control Integrated Framework’ issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). If governors, SEAs, and or subrecipients propose to use ESF funds for construction they must also comply with applicable requirements in 34 CFR section 76.600 and 34 CFR sections 75.600–617. Approved construction projects must comply with all other applicable Uniform Guidance requirements, as well as the ED’s regulations regarding construction, as applicable, at 34 CFR section 76.600. As is the case with all construction contracts using laborers and mechanics financed by federal education funds, recipients and subrecipients that use ESF funds for construction contracts over $2,000 must meet Davis-Bacon prevailing wage requirements. Condition: PLA did not verify compliance with prevailing wage requirements with subcontractors for construction projects financed by federal education funds. Questioned costs: $365,489. Context: 1 of 1 construction projects financed by federal education funds were subject to prevailing wage requirements. Cause: PLA was not familiar with using federal education funds for construction costs and were not aware of the prevailing wage requirements Effect: Laborers and mechanics paid by subcontractors may have been paid below prevailing wage rates. Repeat Finding: Yes – 2023-002. Recommendation: We recommend that for future construction contracts financed by federal education funds PLA verify that subcontractors comply with prevailing wage requirements. Views of responsible officials: There is no disagreement with the audit finding.
Material Weakness Federal Program(s): Research and Development Cluster Mental and Behavioral Health Education and Training Grants Assistance Listing Number(s): Research and Development Cluster • 11.417 • 12.420 • 12.905 • 84.116Z • 84.019A • 47.076 • 47.050 Mental and Behavioral Health Education and Training Grants • 93.732 Criteria: Auditee requirements contained in Title 2 U.S. Code of Federal Regulations (2 CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post Federal Award Requirements, Section 200.303 – Internal Controls, requires the auditee to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonfederal 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 a framework such as the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: Timesheets and time and effort reports used to track time spent on federal programs did not have approval signatures by the employee’s supervisor. Cause: Ineffective design and implementation of internal controls around approval of timesheets and time and effort reports. Effect or Potential Effect: Ineffective control procedures could result in unallowable costs or activities being charged to federal grant programs. Questioned Costs: None Context: In our sample of 10 payroll transactions of amounts charged to the Research and Development Cluster, 9 of the timesheets or time and effort reports did not have physical indication of review by their supervisors. In our sample of 6 payroll transactions of amounts charged to the Mental and Behavioral Health Education and Training grants, none of the timesheets or time and effort reports had physical indication of review by their supervisors. Repeat Finding: No Recommendation: We recommend the College enforce its policy to have physical signatures on each employee’s timesheet or time and effort report after the review takes place to ensure salary costs charged to the federal program are allowable. Views of Responsible Officials: Management agrees with the finding. See corrective action plan.
Material Weakness Federal Program(s): Research and Development Cluster Mental and Behavioral Health Education and Training Grants Assistance Listing Number(s): Research and Development Cluster • 11.417 • 12.420 • 12.905 • 84.116Z • 84.019A • 47.076 • 47.050 Mental and Behavioral Health Education and Training Grants • 93.732 Criteria: Auditee requirements contained in Title 2 U.S. Code of Federal Regulations (2 CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post Federal Award Requirements, Section 200.303 – Internal Controls, requires the auditee to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonfederal 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 a framework such as the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: Timesheets and time and effort reports used to track time spent on federal programs did not have approval signatures by the employee’s supervisor. Cause: Ineffective design and implementation of internal controls around approval of timesheets and time and effort reports. Effect or Potential Effect: Ineffective control procedures could result in unallowable costs or activities being charged to federal grant programs. Questioned Costs: None Context: In our sample of 10 payroll transactions of amounts charged to the Research and Development Cluster, 9 of the timesheets or time and effort reports did not have physical indication of review by their supervisors. In our sample of 6 payroll transactions of amounts charged to the Mental and Behavioral Health Education and Training grants, none of the timesheets or time and effort reports had physical indication of review by their supervisors. Repeat Finding: No Recommendation: We recommend the College enforce its policy to have physical signatures on each employee’s timesheet or time and effort report after the review takes place to ensure salary costs charged to the federal program are allowable. Views of Responsible Officials: Management agrees with the finding. See corrective action plan.
Material Weakness Federal Program(s): Research and Development Cluster Mental and Behavioral Health Education and Training Grants Assistance Listing Number(s): Research and Development Cluster • 11.417 • 12.420 • 12.905 • 84.116Z • 84.019A • 47.076 • 47.050 Mental and Behavioral Health Education and Training Grants • 93.732 Criteria: Auditee requirements contained in Title 2 U.S. Code of Federal Regulations (2 CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post Federal Award Requirements, Section 200.303 – Internal Controls, requires the auditee to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonfederal 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 a framework such as the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: Timesheets and time and effort reports used to track time spent on federal programs did not have approval signatures by the employee’s supervisor. Cause: Ineffective design and implementation of internal controls around approval of timesheets and time and effort reports. Effect or Potential Effect: Ineffective control procedures could result in unallowable costs or activities being charged to federal grant programs. Questioned Costs: None Context: In our sample of 10 payroll transactions of amounts charged to the Research and Development Cluster, 9 of the timesheets or time and effort reports did not have physical indication of review by their supervisors. In our sample of 6 payroll transactions of amounts charged to the Mental and Behavioral Health Education and Training grants, none of the timesheets or time and effort reports had physical indication of review by their supervisors. Repeat Finding: No Recommendation: We recommend the College enforce its policy to have physical signatures on each employee’s timesheet or time and effort report after the review takes place to ensure salary costs charged to the federal program are allowable. Views of Responsible Officials: Management agrees with the finding. See corrective action plan.
Material Weakness Federal Program(s): Research and Development Cluster Mental and Behavioral Health Education and Training Grants Assistance Listing Number(s): Research and Development Cluster • 11.417 • 12.420 • 12.905 • 84.116Z • 84.019A • 47.076 • 47.050 Mental and Behavioral Health Education and Training Grants • 93.732 Criteria: Auditee requirements contained in Title 2 U.S. Code of Federal Regulations (2 CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post Federal Award Requirements, Section 200.303 – Internal Controls, requires the auditee to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonfederal 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 a framework such as the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: Timesheets and time and effort reports used to track time spent on federal programs did not have approval signatures by the employee’s supervisor. Cause: Ineffective design and implementation of internal controls around approval of timesheets and time and effort reports. Effect or Potential Effect: Ineffective control procedures could result in unallowable costs or activities being charged to federal grant programs. Questioned Costs: None Context: In our sample of 10 payroll transactions of amounts charged to the Research and Development Cluster, 9 of the timesheets or time and effort reports did not have physical indication of review by their supervisors. In our sample of 6 payroll transactions of amounts charged to the Mental and Behavioral Health Education and Training grants, none of the timesheets or time and effort reports had physical indication of review by their supervisors. Repeat Finding: No Recommendation: We recommend the College enforce its policy to have physical signatures on each employee’s timesheet or time and effort report after the review takes place to ensure salary costs charged to the federal program are allowable. Views of Responsible Officials: Management agrees with the finding. See corrective action plan.
Material Weakness Federal Program(s): Research and Development Cluster Mental and Behavioral Health Education and Training Grants Assistance Listing Number(s): Research and Development Cluster • 11.417 • 12.420 • 12.905 • 84.116Z • 84.019A • 47.076 • 47.050 Mental and Behavioral Health Education and Training Grants • 93.732 Criteria: Auditee requirements contained in Title 2 U.S. Code of Federal Regulations (2 CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post Federal Award Requirements, Section 200.303 – Internal Controls, requires the auditee to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonfederal 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 a framework such as the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: Timesheets and time and effort reports used to track time spent on federal programs did not have approval signatures by the employee’s supervisor. Cause: Ineffective design and implementation of internal controls around approval of timesheets and time and effort reports. Effect or Potential Effect: Ineffective control procedures could result in unallowable costs or activities being charged to federal grant programs. Questioned Costs: None Context: In our sample of 10 payroll transactions of amounts charged to the Research and Development Cluster, 9 of the timesheets or time and effort reports did not have physical indication of review by their supervisors. In our sample of 6 payroll transactions of amounts charged to the Mental and Behavioral Health Education and Training grants, none of the timesheets or time and effort reports had physical indication of review by their supervisors. Repeat Finding: No Recommendation: We recommend the College enforce its policy to have physical signatures on each employee’s timesheet or time and effort report after the review takes place to ensure salary costs charged to the federal program are allowable. Views of Responsible Officials: Management agrees with the finding. See corrective action plan.
Material Weakness Federal Program(s): Research and Development Cluster Mental and Behavioral Health Education and Training Grants Assistance Listing Number(s): Research and Development Cluster • 11.417 • 12.420 • 12.905 • 84.116Z • 84.019A • 47.076 • 47.050 Mental and Behavioral Health Education and Training Grants • 93.732 Criteria: Auditee requirements contained in Title 2 U.S. Code of Federal Regulations (2 CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post Federal Award Requirements, Section 200.303 – Internal Controls, requires the auditee to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonfederal 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 a framework such as the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: Timesheets and time and effort reports used to track time spent on federal programs did not have approval signatures by the employee’s supervisor. Cause: Ineffective design and implementation of internal controls around approval of timesheets and time and effort reports. Effect or Potential Effect: Ineffective control procedures could result in unallowable costs or activities being charged to federal grant programs. Questioned Costs: None Context: In our sample of 10 payroll transactions of amounts charged to the Research and Development Cluster, 9 of the timesheets or time and effort reports did not have physical indication of review by their supervisors. In our sample of 6 payroll transactions of amounts charged to the Mental and Behavioral Health Education and Training grants, none of the timesheets or time and effort reports had physical indication of review by their supervisors. Repeat Finding: No Recommendation: We recommend the College enforce its policy to have physical signatures on each employee’s timesheet or time and effort report after the review takes place to ensure salary costs charged to the federal program are allowable. Views of Responsible Officials: Management agrees with the finding. See corrective action plan.
Material Weakness Federal Program(s): Research and Development Cluster Mental and Behavioral Health Education and Training Grants Assistance Listing Number(s): Research and Development Cluster • 11.417 • 12.420 • 12.905 • 84.116Z • 84.019A • 47.076 • 47.050 Mental and Behavioral Health Education and Training Grants • 93.732 Criteria: Auditee requirements contained in Title 2 U.S. Code of Federal Regulations (2 CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post Federal Award Requirements, Section 200.303 – Internal Controls, requires the auditee to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonfederal 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 a framework such as the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: Timesheets and time and effort reports used to track time spent on federal programs did not have approval signatures by the employee’s supervisor. Cause: Ineffective design and implementation of internal controls around approval of timesheets and time and effort reports. Effect or Potential Effect: Ineffective control procedures could result in unallowable costs or activities being charged to federal grant programs. Questioned Costs: None Context: In our sample of 10 payroll transactions of amounts charged to the Research and Development Cluster, 9 of the timesheets or time and effort reports did not have physical indication of review by their supervisors. In our sample of 6 payroll transactions of amounts charged to the Mental and Behavioral Health Education and Training grants, none of the timesheets or time and effort reports had physical indication of review by their supervisors. Repeat Finding: No Recommendation: We recommend the College enforce its policy to have physical signatures on each employee’s timesheet or time and effort report after the review takes place to ensure salary costs charged to the federal program are allowable. Views of Responsible Officials: Management agrees with the finding. See corrective action plan.
Material Weakness Federal Program(s): Research and Development Cluster Mental and Behavioral Health Education and Training Grants Assistance Listing Number(s): Research and Development Cluster • 11.417 • 12.420 • 12.905 • 84.116Z • 84.019A • 47.076 • 47.050 Mental and Behavioral Health Education and Training Grants • 93.732 Criteria: Auditee requirements contained in Title 2 U.S. Code of Federal Regulations (2 CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post Federal Award Requirements, Section 200.303 – Internal Controls, requires the auditee to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonfederal 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 a framework such as the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: Timesheets and time and effort reports used to track time spent on federal programs did not have approval signatures by the employee’s supervisor. Cause: Ineffective design and implementation of internal controls around approval of timesheets and time and effort reports. Effect or Potential Effect: Ineffective control procedures could result in unallowable costs or activities being charged to federal grant programs. Questioned Costs: None Context: In our sample of 10 payroll transactions of amounts charged to the Research and Development Cluster, 9 of the timesheets or time and effort reports did not have physical indication of review by their supervisors. In our sample of 6 payroll transactions of amounts charged to the Mental and Behavioral Health Education and Training grants, none of the timesheets or time and effort reports had physical indication of review by their supervisors. Repeat Finding: No Recommendation: We recommend the College enforce its policy to have physical signatures on each employee’s timesheet or time and effort report after the review takes place to ensure salary costs charged to the federal program are allowable. Views of Responsible Officials: Management agrees with the finding. See corrective action plan.
Material Weakness Federal Program(s): Research and Development Cluster Mental and Behavioral Health Education and Training Grants Assistance Listing Number(s): Research and Development Cluster • 11.417 • 12.420 • 12.905 • 84.116Z • 84.019A • 47.076 • 47.050 Mental and Behavioral Health Education and Training Grants • 93.732 Criteria: Auditee requirements contained in Title 2 U.S. Code of Federal Regulations (2 CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post Federal Award Requirements, Section 200.303 – Internal Controls, requires the auditee to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonfederal 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 a framework such as the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: Timesheets and time and effort reports used to track time spent on federal programs did not have approval signatures by the employee’s supervisor. Cause: Ineffective design and implementation of internal controls around approval of timesheets and time and effort reports. Effect or Potential Effect: Ineffective control procedures could result in unallowable costs or activities being charged to federal grant programs. Questioned Costs: None Context: In our sample of 10 payroll transactions of amounts charged to the Research and Development Cluster, 9 of the timesheets or time and effort reports did not have physical indication of review by their supervisors. In our sample of 6 payroll transactions of amounts charged to the Mental and Behavioral Health Education and Training grants, none of the timesheets or time and effort reports had physical indication of review by their supervisors. Repeat Finding: No Recommendation: We recommend the College enforce its policy to have physical signatures on each employee’s timesheet or time and effort report after the review takes place to ensure salary costs charged to the federal program are allowable. Views of Responsible Officials: Management agrees with the finding. See corrective action plan.
Material Weakness Federal Program(s): Research and Development Cluster Mental and Behavioral Health Education and Training Grants Assistance Listing Number(s): Research and Development Cluster • 11.417 • 12.420 • 12.905 • 84.116Z • 84.019A • 47.076 • 47.050 Mental and Behavioral Health Education and Training Grants • 93.732 Criteria: Auditee requirements contained in Title 2 U.S. Code of Federal Regulations (2 CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post Federal Award Requirements, Section 200.303 – Internal Controls, requires the auditee to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonfederal 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 a framework such as the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: Timesheets and time and effort reports used to track time spent on federal programs did not have approval signatures by the employee’s supervisor. Cause: Ineffective design and implementation of internal controls around approval of timesheets and time and effort reports. Effect or Potential Effect: Ineffective control procedures could result in unallowable costs or activities being charged to federal grant programs. Questioned Costs: None Context: In our sample of 10 payroll transactions of amounts charged to the Research and Development Cluster, 9 of the timesheets or time and effort reports did not have physical indication of review by their supervisors. In our sample of 6 payroll transactions of amounts charged to the Mental and Behavioral Health Education and Training grants, none of the timesheets or time and effort reports had physical indication of review by their supervisors. Repeat Finding: No Recommendation: We recommend the College enforce its policy to have physical signatures on each employee’s timesheet or time and effort report after the review takes place to ensure salary costs charged to the federal program are allowable. Views of Responsible Officials: Management agrees with the finding. See corrective action plan.
Material Weakness Federal Program(s): Research and Development Cluster Mental and Behavioral Health Education and Training Grants Assistance Listing Number(s): Research and Development Cluster • 11.417 • 12.420 • 12.905 • 84.116Z • 84.019A • 47.076 • 47.050 Mental and Behavioral Health Education and Training Grants • 93.732 Criteria: Auditee requirements contained in Title 2 U.S. Code of Federal Regulations (2 CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post Federal Award Requirements, Section 200.303 – Internal Controls, requires the auditee to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonfederal 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 a framework such as the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: Timesheets and time and effort reports used to track time spent on federal programs did not have approval signatures by the employee’s supervisor. Cause: Ineffective design and implementation of internal controls around approval of timesheets and time and effort reports. Effect or Potential Effect: Ineffective control procedures could result in unallowable costs or activities being charged to federal grant programs. Questioned Costs: None Context: In our sample of 10 payroll transactions of amounts charged to the Research and Development Cluster, 9 of the timesheets or time and effort reports did not have physical indication of review by their supervisors. In our sample of 6 payroll transactions of amounts charged to the Mental and Behavioral Health Education and Training grants, none of the timesheets or time and effort reports had physical indication of review by their supervisors. Repeat Finding: No Recommendation: We recommend the College enforce its policy to have physical signatures on each employee’s timesheet or time and effort report after the review takes place to ensure salary costs charged to the federal program are allowable. Views of Responsible Officials: Management agrees with the finding. See corrective action plan.
2024-007: Student Credit Balances from Title IV Awards Significant Deficiency Federal Program: Student Financial Assistance Cluster Assistance Listing Number(s): Student Financial Assistance Cluster • 84.007 • 84.033 • 84.038 • 84.063 • 84.268 • 84.379 • 93.925 Criteria: Auditee requirements contained in Title 2 U.S. Code of Federal Regulations (2 CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post Federal Award Requirements, Section 200.303 – Internal Controls, requires the auditee to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonfederal 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 a framework such as the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: When Title IV funds are credited to a student account and they exceed the amount of tuition and fees, food and housing, and other authorized charges assessed the student, a credit balance is created. The institution must pay the resulting credit balance directly to the student or parent borrower within 14 days after (1) the first day of class of a payment period if the credit balance occurred on or before that day, or (2) the balance occurred if that was after the first day of class. The College does not have a control in place with physical indication of review over refund process for student credit balances. Cause: Lack of control in place over refunds from student credit balances Effect or Potential Effect: Student credit balances may not be refunded within the 14-day requirement. Questioned Costs: None Context: During our control assessment over student credit balance refunds, we noted there is no control in place and no physical indication of review taking place to ensure student credit balances are properly refunded within the 14-day requirement. Repeat Finding: No Recommendation: We recommend the College review its process and controls in place for student credit balances to include an independent review and sufficient documentation to support the application of the control. Views of Responsible Officials: Management agrees with the finding. See corrective action plan.
2024-007: Student Credit Balances from Title IV Awards Significant Deficiency Federal Program: Student Financial Assistance Cluster Assistance Listing Number(s): Student Financial Assistance Cluster • 84.007 • 84.033 • 84.038 • 84.063 • 84.268 • 84.379 • 93.925 Criteria: Auditee requirements contained in Title 2 U.S. Code of Federal Regulations (2 CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post Federal Award Requirements, Section 200.303 – Internal Controls, requires the auditee to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonfederal 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 a framework such as the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: When Title IV funds are credited to a student account and they exceed the amount of tuition and fees, food and housing, and other authorized charges assessed the student, a credit balance is created. The institution must pay the resulting credit balance directly to the student or parent borrower within 14 days after (1) the first day of class of a payment period if the credit balance occurred on or before that day, or (2) the balance occurred if that was after the first day of class. The College does not have a control in place with physical indication of review over refund process for student credit balances. Cause: Lack of control in place over refunds from student credit balances Effect or Potential Effect: Student credit balances may not be refunded within the 14-day requirement. Questioned Costs: None Context: During our control assessment over student credit balance refunds, we noted there is no control in place and no physical indication of review taking place to ensure student credit balances are properly refunded within the 14-day requirement. Repeat Finding: No Recommendation: We recommend the College review its process and controls in place for student credit balances to include an independent review and sufficient documentation to support the application of the control. Views of Responsible Officials: Management agrees with the finding. See corrective action plan.
2024-007: Student Credit Balances from Title IV Awards Significant Deficiency Federal Program: Student Financial Assistance Cluster Assistance Listing Number(s): Student Financial Assistance Cluster • 84.007 • 84.033 • 84.038 • 84.063 • 84.268 • 84.379 • 93.925 Criteria: Auditee requirements contained in Title 2 U.S. Code of Federal Regulations (2 CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post Federal Award Requirements, Section 200.303 – Internal Controls, requires the auditee to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonfederal 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 a framework such as the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: When Title IV funds are credited to a student account and they exceed the amount of tuition and fees, food and housing, and other authorized charges assessed the student, a credit balance is created. The institution must pay the resulting credit balance directly to the student or parent borrower within 14 days after (1) the first day of class of a payment period if the credit balance occurred on or before that day, or (2) the balance occurred if that was after the first day of class. The College does not have a control in place with physical indication of review over refund process for student credit balances. Cause: Lack of control in place over refunds from student credit balances Effect or Potential Effect: Student credit balances may not be refunded within the 14-day requirement. Questioned Costs: None Context: During our control assessment over student credit balance refunds, we noted there is no control in place and no physical indication of review taking place to ensure student credit balances are properly refunded within the 14-day requirement. Repeat Finding: No Recommendation: We recommend the College review its process and controls in place for student credit balances to include an independent review and sufficient documentation to support the application of the control. Views of Responsible Officials: Management agrees with the finding. See corrective action plan.
2024-007: Student Credit Balances from Title IV Awards Significant Deficiency Federal Program: Student Financial Assistance Cluster Assistance Listing Number(s): Student Financial Assistance Cluster • 84.007 • 84.033 • 84.038 • 84.063 • 84.268 • 84.379 • 93.925 Criteria: Auditee requirements contained in Title 2 U.S. Code of Federal Regulations (2 CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post Federal Award Requirements, Section 200.303 – Internal Controls, requires the auditee to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonfederal 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 a framework such as the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: When Title IV funds are credited to a student account and they exceed the amount of tuition and fees, food and housing, and other authorized charges assessed the student, a credit balance is created. The institution must pay the resulting credit balance directly to the student or parent borrower within 14 days after (1) the first day of class of a payment period if the credit balance occurred on or before that day, or (2) the balance occurred if that was after the first day of class. The College does not have a control in place with physical indication of review over refund process for student credit balances. Cause: Lack of control in place over refunds from student credit balances Effect or Potential Effect: Student credit balances may not be refunded within the 14-day requirement. Questioned Costs: None Context: During our control assessment over student credit balance refunds, we noted there is no control in place and no physical indication of review taking place to ensure student credit balances are properly refunded within the 14-day requirement. Repeat Finding: No Recommendation: We recommend the College review its process and controls in place for student credit balances to include an independent review and sufficient documentation to support the application of the control. Views of Responsible Officials: Management agrees with the finding. See corrective action plan.
2024-007: Student Credit Balances from Title IV Awards Significant Deficiency Federal Program: Student Financial Assistance Cluster Assistance Listing Number(s): Student Financial Assistance Cluster • 84.007 • 84.033 • 84.038 • 84.063 • 84.268 • 84.379 • 93.925 Criteria: Auditee requirements contained in Title 2 U.S. Code of Federal Regulations (2 CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post Federal Award Requirements, Section 200.303 – Internal Controls, requires the auditee to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonfederal 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 a framework such as the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: When Title IV funds are credited to a student account and they exceed the amount of tuition and fees, food and housing, and other authorized charges assessed the student, a credit balance is created. The institution must pay the resulting credit balance directly to the student or parent borrower within 14 days after (1) the first day of class of a payment period if the credit balance occurred on or before that day, or (2) the balance occurred if that was after the first day of class. The College does not have a control in place with physical indication of review over refund process for student credit balances. Cause: Lack of control in place over refunds from student credit balances Effect or Potential Effect: Student credit balances may not be refunded within the 14-day requirement. Questioned Costs: None Context: During our control assessment over student credit balance refunds, we noted there is no control in place and no physical indication of review taking place to ensure student credit balances are properly refunded within the 14-day requirement. Repeat Finding: No Recommendation: We recommend the College review its process and controls in place for student credit balances to include an independent review and sufficient documentation to support the application of the control. Views of Responsible Officials: Management agrees with the finding. See corrective action plan.
2024-007: Student Credit Balances from Title IV Awards Significant Deficiency Federal Program: Student Financial Assistance Cluster Assistance Listing Number(s): Student Financial Assistance Cluster • 84.007 • 84.033 • 84.038 • 84.063 • 84.268 • 84.379 • 93.925 Criteria: Auditee requirements contained in Title 2 U.S. Code of Federal Regulations (2 CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post Federal Award Requirements, Section 200.303 – Internal Controls, requires the auditee to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonfederal 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 a framework such as the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: When Title IV funds are credited to a student account and they exceed the amount of tuition and fees, food and housing, and other authorized charges assessed the student, a credit balance is created. The institution must pay the resulting credit balance directly to the student or parent borrower within 14 days after (1) the first day of class of a payment period if the credit balance occurred on or before that day, or (2) the balance occurred if that was after the first day of class. The College does not have a control in place with physical indication of review over refund process for student credit balances. Cause: Lack of control in place over refunds from student credit balances Effect or Potential Effect: Student credit balances may not be refunded within the 14-day requirement. Questioned Costs: None Context: During our control assessment over student credit balance refunds, we noted there is no control in place and no physical indication of review taking place to ensure student credit balances are properly refunded within the 14-day requirement. Repeat Finding: No Recommendation: We recommend the College review its process and controls in place for student credit balances to include an independent review and sufficient documentation to support the application of the control. Views of Responsible Officials: Management agrees with the finding. See corrective action plan.
2024-007: Student Credit Balances from Title IV Awards Significant Deficiency Federal Program: Student Financial Assistance Cluster Assistance Listing Number(s): Student Financial Assistance Cluster • 84.007 • 84.033 • 84.038 • 84.063 • 84.268 • 84.379 • 93.925 Criteria: Auditee requirements contained in Title 2 U.S. Code of Federal Regulations (2 CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post Federal Award Requirements, Section 200.303 – Internal Controls, requires the auditee to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonfederal 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 a framework such as the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: When Title IV funds are credited to a student account and they exceed the amount of tuition and fees, food and housing, and other authorized charges assessed the student, a credit balance is created. The institution must pay the resulting credit balance directly to the student or parent borrower within 14 days after (1) the first day of class of a payment period if the credit balance occurred on or before that day, or (2) the balance occurred if that was after the first day of class. The College does not have a control in place with physical indication of review over refund process for student credit balances. Cause: Lack of control in place over refunds from student credit balances Effect or Potential Effect: Student credit balances may not be refunded within the 14-day requirement. Questioned Costs: None Context: During our control assessment over student credit balance refunds, we noted there is no control in place and no physical indication of review taking place to ensure student credit balances are properly refunded within the 14-day requirement. Repeat Finding: No Recommendation: We recommend the College review its process and controls in place for student credit balances to include an independent review and sufficient documentation to support the application of the control. Views of Responsible Officials: Management agrees with the finding. See corrective action plan.
(2024-016) Title: Internal control over Unemployment Insurance financial reporting needs improvement Prior Year Findings: None State Department: Labor Administrative and Financial Services State Bureau: Unemployment Compensation Security and Employment Service Center Office of the State Controller Federal Agency: U.S. Department of Labor Assistance Listing Title: Unemployment Insurance (UI) (COVID-19) Assistance Listing Number: 17.225 Federal Award Identification Number: See E-77 Compliance Area: Reporting Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.510; Governmental Accounting, Auditing, and Financial Reporting (GAAFR), Part 5, Section A: Internal Control; State Administrative and Accounting Manual (SAAM) Chapter 80 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the State’s financial statements which must include the total Federal awards expended. At a minimum, the SEFA must provide total Federal awards expended for each individual Federal program. The GAAFR states that a comprehensive framework of internal control is required to obtain reasonable assurance over financial reporting. The Office of the State Controller (OSC) has the responsibility to develop and maintain a system of internal controls and procedures to check the accuracy and reliability of its accounting data, promote operational efficiency, and encourage adherence to prescribed managerial policies for accounting and financial controls. Condition: The Security and Employment Service Center (SESC) is responsible for recording accounting transactions and reconciling balances between Federal funds and the State-funded Unemployment Insurance (UI) program under the Employment Security Fund (ESF). SESC is required to periodically record transfers of revenues and expenditures between Federal and State funds, which are separately presented in the State’s financial statements, but combined for SEFA reporting purposes. OSC compiles information collected from SESC in year-end closing packages for financial and SEFA reporting purposes. The Office of the State Auditor’s (OSA) audit of year-end account balances and related SEFA reporting identified a deposit of $11.6 million, representing a transfer between Federal and State UI funds, that was not accurately recorded. This resulted in the following errors: • ESF Cash & Short-Term Investments was overstated by $11.6 million, and Restricted Deposits & Investments was understated by $11.6 million on the State’s financial statements. • SEFA expenditures were overstated by $11.6 million. OSA proposed an audit adjustment to reclassify and correct the balances on the State’s financial statements and SEFA. The adjustment was recorded by OSC. Context: Before OSA’s proposed audit adjustment: • ESF Cash & Short-Term Investments and Restricted Deposits & Investments totaled $13 million and $735.2 million, respectively. • SEFA expenditures for the UI program totaled $150.7 million. Cause: Lack of supervisory oversight Effect: Before OSC corrected year-end account balances and related SEFA reporting: • ESF asset balances on the State’s financial statements were misclassified. • total expenditures reported on the SEFA were inaccurate. The SEFA is submitted to the Federal government, and errors in reporting may result in incorrect information used for programmatic, policy, or statistical purposes. Recommendation: We recommend that SESC and OSC enhance supervisory oversight to ensure that balances reported on the State’s financial statements and SEFA are accurate. Corrective Action Plan: See F-11 Management’s Response: The Department agrees with this finding. The department will further expand the procedures used to prepare and review the SEFA. Contact: Marilyn Leimbach, Director, Security and Employment Service Center, DFPS, DAFS, 207-248-2556 (State Number: 24-0308-02)
(2024-016) Title: Internal control over Unemployment Insurance financial reporting needs improvement Prior Year Findings: None State Department: Labor Administrative and Financial Services State Bureau: Unemployment Compensation Security and Employment Service Center Office of the State Controller Federal Agency: U.S. Department of Labor Assistance Listing Title: Unemployment Insurance (UI) (COVID-19) Assistance Listing Number: 17.225 Federal Award Identification Number: See E-77 Compliance Area: Reporting Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.510; Governmental Accounting, Auditing, and Financial Reporting (GAAFR), Part 5, Section A: Internal Control; State Administrative and Accounting Manual (SAAM) Chapter 80 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the State’s financial statements which must include the total Federal awards expended. At a minimum, the SEFA must provide total Federal awards expended for each individual Federal program. The GAAFR states that a comprehensive framework of internal control is required to obtain reasonable assurance over financial reporting. The Office of the State Controller (OSC) has the responsibility to develop and maintain a system of internal controls and procedures to check the accuracy and reliability of its accounting data, promote operational efficiency, and encourage adherence to prescribed managerial policies for accounting and financial controls. Condition: The Security and Employment Service Center (SESC) is responsible for recording accounting transactions and reconciling balances between Federal funds and the State-funded Unemployment Insurance (UI) program under the Employment Security Fund (ESF). SESC is required to periodically record transfers of revenues and expenditures between Federal and State funds, which are separately presented in the State’s financial statements, but combined for SEFA reporting purposes. OSC compiles information collected from SESC in year-end closing packages for financial and SEFA reporting purposes. The Office of the State Auditor’s (OSA) audit of year-end account balances and related SEFA reporting identified a deposit of $11.6 million, representing a transfer between Federal and State UI funds, that was not accurately recorded. This resulted in the following errors: • ESF Cash & Short-Term Investments was overstated by $11.6 million, and Restricted Deposits & Investments was understated by $11.6 million on the State’s financial statements. • SEFA expenditures were overstated by $11.6 million. OSA proposed an audit adjustment to reclassify and correct the balances on the State’s financial statements and SEFA. The adjustment was recorded by OSC. Context: Before OSA’s proposed audit adjustment: • ESF Cash & Short-Term Investments and Restricted Deposits & Investments totaled $13 million and $735.2 million, respectively. • SEFA expenditures for the UI program totaled $150.7 million. Cause: Lack of supervisory oversight Effect: Before OSC corrected year-end account balances and related SEFA reporting: • ESF asset balances on the State’s financial statements were misclassified. • total expenditures reported on the SEFA were inaccurate. The SEFA is submitted to the Federal government, and errors in reporting may result in incorrect information used for programmatic, policy, or statistical purposes. Recommendation: We recommend that SESC and OSC enhance supervisory oversight to ensure that balances reported on the State’s financial statements and SEFA are accurate. Corrective Action Plan: See F-11 Management’s Response: The Department agrees with this finding. The department will further expand the procedures used to prepare and review the SEFA. Contact: Marilyn Leimbach, Director, Security and Employment Service Center, DFPS, DAFS, 207-248-2556 (State Number: 24-0308-02)
(2024-022) Title: Internal control over SNAP eligibility determinations and benefit calculations needs improvement Prior Year Findings: See schedule of Findings and Questioned costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster Assistance Listing Number: 10.551, 10.561 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Allowable costs/cost principles Eligibility Special tests and provisions Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: ALN 10.551 $12,335 Likely Questioned Costs: Undeterminable; incorrectly calculated Supplemental Nutrition Assistance Program (SNAP) benefits may result in overpayments or underpayments to clients. Since there are known overpayments and underpayments in our sample, a projection of questioned costs cannot be reasonably estimated. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 272.10; 7 CFR 273.2 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. All State agencies must sufficiently automate their SNAP operations and computerize their systems for obtaining, maintaining, utilizing and transmitting information concerning SNAP. A SNAP application form must be signed to establish a filing date and to determine the State agency’s deadline for acting on the form. The State agency shall not certify a household without a signed form. Condition: SNAP is administered by the Office for Family Independence (OFI) and provides monthly benefits to eligible households to purchase nutritious foods. OFI is required by Federal program regulations to utilize an automated information system for SNAP. The information system must maintain all case file information necessary to properly process eligibility determinations and benefit calculations. The Automated Client Eligibility System (ACES) is the information system used by OFI to automate SNAP operations. ACES relies on the maintenance of a complex framework of system results to make eligibility determinations and related benefit calculations. The Office of the State Auditor (OSA) tested 60 household monthly benefit payments to verify the accuracy of SNAP operations utilizing ACES, and identified the following: • Nine overpayments of monthly SNAP benefits, including: o four benefit overpayments totaling $5,806; the Department was unable to provide documentation to support the maximum income limit requirement. o two benefit overpayments totaling $2,714 where the clients’ application for benefit renewal did not include SNAP; however, the households were open to SNAP benefits. o two benefit overpayments totaling $2,349 due to manual processing errors. o one benefit overpayment totaling $1,041; the client’s signature on their application was missing, which makes them ineligible for SNAP benefits. • One $395 underpayment of a monthly SNAP benefit due to manual processing errors • One household with an overpayment of $425 and an underpayment of $69 due to manual processing errors • Three households received accurate monthly benefit payments; however, asset and expense information were not accurately reflected within ACES. OSA selected a non-statistical random sample. The Department does not have adequate policies and procedures in place to ensure that ACES case file modifications, whether manual or system interfaced, that result in adjustments to previously issued monthly SNAP benefits are appropriately processed. This includes a recalculation of previously issued benefits when case file modifications are processed, establishment of corresponding overpayments or underpayments, and related follow-up actions with households. Context: In fiscal year 2024, the State provided approximately 129,000 SNAP clients with $371.4 million in Federal benefits. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Known questioned costs • Potential future questioned costs and disallowances • Benefits may be incorrectly calculated, resulting in households being underpaid and/or overpaid. • Noncompliance with Federal regulations Recommendation: We recommend that the Department implement additional policies and procedures to ensure that: • case information entered into ACES is accurate; • automated eligibility determinations and benefit calculations are processed in accordance with Federal regulations; and • recalculations of previously issued benefits and related follow-up actions occur when case file modifications are retroactive. Corrective Action Plan: See F-13 Management’s Response: The Department partially agrees with this finding. Of the 60 cases reviewed, 13 (21.67%) had errors in calculations or documentation. The Department is confident that the staff followed correct procedures in providing the TANF funded resource guide in the first four cases cited. The errors in these cases were merely a lack of documentation. The Department agrees with the calculation errors in the following 7 cases (11.67% of the 60 reviewed). The Department has developed a corrective action plan to ensure compliance moving forward. Contact: Michael E. Downs, Senior Program Manager, SNAP, DHHS, 207-592-4850 Auditor’s Concluding Remarks: The Department states that they are “confident that the staff followed correct procedures” for the four benefit overpayments totaling $5,806 and that “errors in these cases were merely a lack of documentation;” however, the Department cannot substantiate that staff followed established procedures if there is a lack of documentation to support adherence to procedures. The finding remains as stated. (State Number: 24-1108-04)
(2024-022) Title: Internal control over SNAP eligibility determinations and benefit calculations needs improvement Prior Year Findings: See schedule of Findings and Questioned costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster Assistance Listing Number: 10.551, 10.561 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Allowable costs/cost principles Eligibility Special tests and provisions Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: ALN 10.551 $12,335 Likely Questioned Costs: Undeterminable; incorrectly calculated Supplemental Nutrition Assistance Program (SNAP) benefits may result in overpayments or underpayments to clients. Since there are known overpayments and underpayments in our sample, a projection of questioned costs cannot be reasonably estimated. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 272.10; 7 CFR 273.2 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. All State agencies must sufficiently automate their SNAP operations and computerize their systems for obtaining, maintaining, utilizing and transmitting information concerning SNAP. A SNAP application form must be signed to establish a filing date and to determine the State agency’s deadline for acting on the form. The State agency shall not certify a household without a signed form. Condition: SNAP is administered by the Office for Family Independence (OFI) and provides monthly benefits to eligible households to purchase nutritious foods. OFI is required by Federal program regulations to utilize an automated information system for SNAP. The information system must maintain all case file information necessary to properly process eligibility determinations and benefit calculations. The Automated Client Eligibility System (ACES) is the information system used by OFI to automate SNAP operations. ACES relies on the maintenance of a complex framework of system results to make eligibility determinations and related benefit calculations. The Office of the State Auditor (OSA) tested 60 household monthly benefit payments to verify the accuracy of SNAP operations utilizing ACES, and identified the following: • Nine overpayments of monthly SNAP benefits, including: o four benefit overpayments totaling $5,806; the Department was unable to provide documentation to support the maximum income limit requirement. o two benefit overpayments totaling $2,714 where the clients’ application for benefit renewal did not include SNAP; however, the households were open to SNAP benefits. o two benefit overpayments totaling $2,349 due to manual processing errors. o one benefit overpayment totaling $1,041; the client’s signature on their application was missing, which makes them ineligible for SNAP benefits. • One $395 underpayment of a monthly SNAP benefit due to manual processing errors • One household with an overpayment of $425 and an underpayment of $69 due to manual processing errors • Three households received accurate monthly benefit payments; however, asset and expense information were not accurately reflected within ACES. OSA selected a non-statistical random sample. The Department does not have adequate policies and procedures in place to ensure that ACES case file modifications, whether manual or system interfaced, that result in adjustments to previously issued monthly SNAP benefits are appropriately processed. This includes a recalculation of previously issued benefits when case file modifications are processed, establishment of corresponding overpayments or underpayments, and related follow-up actions with households. Context: In fiscal year 2024, the State provided approximately 129,000 SNAP clients with $371.4 million in Federal benefits. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Known questioned costs • Potential future questioned costs and disallowances • Benefits may be incorrectly calculated, resulting in households being underpaid and/or overpaid. • Noncompliance with Federal regulations Recommendation: We recommend that the Department implement additional policies and procedures to ensure that: • case information entered into ACES is accurate; • automated eligibility determinations and benefit calculations are processed in accordance with Federal regulations; and • recalculations of previously issued benefits and related follow-up actions occur when case file modifications are retroactive. Corrective Action Plan: See F-13 Management’s Response: The Department partially agrees with this finding. Of the 60 cases reviewed, 13 (21.67%) had errors in calculations or documentation. The Department is confident that the staff followed correct procedures in providing the TANF funded resource guide in the first four cases cited. The errors in these cases were merely a lack of documentation. The Department agrees with the calculation errors in the following 7 cases (11.67% of the 60 reviewed). The Department has developed a corrective action plan to ensure compliance moving forward. Contact: Michael E. Downs, Senior Program Manager, SNAP, DHHS, 207-592-4850 Auditor’s Concluding Remarks: The Department states that they are “confident that the staff followed correct procedures” for the four benefit overpayments totaling $5,806 and that “errors in these cases were merely a lack of documentation;” however, the Department cannot substantiate that staff followed established procedures if there is a lack of documentation to support adherence to procedures. The finding remains as stated. (State Number: 24-1108-04)
(2024-023) Title: Internal control over SNAP deceased client cases needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster Assistance Listing Number: 10.551, 10.561 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: ALN 10.551 $11,080 Likely Questioned Costs: Undeterminable; the Office of the State Auditor (OSA) tested a sample of cases where Supplemental Nutrition Assistance Program (SNAP) benefits were issued after the client’s date of death (DOD). Issuance of benefits to a deceased client does not necessarily result in unallowable program costs, as the issued benefits may not be expended; therefore, an error rate cannot be applied to the population and a projection of questioned costs cannot be reasonably estimated. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 272.8 and .14 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. State agency action on information items about recipient households shall include review of information and comparison of it to case record information. State agencies must initiate and pursue actions on recipient households within 45 days of the receipt of the information items. States shall establish a system to verify and ensure that benefits are not issued to individuals who are deceased. Condition: The Office for Family Independence (OFI) manages the Automated Client Eligibility System (ACES) used to determine eligibility for Federal assistance programs, including SNAP. Information maintained in ACES is relied upon by OFI for determining monthly SNAP benefits issued to client Electronic Benefit Transaction (EBT) cards. OFI relies on numerous data sources for identifying and providing client DOD information for input into ACES, including monthly data exchanges with the Maine Center for Disease Control & Prevention (MeCDC) Vital Records, which includes Social Security Administration data. Federal program regulations require OFI to act on client cases within 45 days of receipt of DOD information. This includes review and comparison of DOD information to ACES case file information, and suspension of program participation and related benefits as warranted. OFI policies for SNAP require deactivation of the client’s EBT card as well as expungement of authorized benefits from the EBT card. If activity occurred on the client’s EBT card subsequent to the DOD, the case must be reported as potential fraud and referred for investigation. OSA obtained DOD information from MeCDC Vital Records and compared it to clients who received SNAP benefits during fiscal year 2024. OSA identified 214 cases where SNAP benefits were issued more than 75 days following the client’s DOD; this benchmark was applied to denote the 45-day Federal program regulation related to monthly receipt of DOD information. OSA tested 43 of these SNAP cases and identified the following: • 16 single member household clients had EBT card purchase activity after DOD. Of these 16 clients: o 14 clients had transaction activity after DOD that occurred in fiscal year 2024, resulting in unallowable costs totaling $11,080. Additional issues were noted for six of the 14 clients, as follows: • Two clients were not identified as potential fraud in the ACES case file. As a result, they were not referred for investigation as required by OFI policies. • One client’s EBT card was not deactivated upon receipt of DOD information. • Two clients’ benefits were not expunged upon receipt of DOD information as required by OFI policies; benefits were only expunged by the system-automated process based on inactivity after 274 days. • One client’s case remained open 91 days after OFI was notified of the client’s DOD, resulting in three months of unauthorized SNAP benefit issuances. o two clients had transaction activity that occurred subsequent to fiscal year 2024. Of the two clients, one client was not identified as potential fraud in the ACES case file. As a result, they were not referred for investigation as required by OFI policies. • Eight clients with no EBT card purchase activity after DOD had additional issues noted, as follows: o For six clients, the EBT card was never deactivated; therefore, benefits remained open and available for use 83 to 112 days after DOD. o One client’s benefits were not expunged upon receipt of DOD information as required by OFI policies; benefits were only expunged by the system-automated process based on inactivity after 274 days. o One client’s EBT card was never deactivated and benefits were not expunged upon receipt of DOD information as required by OFI policies. OSA selected a non-statistical random sample. Context: In fiscal year 2024, the State provided approximately 129,000 SNAP clients with $371.4 million in Federal benefits. Of the 129,000 SNAP clients, 1,789 had a DOD in fiscal year 2024. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Benefits issued to deceased clients may result in unauthorized EBT card purchase activity. • Known questioned costs • Potential future questioned costs and disallowances • Noncompliance with Federal regulations Recommendation: We recommend that the Department enhance policies and procedures to ensure that DOD information is received, reviewed, and updated in ACES on a more frequent basis to prevent unauthorized SNAP benefit issuances and EBT card purchase activity. In addition, we recommend that the Department review all client cases noted in the Condition of this finding to ensure that: • ACES case file DOD information is accurate; • SNAP benefits are expunged and EBT cards are deactivated in accordance with existing policies; • cases are identified as potential fraud and referred for investigation as warranted; and • unallowable costs are identified and reported to Federal oversight agencies and required recoupment activities are pursued. Corrective Action Plan: See F-13 Management’s Response: The Department partially agrees with this finding. In most cases cited the Department took appropriate action within the 45 days required by federal regulation related to IEVS information or within the 10-12-10 standard required for community complaints depending on the source of the information. The Department recognizes that some actions were lacking or could have been taken more quickly. A dedicated MaineCare Program Integrity Team is now working on the IEVS reports related to deceased members and has detailed SOPs for death matches. Based on the data improvements, this finding may continue to a small degree in the SFY 2025 audit and should be cleaned up in the SFY 2026 audit. Contact: Michael E. Downs, Senior Program Manager, SNAP, DHHS, 207-592-4850 Auditor’s Concluding Remarks: The exceptions noted in the Condition were identified within a sample of SNAP cases where benefits were issued more than 75 days following the client’s DOD. The 75-day benchmark was applied to include considerations of the monthly (30 day) receipt and the Federal program regulation (45 day). These cases demonstrate that the Department did not take appropriate action as required by Federal regulations in all exceptions identified. The finding remains as stated. (State Number: 24-1108-03)
(2024-023) Title: Internal control over SNAP deceased client cases needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster Assistance Listing Number: 10.551, 10.561 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: ALN 10.551 $11,080 Likely Questioned Costs: Undeterminable; the Office of the State Auditor (OSA) tested a sample of cases where Supplemental Nutrition Assistance Program (SNAP) benefits were issued after the client’s date of death (DOD). Issuance of benefits to a deceased client does not necessarily result in unallowable program costs, as the issued benefits may not be expended; therefore, an error rate cannot be applied to the population and a projection of questioned costs cannot be reasonably estimated. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 272.8 and .14 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. State agency action on information items about recipient households shall include review of information and comparison of it to case record information. State agencies must initiate and pursue actions on recipient households within 45 days of the receipt of the information items. States shall establish a system to verify and ensure that benefits are not issued to individuals who are deceased. Condition: The Office for Family Independence (OFI) manages the Automated Client Eligibility System (ACES) used to determine eligibility for Federal assistance programs, including SNAP. Information maintained in ACES is relied upon by OFI for determining monthly SNAP benefits issued to client Electronic Benefit Transaction (EBT) cards. OFI relies on numerous data sources for identifying and providing client DOD information for input into ACES, including monthly data exchanges with the Maine Center for Disease Control & Prevention (MeCDC) Vital Records, which includes Social Security Administration data. Federal program regulations require OFI to act on client cases within 45 days of receipt of DOD information. This includes review and comparison of DOD information to ACES case file information, and suspension of program participation and related benefits as warranted. OFI policies for SNAP require deactivation of the client’s EBT card as well as expungement of authorized benefits from the EBT card. If activity occurred on the client’s EBT card subsequent to the DOD, the case must be reported as potential fraud and referred for investigation. OSA obtained DOD information from MeCDC Vital Records and compared it to clients who received SNAP benefits during fiscal year 2024. OSA identified 214 cases where SNAP benefits were issued more than 75 days following the client’s DOD; this benchmark was applied to denote the 45-day Federal program regulation related to monthly receipt of DOD information. OSA tested 43 of these SNAP cases and identified the following: • 16 single member household clients had EBT card purchase activity after DOD. Of these 16 clients: o 14 clients had transaction activity after DOD that occurred in fiscal year 2024, resulting in unallowable costs totaling $11,080. Additional issues were noted for six of the 14 clients, as follows: • Two clients were not identified as potential fraud in the ACES case file. As a result, they were not referred for investigation as required by OFI policies. • One client’s EBT card was not deactivated upon receipt of DOD information. • Two clients’ benefits were not expunged upon receipt of DOD information as required by OFI policies; benefits were only expunged by the system-automated process based on inactivity after 274 days. • One client’s case remained open 91 days after OFI was notified of the client’s DOD, resulting in three months of unauthorized SNAP benefit issuances. o two clients had transaction activity that occurred subsequent to fiscal year 2024. Of the two clients, one client was not identified as potential fraud in the ACES case file. As a result, they were not referred for investigation as required by OFI policies. • Eight clients with no EBT card purchase activity after DOD had additional issues noted, as follows: o For six clients, the EBT card was never deactivated; therefore, benefits remained open and available for use 83 to 112 days after DOD. o One client’s benefits were not expunged upon receipt of DOD information as required by OFI policies; benefits were only expunged by the system-automated process based on inactivity after 274 days. o One client’s EBT card was never deactivated and benefits were not expunged upon receipt of DOD information as required by OFI policies. OSA selected a non-statistical random sample. Context: In fiscal year 2024, the State provided approximately 129,000 SNAP clients with $371.4 million in Federal benefits. Of the 129,000 SNAP clients, 1,789 had a DOD in fiscal year 2024. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Benefits issued to deceased clients may result in unauthorized EBT card purchase activity. • Known questioned costs • Potential future questioned costs and disallowances • Noncompliance with Federal regulations Recommendation: We recommend that the Department enhance policies and procedures to ensure that DOD information is received, reviewed, and updated in ACES on a more frequent basis to prevent unauthorized SNAP benefit issuances and EBT card purchase activity. In addition, we recommend that the Department review all client cases noted in the Condition of this finding to ensure that: • ACES case file DOD information is accurate; • SNAP benefits are expunged and EBT cards are deactivated in accordance with existing policies; • cases are identified as potential fraud and referred for investigation as warranted; and • unallowable costs are identified and reported to Federal oversight agencies and required recoupment activities are pursued. Corrective Action Plan: See F-13 Management’s Response: The Department partially agrees with this finding. In most cases cited the Department took appropriate action within the 45 days required by federal regulation related to IEVS information or within the 10-12-10 standard required for community complaints depending on the source of the information. The Department recognizes that some actions were lacking or could have been taken more quickly. A dedicated MaineCare Program Integrity Team is now working on the IEVS reports related to deceased members and has detailed SOPs for death matches. Based on the data improvements, this finding may continue to a small degree in the SFY 2025 audit and should be cleaned up in the SFY 2026 audit. Contact: Michael E. Downs, Senior Program Manager, SNAP, DHHS, 207-592-4850 Auditor’s Concluding Remarks: The exceptions noted in the Condition were identified within a sample of SNAP cases where benefits were issued more than 75 days following the client’s DOD. The 75-day benchmark was applied to include considerations of the monthly (30 day) receipt and the Federal program regulation (45 day). These cases demonstrate that the Department did not take appropriate action as required by Federal regulations in all exceptions identified. The finding remains as stated. (State Number: 24-1108-03)
(2024-024) Title: Internal control over automated SNAP eligibility certification periods needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster Assistance Listing Number: 10.551, 10.561 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Allowable costs/cost principles Eligibility Special tests and provisions Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: ALN 10.551 $3,973 Likely Questioned Costs: Undeterminable; incorrectly suspending Supplemental Nutrition Assistance Program (SNAP) benefits may result in overpayments or underpayments to households. Since there are known overpayments and underpayments in our sample, a projection of questioned costs cannot be reasonably estimated. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 272.10; 7 CFR 273.10 and .12 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. All State agencies must sufficiently automate their SNAP operations and computerize their systems for obtaining, maintaining, utilizing and transmitting information concerning SNAP, which includes automatic cutoff of participation for households which have not been recertified at the end of their certification period. SNAP households must be assigned eligibility certification periods of at least six months unless the household is classified as exempt based on program regulations. The State agency must have at least one contact with each SNAP household every 12 months. Submission of periodic eligibility reports is required by non-exempt households. Non-exempt households that are certified for longer than six months must file a periodic report between four months and six months, as required by the State agency. In addition, the State agency must not require the submission of periodic reports by households certified for 12 months or less in which all adult members are elderly or have a disability and no earned income. Condition: SNAP is administered by the Office for Family Independence (OFI) and provides monthly benefits to eligible households to purchase nutritious foods. OFI is required by Federal program regulations to utilize an automated information system for SNAP. The information system must maintain all case file information necessary to properly process eligibility determinations and benefit computations. The Automated Client Eligibility System (ACES) is the information system used by OFI to automate SNAP operations. ACES relies on the maintenance of a complex framework of system rules to make eligibility determinations, including notification letters to clients when 6-month reports and 12-month redeterminations of eligibility are required. All SNAP households, except for elderly and disabled cases with no earned income, are required to submit 6-month reports. In addition, all SNAP households must undergo an annual redetermination of eligibility. Each household’s recertification requirements are indicated by date fields in the ACES case file. If a required report or redetermination is not completed by the date indicated in the applicable field, the case’s monthly SNAP benefit is automatically suspended by the system. The Office of the State Auditor (OSA) tested a sample of 20 cases automatically suspended for failure to complete a required review in fiscal year 2024 to verify the accuracy of automated SNAP operations utilizing ACES. In 14 of the 20 cases tested, OSA identified that ACES incorrectly suspended benefits, as follows: • One case was suspended four months after the 6-month reporting requirement, resulting in a known overpayment of $92. • One case was suspended one month after the annual redetermination requirement, resulting in a known overpayment of $535. • Six cases were underpaid SNAP benefits totaling $4,424 because of incorrect benefit suspensions, ranging from one to five months prior to the applicable 6-month reporting requirement. • Five cases were underpaid SNAP benefits totaling $4,206 because of incorrect benefit suspensions, ranging from five to ten months prior to the annual redetermination requirement. • One case was never required to submit 6-month reports or annual redeterminations since commencement of SNAP benefits in July 2022. This resulted in overpayments for the entirety of fiscal year 2024 totaling $3,346. The Department identified the overpayment in July 2024 but has not recouped it yet, thus OSA is questioning costs totaling $3,346. OSA selected a non-statistical random sample. Context: In fiscal year 2024, the State provided approximately 129,000 SNAP clients with $371.4 million in Federal benefits. 213 clients were automatically suspended by ACES during fiscal year 2024 due to recertification or redetermination requirements. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight • Automated SNAP eligibility system recertification and suspension criteria was not configured in accordance with Federal regulations. Effect: • Known questioned costs • Potential future questioned costs and disallowances • Noncompliance with Federal regulations • Benefits may be incorrectly suspended, resulting in households being underpaid or overpaid. Recommendation: We recommend that the Department enhance policies and procedures to ensure that automated SNAP eligibility certification periods and related ACES case file fields are properly configured to process benefits in accordance with Federal regulations. In addition, we recommend that the Department identify underpayments and/or overpayments resulting from recertification period errors and take action as warranted. Corrective Action Plan: See F-14 Management’s Response: The Department agrees with the factual conclusions and calculations. The Department believes the necessary corrective action has been taken and will be reflected in the SFY25 audit. Contact: Ian Yaffe, Director, Office for Family Independence, DHHS, 207-592-1481 (State Number: 24-1108-02)