Finding Number: 2024-027 Prior Year Finding Number: 2023-032 Compliance Requirement: Eligibility Program: U.S. Department of Health and Human Services Medicaid Cluster ALN: 93.775, 93.777, 93.778 Award #: Various Award Year: 10/01/2023 – 09/30/2024 Government Department/Agency: Department of Health Care Finance (DHCF)/Department of Human Services (DHS)/Economic Security Administration (ESA) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. The Medicaid State Plan: Citation 42 CFR Section 431.17AT-79-29. Section 4.7 (Maintenance of Records) states, “The Medicaid agency maintains or supervises the maintenance of records necessary for the proper and efficient operation of the plan, including records regarding applications, determination of eligibility, the provision of medical assistance, and administrative costs and statistical, fiscal and other records necessary for reporting and accountability, and retains these records in accordance with Federal requirements. All requirements of 42 CFR 431.17 are met.” Economic Security Administration (ESA) Policy Manual, Section 1.3, “All eligibility criteria and clarifying information are documented on the Record of Case Action, form 1052. The case record should speak for itself. An outside reviewer shall be able to follow the chronology of events in the case be reading the narrative. All application documents including verification and correspondence must be date-stamped. For working recipients, the record should include the dates pay is received and how often the recipient is paid. When the recipient’s statement is the best available source, the record should include the application/recipient and agency efforts to verify the information. All address changes should be documented.” In accordance with 42 CRF Section 435.912(c)(3), Timeliness and performance standard requirements - Standard for new applications and transferred accounts. Except as provided in paragraph (e) of this section, the determination of eligibility for any applicant or individual whose account was transferred from another insurance affordability program may not exceed — (i) 90 calendar days for applicants who apply for Medicaid on the basis of disability; and (ii) 45 calendar days for all other applicants. 42 CRF Section 435.912 (c)(4) Standard for renewals. The redetermination of eligibility at a beneficiary's regularly scheduled renewal may not exceed the end of the beneficiary's eligibility period, except as provided in paragraphs (e) and (c)(4)(i) and (ii) of this section. (i) In the case of a beneficiary who returns a renewal form less than 30 calendar days prior to the end of the beneficiary's eligibility period, the redetermination of eligibility may not exceed the end of the month following the end of the beneficiary's eligibility period. (ii) In the case of a beneficiary who is determined ineligible on the basis for which they are currently receiving Medicaid (the applicable modified adjusted gross income standard described in Section 435.911(b)(1) and (2) or another basis) and for whom the agency is considering eligibility on another basis, the eligibility determination on the new basis may not exceed— (A) 90 calendar days for beneficiaries whose eligibility is being determined on the basis of disability; and (B) 45 calendar days for all other beneficiaries. 42 CRF Section 435.912 (c)(5) Standard for redeterminations based on changes in circumstances. Except as provided in paragraph (e) of this section, the redetermination of eligibility for a beneficiary based on a change in circumstances reported by the beneficiary or received from a third party may not exceed the end of the month that occurs — (i) 30 calendar days following the agency's receipt of information related to the change in circumstances, unless the agency needs to request additional information from the beneficiary; (ii) 60 calendar days following the agency's receipt of information related to the change in circumstances if the agency must request additional information from the beneficiary; or (iii) In the case of a beneficiary who is determined ineligible on the basis for which they are currently receiving Medicaid (the applicable modified adjusted gross income standard described in Section 435.911(b)(1) and (2) or another basis) and for whom the agency is considering eligibility on another basis — (A) 90 calendar days following the determination of ineligibility on the current basis, for beneficiaries whose eligibility is being determined on the basis of disability; and (B) 45 calendar days following the determination of ineligibility on the current basis for all other beneficiaries. 42 CRF Section 435.912 (c)(6) Standard for redeterminations based on anticipated changes. The redetermination of eligibility for a beneficiary based on an anticipated change in circumstances may not exceed the end of the month in which the anticipated change occurs, except as provided in paragraphs (e) and (c)(6)(i) and (ii) of this section. (i) In the case of a beneficiary who returns information or documentation requested pursuant to Section 435.919(b)(6) less than 30 calendar days prior to the end of the month in which the anticipated change occurs, the redetermination of eligibility may not exceed the end of the month following the month in which the anticipated change occurs. (ii) In the case of a beneficiary who is determined ineligible on the basis for which they are currently receiving Medicaid (the applicable modified adjusted gross income standard described in Section 435.911(b)(1) and (2) or another basis) and for whom the agency is considering eligibility on another basis, the eligibility determination on the new basis may not exceed — (A) 90 calendar days for beneficiaries whose eligibility is being determined on the basis of disability; and (B) 45 calendar days for all other beneficiaries. Condition – During testing over beneficiary eligibility for the Medicaid benefits, we noted that the District’s Economic Security Administration (ESA) was unable to provide sufficient documentation to support the beneficiary’s eligibility determination totaling 283,898 total population during the fiscal year 2024 audit. Specifically, out of a sample of 132 participant files tested, we noted the following exception: • For three (3) participant files, ESA did not process the application within the required timeframe. The Department of Health Care Finance, as the State Medicaid Agency, lacks a quality control oversight system to ensure that eligibility documentation and verification is maintained to support the eligibility decision. Questioned Costs – Not determinable. Context – This is a condition identified per review of ESA’s compliance with specified requirements using a statistically valid sample. Effect – Lack of supporting documentation for program services and noncompliance with program requirements could result in disallowances of costs and participants could be receiving benefits that they are not entitled to receive under the program. Cause – DHCF and ESA did not appear to adhere to internal control procedures to ensure that applications are properly processed in accordance with Federal Regulations. Recommendation - We recommend that ESA strictly implement internal control procedures to ensure that documentation is maintained to support the beneficiary determinations. Related Noncompliance – Noncompliance. Views of Responsible Officials and Planned Corrective Actions – ESA concurs with this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2024-027 Prior Year Finding Number: 2023-032 Compliance Requirement: Eligibility Program: U.S. Department of Health and Human Services Medicaid Cluster ALN: 93.775, 93.777, 93.778 Award #: Various Award Year: 10/01/2023 – 09/30/2024 Government Department/Agency: Department of Health Care Finance (DHCF)/Department of Human Services (DHS)/Economic Security Administration (ESA) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. The Medicaid State Plan: Citation 42 CFR Section 431.17AT-79-29. Section 4.7 (Maintenance of Records) states, “The Medicaid agency maintains or supervises the maintenance of records necessary for the proper and efficient operation of the plan, including records regarding applications, determination of eligibility, the provision of medical assistance, and administrative costs and statistical, fiscal and other records necessary for reporting and accountability, and retains these records in accordance with Federal requirements. All requirements of 42 CFR 431.17 are met.” Economic Security Administration (ESA) Policy Manual, Section 1.3, “All eligibility criteria and clarifying information are documented on the Record of Case Action, form 1052. The case record should speak for itself. An outside reviewer shall be able to follow the chronology of events in the case be reading the narrative. All application documents including verification and correspondence must be date-stamped. For working recipients, the record should include the dates pay is received and how often the recipient is paid. When the recipient’s statement is the best available source, the record should include the application/recipient and agency efforts to verify the information. All address changes should be documented.” In accordance with 42 CRF Section 435.912(c)(3), Timeliness and performance standard requirements - Standard for new applications and transferred accounts. Except as provided in paragraph (e) of this section, the determination of eligibility for any applicant or individual whose account was transferred from another insurance affordability program may not exceed — (i) 90 calendar days for applicants who apply for Medicaid on the basis of disability; and (ii) 45 calendar days for all other applicants. 42 CRF Section 435.912 (c)(4) Standard for renewals. The redetermination of eligibility at a beneficiary's regularly scheduled renewal may not exceed the end of the beneficiary's eligibility period, except as provided in paragraphs (e) and (c)(4)(i) and (ii) of this section. (i) In the case of a beneficiary who returns a renewal form less than 30 calendar days prior to the end of the beneficiary's eligibility period, the redetermination of eligibility may not exceed the end of the month following the end of the beneficiary's eligibility period. (ii) In the case of a beneficiary who is determined ineligible on the basis for which they are currently receiving Medicaid (the applicable modified adjusted gross income standard described in Section 435.911(b)(1) and (2) or another basis) and for whom the agency is considering eligibility on another basis, the eligibility determination on the new basis may not exceed— (A) 90 calendar days for beneficiaries whose eligibility is being determined on the basis of disability; and (B) 45 calendar days for all other beneficiaries. 42 CRF Section 435.912 (c)(5) Standard for redeterminations based on changes in circumstances. Except as provided in paragraph (e) of this section, the redetermination of eligibility for a beneficiary based on a change in circumstances reported by the beneficiary or received from a third party may not exceed the end of the month that occurs — (i) 30 calendar days following the agency's receipt of information related to the change in circumstances, unless the agency needs to request additional information from the beneficiary; (ii) 60 calendar days following the agency's receipt of information related to the change in circumstances if the agency must request additional information from the beneficiary; or (iii) In the case of a beneficiary who is determined ineligible on the basis for which they are currently receiving Medicaid (the applicable modified adjusted gross income standard described in Section 435.911(b)(1) and (2) or another basis) and for whom the agency is considering eligibility on another basis — (A) 90 calendar days following the determination of ineligibility on the current basis, for beneficiaries whose eligibility is being determined on the basis of disability; and (B) 45 calendar days following the determination of ineligibility on the current basis for all other beneficiaries. 42 CRF Section 435.912 (c)(6) Standard for redeterminations based on anticipated changes. The redetermination of eligibility for a beneficiary based on an anticipated change in circumstances may not exceed the end of the month in which the anticipated change occurs, except as provided in paragraphs (e) and (c)(6)(i) and (ii) of this section. (i) In the case of a beneficiary who returns information or documentation requested pursuant to Section 435.919(b)(6) less than 30 calendar days prior to the end of the month in which the anticipated change occurs, the redetermination of eligibility may not exceed the end of the month following the month in which the anticipated change occurs. (ii) In the case of a beneficiary who is determined ineligible on the basis for which they are currently receiving Medicaid (the applicable modified adjusted gross income standard described in Section 435.911(b)(1) and (2) or another basis) and for whom the agency is considering eligibility on another basis, the eligibility determination on the new basis may not exceed — (A) 90 calendar days for beneficiaries whose eligibility is being determined on the basis of disability; and (B) 45 calendar days for all other beneficiaries. Condition – During testing over beneficiary eligibility for the Medicaid benefits, we noted that the District’s Economic Security Administration (ESA) was unable to provide sufficient documentation to support the beneficiary’s eligibility determination totaling 283,898 total population during the fiscal year 2024 audit. Specifically, out of a sample of 132 participant files tested, we noted the following exception: • For three (3) participant files, ESA did not process the application within the required timeframe. The Department of Health Care Finance, as the State Medicaid Agency, lacks a quality control oversight system to ensure that eligibility documentation and verification is maintained to support the eligibility decision. Questioned Costs – Not determinable. Context – This is a condition identified per review of ESA’s compliance with specified requirements using a statistically valid sample. Effect – Lack of supporting documentation for program services and noncompliance with program requirements could result in disallowances of costs and participants could be receiving benefits that they are not entitled to receive under the program. Cause – DHCF and ESA did not appear to adhere to internal control procedures to ensure that applications are properly processed in accordance with Federal Regulations. Recommendation - We recommend that ESA strictly implement internal control procedures to ensure that documentation is maintained to support the beneficiary determinations. Related Noncompliance – Noncompliance. Views of Responsible Officials and Planned Corrective Actions – ESA concurs with this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2024-027 Prior Year Finding Number: 2023-032 Compliance Requirement: Eligibility Program: U.S. Department of Health and Human Services Medicaid Cluster ALN: 93.775, 93.777, 93.778 Award #: Various Award Year: 10/01/2023 – 09/30/2024 Government Department/Agency: Department of Health Care Finance (DHCF)/Department of Human Services (DHS)/Economic Security Administration (ESA) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. The Medicaid State Plan: Citation 42 CFR Section 431.17AT-79-29. Section 4.7 (Maintenance of Records) states, “The Medicaid agency maintains or supervises the maintenance of records necessary for the proper and efficient operation of the plan, including records regarding applications, determination of eligibility, the provision of medical assistance, and administrative costs and statistical, fiscal and other records necessary for reporting and accountability, and retains these records in accordance with Federal requirements. All requirements of 42 CFR 431.17 are met.” Economic Security Administration (ESA) Policy Manual, Section 1.3, “All eligibility criteria and clarifying information are documented on the Record of Case Action, form 1052. The case record should speak for itself. An outside reviewer shall be able to follow the chronology of events in the case be reading the narrative. All application documents including verification and correspondence must be date-stamped. For working recipients, the record should include the dates pay is received and how often the recipient is paid. When the recipient’s statement is the best available source, the record should include the application/recipient and agency efforts to verify the information. All address changes should be documented.” In accordance with 42 CRF Section 435.912(c)(3), Timeliness and performance standard requirements - Standard for new applications and transferred accounts. Except as provided in paragraph (e) of this section, the determination of eligibility for any applicant or individual whose account was transferred from another insurance affordability program may not exceed — (i) 90 calendar days for applicants who apply for Medicaid on the basis of disability; and (ii) 45 calendar days for all other applicants. 42 CRF Section 435.912 (c)(4) Standard for renewals. The redetermination of eligibility at a beneficiary's regularly scheduled renewal may not exceed the end of the beneficiary's eligibility period, except as provided in paragraphs (e) and (c)(4)(i) and (ii) of this section. (i) In the case of a beneficiary who returns a renewal form less than 30 calendar days prior to the end of the beneficiary's eligibility period, the redetermination of eligibility may not exceed the end of the month following the end of the beneficiary's eligibility period. (ii) In the case of a beneficiary who is determined ineligible on the basis for which they are currently receiving Medicaid (the applicable modified adjusted gross income standard described in Section 435.911(b)(1) and (2) or another basis) and for whom the agency is considering eligibility on another basis, the eligibility determination on the new basis may not exceed— (A) 90 calendar days for beneficiaries whose eligibility is being determined on the basis of disability; and (B) 45 calendar days for all other beneficiaries. 42 CRF Section 435.912 (c)(5) Standard for redeterminations based on changes in circumstances. Except as provided in paragraph (e) of this section, the redetermination of eligibility for a beneficiary based on a change in circumstances reported by the beneficiary or received from a third party may not exceed the end of the month that occurs — (i) 30 calendar days following the agency's receipt of information related to the change in circumstances, unless the agency needs to request additional information from the beneficiary; (ii) 60 calendar days following the agency's receipt of information related to the change in circumstances if the agency must request additional information from the beneficiary; or (iii) In the case of a beneficiary who is determined ineligible on the basis for which they are currently receiving Medicaid (the applicable modified adjusted gross income standard described in Section 435.911(b)(1) and (2) or another basis) and for whom the agency is considering eligibility on another basis — (A) 90 calendar days following the determination of ineligibility on the current basis, for beneficiaries whose eligibility is being determined on the basis of disability; and (B) 45 calendar days following the determination of ineligibility on the current basis for all other beneficiaries. 42 CRF Section 435.912 (c)(6) Standard for redeterminations based on anticipated changes. The redetermination of eligibility for a beneficiary based on an anticipated change in circumstances may not exceed the end of the month in which the anticipated change occurs, except as provided in paragraphs (e) and (c)(6)(i) and (ii) of this section. (i) In the case of a beneficiary who returns information or documentation requested pursuant to Section 435.919(b)(6) less than 30 calendar days prior to the end of the month in which the anticipated change occurs, the redetermination of eligibility may not exceed the end of the month following the month in which the anticipated change occurs. (ii) In the case of a beneficiary who is determined ineligible on the basis for which they are currently receiving Medicaid (the applicable modified adjusted gross income standard described in Section 435.911(b)(1) and (2) or another basis) and for whom the agency is considering eligibility on another basis, the eligibility determination on the new basis may not exceed — (A) 90 calendar days for beneficiaries whose eligibility is being determined on the basis of disability; and (B) 45 calendar days for all other beneficiaries. Condition – During testing over beneficiary eligibility for the Medicaid benefits, we noted that the District’s Economic Security Administration (ESA) was unable to provide sufficient documentation to support the beneficiary’s eligibility determination totaling 283,898 total population during the fiscal year 2024 audit. Specifically, out of a sample of 132 participant files tested, we noted the following exception: • For three (3) participant files, ESA did not process the application within the required timeframe. The Department of Health Care Finance, as the State Medicaid Agency, lacks a quality control oversight system to ensure that eligibility documentation and verification is maintained to support the eligibility decision. Questioned Costs – Not determinable. Context – This is a condition identified per review of ESA’s compliance with specified requirements using a statistically valid sample. Effect – Lack of supporting documentation for program services and noncompliance with program requirements could result in disallowances of costs and participants could be receiving benefits that they are not entitled to receive under the program. Cause – DHCF and ESA did not appear to adhere to internal control procedures to ensure that applications are properly processed in accordance with Federal Regulations. Recommendation - We recommend that ESA strictly implement internal control procedures to ensure that documentation is maintained to support the beneficiary determinations. Related Noncompliance – Noncompliance. Views of Responsible Officials and Planned Corrective Actions – ESA concurs with this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2024-028 Prior Year Finding Number: 2023-033 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Program: U.S. Department of Health and Human Services Opioid STR ALN: 93.788 Award #: Various Award Year: 09/30/2020 – 09/29/2024 Government Department/Agency: Department of Behavioral Health (DBH) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR Section 200.403, “Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. (g) Be adequately documented.” Condition – During our testwork over nonpayroll transactions for the Activities Allowed or Unallowed and Allowable Costs/Cost Principles, we noted that for one (1) out of sixty-two (62) samples, the transaction was charged twice to the program. Total amount of nonpayroll transactions is $19,095,189, and the amount of exception is $122,311. Questioned Costs – Known amount is $122,311. Context – This is a condition identified per review of DBH’s compliance with specified requirements using a statistically valid sample. Total amount of samples selected for testing amounted to $5,633,513. Effect – Lack of proper review of expenditures could result to unallowable costs charged to the program. Cause – DBH does not have adequate controls in place to ensure that only allowable costs are charged to the program. Recommendation – We recommend that DBH strengthen internal control procedures to ensure that expenditures are allowable, and that sufficient documentation is retained to support that allowability. Related Noncompliance – Noncompliance. Views of Responsible Officials and Planned Corrective Actions – DBH concurs with the finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2024-029 Prior Year Finding Number: N/A Compliance Requirement: Cash Management Program: U.S. Department of Health and Human Services Opioid STR ALN: 93.788 Award #: Various Award Year: 09/30/2020 – 09/29/2024 Government Department/Agency: Department of Behavioral Health (DBH) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. When entities are funded on a reimbursement basis, program costs must be incurred prior to the date of the reimbursement request (2 CFR Section 200.305(b)(3)). US Department of the Treasury (Treasury) regulations at 31 CFR Part 205 implement the Cash Management Improvement Act of 1990 (CMIA), as amended (Pub. L. No. 101-453; 31 USC 6501 et seq.). Subpart A of those regulations requires state recipients to enter into Treasury-State Agreements that prescribe specific methods of drawing down federal funds (funding techniques) for federal programs listed in the Assistance Listing (Catalog of federal Domestic Assistance) that meet the funding threshold for a major federal assistance program under the CMIA. Treasury-State Agreements also specify the terms and conditions under which an interest liability would be incurred. Programs not covered by a Treasury-State Agreement are subject to procedures prescribed by Treasury in Subpart B of 31 CFR Part 205 (Subpart B), which at 31 CFR section 205.33(a) include the requirement for a state to minimize the time between the drawdown of federal funds and their disbursement for federal program purposes. Condition – During our testing of individual draws of federal funds, we noted that for one (1) sample selected and tested, the review of drawdown was made after it has been requested. Questioned Costs – Not determinable. Context – This is a condition identified per review of DBH’s compliance with specified requirements using a statistically valid sample. The sample drawdown, which is related to expenditures incurred during fiscal year 2024, was requested on December 24, 2024 but the review of the drawdown request did not happen until January 28, 2025. The total drawdown selected for testing amounted to $19,381,854. Effect – DBH is not in compliance with cash management requirements. Failure to timely review cash draw requests could result in cash draws that do not accurately reflect eligible program costs. Cause – DBH did not appear to adhere to internal control procedures to ensure the timely review of cash draws. Recommendation – We recommend DBH evaluate its existing cash management control procedures and ensure all federal draw requests are reviewed timely. We also recommend DBH establish procedures to periodically monitor its compliance with the cash management requirements and initiate necessary actions to resolve any noncompliance that results. Related Noncompliance – Noncompliance. Views of Responsible Officials and Planned Corrective Actions – DBH concurs with the finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2024-030 Prior Year Finding Number: 2023-035 Compliance Requirement: Reporting Program: U.S. Department of Health and Human Services Opioid STR ALN: 93.788 Award #: Various Award Year: 09/30/2020 – 09/29/2024 Government Department/Agency: Department of Behavioral Health (DBH) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Federal Financial Report (FFR) Controls over Reporting Compliance: 2 CFR 200.333 requires that financial records, supporting documents, statistical records, and all other non-federal entity records pertinent to a federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the federal awarding agency or pass-through entity in the case of a subrecipient. Performance Progress Report (PPR) Underlying Data: The audit objective for the Reporting compliance requirement stated in the 2 CFR Part 200, appendix XI Compliance Supplement is as follows: Determine whether required reports for Federal awards include all activity of the reporting period, are supported by applicable accounting or performance records, and are fairly presented in accordance with governing requirements. Schedule of Expenditures of Federal Awards (SEFA) Reporting Compliance: Requirements, Cost Principles, and Audit Requirements, section 200.510(b) states the auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with 200.502. While not required, the auditee may choose to provide information requested by Federal awarding agencies and pass-through entities to make the schedule easier to use. Condition – During our testing of the reporting compliance requirement, we noted the following: • FFR Controls over Reporting Compliance: DBH’s control over compliance for financial reporting is as follows: “All reports are reviewed by the Accounting Officer or Agency Fiscal Officer prior to submission to the Federal government. DBH Program and Fiscal Services staff review programmatic and financial reports.” We noted DBH did not timely review and approve the annual Financial Reporting Report (FFR or SF-425) prior to submission to the Federal government. Total population is one (1) report and sample selected is one (1). • PPR Reporting Compliance: We noted DBH did not have documentation for the information, as well as the source of the information, it used in the Opioid STR’s Performance Progress Report. Information as reported in the reports was unsupported as management did not retain the underlying data. Total population is two (2) reports and sample selected is one (1). • SEFA Reporting Compliance: During our testing for the SEFA, we noted that DBH incorrectly reported the value of subrecipient expenditures included within the subrecipient expenditure column. For the year ended September 30, 2024, DBH incurred $12.0 million in subrecipient expenditures for this program and incorrectly reported that there were no subrecipient expenditures on the initial SEFA. While the subrecipient expenditures amount was not accurate, the total expenditures amount was accurately reported. The error in the subrecipient expenditures amount was subsequently identified and corrected as a result of the audit process. Questioned Costs – None. Context – This is a condition identified per review of DBH’s compliance with specified reporting requirements using a statistically valid sample. Effect – Without proper internal controls and policies and procedures in place to ensure that correct amounts were reported and were properly reviewed as it relates to the Opioid STR program: • FFR Controls over Reporting Compliance: There is an increased risk of errors occurring and being undetected, or errors being present in reports if no review and approval occurred. • PPR Reporting Compliance: DBH cannot be assured that it reported complete and accurate information to enable the Substance Abuse and Mental Health Services Administration (SAMHSA), an operating division of the Department of Health and Human Services (HHS), to assess the outcomes of the State’s use of Opioid program funding. • SEFA Reporting Compliance: The effect of the condition is that the SEFA was not accurately prepared. Cause – Management did not have proper internal controls and policies and procedures in place to ensure that the amounts on the FFR and SEFA were properly reported, and the reports were properly reviewed and approved. Recommendation – We recommend the following: • FFR Controls over Reporting Compliance: We recommend DBH strengthen its internal control to ensure timely review and approval of the FFR before report submission. • PPR Reporting Compliance: We recommend DBH develop formal, written procedures to identify the sources of information necessary and steps needed to compile accurate and complete information for the Opioid program performance reports; and retain in a central location all documentation that it used to support information included in each performance report it submits to the federal government. • SEFA Reporting Compliance: We recommend DBH ensure that agency personnel receive proper training on subrecipient versus vendor determination; as well as review existing policies and procedures for preparing the Schedule of Expenditures of Federal Awards to ensure that it is complete and accurate. Related Noncompliance – Noncompliance. Views of Responsible Officials and Planned Corrective Actions – The DBH Office of the Chief Financial Officer (OCFO) concurs with this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2024-031 Prior Year Finding Number: 2023-036 Compliance Requirement: Subrecipient Monitoring Program: U.S. Department of Health and Human Services Opioid STR ALN: 93.788 Award #: Various Award Year: 09/30/2020 – 09/29/2024 Government Department/Agency: Department of Behavioral Health (DBH) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Earmarking Requirements for Subrecipients: Award recipients must comply with the requirements for subrecipients monitoring and management as outlined in the provisions of 45 CFR Section 75.351-352 and should ensure written subaward/subcontract agreements are in place. The written agreement must require that subrecipients comply with the same terms and conditions as the prime recipient, as applicable (i.e., financial management requirements, audit requirements, etc.) and should describe the scope of work, deliverables, etc. The grant agreements provide that the District may use no more than ten (10) percent of the total grant award for administrative costs and developing the infrastructure necessary for expansion of services. Also, no more than ten (10) percent of the total grant award may be used for data collection, performance measurement, and performance assessment, including incentives for participating in the required data collection follow-up. Condition – During our testing of the Subrecipient Monitoring compliance requirement, we noted the following: Earmarking Requirements for Subrecipients: During our testing of the State Targeted Response to the Opioid Crisis Program, we noted that the agency used a different established indirect cost rate in monitoring the earmarking of awardees than the maximum administrative costs/indirect costs. For two (2) out of eleven (11) samples selected for testing, the awardees exceeded the ten (10) percent funding limitation for administrative costs/indirect costs. In addition, DBH does not have a process to monitor the ten (10) percent earmarking requirement for costs of developing the infrastructure necessary for expansion of services; and for data collection, performance measurement, and performance assessment, including incentives for participating in the required data collection follow-up. Total amount of population is $11,977,624, and the total amount of exceptions for two (2) samples is $524,658. Questioned Costs – Not determinable. Context – This is a condition identified per review of DBH’s compliance with specified subrecipient monitoring requirements using a statistically valid sample. Effect – Subrecipients may not be properly monitored, which may result in subawards being used for unauthorized purposes in violation of the terms and conditions of the subawards or that the subaward performance goals were not achieved. Cause – There is lack of sufficient documentary evidence to support that the controls are operating as designed related to subrecipient monitoring compliance. Recommendation – We recommend that DBH maintain sufficient documentation to evidence its internal controls over the risk assessment and monitoring of subrecipients. Related Noncompliance – Material noncompliance. Views of Responsible Officials and Planned Corrective Actions – DBH concurs with this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2024-032 Prior Year Finding Number: N/A Compliance Requirement: Eligibility Program: U.S. Department of Health and Human Services HIV Care Formula Grants ALN: 93.917 Award #: Various Award Year: 10/01/2023 – 09/30/2024 Government Department/Agency: Department of Health (DC Health) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. To be eligible to receive assistance in the form of therapeutics, an individual must meet the following requirement: 42 U.S. Code Section 300ff-26 - Provision of treatments: (b) Eligible individual. To be eligible to receive assistance from a State under this section an individual shall— (1) have a medical diagnosis of HIV/AIDS; and (2) be a low-income individual, as defined by the State. Condition – During our review of forty (40) participant eligibility files out of population of 875, under the HIV Care Formula Grants, we noted the following: • For all forty (40) participant eligibility files tested, we noted absence of secondary supervisory review as required. Specifically, eligibility determinations are made solely by the eligibility specialist without documented supervisory review or sign-off. • For two (2) participant files reviewed, we noted that there was no documentation pertaining to the proof of HIV diagnosis, verification of income and/or residency in the Ramsell Eligibility System. Questioned Costs – Not determinable. Context – This is a condition identified per review of DC Health’s compliance with specified requirements for eligibility using a statistically valid sample. Effect – The lack of a secondary review or maintenance of eligibility documents increases the risk of noncompliance with federal eligibility requirements, potentially leading to questioned costs. Cause – DC Health does not have a formal supervisory review process in place to verify the completeness and accuracy of eligibility determinations. Recommendation – We recommend that DC Health strengthen its existing policies and procedures by establishing a formal supervisory review process that includes a documented secondary review and approval of all eligibility files prior to participant enrollment. Additionally, we recommend that DC Health enhance its internal control procedures to ensure that all documentation supporting eligibility determinations is properly maintained in accordance with program requirements. Related Noncompliance – Material noncompliance. Views of Responsible Officials and Planned Corrective Actions – DC Health concurs with the finding. The HIV/AIDS, Hepatitis, STD and TB Administration (HAHSTA) has done a preliminary assessment of the root cause and conditions that created the exceptions noted in the testing of eligibility samples. DC Health agrees that the infrequency of reviews and lack of documented secondary supervisory reviews are contributing factors. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2024-033 Prior Year Finding Number: N/A Compliance Requirement: Matching, Level of Effort, Earmarking Program: U.S. Department of Health and Human Services HIV Care Formula Grants ALN: 93.917 Award #: Various Award Year: 10/01/2023 – 09/30/2024 Government Department/Agency: Department of Health (DC Health) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Matching States and territories (excluding Puerto Rico) with greater than one percent of the aggregate number of national cases of HIV/AIDS in the two-year period preceding the federal fiscal year in which the state is applying for a grant must, depending on the number of years in which this threshold requirement has been met, provide matching funds as follows (42 USC 300ff-27(d)): All recipients are subject to a matching requirement for ADAP supplemental funds in an amount equal to $1 for every $4 of federal funds (42 USC 300ff-28(a)(2)(F)(ii)(III)). Those recipients that are required to match the base formula funds may request and receive a waiver from this additional matching requirement. Level of Effort The state/territory will maintain HIV-related activities at a level that is equal to not less than the level of such expenditures by the state/territory for the one-year period preceding the fiscal year for which the state/territory is applying for RWHAP Part B funds (42 USC 300ff- 27(b)(7)(E)). Maintenance of Effort (MOE) requirement: The recipient must maintain non-federal funding for HIV-related activities at a level that is not less than the expenditures for such activities during the fiscal year prior to receiving the award (see Section 2617(b)(7)(E) of the PHS Act). Condition – DC Health did not provide the necessary documentation to support the computation of the required matching and level of effort amounts. As a result, we were unable to verify whether DC Health met the required thresholds or performed the appropriate calculations. Questioned Costs – Not determinable. Context – This is a condition identified per review of DC Health’s compliance with specified requirements. Effect – Without adequate internal controls to ensure proper documentation of the requirements, it may increase the risk that matching costs will be questioned. Cause – DC Health does not have adequate internal controls requiring the retention of documentation related to matching and level of effort compliance. Recommendation – We recommend that DC Health strengthen its policies and procedures to ensure that all matching contributions and level of effort requirements thresholds are properly documented. DC Health should ensure that detailed reconciliations, expenditure reports, and applicable source documents are maintained for audit purposes. Related Noncompliance – Material noncompliance. Views of Responsible Officials and Planned Corrective Actions – DC Health concurs with the finding. While DC Health reported match and level of effort expenditures in total, there was not sufficient documentation to distinguish 100% of the components of the match and LOE required. This detail included account-types/classifications, account numbers, allocation amounts and service areas needed to total the match and LOE requirements. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2024-034 Prior Year Finding Number: N/A Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Program: U.S. Department of Health and Human Services Block Grants for Substance Use Prevention, Treatment, and Recovery Services ALN: 93.959 Award #: Various Award Years: 10/01/2022 – 09/30/2024; 03/15/2021 – 03/14/2025 Government Department/Agency: Department of Behavioral Health (DBH) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR Section 200.430 Compensation – Personal Services: “Costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the establish written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity’s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable.” 2 CFR Section 200.430 (g): Standards for Documentation of Personnel Expenses. (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the recipient or subrecipient; (iii) Reasonably reflect the total activity for which the employee is compensated by the recipient or subrecipient, not exceeding 100 percent of compensated activities; (iv) Encompass federally-assisted and all other activities compensated by the recipient or subrecipient on an integrated basis but may include the use of subsidiary records as defined in the recipient's or subrecipient's written policy; (v) Comply with the established accounting policies and procedures of the recipient or subrecipient; (vi) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (vii) Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated. Condition – We noted that the DBH allocated payroll expenditures to the Block Grants for Substance Use Prevention, Treatment and Recovery Services (SUPTRS) during fiscal year 2024 based on budgeted percentages. These percentages were entered into the PeopleSoft Human Resources/Payroll System (PeopleSoft) at the beginning of the fiscal year and were based on management’s estimate of the respective employee’s level of effort for each program. PeopleSoft calculated the payroll costs every payroll cycle for each employee and program based on the predetermined percentage, and reported it through the Labor Distribution Report (485 Report). However, management cannot provide supporting documentation regarding the periodic comparison of actual costs to the budgeted costs as required by 2 CFR Section 200.430. Specifically, 17 out of 60 sampled payroll items tested for the SUPTRS program were recorded based on estimated hours and not actual hours. For the other 43 sampled items, these individuals worked 100% of their time on SUPTRS, therefore, there is no possibility of error. Questioned Costs – Known amount is $43,235. Context – This is a condition identified per review of DBH’s compliance with specified requirements using a statistically valid sample. Payroll costs, including fringe benefits, for the SUPTRS program in fiscal year 2024 totaled $4,667,478. Effect – DBH was unable to demonstrate that the payroll expenditures charged to the SUPTRS program accurately reflected the actual time incurred on the program and such expenditures were properly supported in accordance with 2 CFR Section 200.430, Compensation – Personal Services. Cause – DBH does not have policies and procedures in place to review and reconcile the estimated amount of payroll expenditures charged to the SUPTRS Program to the actual expenditures incurred. Recommendation – We recommend that DBH deploy policies and procedures to periodically compare employees’ estimated hours per the 485 Report to the actual hours incurred, and make any necessary adjustments as required by 2 CFR Section 200.430. Related Noncompliance – Material noncompliance. Views of Responsible Officials and Planned Corrective Actions – DBH agrees with the findings and will put controls in place to resolve the issue. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2024-035 Prior Year Finding Number: N/A Compliance Requirement: Matching, Level of Effort, Earmarking Program: U.S. Department of Health and Human Services Block Grants for Substance Use Prevention, Treatment, and Recovery Services ALN: 93.959 Award #: Various Award Years: 10/01/2022 – 09/30/2024; 03/15/2021 – 03/14/2025 Government Department/Agency: Department of Behavioral Health (DBH) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Earmarking requirement: a) The state shall expend not less than 20 percent of Substance Use Prevention, Treatment and Recovery Services Block Grant (SUPTRS BG) for primary prevention programs for individuals who do not require treatment for Substance Use Disorder (SUD). The programs should educate and counsel the individuals on such SUD and provide for activities to reduce the risk of such SUD by the individuals (42 USC 300x-22; 45 CFR Sections 96.124 (b)(1) and 96.125). b) Designated states (i.e., any state whose cases of Acquired Immunodeficiency Syndrome (AIDS) is 10 or more per 100,000 individuals (as indicated by the number of such cases reported to and confirmed by the Centers for Disease Control and Prevention for the most recent calendar year for which data are available)), shall expend not less than two percent and not more than five percent of the award amount to carry out one or more projects to make available to individuals early intervention services for HIV disease (EIS HIV) at the sites where the individuals are undergoing SUD treatment. c) The state may not expend more than five percent of the grant to pay the costs of administering the grant (42 USC 300x-31; 45 CFR Section 96.135 (b)(1)). Condition – DBH did not provide the necessary documentation to support compliance with earmarking requirements as described above. As a result, we were unable to verify whether DBH met the required thresholds. Questioned Costs – Not determinable. Context – This is a condition identified per review of DBH’s compliance with earmarking requirements. Effect – Without adequate internal controls to ensure proper documentation of the requirements, it may increase the risk that earmarking requirements may not be met. Cause – DBH does not have adequate internal controls requiring the retention of documentation related to earmarking compliance requirements. Recommendation – We recommend that DBH strengthen its policies and procedures to ensure that all earmarking requirements thresholds are properly documented. DBH should ensure that detailed reconciliations, expenditure reports, and applicable source documents are maintained for audit purposes. Related Noncompliance – Material noncompliance. Views of Responsible Officials and Planned Corrective Actions – DBH concurs with this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2024-036 Prior Year Finding Number: N/A Compliance Requirement: Reporting Program: U.S. Department of Health and Human Services Block Grants for Substance Use Prevention, Treatment, and Recovery Services ALN: 93.959 Award #: Various Award Years: 10/01/2022 – 09/30/2024; 03/15/2021 – 03/14/2025 Government Department/Agency: Department of Behavioral Health (DBH) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. The Uniform Guidance in 2 CFR Section 200.302(a), Financial Management, states that each state must expend and account for the federal award in accordance with state laws and procedures for expending and accounting for the state’s own funds. In addition, the state’s and the other non-federal entity’s financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statutes, regulations, and the terms and conditions of the federal award. Condition – Subrecipient expenditures, totaling approximately $1.1 million, which are required to be presented in the Schedule of Expenditures of Federal Awards (SEFA), were improperly excluded from the initial SEFA prepared by management. Subsequently, the SEFA was adjusted by DBH to reflect the subrecipient expenditures incurred for the program. Questioned Costs – None. Context – This is a condition identified per review of DBH’s compliance with reporting requirements. Effect – Failure to properly review and present expenditures can result in noncompliance with reporting requirements. Cause – DBH did not comply with their policies and procedures to ensure accuracy of the SEFA. Recommendation – We recommend that DBH adhere to instituted policies and procedures to ensure the accuracy of the SEFA. Related Noncompliance – Noncompliance. Views of Responsible Officials and Planned Corrective Actions – The DBH Office of the Chief Financial Officer (OCFO) concurs with this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Prior Year Finding Number: N/A Compliance Requirement: Reporting Program: U.S. Department of Homeland Security Homeland Security Grant Program ALN: 97.067 Award #: EMW-2021-SS-00078-S01, EMW-2022-SS-00084-S01, EMW-2023-SS-00056-S01 Award Year: 10/01/2023 – 09/30/2024 Government Department/Agency: Homeland Security and Emergency Management Agency (HSEMA) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. In accordance with 2 CFR Part 170, Appendix A, under the Federal Funding Accountability and Transparency Act (FFATA), the department is required to collect and report information on each subaward or amendment of $30,000 or more in federal funds in the FFATA Subaward Reporting System (FSRS) or System for Award Management (sam.gov) website from March 8, 2025 onwards. In accordance with the requirements of 2 CFR Section 1402.300(b), the non-Federal entity is responsible for complying with all requirements of the Federal award. For all Federal awards, this includes the provisions of FFATA, which includes requirements on executive compensation, and also requirements implementing the Act for the non-Federal entity at 2 CFR Part 25 Financial Assistance Use of Universal Identifier and System for Award Management and 2 CFR Part 170 Reporting Subaward and Executive Compensation Information. Condition – For all nine (9) first tier subawards samples selected for FFATA testing, we noted that HSEMA failed to provide evidence that it reported the subaward information through the FSRS or sam.gov website to fulfill the FFATA requirements. Questioned Costs – None. Context – This is a condition identified per review of HSEMA’s compliance with reporting requirements using a statistically valid sample. Effect – Failure to properly submit the FFATA report results in noncompliance for the Homeland Security Grant program. Cause – HSEMA did not have proper internal controls and policies and procedures in place to fulfill the FFATA reporting requirements. Recommendation – We recommend that HSEMA evaluate its Transparency Act reporting control procedures and update them as necessary to ensure they promote compliance with the Federal regulations. These procedures should include a supervisory review of the report information before it is submitted to the System for Award Management (sam.gov) website. Related Noncompliance – Noncompliance. Views of Responsible Officials and Planned Corrective Actions – HSEMA concurs that the subaward reporting required by FFATA is not currently complete and up to date in sam.gov website. Due to the transition to sam.gov and the FSRS system being terminated, the record of prior FFATA reports submitted that encountered errors and were left in partially complete status is no longer retrievable from the FSRS system to demonstrate that the report had been submitted. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2024-022 Prior Year Finding Number: N/A Compliance Requirement: Reporting Program: U.S. Department of Health and Human Services Child Care and Development Fund Cluster ALN: 93.575, 93.596 Award #: 2401DCCDD; 2101DCCDC6 Award Years: 10/01/2023 – 09/30/2026 10/01/2020 – 09/30/2024 Government Department/Agency: Office of the State Superintendent of Education (OSSE) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. In accordance with 2 CFR Part 170, Appendix A, under the Federal Funding Accountability and Transparency Act (FFATA), the department is required to collect and report information on each subaward or amendment of $30,000 or more in federal funds in the FFATA Subaward Reporting System (FSRS) or System for Award Management (sam.gov) website from March 8, 2025 onwards. In accordance with the requirements of 2 CFR Section 1402.300(b), the non-Federal entity is responsible for complying with all requirements of the Federal award. For all Federal awards, this includes the provisions of FFATA, which includes requirements on executive compensation, and also requirements implementing the Act for the non-Federal entity at 2 CFR Part 25 Financial Assistance Use of Universal Identifier and System for Award Management and 2 CFR Part 170 Reporting Subaward and Executive Compensation Information. Condition – For one (1) subaward sample selected for FFATA testing, we noted that OSSE failed to provide evidence that it reported the subaward information through the FSRS or sam.gov website to fulfill the FFATA requirements. Questioned Costs – None. Context – This is a condition identified per review of OSSE’s compliance with reporting requirements. Effect – Failure to properly submit the FFATA report results in noncompliance for the Child Care and Development Block Grant program. Cause – OSSE did not have proper internal controls and policies and procedures in place to fulfill the FFATA reporting requirements. Recommendation – We recommend that OSSE evaluate its Transparency Act reporting control procedures and update them as necessary to ensure they promote compliance with the Federal regulations. These procedures should include a supervisory review of the report information before it is submitted to the System for Award Management (sam.gov) website. Related Noncompliance – Noncompliance. Views of Responsible Officials and Planned Corrective Actions – OSSE concurs with the auditor’s finding and recommendations related to this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2024-027 Prior Year Finding Number: 2023-032 Compliance Requirement: Eligibility Program: U.S. Department of Health and Human Services Medicaid Cluster ALN: 93.775, 93.777, 93.778 Award #: Various Award Year: 10/01/2023 – 09/30/2024 Government Department/Agency: Department of Health Care Finance (DHCF)/Department of Human Services (DHS)/Economic Security Administration (ESA) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. The Medicaid State Plan: Citation 42 CFR Section 431.17AT-79-29. Section 4.7 (Maintenance of Records) states, “The Medicaid agency maintains or supervises the maintenance of records necessary for the proper and efficient operation of the plan, including records regarding applications, determination of eligibility, the provision of medical assistance, and administrative costs and statistical, fiscal and other records necessary for reporting and accountability, and retains these records in accordance with Federal requirements. All requirements of 42 CFR 431.17 are met.” Economic Security Administration (ESA) Policy Manual, Section 1.3, “All eligibility criteria and clarifying information are documented on the Record of Case Action, form 1052. The case record should speak for itself. An outside reviewer shall be able to follow the chronology of events in the case be reading the narrative. All application documents including verification and correspondence must be date-stamped. For working recipients, the record should include the dates pay is received and how often the recipient is paid. When the recipient’s statement is the best available source, the record should include the application/recipient and agency efforts to verify the information. All address changes should be documented.” In accordance with 42 CRF Section 435.912(c)(3), Timeliness and performance standard requirements - Standard for new applications and transferred accounts. Except as provided in paragraph (e) of this section, the determination of eligibility for any applicant or individual whose account was transferred from another insurance affordability program may not exceed — (i) 90 calendar days for applicants who apply for Medicaid on the basis of disability; and (ii) 45 calendar days for all other applicants. 42 CRF Section 435.912 (c)(4) Standard for renewals. The redetermination of eligibility at a beneficiary's regularly scheduled renewal may not exceed the end of the beneficiary's eligibility period, except as provided in paragraphs (e) and (c)(4)(i) and (ii) of this section. (i) In the case of a beneficiary who returns a renewal form less than 30 calendar days prior to the end of the beneficiary's eligibility period, the redetermination of eligibility may not exceed the end of the month following the end of the beneficiary's eligibility period. (ii) In the case of a beneficiary who is determined ineligible on the basis for which they are currently receiving Medicaid (the applicable modified adjusted gross income standard described in Section 435.911(b)(1) and (2) or another basis) and for whom the agency is considering eligibility on another basis, the eligibility determination on the new basis may not exceed— (A) 90 calendar days for beneficiaries whose eligibility is being determined on the basis of disability; and (B) 45 calendar days for all other beneficiaries. 42 CRF Section 435.912 (c)(5) Standard for redeterminations based on changes in circumstances. Except as provided in paragraph (e) of this section, the redetermination of eligibility for a beneficiary based on a change in circumstances reported by the beneficiary or received from a third party may not exceed the end of the month that occurs — (i) 30 calendar days following the agency's receipt of information related to the change in circumstances, unless the agency needs to request additional information from the beneficiary; (ii) 60 calendar days following the agency's receipt of information related to the change in circumstances if the agency must request additional information from the beneficiary; or (iii) In the case of a beneficiary who is determined ineligible on the basis for which they are currently receiving Medicaid (the applicable modified adjusted gross income standard described in Section 435.911(b)(1) and (2) or another basis) and for whom the agency is considering eligibility on another basis — (A) 90 calendar days following the determination of ineligibility on the current basis, for beneficiaries whose eligibility is being determined on the basis of disability; and (B) 45 calendar days following the determination of ineligibility on the current basis for all other beneficiaries. 42 CRF Section 435.912 (c)(6) Standard for redeterminations based on anticipated changes. The redetermination of eligibility for a beneficiary based on an anticipated change in circumstances may not exceed the end of the month in which the anticipated change occurs, except as provided in paragraphs (e) and (c)(6)(i) and (ii) of this section. (i) In the case of a beneficiary who returns information or documentation requested pursuant to Section 435.919(b)(6) less than 30 calendar days prior to the end of the month in which the anticipated change occurs, the redetermination of eligibility may not exceed the end of the month following the month in which the anticipated change occurs. (ii) In the case of a beneficiary who is determined ineligible on the basis for which they are currently receiving Medicaid (the applicable modified adjusted gross income standard described in Section 435.911(b)(1) and (2) or another basis) and for whom the agency is considering eligibility on another basis, the eligibility determination on the new basis may not exceed — (A) 90 calendar days for beneficiaries whose eligibility is being determined on the basis of disability; and (B) 45 calendar days for all other beneficiaries. Condition – During testing over beneficiary eligibility for the Medicaid benefits, we noted that the District’s Economic Security Administration (ESA) was unable to provide sufficient documentation to support the beneficiary’s eligibility determination totaling 283,898 total population during the fiscal year 2024 audit. Specifically, out of a sample of 132 participant files tested, we noted the following exception: • For three (3) participant files, ESA did not process the application within the required timeframe. The Department of Health Care Finance, as the State Medicaid Agency, lacks a quality control oversight system to ensure that eligibility documentation and verification is maintained to support the eligibility decision. Questioned Costs – Not determinable. Context – This is a condition identified per review of ESA’s compliance with specified requirements using a statistically valid sample. Effect – Lack of supporting documentation for program services and noncompliance with program requirements could result in disallowances of costs and participants could be receiving benefits that they are not entitled to receive under the program. Cause – DHCF and ESA did not appear to adhere to internal control procedures to ensure that applications are properly processed in accordance with Federal Regulations. Recommendation - We recommend that ESA strictly implement internal control procedures to ensure that documentation is maintained to support the beneficiary determinations. Related Noncompliance – Noncompliance. Views of Responsible Officials and Planned Corrective Actions – ESA concurs with this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2024-027 Prior Year Finding Number: 2023-032 Compliance Requirement: Eligibility Program: U.S. Department of Health and Human Services Medicaid Cluster ALN: 93.775, 93.777, 93.778 Award #: Various Award Year: 10/01/2023 – 09/30/2024 Government Department/Agency: Department of Health Care Finance (DHCF)/Department of Human Services (DHS)/Economic Security Administration (ESA) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. The Medicaid State Plan: Citation 42 CFR Section 431.17AT-79-29. Section 4.7 (Maintenance of Records) states, “The Medicaid agency maintains or supervises the maintenance of records necessary for the proper and efficient operation of the plan, including records regarding applications, determination of eligibility, the provision of medical assistance, and administrative costs and statistical, fiscal and other records necessary for reporting and accountability, and retains these records in accordance with Federal requirements. All requirements of 42 CFR 431.17 are met.” Economic Security Administration (ESA) Policy Manual, Section 1.3, “All eligibility criteria and clarifying information are documented on the Record of Case Action, form 1052. The case record should speak for itself. An outside reviewer shall be able to follow the chronology of events in the case be reading the narrative. All application documents including verification and correspondence must be date-stamped. For working recipients, the record should include the dates pay is received and how often the recipient is paid. When the recipient’s statement is the best available source, the record should include the application/recipient and agency efforts to verify the information. All address changes should be documented.” In accordance with 42 CRF Section 435.912(c)(3), Timeliness and performance standard requirements - Standard for new applications and transferred accounts. Except as provided in paragraph (e) of this section, the determination of eligibility for any applicant or individual whose account was transferred from another insurance affordability program may not exceed — (i) 90 calendar days for applicants who apply for Medicaid on the basis of disability; and (ii) 45 calendar days for all other applicants. 42 CRF Section 435.912 (c)(4) Standard for renewals. The redetermination of eligibility at a beneficiary's regularly scheduled renewal may not exceed the end of the beneficiary's eligibility period, except as provided in paragraphs (e) and (c)(4)(i) and (ii) of this section. (i) In the case of a beneficiary who returns a renewal form less than 30 calendar days prior to the end of the beneficiary's eligibility period, the redetermination of eligibility may not exceed the end of the month following the end of the beneficiary's eligibility period. (ii) In the case of a beneficiary who is determined ineligible on the basis for which they are currently receiving Medicaid (the applicable modified adjusted gross income standard described in Section 435.911(b)(1) and (2) or another basis) and for whom the agency is considering eligibility on another basis, the eligibility determination on the new basis may not exceed— (A) 90 calendar days for beneficiaries whose eligibility is being determined on the basis of disability; and (B) 45 calendar days for all other beneficiaries. 42 CRF Section 435.912 (c)(5) Standard for redeterminations based on changes in circumstances. Except as provided in paragraph (e) of this section, the redetermination of eligibility for a beneficiary based on a change in circumstances reported by the beneficiary or received from a third party may not exceed the end of the month that occurs — (i) 30 calendar days following the agency's receipt of information related to the change in circumstances, unless the agency needs to request additional information from the beneficiary; (ii) 60 calendar days following the agency's receipt of information related to the change in circumstances if the agency must request additional information from the beneficiary; or (iii) In the case of a beneficiary who is determined ineligible on the basis for which they are currently receiving Medicaid (the applicable modified adjusted gross income standard described in Section 435.911(b)(1) and (2) or another basis) and for whom the agency is considering eligibility on another basis — (A) 90 calendar days following the determination of ineligibility on the current basis, for beneficiaries whose eligibility is being determined on the basis of disability; and (B) 45 calendar days following the determination of ineligibility on the current basis for all other beneficiaries. 42 CRF Section 435.912 (c)(6) Standard for redeterminations based on anticipated changes. The redetermination of eligibility for a beneficiary based on an anticipated change in circumstances may not exceed the end of the month in which the anticipated change occurs, except as provided in paragraphs (e) and (c)(6)(i) and (ii) of this section. (i) In the case of a beneficiary who returns information or documentation requested pursuant to Section 435.919(b)(6) less than 30 calendar days prior to the end of the month in which the anticipated change occurs, the redetermination of eligibility may not exceed the end of the month following the month in which the anticipated change occurs. (ii) In the case of a beneficiary who is determined ineligible on the basis for which they are currently receiving Medicaid (the applicable modified adjusted gross income standard described in Section 435.911(b)(1) and (2) or another basis) and for whom the agency is considering eligibility on another basis, the eligibility determination on the new basis may not exceed — (A) 90 calendar days for beneficiaries whose eligibility is being determined on the basis of disability; and (B) 45 calendar days for all other beneficiaries. Condition – During testing over beneficiary eligibility for the Medicaid benefits, we noted that the District’s Economic Security Administration (ESA) was unable to provide sufficient documentation to support the beneficiary’s eligibility determination totaling 283,898 total population during the fiscal year 2024 audit. Specifically, out of a sample of 132 participant files tested, we noted the following exception: • For three (3) participant files, ESA did not process the application within the required timeframe. The Department of Health Care Finance, as the State Medicaid Agency, lacks a quality control oversight system to ensure that eligibility documentation and verification is maintained to support the eligibility decision. Questioned Costs – Not determinable. Context – This is a condition identified per review of ESA’s compliance with specified requirements using a statistically valid sample. Effect – Lack of supporting documentation for program services and noncompliance with program requirements could result in disallowances of costs and participants could be receiving benefits that they are not entitled to receive under the program. Cause – DHCF and ESA did not appear to adhere to internal control procedures to ensure that applications are properly processed in accordance with Federal Regulations. Recommendation - We recommend that ESA strictly implement internal control procedures to ensure that documentation is maintained to support the beneficiary determinations. Related Noncompliance – Noncompliance. Views of Responsible Officials and Planned Corrective Actions – ESA concurs with this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2024-034 Prior Year Finding Number: N/A Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Program: U.S. Department of Health and Human Services Block Grants for Substance Use Prevention, Treatment, and Recovery Services ALN: 93.959 Award #: Various Award Years: 10/01/2022 – 09/30/2024; 03/15/2021 – 03/14/2025 Government Department/Agency: Department of Behavioral Health (DBH) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR Section 200.430 Compensation – Personal Services: “Costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the establish written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity’s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable.” 2 CFR Section 200.430 (g): Standards for Documentation of Personnel Expenses. (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the recipient or subrecipient; (iii) Reasonably reflect the total activity for which the employee is compensated by the recipient or subrecipient, not exceeding 100 percent of compensated activities; (iv) Encompass federally-assisted and all other activities compensated by the recipient or subrecipient on an integrated basis but may include the use of subsidiary records as defined in the recipient's or subrecipient's written policy; (v) Comply with the established accounting policies and procedures of the recipient or subrecipient; (vi) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (vii) Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated. Condition – We noted that the DBH allocated payroll expenditures to the Block Grants for Substance Use Prevention, Treatment and Recovery Services (SUPTRS) during fiscal year 2024 based on budgeted percentages. These percentages were entered into the PeopleSoft Human Resources/Payroll System (PeopleSoft) at the beginning of the fiscal year and were based on management’s estimate of the respective employee’s level of effort for each program. PeopleSoft calculated the payroll costs every payroll cycle for each employee and program based on the predetermined percentage, and reported it through the Labor Distribution Report (485 Report). However, management cannot provide supporting documentation regarding the periodic comparison of actual costs to the budgeted costs as required by 2 CFR Section 200.430. Specifically, 17 out of 60 sampled payroll items tested for the SUPTRS program were recorded based on estimated hours and not actual hours. For the other 43 sampled items, these individuals worked 100% of their time on SUPTRS, therefore, there is no possibility of error. Questioned Costs – Known amount is $43,235. Context – This is a condition identified per review of DBH’s compliance with specified requirements using a statistically valid sample. Payroll costs, including fringe benefits, for the SUPTRS program in fiscal year 2024 totaled $4,667,478. Effect – DBH was unable to demonstrate that the payroll expenditures charged to the SUPTRS program accurately reflected the actual time incurred on the program and such expenditures were properly supported in accordance with 2 CFR Section 200.430, Compensation – Personal Services. Cause – DBH does not have policies and procedures in place to review and reconcile the estimated amount of payroll expenditures charged to the SUPTRS Program to the actual expenditures incurred. Recommendation – We recommend that DBH deploy policies and procedures to periodically compare employees’ estimated hours per the 485 Report to the actual hours incurred, and make any necessary adjustments as required by 2 CFR Section 200.430. Related Noncompliance – Material noncompliance. Views of Responsible Officials and Planned Corrective Actions – DBH agrees with the findings and will put controls in place to resolve the issue. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2024-035 Prior Year Finding Number: N/A Compliance Requirement: Matching, Level of Effort, Earmarking Program: U.S. Department of Health and Human Services Block Grants for Substance Use Prevention, Treatment, and Recovery Services ALN: 93.959 Award #: Various Award Years: 10/01/2022 – 09/30/2024; 03/15/2021 – 03/14/2025 Government Department/Agency: Department of Behavioral Health (DBH) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Earmarking requirement: a) The state shall expend not less than 20 percent of Substance Use Prevention, Treatment and Recovery Services Block Grant (SUPTRS BG) for primary prevention programs for individuals who do not require treatment for Substance Use Disorder (SUD). The programs should educate and counsel the individuals on such SUD and provide for activities to reduce the risk of such SUD by the individuals (42 USC 300x-22; 45 CFR Sections 96.124 (b)(1) and 96.125). b) Designated states (i.e., any state whose cases of Acquired Immunodeficiency Syndrome (AIDS) is 10 or more per 100,000 individuals (as indicated by the number of such cases reported to and confirmed by the Centers for Disease Control and Prevention for the most recent calendar year for which data are available)), shall expend not less than two percent and not more than five percent of the award amount to carry out one or more projects to make available to individuals early intervention services for HIV disease (EIS HIV) at the sites where the individuals are undergoing SUD treatment. c) The state may not expend more than five percent of the grant to pay the costs of administering the grant (42 USC 300x-31; 45 CFR Section 96.135 (b)(1)). Condition – DBH did not provide the necessary documentation to support compliance with earmarking requirements as described above. As a result, we were unable to verify whether DBH met the required thresholds. Questioned Costs – Not determinable. Context – This is a condition identified per review of DBH’s compliance with earmarking requirements. Effect – Without adequate internal controls to ensure proper documentation of the requirements, it may increase the risk that earmarking requirements may not be met. Cause – DBH does not have adequate internal controls requiring the retention of documentation related to earmarking compliance requirements. Recommendation – We recommend that DBH strengthen its policies and procedures to ensure that all earmarking requirements thresholds are properly documented. DBH should ensure that detailed reconciliations, expenditure reports, and applicable source documents are maintained for audit purposes. Related Noncompliance – Material noncompliance. Views of Responsible Officials and Planned Corrective Actions – DBH concurs with this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2024-036 Prior Year Finding Number: N/A Compliance Requirement: Reporting Program: U.S. Department of Health and Human Services Block Grants for Substance Use Prevention, Treatment, and Recovery Services ALN: 93.959 Award #: Various Award Years: 10/01/2022 – 09/30/2024; 03/15/2021 – 03/14/2025 Government Department/Agency: Department of Behavioral Health (DBH) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. The Uniform Guidance in 2 CFR Section 200.302(a), Financial Management, states that each state must expend and account for the federal award in accordance with state laws and procedures for expending and accounting for the state’s own funds. In addition, the state’s and the other non-federal entity’s financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statutes, regulations, and the terms and conditions of the federal award. Condition – Subrecipient expenditures, totaling approximately $1.1 million, which are required to be presented in the Schedule of Expenditures of Federal Awards (SEFA), were improperly excluded from the initial SEFA prepared by management. Subsequently, the SEFA was adjusted by DBH to reflect the subrecipient expenditures incurred for the program. Questioned Costs – None. Context – This is a condition identified per review of DBH’s compliance with reporting requirements. Effect – Failure to properly review and present expenditures can result in noncompliance with reporting requirements. Cause – DBH did not comply with their policies and procedures to ensure accuracy of the SEFA. Recommendation – We recommend that DBH adhere to instituted policies and procedures to ensure the accuracy of the SEFA. Related Noncompliance – Noncompliance. Views of Responsible Officials and Planned Corrective Actions – The DBH Office of the Chief Financial Officer (OCFO) concurs with this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
nadequate Tenant File Documentation and Inconsistencies in MTW Housing Assistance and Public Housing Records (ALN 14.881) Condition: During tenant file testing for both the Housing Choice Voucher (HCV) and Public Housing (PH) components of the Moving to Work (MTW) Demonstration Program, we identified multiple deficiencies in the Authority's documentation and reporting practices:1. For the MTW HAP (HCV) sample, the Authority did not properly complete the "Summary Decision on the Unit" section of the HUD Form 52580-A, which documents the final pass or fail outcome of the Housing Quality Standards (HQS) inspection. As a result, it could not be confirmed whether the unit met HQS requirements at the time of assistance. 2. In six out of twenty-three HCV tenant files tested, housing assistance payments did not agree with the amounts reported on HUD Form 50058, and no reconciliations or explanations were provided. 3. For one out of twenty-three HCV tenants, the Authority was unable to provide a Form 50058 covering the period for which the HAP payment was selected, leaving the payment unsupported. 4. In the MTW Public Housing sample, five out of seventeen tenant files contained discrepancies between tenant receipts or rent register balances and the amounts reported on HUD Form 50058, without adequate explanation or reconciliation. 5. For one out of seventeen Public Housing tenants, the Authority was unable to provide any support for either the receipt from or payment to the tenant for the period tested.Criteria: Under 2 CFR §200.302 and §200.303, the Authority must maintain financial management systems and internal controls sufficient to ensure that costs are allowable, supported, and in compliance with program requirements. The MTW Operations Notice and HUD program rules require PHAs to complete and retain accurate HUD Forms 50058 and 52580-A to support rent calculations, assistance payments, and unit eligibility. The Summary Decision on the Unit section of Form 52580-A is critical to documenting compliance with HQS requirements before assistance can begin or continue. Cause: The Authority lacked effective internal controls and monitoring procedures over tenant file documentation, rent calculation, inspection recordkeeping, and HUD form completion and retention. Effect: Failure to properly complete HQS documentation may signal noncompliance with unit inspection requirements and tenant safety standards, while inconsistencies and missing Forms 50058 undermine the reliability of rent and assistance calculations. Additionally, the absence of supporting documentation for tenant receipts or HAP payments results in unsupported costs, increasing the risk of overpayments, underpayments, or questioned costs under the MTW program. Questioned Costs: $378,340 Recommendation: The Authority should establish procedures to ensure that all required forms, including HUD 50058 and 52580-A with completed Summary Decision sections, are accurately filled out and retained in tenant files. Regular reconciliations between payment records, rent ledgers, and HUD reporting systems should be performed to maintain data integrity. Additionally, staff should receive training on HQS documentation, rent and assistance calculations, and federal recordkeeping requirements. To reinforce compliance with MTW and HUD program rules, periodic internal reviews of tenant files should also be conducted.Reply and Corrective Action Plan: The Authority will implement procedures to ensure that HUD Form 52580-A is fully completed for all HQS inspections, establish reconciliation processes for HAP and tenant rent payments against HUD Form 50058, and document any discrepancies. These steps aim to improve the accuracy and completeness of tenant records.
Finding F2024-004 – Missing approval of timesheet Assistance Listing Number: 93.575 Assistance Listing Program Title: California State Preschool Program (CSPP) Federal Agency: U.S. Department of Labor Pass Through Entity: California Department of Education Federal Award Number: CSPP-3192-0 Federal Award Year: July 1, 2023 to June 30, 2024 Compliance Requirement: A. Activities allowed / unallowed B. Allowable costs/cost principles Criteria The 2 CFR section 200.303 requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provide reasonable assurance that the non-federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Condition In performing allowable costs testwork, we noted that 1 out of 25 timesheets selected for testwork was missing evidence of the supervisor’s approval. Cause The timecard missing the supervisor’s approval resulted from a payroll system restriction that prevents supervisors from viewing employee information, including timecards, for employees who are on leave. This is in place to prevent a supervisor from contacting an employee on approved leave and to assure El Proyecto remains compliant with applicable employment laws and regulations while an employee is on approved leave. This system restriction resulted in the supervisor being unable to approve the employee’s timecard. Effect Lack of review and approval of timesheets could lead to unallowed costs being charged to the program. Questioned Costs None. Recommendation We recommend that El Proyecto implement additional controls to ensure the timesheet related to the actual hours worked for individuals who go on medical leave during a pay period are reviewed and approved. This will help ensure that payroll charges are accurate and that only allowable costs are charged to the grant. Views of Responsible Officials and Planned Corrective Actions El Proyecto will update the standard operating procedure for approving timecards while an employee is on leave while remaining compliant with applicable employment laws and regulations. Person Responsible: Ricardo Ornelas Position of Responsible Party: Chief Financial Officer Completion Date: August 31, 2025
2024-002 [2022‐002]—PREPARATION OF SCHEDULE OF EXPENDITURES OF FEDERAL AWARDSFederal Agency: All presented in the Schedule of Expenditures of Federal Awards. Program Name: All presented in the Schedule of Expenditures of Federal Awards. Assistance Listing Nos. and Program Expenditures: All presented in Schedule of Expenditures of Federal Awards. Award Number and Program Award Year: All awards presented in Schedule of Expenditures of Federal Awards. Compliance Requirement: Other – Schedule of Expenditures of Federal Awards preparation Type of Finding: (F) Significant Deficiency in Internal Control over Compliance of Federal Awards. Questioned Costs: None Statement of Condition During our audit, we reviewed the Coalition’s federal-grants report for the fiscal year and identified the grants, Assistance-Listing numbers (AL #s), expenditure amounts, and all other items required to properly present the Schedule of Expenditures of Federal Awards (SEFA). Finance staff subsequently confirmed the SEFA; however, additional federal expenditures and mis-grouped grant costs were found during later reviews. Criteria2 CFR 200.510 indicates that the auditee must prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the auditee’s financial statements which must include the total federal awards expended as determined in accordance with 2 CFR 200.502, Basis for Determining Federal Awards Expended. Per 2 CFR 200.502, the determination of when a federal award is expended should be based on when the activity related to the federal award occurs. Generally, the activity pertains to events that require the non-federal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards, such as expenditure/expense transactions associated with awards. In addition, 2 CFR Part 200.303 requires the program to establish and maintain effective internal controls over federal awards that provides reasonable assurance of compliance with federal statutes, regulations, and the terms and conditions of federal awards. Effect Without an established process governed by effective internal controls, the Coalition may not prevent or detect material misstatements on its SEFA in a timely manner. In addition, errors in SEFA preparation could affect the major federal program determination and lead to noncompliance with 2 CFR 200 Subpart F, which in turn could result in a substandard single audit. Cause Historically, the Coalition has requested the auditor assist in identifying accruals related to federal grant expenditures as the organization has maintained these records on a cash basis. As the organization has taken more responsibility on maintaining its federal grant expenditures on an accrual basis, an incomplete SEFA has been provided. Recommendation We recommend the Coalition prepare the Schedule of Expenditures of Federal Awards and submit this to the auditor for testing. The SEFA should include the name of the grant, name of grantor, the AL #, the pass-through number if applicable and a reconciliation of the federal revenues and expenditures to the Coalition’s general ledger. The Coalition staff should perform more detailed reviews of the reports to ensure they properly reflect grant receipts and expenditures. This review should be performed by someone other than the preparer and should include documented evidence of agreeing the reported data to the accounting records. We further recommend training for those individuals involved in the preparation and review of the reports to ensure they are fully aware of the requirements. View of Responsible Officials and Corrective Action Plan: The corrective Action Plan will be carried out in the 2025 Fiscal Year and information will be given to the auditors when requested for the next audit. The Coalition will ensure that all information needed for the SEFA is kept and entered accurately (this process has already begun). When the fiscal year closes out, the Coalition will provide the auditors with a test SEFA to confirm that the information we are collecting throughout the year and are asserting are the correct numbers for our federal grants, is indeed the correct information. Corrective Action Plan Timeline: Completed by December 19, 2025 (Final copy of the SEFA will not be given to the auditors until requested for the Audit).Designation Of Employee Position Responsible For Meeting Deadline: Executive Director will oversee this project and work directly with NMCEH finance staff work closely with the auditors to make sure that the information saved and shared is correct.
2024-002 [2022‐002]—PREPARATION OF SCHEDULE OF EXPENDITURES OF FEDERAL AWARDSFederal Agency: All presented in the Schedule of Expenditures of Federal Awards. Program Name: All presented in the Schedule of Expenditures of Federal Awards. Assistance Listing Nos. and Program Expenditures: All presented in Schedule of Expenditures of Federal Awards. Award Number and Program Award Year: All awards presented in Schedule of Expenditures of Federal Awards. Compliance Requirement: Other – Schedule of Expenditures of Federal Awards preparation Type of Finding: (F) Significant Deficiency in Internal Control over Compliance of Federal Awards. Questioned Costs: None Statement of Condition During our audit, we reviewed the Coalition’s federal-grants report for the fiscal year and identified the grants, Assistance-Listing numbers (AL #s), expenditure amounts, and all other items required to properly present the Schedule of Expenditures of Federal Awards (SEFA). Finance staff subsequently confirmed the SEFA; however, additional federal expenditures and mis-grouped grant costs were found during later reviews. Criteria2 CFR 200.510 indicates that the auditee must prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the auditee’s financial statements which must include the total federal awards expended as determined in accordance with 2 CFR 200.502, Basis for Determining Federal Awards Expended. Per 2 CFR 200.502, the determination of when a federal award is expended should be based on when the activity related to the federal award occurs. Generally, the activity pertains to events that require the non-federal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards, such as expenditure/expense transactions associated with awards. In addition, 2 CFR Part 200.303 requires the program to establish and maintain effective internal controls over federal awards that provides reasonable assurance of compliance with federal statutes, regulations, and the terms and conditions of federal awards. Effect Without an established process governed by effective internal controls, the Coalition may not prevent or detect material misstatements on its SEFA in a timely manner. In addition, errors in SEFA preparation could affect the major federal program determination and lead to noncompliance with 2 CFR 200 Subpart F, which in turn could result in a substandard single audit. Cause Historically, the Coalition has requested the auditor assist in identifying accruals related to federal grant expenditures as the organization has maintained these records on a cash basis. As the organization has taken more responsibility on maintaining its federal grant expenditures on an accrual basis, an incomplete SEFA has been provided. Recommendation We recommend the Coalition prepare the Schedule of Expenditures of Federal Awards and submit this to the auditor for testing. The SEFA should include the name of the grant, name of grantor, the AL #, the pass-through number if applicable and a reconciliation of the federal revenues and expenditures to the Coalition’s general ledger. The Coalition staff should perform more detailed reviews of the reports to ensure they properly reflect grant receipts and expenditures. This review should be performed by someone other than the preparer and should include documented evidence of agreeing the reported data to the accounting records. We further recommend training for those individuals involved in the preparation and review of the reports to ensure they are fully aware of the requirements. View of Responsible Officials and Corrective Action Plan: The corrective Action Plan will be carried out in the 2025 Fiscal Year and information will be given to the auditors when requested for the next audit. The Coalition will ensure that all information needed for the SEFA is kept and entered accurately (this process has already begun). When the fiscal year closes out, the Coalition will provide the auditors with a test SEFA to confirm that the information we are collecting throughout the year and are asserting are the correct numbers for our federal grants, is indeed the correct information. Corrective Action Plan Timeline: Completed by December 19, 2025 (Final copy of the SEFA will not be given to the auditors until requested for the Audit).Designation Of Employee Position Responsible For Meeting Deadline: Executive Director will oversee this project and work directly with NMCEH finance staff work closely with the auditors to make sure that the information saved and shared is correct.
2024-002 [2022‐002]—PREPARATION OF SCHEDULE OF EXPENDITURES OF FEDERAL AWARDSFederal Agency: All presented in the Schedule of Expenditures of Federal Awards. Program Name: All presented in the Schedule of Expenditures of Federal Awards. Assistance Listing Nos. and Program Expenditures: All presented in Schedule of Expenditures of Federal Awards. Award Number and Program Award Year: All awards presented in Schedule of Expenditures of Federal Awards. Compliance Requirement: Other – Schedule of Expenditures of Federal Awards preparation Type of Finding: (F) Significant Deficiency in Internal Control over Compliance of Federal Awards. Questioned Costs: None Statement of Condition During our audit, we reviewed the Coalition’s federal-grants report for the fiscal year and identified the grants, Assistance-Listing numbers (AL #s), expenditure amounts, and all other items required to properly present the Schedule of Expenditures of Federal Awards (SEFA). Finance staff subsequently confirmed the SEFA; however, additional federal expenditures and mis-grouped grant costs were found during later reviews. Criteria2 CFR 200.510 indicates that the auditee must prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the auditee’s financial statements which must include the total federal awards expended as determined in accordance with 2 CFR 200.502, Basis for Determining Federal Awards Expended. Per 2 CFR 200.502, the determination of when a federal award is expended should be based on when the activity related to the federal award occurs. Generally, the activity pertains to events that require the non-federal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards, such as expenditure/expense transactions associated with awards. In addition, 2 CFR Part 200.303 requires the program to establish and maintain effective internal controls over federal awards that provides reasonable assurance of compliance with federal statutes, regulations, and the terms and conditions of federal awards. Effect Without an established process governed by effective internal controls, the Coalition may not prevent or detect material misstatements on its SEFA in a timely manner. In addition, errors in SEFA preparation could affect the major federal program determination and lead to noncompliance with 2 CFR 200 Subpart F, which in turn could result in a substandard single audit. Cause Historically, the Coalition has requested the auditor assist in identifying accruals related to federal grant expenditures as the organization has maintained these records on a cash basis. As the organization has taken more responsibility on maintaining its federal grant expenditures on an accrual basis, an incomplete SEFA has been provided. Recommendation We recommend the Coalition prepare the Schedule of Expenditures of Federal Awards and submit this to the auditor for testing. The SEFA should include the name of the grant, name of grantor, the AL #, the pass-through number if applicable and a reconciliation of the federal revenues and expenditures to the Coalition’s general ledger. The Coalition staff should perform more detailed reviews of the reports to ensure they properly reflect grant receipts and expenditures. This review should be performed by someone other than the preparer and should include documented evidence of agreeing the reported data to the accounting records. We further recommend training for those individuals involved in the preparation and review of the reports to ensure they are fully aware of the requirements. View of Responsible Officials and Corrective Action Plan: The corrective Action Plan will be carried out in the 2025 Fiscal Year and information will be given to the auditors when requested for the next audit. The Coalition will ensure that all information needed for the SEFA is kept and entered accurately (this process has already begun). When the fiscal year closes out, the Coalition will provide the auditors with a test SEFA to confirm that the information we are collecting throughout the year and are asserting are the correct numbers for our federal grants, is indeed the correct information. Corrective Action Plan Timeline: Completed by December 19, 2025 (Final copy of the SEFA will not be given to the auditors until requested for the Audit).Designation Of Employee Position Responsible For Meeting Deadline: Executive Director will oversee this project and work directly with NMCEH finance staff work closely with the auditors to make sure that the information saved and shared is correct.
2024-002 [2022‐002]—PREPARATION OF SCHEDULE OF EXPENDITURES OF FEDERAL AWARDSFederal Agency: All presented in the Schedule of Expenditures of Federal Awards. Program Name: All presented in the Schedule of Expenditures of Federal Awards. Assistance Listing Nos. and Program Expenditures: All presented in Schedule of Expenditures of Federal Awards. Award Number and Program Award Year: All awards presented in Schedule of Expenditures of Federal Awards. Compliance Requirement: Other – Schedule of Expenditures of Federal Awards preparation Type of Finding: (F) Significant Deficiency in Internal Control over Compliance of Federal Awards. Questioned Costs: None Statement of Condition During our audit, we reviewed the Coalition’s federal-grants report for the fiscal year and identified the grants, Assistance-Listing numbers (AL #s), expenditure amounts, and all other items required to properly present the Schedule of Expenditures of Federal Awards (SEFA). Finance staff subsequently confirmed the SEFA; however, additional federal expenditures and mis-grouped grant costs were found during later reviews. Criteria2 CFR 200.510 indicates that the auditee must prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the auditee’s financial statements which must include the total federal awards expended as determined in accordance with 2 CFR 200.502, Basis for Determining Federal Awards Expended. Per 2 CFR 200.502, the determination of when a federal award is expended should be based on when the activity related to the federal award occurs. Generally, the activity pertains to events that require the non-federal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards, such as expenditure/expense transactions associated with awards. In addition, 2 CFR Part 200.303 requires the program to establish and maintain effective internal controls over federal awards that provides reasonable assurance of compliance with federal statutes, regulations, and the terms and conditions of federal awards. Effect Without an established process governed by effective internal controls, the Coalition may not prevent or detect material misstatements on its SEFA in a timely manner. In addition, errors in SEFA preparation could affect the major federal program determination and lead to noncompliance with 2 CFR 200 Subpart F, which in turn could result in a substandard single audit. Cause Historically, the Coalition has requested the auditor assist in identifying accruals related to federal grant expenditures as the organization has maintained these records on a cash basis. As the organization has taken more responsibility on maintaining its federal grant expenditures on an accrual basis, an incomplete SEFA has been provided. Recommendation We recommend the Coalition prepare the Schedule of Expenditures of Federal Awards and submit this to the auditor for testing. The SEFA should include the name of the grant, name of grantor, the AL #, the pass-through number if applicable and a reconciliation of the federal revenues and expenditures to the Coalition’s general ledger. The Coalition staff should perform more detailed reviews of the reports to ensure they properly reflect grant receipts and expenditures. This review should be performed by someone other than the preparer and should include documented evidence of agreeing the reported data to the accounting records. We further recommend training for those individuals involved in the preparation and review of the reports to ensure they are fully aware of the requirements. View of Responsible Officials and Corrective Action Plan: The corrective Action Plan will be carried out in the 2025 Fiscal Year and information will be given to the auditors when requested for the next audit. The Coalition will ensure that all information needed for the SEFA is kept and entered accurately (this process has already begun). When the fiscal year closes out, the Coalition will provide the auditors with a test SEFA to confirm that the information we are collecting throughout the year and are asserting are the correct numbers for our federal grants, is indeed the correct information. Corrective Action Plan Timeline: Completed by December 19, 2025 (Final copy of the SEFA will not be given to the auditors until requested for the Audit).Designation Of Employee Position Responsible For Meeting Deadline: Executive Director will oversee this project and work directly with NMCEH finance staff work closely with the auditors to make sure that the information saved and shared is correct.
2024-002 [2022‐002]—PREPARATION OF SCHEDULE OF EXPENDITURES OF FEDERAL AWARDSFederal Agency: All presented in the Schedule of Expenditures of Federal Awards. Program Name: All presented in the Schedule of Expenditures of Federal Awards. Assistance Listing Nos. and Program Expenditures: All presented in Schedule of Expenditures of Federal Awards. Award Number and Program Award Year: All awards presented in Schedule of Expenditures of Federal Awards. Compliance Requirement: Other – Schedule of Expenditures of Federal Awards preparation Type of Finding: (F) Significant Deficiency in Internal Control over Compliance of Federal Awards. Questioned Costs: None Statement of Condition During our audit, we reviewed the Coalition’s federal-grants report for the fiscal year and identified the grants, Assistance-Listing numbers (AL #s), expenditure amounts, and all other items required to properly present the Schedule of Expenditures of Federal Awards (SEFA). Finance staff subsequently confirmed the SEFA; however, additional federal expenditures and mis-grouped grant costs were found during later reviews. Criteria2 CFR 200.510 indicates that the auditee must prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the auditee’s financial statements which must include the total federal awards expended as determined in accordance with 2 CFR 200.502, Basis for Determining Federal Awards Expended. Per 2 CFR 200.502, the determination of when a federal award is expended should be based on when the activity related to the federal award occurs. Generally, the activity pertains to events that require the non-federal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards, such as expenditure/expense transactions associated with awards. In addition, 2 CFR Part 200.303 requires the program to establish and maintain effective internal controls over federal awards that provides reasonable assurance of compliance with federal statutes, regulations, and the terms and conditions of federal awards. Effect Without an established process governed by effective internal controls, the Coalition may not prevent or detect material misstatements on its SEFA in a timely manner. In addition, errors in SEFA preparation could affect the major federal program determination and lead to noncompliance with 2 CFR 200 Subpart F, which in turn could result in a substandard single audit. Cause Historically, the Coalition has requested the auditor assist in identifying accruals related to federal grant expenditures as the organization has maintained these records on a cash basis. As the organization has taken more responsibility on maintaining its federal grant expenditures on an accrual basis, an incomplete SEFA has been provided. Recommendation We recommend the Coalition prepare the Schedule of Expenditures of Federal Awards and submit this to the auditor for testing. The SEFA should include the name of the grant, name of grantor, the AL #, the pass-through number if applicable and a reconciliation of the federal revenues and expenditures to the Coalition’s general ledger. The Coalition staff should perform more detailed reviews of the reports to ensure they properly reflect grant receipts and expenditures. This review should be performed by someone other than the preparer and should include documented evidence of agreeing the reported data to the accounting records. We further recommend training for those individuals involved in the preparation and review of the reports to ensure they are fully aware of the requirements. View of Responsible Officials and Corrective Action Plan: The corrective Action Plan will be carried out in the 2025 Fiscal Year and information will be given to the auditors when requested for the next audit. The Coalition will ensure that all information needed for the SEFA is kept and entered accurately (this process has already begun). When the fiscal year closes out, the Coalition will provide the auditors with a test SEFA to confirm that the information we are collecting throughout the year and are asserting are the correct numbers for our federal grants, is indeed the correct information. Corrective Action Plan Timeline: Completed by December 19, 2025 (Final copy of the SEFA will not be given to the auditors until requested for the Audit).Designation Of Employee Position Responsible For Meeting Deadline: Executive Director will oversee this project and work directly with NMCEH finance staff work closely with the auditors to make sure that the information saved and shared is correct.
2024-002 [2022‐002]—PREPARATION OF SCHEDULE OF EXPENDITURES OF FEDERAL AWARDSFederal Agency: All presented in the Schedule of Expenditures of Federal Awards. Program Name: All presented in the Schedule of Expenditures of Federal Awards. Assistance Listing Nos. and Program Expenditures: All presented in Schedule of Expenditures of Federal Awards. Award Number and Program Award Year: All awards presented in Schedule of Expenditures of Federal Awards. Compliance Requirement: Other – Schedule of Expenditures of Federal Awards preparation Type of Finding: (F) Significant Deficiency in Internal Control over Compliance of Federal Awards. Questioned Costs: None Statement of Condition During our audit, we reviewed the Coalition’s federal-grants report for the fiscal year and identified the grants, Assistance-Listing numbers (AL #s), expenditure amounts, and all other items required to properly present the Schedule of Expenditures of Federal Awards (SEFA). Finance staff subsequently confirmed the SEFA; however, additional federal expenditures and mis-grouped grant costs were found during later reviews. Criteria2 CFR 200.510 indicates that the auditee must prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the auditee’s financial statements which must include the total federal awards expended as determined in accordance with 2 CFR 200.502, Basis for Determining Federal Awards Expended. Per 2 CFR 200.502, the determination of when a federal award is expended should be based on when the activity related to the federal award occurs. Generally, the activity pertains to events that require the non-federal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards, such as expenditure/expense transactions associated with awards. In addition, 2 CFR Part 200.303 requires the program to establish and maintain effective internal controls over federal awards that provides reasonable assurance of compliance with federal statutes, regulations, and the terms and conditions of federal awards. Effect Without an established process governed by effective internal controls, the Coalition may not prevent or detect material misstatements on its SEFA in a timely manner. In addition, errors in SEFA preparation could affect the major federal program determination and lead to noncompliance with 2 CFR 200 Subpart F, which in turn could result in a substandard single audit. Cause Historically, the Coalition has requested the auditor assist in identifying accruals related to federal grant expenditures as the organization has maintained these records on a cash basis. As the organization has taken more responsibility on maintaining its federal grant expenditures on an accrual basis, an incomplete SEFA has been provided. Recommendation We recommend the Coalition prepare the Schedule of Expenditures of Federal Awards and submit this to the auditor for testing. The SEFA should include the name of the grant, name of grantor, the AL #, the pass-through number if applicable and a reconciliation of the federal revenues and expenditures to the Coalition’s general ledger. The Coalition staff should perform more detailed reviews of the reports to ensure they properly reflect grant receipts and expenditures. This review should be performed by someone other than the preparer and should include documented evidence of agreeing the reported data to the accounting records. We further recommend training for those individuals involved in the preparation and review of the reports to ensure they are fully aware of the requirements. View of Responsible Officials and Corrective Action Plan: The corrective Action Plan will be carried out in the 2025 Fiscal Year and information will be given to the auditors when requested for the next audit. The Coalition will ensure that all information needed for the SEFA is kept and entered accurately (this process has already begun). When the fiscal year closes out, the Coalition will provide the auditors with a test SEFA to confirm that the information we are collecting throughout the year and are asserting are the correct numbers for our federal grants, is indeed the correct information. Corrective Action Plan Timeline: Completed by December 19, 2025 (Final copy of the SEFA will not be given to the auditors until requested for the Audit).Designation Of Employee Position Responsible For Meeting Deadline: Executive Director will oversee this project and work directly with NMCEH finance staff work closely with the auditors to make sure that the information saved and shared is correct.
2024-002 [2022‐002]—PREPARATION OF SCHEDULE OF EXPENDITURES OF FEDERAL AWARDSFederal Agency: All presented in the Schedule of Expenditures of Federal Awards. Program Name: All presented in the Schedule of Expenditures of Federal Awards. Assistance Listing Nos. and Program Expenditures: All presented in Schedule of Expenditures of Federal Awards. Award Number and Program Award Year: All awards presented in Schedule of Expenditures of Federal Awards. Compliance Requirement: Other – Schedule of Expenditures of Federal Awards preparation Type of Finding: (F) Significant Deficiency in Internal Control over Compliance of Federal Awards. Questioned Costs: None Statement of Condition During our audit, we reviewed the Coalition’s federal-grants report for the fiscal year and identified the grants, Assistance-Listing numbers (AL #s), expenditure amounts, and all other items required to properly present the Schedule of Expenditures of Federal Awards (SEFA). Finance staff subsequently confirmed the SEFA; however, additional federal expenditures and mis-grouped grant costs were found during later reviews. Criteria2 CFR 200.510 indicates that the auditee must prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the auditee’s financial statements which must include the total federal awards expended as determined in accordance with 2 CFR 200.502, Basis for Determining Federal Awards Expended. Per 2 CFR 200.502, the determination of when a federal award is expended should be based on when the activity related to the federal award occurs. Generally, the activity pertains to events that require the non-federal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards, such as expenditure/expense transactions associated with awards. In addition, 2 CFR Part 200.303 requires the program to establish and maintain effective internal controls over federal awards that provides reasonable assurance of compliance with federal statutes, regulations, and the terms and conditions of federal awards. Effect Without an established process governed by effective internal controls, the Coalition may not prevent or detect material misstatements on its SEFA in a timely manner. In addition, errors in SEFA preparation could affect the major federal program determination and lead to noncompliance with 2 CFR 200 Subpart F, which in turn could result in a substandard single audit. Cause Historically, the Coalition has requested the auditor assist in identifying accruals related to federal grant expenditures as the organization has maintained these records on a cash basis. As the organization has taken more responsibility on maintaining its federal grant expenditures on an accrual basis, an incomplete SEFA has been provided. Recommendation We recommend the Coalition prepare the Schedule of Expenditures of Federal Awards and submit this to the auditor for testing. The SEFA should include the name of the grant, name of grantor, the AL #, the pass-through number if applicable and a reconciliation of the federal revenues and expenditures to the Coalition’s general ledger. The Coalition staff should perform more detailed reviews of the reports to ensure they properly reflect grant receipts and expenditures. This review should be performed by someone other than the preparer and should include documented evidence of agreeing the reported data to the accounting records. We further recommend training for those individuals involved in the preparation and review of the reports to ensure they are fully aware of the requirements. View of Responsible Officials and Corrective Action Plan: The corrective Action Plan will be carried out in the 2025 Fiscal Year and information will be given to the auditors when requested for the next audit. The Coalition will ensure that all information needed for the SEFA is kept and entered accurately (this process has already begun). When the fiscal year closes out, the Coalition will provide the auditors with a test SEFA to confirm that the information we are collecting throughout the year and are asserting are the correct numbers for our federal grants, is indeed the correct information. Corrective Action Plan Timeline: Completed by December 19, 2025 (Final copy of the SEFA will not be given to the auditors until requested for the Audit).Designation Of Employee Position Responsible For Meeting Deadline: Executive Director will oversee this project and work directly with NMCEH finance staff work closely with the auditors to make sure that the information saved and shared is correct.
2024-002 [2022‐002]—PREPARATION OF SCHEDULE OF EXPENDITURES OF FEDERAL AWARDSFederal Agency: All presented in the Schedule of Expenditures of Federal Awards. Program Name: All presented in the Schedule of Expenditures of Federal Awards. Assistance Listing Nos. and Program Expenditures: All presented in Schedule of Expenditures of Federal Awards. Award Number and Program Award Year: All awards presented in Schedule of Expenditures of Federal Awards. Compliance Requirement: Other – Schedule of Expenditures of Federal Awards preparation Type of Finding: (F) Significant Deficiency in Internal Control over Compliance of Federal Awards. Questioned Costs: None Statement of Condition During our audit, we reviewed the Coalition’s federal-grants report for the fiscal year and identified the grants, Assistance-Listing numbers (AL #s), expenditure amounts, and all other items required to properly present the Schedule of Expenditures of Federal Awards (SEFA). Finance staff subsequently confirmed the SEFA; however, additional federal expenditures and mis-grouped grant costs were found during later reviews. Criteria2 CFR 200.510 indicates that the auditee must prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the auditee’s financial statements which must include the total federal awards expended as determined in accordance with 2 CFR 200.502, Basis for Determining Federal Awards Expended. Per 2 CFR 200.502, the determination of when a federal award is expended should be based on when the activity related to the federal award occurs. Generally, the activity pertains to events that require the non-federal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards, such as expenditure/expense transactions associated with awards. In addition, 2 CFR Part 200.303 requires the program to establish and maintain effective internal controls over federal awards that provides reasonable assurance of compliance with federal statutes, regulations, and the terms and conditions of federal awards. Effect Without an established process governed by effective internal controls, the Coalition may not prevent or detect material misstatements on its SEFA in a timely manner. In addition, errors in SEFA preparation could affect the major federal program determination and lead to noncompliance with 2 CFR 200 Subpart F, which in turn could result in a substandard single audit. Cause Historically, the Coalition has requested the auditor assist in identifying accruals related to federal grant expenditures as the organization has maintained these records on a cash basis. As the organization has taken more responsibility on maintaining its federal grant expenditures on an accrual basis, an incomplete SEFA has been provided. Recommendation We recommend the Coalition prepare the Schedule of Expenditures of Federal Awards and submit this to the auditor for testing. The SEFA should include the name of the grant, name of grantor, the AL #, the pass-through number if applicable and a reconciliation of the federal revenues and expenditures to the Coalition’s general ledger. The Coalition staff should perform more detailed reviews of the reports to ensure they properly reflect grant receipts and expenditures. This review should be performed by someone other than the preparer and should include documented evidence of agreeing the reported data to the accounting records. We further recommend training for those individuals involved in the preparation and review of the reports to ensure they are fully aware of the requirements. View of Responsible Officials and Corrective Action Plan: The corrective Action Plan will be carried out in the 2025 Fiscal Year and information will be given to the auditors when requested for the next audit. The Coalition will ensure that all information needed for the SEFA is kept and entered accurately (this process has already begun). When the fiscal year closes out, the Coalition will provide the auditors with a test SEFA to confirm that the information we are collecting throughout the year and are asserting are the correct numbers for our federal grants, is indeed the correct information. Corrective Action Plan Timeline: Completed by December 19, 2025 (Final copy of the SEFA will not be given to the auditors until requested for the Audit).Designation Of Employee Position Responsible For Meeting Deadline: Executive Director will oversee this project and work directly with NMCEH finance staff work closely with the auditors to make sure that the information saved and shared is correct.
2024-002 [2022‐002]—PREPARATION OF SCHEDULE OF EXPENDITURES OF FEDERAL AWARDSFederal Agency: All presented in the Schedule of Expenditures of Federal Awards. Program Name: All presented in the Schedule of Expenditures of Federal Awards. Assistance Listing Nos. and Program Expenditures: All presented in Schedule of Expenditures of Federal Awards. Award Number and Program Award Year: All awards presented in Schedule of Expenditures of Federal Awards. Compliance Requirement: Other – Schedule of Expenditures of Federal Awards preparation Type of Finding: (F) Significant Deficiency in Internal Control over Compliance of Federal Awards. Questioned Costs: None Statement of Condition During our audit, we reviewed the Coalition’s federal-grants report for the fiscal year and identified the grants, Assistance-Listing numbers (AL #s), expenditure amounts, and all other items required to properly present the Schedule of Expenditures of Federal Awards (SEFA). Finance staff subsequently confirmed the SEFA; however, additional federal expenditures and mis-grouped grant costs were found during later reviews. Criteria2 CFR 200.510 indicates that the auditee must prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the auditee’s financial statements which must include the total federal awards expended as determined in accordance with 2 CFR 200.502, Basis for Determining Federal Awards Expended. Per 2 CFR 200.502, the determination of when a federal award is expended should be based on when the activity related to the federal award occurs. Generally, the activity pertains to events that require the non-federal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards, such as expenditure/expense transactions associated with awards. In addition, 2 CFR Part 200.303 requires the program to establish and maintain effective internal controls over federal awards that provides reasonable assurance of compliance with federal statutes, regulations, and the terms and conditions of federal awards. Effect Without an established process governed by effective internal controls, the Coalition may not prevent or detect material misstatements on its SEFA in a timely manner. In addition, errors in SEFA preparation could affect the major federal program determination and lead to noncompliance with 2 CFR 200 Subpart F, which in turn could result in a substandard single audit. Cause Historically, the Coalition has requested the auditor assist in identifying accruals related to federal grant expenditures as the organization has maintained these records on a cash basis. As the organization has taken more responsibility on maintaining its federal grant expenditures on an accrual basis, an incomplete SEFA has been provided. Recommendation We recommend the Coalition prepare the Schedule of Expenditures of Federal Awards and submit this to the auditor for testing. The SEFA should include the name of the grant, name of grantor, the AL #, the pass-through number if applicable and a reconciliation of the federal revenues and expenditures to the Coalition’s general ledger. The Coalition staff should perform more detailed reviews of the reports to ensure they properly reflect grant receipts and expenditures. This review should be performed by someone other than the preparer and should include documented evidence of agreeing the reported data to the accounting records. We further recommend training for those individuals involved in the preparation and review of the reports to ensure they are fully aware of the requirements. View of Responsible Officials and Corrective Action Plan: The corrective Action Plan will be carried out in the 2025 Fiscal Year and information will be given to the auditors when requested for the next audit. The Coalition will ensure that all information needed for the SEFA is kept and entered accurately (this process has already begun). When the fiscal year closes out, the Coalition will provide the auditors with a test SEFA to confirm that the information we are collecting throughout the year and are asserting are the correct numbers for our federal grants, is indeed the correct information. Corrective Action Plan Timeline: Completed by December 19, 2025 (Final copy of the SEFA will not be given to the auditors until requested for the Audit).Designation Of Employee Position Responsible For Meeting Deadline: Executive Director will oversee this project and work directly with NMCEH finance staff work closely with the auditors to make sure that the information saved and shared is correct.
2024-002 [2022‐002]—PREPARATION OF SCHEDULE OF EXPENDITURES OF FEDERAL AWARDSFederal Agency: All presented in the Schedule of Expenditures of Federal Awards. Program Name: All presented in the Schedule of Expenditures of Federal Awards. Assistance Listing Nos. and Program Expenditures: All presented in Schedule of Expenditures of Federal Awards. Award Number and Program Award Year: All awards presented in Schedule of Expenditures of Federal Awards. Compliance Requirement: Other – Schedule of Expenditures of Federal Awards preparation Type of Finding: (F) Significant Deficiency in Internal Control over Compliance of Federal Awards. Questioned Costs: None Statement of Condition During our audit, we reviewed the Coalition’s federal-grants report for the fiscal year and identified the grants, Assistance-Listing numbers (AL #s), expenditure amounts, and all other items required to properly present the Schedule of Expenditures of Federal Awards (SEFA). Finance staff subsequently confirmed the SEFA; however, additional federal expenditures and mis-grouped grant costs were found during later reviews. Criteria2 CFR 200.510 indicates that the auditee must prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the auditee’s financial statements which must include the total federal awards expended as determined in accordance with 2 CFR 200.502, Basis for Determining Federal Awards Expended. Per 2 CFR 200.502, the determination of when a federal award is expended should be based on when the activity related to the federal award occurs. Generally, the activity pertains to events that require the non-federal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards, such as expenditure/expense transactions associated with awards. In addition, 2 CFR Part 200.303 requires the program to establish and maintain effective internal controls over federal awards that provides reasonable assurance of compliance with federal statutes, regulations, and the terms and conditions of federal awards. Effect Without an established process governed by effective internal controls, the Coalition may not prevent or detect material misstatements on its SEFA in a timely manner. In addition, errors in SEFA preparation could affect the major federal program determination and lead to noncompliance with 2 CFR 200 Subpart F, which in turn could result in a substandard single audit. Cause Historically, the Coalition has requested the auditor assist in identifying accruals related to federal grant expenditures as the organization has maintained these records on a cash basis. As the organization has taken more responsibility on maintaining its federal grant expenditures on an accrual basis, an incomplete SEFA has been provided. Recommendation We recommend the Coalition prepare the Schedule of Expenditures of Federal Awards and submit this to the auditor for testing. The SEFA should include the name of the grant, name of grantor, the AL #, the pass-through number if applicable and a reconciliation of the federal revenues and expenditures to the Coalition’s general ledger. The Coalition staff should perform more detailed reviews of the reports to ensure they properly reflect grant receipts and expenditures. This review should be performed by someone other than the preparer and should include documented evidence of agreeing the reported data to the accounting records. We further recommend training for those individuals involved in the preparation and review of the reports to ensure they are fully aware of the requirements. View of Responsible Officials and Corrective Action Plan: The corrective Action Plan will be carried out in the 2025 Fiscal Year and information will be given to the auditors when requested for the next audit. The Coalition will ensure that all information needed for the SEFA is kept and entered accurately (this process has already begun). When the fiscal year closes out, the Coalition will provide the auditors with a test SEFA to confirm that the information we are collecting throughout the year and are asserting are the correct numbers for our federal grants, is indeed the correct information. Corrective Action Plan Timeline: Completed by December 19, 2025 (Final copy of the SEFA will not be given to the auditors until requested for the Audit).Designation Of Employee Position Responsible For Meeting Deadline: Executive Director will oversee this project and work directly with NMCEH finance staff work closely with the auditors to make sure that the information saved and shared is correct.
2024-002 [2022‐002]—PREPARATION OF SCHEDULE OF EXPENDITURES OF FEDERAL AWARDSFederal Agency: All presented in the Schedule of Expenditures of Federal Awards. Program Name: All presented in the Schedule of Expenditures of Federal Awards. Assistance Listing Nos. and Program Expenditures: All presented in Schedule of Expenditures of Federal Awards. Award Number and Program Award Year: All awards presented in Schedule of Expenditures of Federal Awards. Compliance Requirement: Other – Schedule of Expenditures of Federal Awards preparation Type of Finding: (F) Significant Deficiency in Internal Control over Compliance of Federal Awards. Questioned Costs: None Statement of Condition During our audit, we reviewed the Coalition’s federal-grants report for the fiscal year and identified the grants, Assistance-Listing numbers (AL #s), expenditure amounts, and all other items required to properly present the Schedule of Expenditures of Federal Awards (SEFA). Finance staff subsequently confirmed the SEFA; however, additional federal expenditures and mis-grouped grant costs were found during later reviews. Criteria2 CFR 200.510 indicates that the auditee must prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the auditee’s financial statements which must include the total federal awards expended as determined in accordance with 2 CFR 200.502, Basis for Determining Federal Awards Expended. Per 2 CFR 200.502, the determination of when a federal award is expended should be based on when the activity related to the federal award occurs. Generally, the activity pertains to events that require the non-federal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards, such as expenditure/expense transactions associated with awards. In addition, 2 CFR Part 200.303 requires the program to establish and maintain effective internal controls over federal awards that provides reasonable assurance of compliance with federal statutes, regulations, and the terms and conditions of federal awards. Effect Without an established process governed by effective internal controls, the Coalition may not prevent or detect material misstatements on its SEFA in a timely manner. In addition, errors in SEFA preparation could affect the major federal program determination and lead to noncompliance with 2 CFR 200 Subpart F, which in turn could result in a substandard single audit. Cause Historically, the Coalition has requested the auditor assist in identifying accruals related to federal grant expenditures as the organization has maintained these records on a cash basis. As the organization has taken more responsibility on maintaining its federal grant expenditures on an accrual basis, an incomplete SEFA has been provided. Recommendation We recommend the Coalition prepare the Schedule of Expenditures of Federal Awards and submit this to the auditor for testing. The SEFA should include the name of the grant, name of grantor, the AL #, the pass-through number if applicable and a reconciliation of the federal revenues and expenditures to the Coalition’s general ledger. The Coalition staff should perform more detailed reviews of the reports to ensure they properly reflect grant receipts and expenditures. This review should be performed by someone other than the preparer and should include documented evidence of agreeing the reported data to the accounting records. We further recommend training for those individuals involved in the preparation and review of the reports to ensure they are fully aware of the requirements. View of Responsible Officials and Corrective Action Plan: The corrective Action Plan will be carried out in the 2025 Fiscal Year and information will be given to the auditors when requested for the next audit. The Coalition will ensure that all information needed for the SEFA is kept and entered accurately (this process has already begun). When the fiscal year closes out, the Coalition will provide the auditors with a test SEFA to confirm that the information we are collecting throughout the year and are asserting are the correct numbers for our federal grants, is indeed the correct information. Corrective Action Plan Timeline: Completed by December 19, 2025 (Final copy of the SEFA will not be given to the auditors until requested for the Audit).Designation Of Employee Position Responsible For Meeting Deadline: Executive Director will oversee this project and work directly with NMCEH finance staff work closely with the auditors to make sure that the information saved and shared is correct.
2024-002 [2022‐002]—PREPARATION OF SCHEDULE OF EXPENDITURES OF FEDERAL AWARDSFederal Agency: All presented in the Schedule of Expenditures of Federal Awards. Program Name: All presented in the Schedule of Expenditures of Federal Awards. Assistance Listing Nos. and Program Expenditures: All presented in Schedule of Expenditures of Federal Awards. Award Number and Program Award Year: All awards presented in Schedule of Expenditures of Federal Awards. Compliance Requirement: Other – Schedule of Expenditures of Federal Awards preparation Type of Finding: (F) Significant Deficiency in Internal Control over Compliance of Federal Awards. Questioned Costs: None Statement of Condition During our audit, we reviewed the Coalition’s federal-grants report for the fiscal year and identified the grants, Assistance-Listing numbers (AL #s), expenditure amounts, and all other items required to properly present the Schedule of Expenditures of Federal Awards (SEFA). Finance staff subsequently confirmed the SEFA; however, additional federal expenditures and mis-grouped grant costs were found during later reviews. Criteria2 CFR 200.510 indicates that the auditee must prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the auditee’s financial statements which must include the total federal awards expended as determined in accordance with 2 CFR 200.502, Basis for Determining Federal Awards Expended. Per 2 CFR 200.502, the determination of when a federal award is expended should be based on when the activity related to the federal award occurs. Generally, the activity pertains to events that require the non-federal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards, such as expenditure/expense transactions associated with awards. In addition, 2 CFR Part 200.303 requires the program to establish and maintain effective internal controls over federal awards that provides reasonable assurance of compliance with federal statutes, regulations, and the terms and conditions of federal awards. Effect Without an established process governed by effective internal controls, the Coalition may not prevent or detect material misstatements on its SEFA in a timely manner. In addition, errors in SEFA preparation could affect the major federal program determination and lead to noncompliance with 2 CFR 200 Subpart F, which in turn could result in a substandard single audit. Cause Historically, the Coalition has requested the auditor assist in identifying accruals related to federal grant expenditures as the organization has maintained these records on a cash basis. As the organization has taken more responsibility on maintaining its federal grant expenditures on an accrual basis, an incomplete SEFA has been provided. Recommendation We recommend the Coalition prepare the Schedule of Expenditures of Federal Awards and submit this to the auditor for testing. The SEFA should include the name of the grant, name of grantor, the AL #, the pass-through number if applicable and a reconciliation of the federal revenues and expenditures to the Coalition’s general ledger. The Coalition staff should perform more detailed reviews of the reports to ensure they properly reflect grant receipts and expenditures. This review should be performed by someone other than the preparer and should include documented evidence of agreeing the reported data to the accounting records. We further recommend training for those individuals involved in the preparation and review of the reports to ensure they are fully aware of the requirements. View of Responsible Officials and Corrective Action Plan: The corrective Action Plan will be carried out in the 2025 Fiscal Year and information will be given to the auditors when requested for the next audit. The Coalition will ensure that all information needed for the SEFA is kept and entered accurately (this process has already begun). When the fiscal year closes out, the Coalition will provide the auditors with a test SEFA to confirm that the information we are collecting throughout the year and are asserting are the correct numbers for our federal grants, is indeed the correct information. Corrective Action Plan Timeline: Completed by December 19, 2025 (Final copy of the SEFA will not be given to the auditors until requested for the Audit).Designation Of Employee Position Responsible For Meeting Deadline: Executive Director will oversee this project and work directly with NMCEH finance staff work closely with the auditors to make sure that the information saved and shared is correct.
2024-002 [2022‐002]—PREPARATION OF SCHEDULE OF EXPENDITURES OF FEDERAL AWARDSFederal Agency: All presented in the Schedule of Expenditures of Federal Awards. Program Name: All presented in the Schedule of Expenditures of Federal Awards. Assistance Listing Nos. and Program Expenditures: All presented in Schedule of Expenditures of Federal Awards. Award Number and Program Award Year: All awards presented in Schedule of Expenditures of Federal Awards. Compliance Requirement: Other – Schedule of Expenditures of Federal Awards preparation Type of Finding: (F) Significant Deficiency in Internal Control over Compliance of Federal Awards. Questioned Costs: None Statement of Condition During our audit, we reviewed the Coalition’s federal-grants report for the fiscal year and identified the grants, Assistance-Listing numbers (AL #s), expenditure amounts, and all other items required to properly present the Schedule of Expenditures of Federal Awards (SEFA). Finance staff subsequently confirmed the SEFA; however, additional federal expenditures and mis-grouped grant costs were found during later reviews. Criteria2 CFR 200.510 indicates that the auditee must prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the auditee’s financial statements which must include the total federal awards expended as determined in accordance with 2 CFR 200.502, Basis for Determining Federal Awards Expended. Per 2 CFR 200.502, the determination of when a federal award is expended should be based on when the activity related to the federal award occurs. Generally, the activity pertains to events that require the non-federal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards, such as expenditure/expense transactions associated with awards. In addition, 2 CFR Part 200.303 requires the program to establish and maintain effective internal controls over federal awards that provides reasonable assurance of compliance with federal statutes, regulations, and the terms and conditions of federal awards. Effect Without an established process governed by effective internal controls, the Coalition may not prevent or detect material misstatements on its SEFA in a timely manner. In addition, errors in SEFA preparation could affect the major federal program determination and lead to noncompliance with 2 CFR 200 Subpart F, which in turn could result in a substandard single audit. Cause Historically, the Coalition has requested the auditor assist in identifying accruals related to federal grant expenditures as the organization has maintained these records on a cash basis. As the organization has taken more responsibility on maintaining its federal grant expenditures on an accrual basis, an incomplete SEFA has been provided. Recommendation We recommend the Coalition prepare the Schedule of Expenditures of Federal Awards and submit this to the auditor for testing. The SEFA should include the name of the grant, name of grantor, the AL #, the pass-through number if applicable and a reconciliation of the federal revenues and expenditures to the Coalition’s general ledger. The Coalition staff should perform more detailed reviews of the reports to ensure they properly reflect grant receipts and expenditures. This review should be performed by someone other than the preparer and should include documented evidence of agreeing the reported data to the accounting records. We further recommend training for those individuals involved in the preparation and review of the reports to ensure they are fully aware of the requirements. View of Responsible Officials and Corrective Action Plan: The corrective Action Plan will be carried out in the 2025 Fiscal Year and information will be given to the auditors when requested for the next audit. The Coalition will ensure that all information needed for the SEFA is kept and entered accurately (this process has already begun). When the fiscal year closes out, the Coalition will provide the auditors with a test SEFA to confirm that the information we are collecting throughout the year and are asserting are the correct numbers for our federal grants, is indeed the correct information. Corrective Action Plan Timeline: Completed by December 19, 2025 (Final copy of the SEFA will not be given to the auditors until requested for the Audit).Designation Of Employee Position Responsible For Meeting Deadline: Executive Director will oversee this project and work directly with NMCEH finance staff work closely with the auditors to make sure that the information saved and shared is correct.
2024-002 [2022‐002]—PREPARATION OF SCHEDULE OF EXPENDITURES OF FEDERAL AWARDSFederal Agency: All presented in the Schedule of Expenditures of Federal Awards. Program Name: All presented in the Schedule of Expenditures of Federal Awards. Assistance Listing Nos. and Program Expenditures: All presented in Schedule of Expenditures of Federal Awards. Award Number and Program Award Year: All awards presented in Schedule of Expenditures of Federal Awards. Compliance Requirement: Other – Schedule of Expenditures of Federal Awards preparation Type of Finding: (F) Significant Deficiency in Internal Control over Compliance of Federal Awards. Questioned Costs: None Statement of Condition During our audit, we reviewed the Coalition’s federal-grants report for the fiscal year and identified the grants, Assistance-Listing numbers (AL #s), expenditure amounts, and all other items required to properly present the Schedule of Expenditures of Federal Awards (SEFA). Finance staff subsequently confirmed the SEFA; however, additional federal expenditures and mis-grouped grant costs were found during later reviews. Criteria2 CFR 200.510 indicates that the auditee must prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the auditee’s financial statements which must include the total federal awards expended as determined in accordance with 2 CFR 200.502, Basis for Determining Federal Awards Expended. Per 2 CFR 200.502, the determination of when a federal award is expended should be based on when the activity related to the federal award occurs. Generally, the activity pertains to events that require the non-federal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards, such as expenditure/expense transactions associated with awards. In addition, 2 CFR Part 200.303 requires the program to establish and maintain effective internal controls over federal awards that provides reasonable assurance of compliance with federal statutes, regulations, and the terms and conditions of federal awards. Effect Without an established process governed by effective internal controls, the Coalition may not prevent or detect material misstatements on its SEFA in a timely manner. In addition, errors in SEFA preparation could affect the major federal program determination and lead to noncompliance with 2 CFR 200 Subpart F, which in turn could result in a substandard single audit. Cause Historically, the Coalition has requested the auditor assist in identifying accruals related to federal grant expenditures as the organization has maintained these records on a cash basis. As the organization has taken more responsibility on maintaining its federal grant expenditures on an accrual basis, an incomplete SEFA has been provided. Recommendation We recommend the Coalition prepare the Schedule of Expenditures of Federal Awards and submit this to the auditor for testing. The SEFA should include the name of the grant, name of grantor, the AL #, the pass-through number if applicable and a reconciliation of the federal revenues and expenditures to the Coalition’s general ledger. The Coalition staff should perform more detailed reviews of the reports to ensure they properly reflect grant receipts and expenditures. This review should be performed by someone other than the preparer and should include documented evidence of agreeing the reported data to the accounting records. We further recommend training for those individuals involved in the preparation and review of the reports to ensure they are fully aware of the requirements. View of Responsible Officials and Corrective Action Plan: The corrective Action Plan will be carried out in the 2025 Fiscal Year and information will be given to the auditors when requested for the next audit. The Coalition will ensure that all information needed for the SEFA is kept and entered accurately (this process has already begun). When the fiscal year closes out, the Coalition will provide the auditors with a test SEFA to confirm that the information we are collecting throughout the year and are asserting are the correct numbers for our federal grants, is indeed the correct information. Corrective Action Plan Timeline: Completed by December 19, 2025 (Final copy of the SEFA will not be given to the auditors until requested for the Audit).Designation Of Employee Position Responsible For Meeting Deadline: Executive Director will oversee this project and work directly with NMCEH finance staff work closely with the auditors to make sure that the information saved and shared is correct.
2024-002 [2022‐002]—PREPARATION OF SCHEDULE OF EXPENDITURES OF FEDERAL AWARDSFederal Agency: All presented in the Schedule of Expenditures of Federal Awards. Program Name: All presented in the Schedule of Expenditures of Federal Awards. Assistance Listing Nos. and Program Expenditures: All presented in Schedule of Expenditures of Federal Awards. Award Number and Program Award Year: All awards presented in Schedule of Expenditures of Federal Awards. Compliance Requirement: Other – Schedule of Expenditures of Federal Awards preparation Type of Finding: (F) Significant Deficiency in Internal Control over Compliance of Federal Awards. Questioned Costs: None Statement of Condition During our audit, we reviewed the Coalition’s federal-grants report for the fiscal year and identified the grants, Assistance-Listing numbers (AL #s), expenditure amounts, and all other items required to properly present the Schedule of Expenditures of Federal Awards (SEFA). Finance staff subsequently confirmed the SEFA; however, additional federal expenditures and mis-grouped grant costs were found during later reviews. Criteria2 CFR 200.510 indicates that the auditee must prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the auditee’s financial statements which must include the total federal awards expended as determined in accordance with 2 CFR 200.502, Basis for Determining Federal Awards Expended. Per 2 CFR 200.502, the determination of when a federal award is expended should be based on when the activity related to the federal award occurs. Generally, the activity pertains to events that require the non-federal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards, such as expenditure/expense transactions associated with awards. In addition, 2 CFR Part 200.303 requires the program to establish and maintain effective internal controls over federal awards that provides reasonable assurance of compliance with federal statutes, regulations, and the terms and conditions of federal awards. Effect Without an established process governed by effective internal controls, the Coalition may not prevent or detect material misstatements on its SEFA in a timely manner. In addition, errors in SEFA preparation could affect the major federal program determination and lead to noncompliance with 2 CFR 200 Subpart F, which in turn could result in a substandard single audit. Cause Historically, the Coalition has requested the auditor assist in identifying accruals related to federal grant expenditures as the organization has maintained these records on a cash basis. As the organization has taken more responsibility on maintaining its federal grant expenditures on an accrual basis, an incomplete SEFA has been provided. Recommendation We recommend the Coalition prepare the Schedule of Expenditures of Federal Awards and submit this to the auditor for testing. The SEFA should include the name of the grant, name of grantor, the AL #, the pass-through number if applicable and a reconciliation of the federal revenues and expenditures to the Coalition’s general ledger. The Coalition staff should perform more detailed reviews of the reports to ensure they properly reflect grant receipts and expenditures. This review should be performed by someone other than the preparer and should include documented evidence of agreeing the reported data to the accounting records. We further recommend training for those individuals involved in the preparation and review of the reports to ensure they are fully aware of the requirements. View of Responsible Officials and Corrective Action Plan: The corrective Action Plan will be carried out in the 2025 Fiscal Year and information will be given to the auditors when requested for the next audit. The Coalition will ensure that all information needed for the SEFA is kept and entered accurately (this process has already begun). When the fiscal year closes out, the Coalition will provide the auditors with a test SEFA to confirm that the information we are collecting throughout the year and are asserting are the correct numbers for our federal grants, is indeed the correct information. Corrective Action Plan Timeline: Completed by December 19, 2025 (Final copy of the SEFA will not be given to the auditors until requested for the Audit).Designation Of Employee Position Responsible For Meeting Deadline: Executive Director will oversee this project and work directly with NMCEH finance staff work closely with the auditors to make sure that the information saved and shared is correct.
2024-002 [2022‐002]—PREPARATION OF SCHEDULE OF EXPENDITURES OF FEDERAL AWARDSFederal Agency: All presented in the Schedule of Expenditures of Federal Awards. Program Name: All presented in the Schedule of Expenditures of Federal Awards. Assistance Listing Nos. and Program Expenditures: All presented in Schedule of Expenditures of Federal Awards. Award Number and Program Award Year: All awards presented in Schedule of Expenditures of Federal Awards. Compliance Requirement: Other – Schedule of Expenditures of Federal Awards preparation Type of Finding: (F) Significant Deficiency in Internal Control over Compliance of Federal Awards. Questioned Costs: None Statement of Condition During our audit, we reviewed the Coalition’s federal-grants report for the fiscal year and identified the grants, Assistance-Listing numbers (AL #s), expenditure amounts, and all other items required to properly present the Schedule of Expenditures of Federal Awards (SEFA). Finance staff subsequently confirmed the SEFA; however, additional federal expenditures and mis-grouped grant costs were found during later reviews. Criteria2 CFR 200.510 indicates that the auditee must prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the auditee’s financial statements which must include the total federal awards expended as determined in accordance with 2 CFR 200.502, Basis for Determining Federal Awards Expended. Per 2 CFR 200.502, the determination of when a federal award is expended should be based on when the activity related to the federal award occurs. Generally, the activity pertains to events that require the non-federal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards, such as expenditure/expense transactions associated with awards. In addition, 2 CFR Part 200.303 requires the program to establish and maintain effective internal controls over federal awards that provides reasonable assurance of compliance with federal statutes, regulations, and the terms and conditions of federal awards. Effect Without an established process governed by effective internal controls, the Coalition may not prevent or detect material misstatements on its SEFA in a timely manner. In addition, errors in SEFA preparation could affect the major federal program determination and lead to noncompliance with 2 CFR 200 Subpart F, which in turn could result in a substandard single audit. Cause Historically, the Coalition has requested the auditor assist in identifying accruals related to federal grant expenditures as the organization has maintained these records on a cash basis. As the organization has taken more responsibility on maintaining its federal grant expenditures on an accrual basis, an incomplete SEFA has been provided. Recommendation We recommend the Coalition prepare the Schedule of Expenditures of Federal Awards and submit this to the auditor for testing. The SEFA should include the name of the grant, name of grantor, the AL #, the pass-through number if applicable and a reconciliation of the federal revenues and expenditures to the Coalition’s general ledger. The Coalition staff should perform more detailed reviews of the reports to ensure they properly reflect grant receipts and expenditures. This review should be performed by someone other than the preparer and should include documented evidence of agreeing the reported data to the accounting records. We further recommend training for those individuals involved in the preparation and review of the reports to ensure they are fully aware of the requirements. View of Responsible Officials and Corrective Action Plan: The corrective Action Plan will be carried out in the 2025 Fiscal Year and information will be given to the auditors when requested for the next audit. The Coalition will ensure that all information needed for the SEFA is kept and entered accurately (this process has already begun). When the fiscal year closes out, the Coalition will provide the auditors with a test SEFA to confirm that the information we are collecting throughout the year and are asserting are the correct numbers for our federal grants, is indeed the correct information. Corrective Action Plan Timeline: Completed by December 19, 2025 (Final copy of the SEFA will not be given to the auditors until requested for the Audit).Designation Of Employee Position Responsible For Meeting Deadline: Executive Director will oversee this project and work directly with NMCEH finance staff work closely with the auditors to make sure that the information saved and shared is correct.
2024-002 [2022‐002]—PREPARATION OF SCHEDULE OF EXPENDITURES OF FEDERAL AWARDSFederal Agency: All presented in the Schedule of Expenditures of Federal Awards. Program Name: All presented in the Schedule of Expenditures of Federal Awards. Assistance Listing Nos. and Program Expenditures: All presented in Schedule of Expenditures of Federal Awards. Award Number and Program Award Year: All awards presented in Schedule of Expenditures of Federal Awards. Compliance Requirement: Other – Schedule of Expenditures of Federal Awards preparation Type of Finding: (F) Significant Deficiency in Internal Control over Compliance of Federal Awards. Questioned Costs: None Statement of Condition During our audit, we reviewed the Coalition’s federal-grants report for the fiscal year and identified the grants, Assistance-Listing numbers (AL #s), expenditure amounts, and all other items required to properly present the Schedule of Expenditures of Federal Awards (SEFA). Finance staff subsequently confirmed the SEFA; however, additional federal expenditures and mis-grouped grant costs were found during later reviews. Criteria2 CFR 200.510 indicates that the auditee must prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the auditee’s financial statements which must include the total federal awards expended as determined in accordance with 2 CFR 200.502, Basis for Determining Federal Awards Expended. Per 2 CFR 200.502, the determination of when a federal award is expended should be based on when the activity related to the federal award occurs. Generally, the activity pertains to events that require the non-federal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards, such as expenditure/expense transactions associated with awards. In addition, 2 CFR Part 200.303 requires the program to establish and maintain effective internal controls over federal awards that provides reasonable assurance of compliance with federal statutes, regulations, and the terms and conditions of federal awards. Effect Without an established process governed by effective internal controls, the Coalition may not prevent or detect material misstatements on its SEFA in a timely manner. In addition, errors in SEFA preparation could affect the major federal program determination and lead to noncompliance with 2 CFR 200 Subpart F, which in turn could result in a substandard single audit. Cause Historically, the Coalition has requested the auditor assist in identifying accruals related to federal grant expenditures as the organization has maintained these records on a cash basis. As the organization has taken more responsibility on maintaining its federal grant expenditures on an accrual basis, an incomplete SEFA has been provided. Recommendation We recommend the Coalition prepare the Schedule of Expenditures of Federal Awards and submit this to the auditor for testing. The SEFA should include the name of the grant, name of grantor, the AL #, the pass-through number if applicable and a reconciliation of the federal revenues and expenditures to the Coalition’s general ledger. The Coalition staff should perform more detailed reviews of the reports to ensure they properly reflect grant receipts and expenditures. This review should be performed by someone other than the preparer and should include documented evidence of agreeing the reported data to the accounting records. We further recommend training for those individuals involved in the preparation and review of the reports to ensure they are fully aware of the requirements. View of Responsible Officials and Corrective Action Plan: The corrective Action Plan will be carried out in the 2025 Fiscal Year and information will be given to the auditors when requested for the next audit. The Coalition will ensure that all information needed for the SEFA is kept and entered accurately (this process has already begun). When the fiscal year closes out, the Coalition will provide the auditors with a test SEFA to confirm that the information we are collecting throughout the year and are asserting are the correct numbers for our federal grants, is indeed the correct information. Corrective Action Plan Timeline: Completed by December 19, 2025 (Final copy of the SEFA will not be given to the auditors until requested for the Audit).Designation Of Employee Position Responsible For Meeting Deadline: Executive Director will oversee this project and work directly with NMCEH finance staff work closely with the auditors to make sure that the information saved and shared is correct.
2024-002 [2022‐002]—PREPARATION OF SCHEDULE OF EXPENDITURES OF FEDERAL AWARDSFederal Agency: All presented in the Schedule of Expenditures of Federal Awards. Program Name: All presented in the Schedule of Expenditures of Federal Awards. Assistance Listing Nos. and Program Expenditures: All presented in Schedule of Expenditures of Federal Awards. Award Number and Program Award Year: All awards presented in Schedule of Expenditures of Federal Awards. Compliance Requirement: Other – Schedule of Expenditures of Federal Awards preparation Type of Finding: (F) Significant Deficiency in Internal Control over Compliance of Federal Awards. Questioned Costs: None Statement of Condition During our audit, we reviewed the Coalition’s federal-grants report for the fiscal year and identified the grants, Assistance-Listing numbers (AL #s), expenditure amounts, and all other items required to properly present the Schedule of Expenditures of Federal Awards (SEFA). Finance staff subsequently confirmed the SEFA; however, additional federal expenditures and mis-grouped grant costs were found during later reviews. Criteria2 CFR 200.510 indicates that the auditee must prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the auditee’s financial statements which must include the total federal awards expended as determined in accordance with 2 CFR 200.502, Basis for Determining Federal Awards Expended. Per 2 CFR 200.502, the determination of when a federal award is expended should be based on when the activity related to the federal award occurs. Generally, the activity pertains to events that require the non-federal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards, such as expenditure/expense transactions associated with awards. In addition, 2 CFR Part 200.303 requires the program to establish and maintain effective internal controls over federal awards that provides reasonable assurance of compliance with federal statutes, regulations, and the terms and conditions of federal awards. Effect Without an established process governed by effective internal controls, the Coalition may not prevent or detect material misstatements on its SEFA in a timely manner. In addition, errors in SEFA preparation could affect the major federal program determination and lead to noncompliance with 2 CFR 200 Subpart F, which in turn could result in a substandard single audit. Cause Historically, the Coalition has requested the auditor assist in identifying accruals related to federal grant expenditures as the organization has maintained these records on a cash basis. As the organization has taken more responsibility on maintaining its federal grant expenditures on an accrual basis, an incomplete SEFA has been provided. Recommendation We recommend the Coalition prepare the Schedule of Expenditures of Federal Awards and submit this to the auditor for testing. The SEFA should include the name of the grant, name of grantor, the AL #, the pass-through number if applicable and a reconciliation of the federal revenues and expenditures to the Coalition’s general ledger. The Coalition staff should perform more detailed reviews of the reports to ensure they properly reflect grant receipts and expenditures. This review should be performed by someone other than the preparer and should include documented evidence of agreeing the reported data to the accounting records. We further recommend training for those individuals involved in the preparation and review of the reports to ensure they are fully aware of the requirements. View of Responsible Officials and Corrective Action Plan: The corrective Action Plan will be carried out in the 2025 Fiscal Year and information will be given to the auditors when requested for the next audit. The Coalition will ensure that all information needed for the SEFA is kept and entered accurately (this process has already begun). When the fiscal year closes out, the Coalition will provide the auditors with a test SEFA to confirm that the information we are collecting throughout the year and are asserting are the correct numbers for our federal grants, is indeed the correct information. Corrective Action Plan Timeline: Completed by December 19, 2025 (Final copy of the SEFA will not be given to the auditors until requested for the Audit).Designation Of Employee Position Responsible For Meeting Deadline: Executive Director will oversee this project and work directly with NMCEH finance staff work closely with the auditors to make sure that the information saved and shared is correct.
2024-002 [2022‐002]—PREPARATION OF SCHEDULE OF EXPENDITURES OF FEDERAL AWARDSFederal Agency: All presented in the Schedule of Expenditures of Federal Awards. Program Name: All presented in the Schedule of Expenditures of Federal Awards. Assistance Listing Nos. and Program Expenditures: All presented in Schedule of Expenditures of Federal Awards. Award Number and Program Award Year: All awards presented in Schedule of Expenditures of Federal Awards. Compliance Requirement: Other – Schedule of Expenditures of Federal Awards preparation Type of Finding: (F) Significant Deficiency in Internal Control over Compliance of Federal Awards. Questioned Costs: None Statement of Condition During our audit, we reviewed the Coalition’s federal-grants report for the fiscal year and identified the grants, Assistance-Listing numbers (AL #s), expenditure amounts, and all other items required to properly present the Schedule of Expenditures of Federal Awards (SEFA). Finance staff subsequently confirmed the SEFA; however, additional federal expenditures and mis-grouped grant costs were found during later reviews. Criteria2 CFR 200.510 indicates that the auditee must prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the auditee’s financial statements which must include the total federal awards expended as determined in accordance with 2 CFR 200.502, Basis for Determining Federal Awards Expended. Per 2 CFR 200.502, the determination of when a federal award is expended should be based on when the activity related to the federal award occurs. Generally, the activity pertains to events that require the non-federal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards, such as expenditure/expense transactions associated with awards. In addition, 2 CFR Part 200.303 requires the program to establish and maintain effective internal controls over federal awards that provides reasonable assurance of compliance with federal statutes, regulations, and the terms and conditions of federal awards. Effect Without an established process governed by effective internal controls, the Coalition may not prevent or detect material misstatements on its SEFA in a timely manner. In addition, errors in SEFA preparation could affect the major federal program determination and lead to noncompliance with 2 CFR 200 Subpart F, which in turn could result in a substandard single audit. Cause Historically, the Coalition has requested the auditor assist in identifying accruals related to federal grant expenditures as the organization has maintained these records on a cash basis. As the organization has taken more responsibility on maintaining its federal grant expenditures on an accrual basis, an incomplete SEFA has been provided. Recommendation We recommend the Coalition prepare the Schedule of Expenditures of Federal Awards and submit this to the auditor for testing. The SEFA should include the name of the grant, name of grantor, the AL #, the pass-through number if applicable and a reconciliation of the federal revenues and expenditures to the Coalition’s general ledger. The Coalition staff should perform more detailed reviews of the reports to ensure they properly reflect grant receipts and expenditures. This review should be performed by someone other than the preparer and should include documented evidence of agreeing the reported data to the accounting records. We further recommend training for those individuals involved in the preparation and review of the reports to ensure they are fully aware of the requirements. View of Responsible Officials and Corrective Action Plan: The corrective Action Plan will be carried out in the 2025 Fiscal Year and information will be given to the auditors when requested for the next audit. The Coalition will ensure that all information needed for the SEFA is kept and entered accurately (this process has already begun). When the fiscal year closes out, the Coalition will provide the auditors with a test SEFA to confirm that the information we are collecting throughout the year and are asserting are the correct numbers for our federal grants, is indeed the correct information. Corrective Action Plan Timeline: Completed by December 19, 2025 (Final copy of the SEFA will not be given to the auditors until requested for the Audit).Designation Of Employee Position Responsible For Meeting Deadline: Executive Director will oversee this project and work directly with NMCEH finance staff work closely with the auditors to make sure that the information saved and shared is correct.
2024-002 [2022‐002]—PREPARATION OF SCHEDULE OF EXPENDITURES OF FEDERAL AWARDSFederal Agency: All presented in the Schedule of Expenditures of Federal Awards. Program Name: All presented in the Schedule of Expenditures of Federal Awards. Assistance Listing Nos. and Program Expenditures: All presented in Schedule of Expenditures of Federal Awards. Award Number and Program Award Year: All awards presented in Schedule of Expenditures of Federal Awards. Compliance Requirement: Other – Schedule of Expenditures of Federal Awards preparation Type of Finding: (F) Significant Deficiency in Internal Control over Compliance of Federal Awards. Questioned Costs: None Statement of Condition During our audit, we reviewed the Coalition’s federal-grants report for the fiscal year and identified the grants, Assistance-Listing numbers (AL #s), expenditure amounts, and all other items required to properly present the Schedule of Expenditures of Federal Awards (SEFA). Finance staff subsequently confirmed the SEFA; however, additional federal expenditures and mis-grouped grant costs were found during later reviews. Criteria2 CFR 200.510 indicates that the auditee must prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the auditee’s financial statements which must include the total federal awards expended as determined in accordance with 2 CFR 200.502, Basis for Determining Federal Awards Expended. Per 2 CFR 200.502, the determination of when a federal award is expended should be based on when the activity related to the federal award occurs. Generally, the activity pertains to events that require the non-federal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards, such as expenditure/expense transactions associated with awards. In addition, 2 CFR Part 200.303 requires the program to establish and maintain effective internal controls over federal awards that provides reasonable assurance of compliance with federal statutes, regulations, and the terms and conditions of federal awards. Effect Without an established process governed by effective internal controls, the Coalition may not prevent or detect material misstatements on its SEFA in a timely manner. In addition, errors in SEFA preparation could affect the major federal program determination and lead to noncompliance with 2 CFR 200 Subpart F, which in turn could result in a substandard single audit. Cause Historically, the Coalition has requested the auditor assist in identifying accruals related to federal grant expenditures as the organization has maintained these records on a cash basis. As the organization has taken more responsibility on maintaining its federal grant expenditures on an accrual basis, an incomplete SEFA has been provided. Recommendation We recommend the Coalition prepare the Schedule of Expenditures of Federal Awards and submit this to the auditor for testing. The SEFA should include the name of the grant, name of grantor, the AL #, the pass-through number if applicable and a reconciliation of the federal revenues and expenditures to the Coalition’s general ledger. The Coalition staff should perform more detailed reviews of the reports to ensure they properly reflect grant receipts and expenditures. This review should be performed by someone other than the preparer and should include documented evidence of agreeing the reported data to the accounting records. We further recommend training for those individuals involved in the preparation and review of the reports to ensure they are fully aware of the requirements. View of Responsible Officials and Corrective Action Plan: The corrective Action Plan will be carried out in the 2025 Fiscal Year and information will be given to the auditors when requested for the next audit. The Coalition will ensure that all information needed for the SEFA is kept and entered accurately (this process has already begun). When the fiscal year closes out, the Coalition will provide the auditors with a test SEFA to confirm that the information we are collecting throughout the year and are asserting are the correct numbers for our federal grants, is indeed the correct information. Corrective Action Plan Timeline: Completed by December 19, 2025 (Final copy of the SEFA will not be given to the auditors until requested for the Audit).Designation Of Employee Position Responsible For Meeting Deadline: Executive Director will oversee this project and work directly with NMCEH finance staff work closely with the auditors to make sure that the information saved and shared is correct.
Item 2024-002 Reporting (Repeat 2023-002) Head Start and Early Head Start Assistance Listing #93.600 Head Start Grant No. 04CH01121 U.S. Department of Health and Human Services Federal Award Year - 2024 Condition – Adequate controls were not in place to review and approve grant reports prior to their submission to the grantor. The Federal Financial Reports (SF-425) for the Head Start Cluster grants were not reviewed and approved prior to submission to the Payment Management System. Criteria – Grantees should have controls in place to ensure that grant reports are being reviewed and approved by management prior to being submitted to the grantor. 2 CFR 200.303 requires the non‐Federal entity to “(a) establish and maintain effective internal controls over the Federal award that provides reasonable assurance that the non‐Federal entity is managing the Federal statutes, regulations, and the terms and conditions of the Federal award.” Cause – Lack of sufficient controls over the review and approval of grant reports to ensure the accuracy and completeness of the report being submitted to the grantor. Questioned Costs – Not applicable. Effect – Lack of proper review and approval could result in improper reporting which could lead to disallowed costs. However, our audit disclosed no instances of unallowable costs. Recommendation – We recommend the implementation of controls to ensure there is evidence of review and approval of the quarterly grant reports prior to submission to the grantor. Management’s Response – The Agency will implement controls to ensure proper review and approval is obtained on required grant reports prior to submission to the grantor.
Finding Number: 2024-001 Finding Title : Internal Controls and Compliance over Eligibility for Multifamily Housing Projects Compliance Requirement(s): Eligibility Classification: Material Weakness Programs: Home Investment Partnerships Program ALN #: 14.239 Pass-through entity: N/A – Direct Award Federal Agency: Department of Housing and Urban Development Federal Award Numbers: M20-MC060518, M21-MP060518, M21-MC060518, M22-MC060518, M23-MC060518 Federal Award Year: 2020, 2021, 2022, 2023 Criteria or specific requirement (including statutory, regulatory, or other citation) 24 CFR92.252 Qualification as affordable housing: Rental housing - (e) Periods of affordability. The HOME-assisted units must meet the affordability requirements for not less than the applicable period, beginning after project completion. (1) The affordability requirements: (i) Apply without regard to the term of any loan or mortgage, repayment of the HOME investment, or the transfer of ownership. (ii) Must be imposed by a deed restriction, a covenant running with the land, an agreement restricting the use of the property, or other mechanisms approved by HUD and must give the participating jurisdiction the right to require specific performance (except that the participating jurisdiction may provide that the affordability restrictions may terminate upon foreclosure or transfer in lieu of foreclosure); and (iii) Must be recorded in accordance with State recordation laws. (2) The participating jurisdiction may use purchase options, rights of first refusal or other preemptive rights to purchase the housing before foreclosure or deed in lieu of foreclosure to preserve affordability. (3) The affordability restrictions shall be revived according to the original terms if, during the original affordability period, the owner of record before the foreclosure, or deed in lieu of foreclosure, or any entity that includes the former owner or those with whom the former owner has or had family or business ties, obtains an ownership interest in the project or property. (4) The termination of the restrictions on the project does not terminate the participating jurisdiction's repayment obligation under § 92.503(b). (h) Tenant income. The income of each tenant must be determined initially in accordance with §92.203(a)(1)(i). In addition, each year during the period of affordability the project owner must re-examine each tenant's annual income in accordance with one of the options in § 92.203 selected by the participating jurisdiction. An owner of a multifamily project with an affordability period of ten years or more who re-examines tenant's annual income through a statement and certification in accordance with § 92.203(b)(1)(ii), must examine the income of each tenant, in accordance with § 92.203(b)(1)(i), every sixth year of the affordability period, except that, for units that receive Federal or State project-based rental subsidy, the owner must accept the income determination pursuant to § 92.203(a)(1). 24 CFR 92.203 Income determinations - (b) Required Documentation for Annual Income Calculations (1) For families who are tenants in HOME-assisted housing and not receiving HOME tenant-based rental assistance, the participating jurisdiction must initially determine annual income using the method in paragraph (b)(1)(i) of this section. For subsequent income determinations during the period of affordability, the participating jurisdiction may use any one of the following methods in accordance with §92.252(h): (i) Examine at least two months of source documents evidencing annual income (e.g., wage statement, interest statement, and unemployment compensation statement) for the family. (ii) Obtain from the family a written statement of the amount of the family's annual income and family size, along with a certification that the information is complete and accurate. The certification must state that the family will provide source documents upon request. (iii) Obtain a written statement from the administrator of a government program under which the family receives benefits, and which examines each year the annual income of the family. The statement must indicate the tenant's family size and state the amount of the family's annual income; or alternatively, the statement must indicate the current dollar limit for very low- or low-income families for the family size of the tenant and state that the tenant's annual income does not exceed this limit. Title 45 US Code of Federal Regulations Part 75 (45 CFR part 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HHS Awards, section 75.303 also states that nonfederal entities must 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. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designated to ensure compliance with Federal laws, regulations and program compliance requirements. Effective internal controls should include procedures to ensure eligibility criteria are met and documented. Condition The City was unable to collect documents from the property manager to ensure that individuals who occupied HOME assisted units were eligible tenants for four of the eight properties selected for testing from a population of seventy-four properties. The four properties for which documents could not be collected included a total of forty-two units, all related to the same development group. The City was unable to obtain the necessary documentation from the development groups property manager to verify household income for each tenant. As a result, it could not determine compliance with income eligibility, maximum rent limits, or minimum set-aside requirements for units designated for eligible individuals. Cause The City’s attempts to contact the development group for these properties have been unsuccessful, the city was therefore unable to obtain the required documents to assess each family's income which is needed for determining income eligibility, compliance with maximum rent requirements or minimum set-aside requirements for units designated for eligible individuals. The City has made continued attempts to contact the development group, though they have not yet been successful in obtaining the information. Effect or potential effect The lack of information available from the development group has meant the City is without the information needed to evaluate the properties and their related tenants for compliance with HUD eligibility criteria. Questioned costs None Context The City had eighteen outstanding loans with this development group for Multi Family Construction projects as of the fiscal year end, carrying a balance of $9.5m. This represents 12% of the 154 HOME Loans and their related $79.3m outstanding balances. Identification as a repeat finding if applicable 2023-002 Recommendation We recommend the City continue its attempts to obtain the necessary documents from the developer and exercising its rights to enforce compliance through the terms of its contractual arrangement when necessary. Additionally, we recommend the City enhance policies and/or procedure for addressing unresponsiveness among developers to establish a structure for clear communication, expectations, an escalation process, and consistent documentation requirements. Views of responsible officials and planned corrective actions The City continues to monitor HOME-assisted units to ensure eligibility with income requirements. Since the last audit period, the developer has not yet complied with multiple requests from the City to provide missing documentation; however, City staff continues outreach and has communicated shortcomings with said developer on the dates mentioned in FY 23 corrective action plan and also July 2, 2024, July 16, 2024, July 18, 2024, September 3, 2024, September 10, 2024, September 11, 2024, September 18, 2024, October 30, 2024, November 4, 2024, and December 2, 2024. The City informed the developer that continued non-compliance will result in escalation to the City Attorney, and escalation is currently underway. The City has updated procedures to add layers of review and increase frequency of communication with developers to ensure timely submission and efforts to obtain necessary documents. The City is confident that these measures will demonstrate compliance with eligibility requirements and resolve the auditor’s concerns.
Finding Number: 2024-001 Finding Title : Internal Controls and Compliance over Eligibility for Multifamily Housing Projects Compliance Requirement(s): Eligibility Classification: Material Weakness Programs: Home Investment Partnerships Program ALN #: 14.239 Pass-through entity: N/A – Direct Award Federal Agency: Department of Housing and Urban Development Federal Award Numbers: M20-MC060518, M21-MP060518, M21-MC060518, M22-MC060518, M23-MC060518 Federal Award Year: 2020, 2021, 2022, 2023 Criteria or specific requirement (including statutory, regulatory, or other citation) 24 CFR92.252 Qualification as affordable housing: Rental housing - (e) Periods of affordability. The HOME-assisted units must meet the affordability requirements for not less than the applicable period, beginning after project completion. (1) The affordability requirements: (i) Apply without regard to the term of any loan or mortgage, repayment of the HOME investment, or the transfer of ownership. (ii) Must be imposed by a deed restriction, a covenant running with the land, an agreement restricting the use of the property, or other mechanisms approved by HUD and must give the participating jurisdiction the right to require specific performance (except that the participating jurisdiction may provide that the affordability restrictions may terminate upon foreclosure or transfer in lieu of foreclosure); and (iii) Must be recorded in accordance with State recordation laws. (2) The participating jurisdiction may use purchase options, rights of first refusal or other preemptive rights to purchase the housing before foreclosure or deed in lieu of foreclosure to preserve affordability. (3) The affordability restrictions shall be revived according to the original terms if, during the original affordability period, the owner of record before the foreclosure, or deed in lieu of foreclosure, or any entity that includes the former owner or those with whom the former owner has or had family or business ties, obtains an ownership interest in the project or property. (4) The termination of the restrictions on the project does not terminate the participating jurisdiction's repayment obligation under § 92.503(b). (h) Tenant income. The income of each tenant must be determined initially in accordance with §92.203(a)(1)(i). In addition, each year during the period of affordability the project owner must re-examine each tenant's annual income in accordance with one of the options in § 92.203 selected by the participating jurisdiction. An owner of a multifamily project with an affordability period of ten years or more who re-examines tenant's annual income through a statement and certification in accordance with § 92.203(b)(1)(ii), must examine the income of each tenant, in accordance with § 92.203(b)(1)(i), every sixth year of the affordability period, except that, for units that receive Federal or State project-based rental subsidy, the owner must accept the income determination pursuant to § 92.203(a)(1). 24 CFR 92.203 Income determinations - (b) Required Documentation for Annual Income Calculations (1) For families who are tenants in HOME-assisted housing and not receiving HOME tenant-based rental assistance, the participating jurisdiction must initially determine annual income using the method in paragraph (b)(1)(i) of this section. For subsequent income determinations during the period of affordability, the participating jurisdiction may use any one of the following methods in accordance with §92.252(h): (i) Examine at least two months of source documents evidencing annual income (e.g., wage statement, interest statement, and unemployment compensation statement) for the family. (ii) Obtain from the family a written statement of the amount of the family's annual income and family size, along with a certification that the information is complete and accurate. The certification must state that the family will provide source documents upon request. (iii) Obtain a written statement from the administrator of a government program under which the family receives benefits, and which examines each year the annual income of the family. The statement must indicate the tenant's family size and state the amount of the family's annual income; or alternatively, the statement must indicate the current dollar limit for very low- or low-income families for the family size of the tenant and state that the tenant's annual income does not exceed this limit. Title 45 US Code of Federal Regulations Part 75 (45 CFR part 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HHS Awards, section 75.303 also states that nonfederal entities must 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. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designated to ensure compliance with Federal laws, regulations and program compliance requirements. Effective internal controls should include procedures to ensure eligibility criteria are met and documented. Condition The City was unable to collect documents from the property manager to ensure that individuals who occupied HOME assisted units were eligible tenants for four of the eight properties selected for testing from a population of seventy-four properties. The four properties for which documents could not be collected included a total of forty-two units, all related to the same development group. The City was unable to obtain the necessary documentation from the development groups property manager to verify household income for each tenant. As a result, it could not determine compliance with income eligibility, maximum rent limits, or minimum set-aside requirements for units designated for eligible individuals. Cause The City’s attempts to contact the development group for these properties have been unsuccessful, the city was therefore unable to obtain the required documents to assess each family's income which is needed for determining income eligibility, compliance with maximum rent requirements or minimum set-aside requirements for units designated for eligible individuals. The City has made continued attempts to contact the development group, though they have not yet been successful in obtaining the information. Effect or potential effect The lack of information available from the development group has meant the City is without the information needed to evaluate the properties and their related tenants for compliance with HUD eligibility criteria. Questioned costs None Context The City had eighteen outstanding loans with this development group for Multi Family Construction projects as of the fiscal year end, carrying a balance of $9.5m. This represents 12% of the 154 HOME Loans and their related $79.3m outstanding balances. Identification as a repeat finding if applicable 2023-002 Recommendation We recommend the City continue its attempts to obtain the necessary documents from the developer and exercising its rights to enforce compliance through the terms of its contractual arrangement when necessary. Additionally, we recommend the City enhance policies and/or procedure for addressing unresponsiveness among developers to establish a structure for clear communication, expectations, an escalation process, and consistent documentation requirements. Views of responsible officials and planned corrective actions The City continues to monitor HOME-assisted units to ensure eligibility with income requirements. Since the last audit period, the developer has not yet complied with multiple requests from the City to provide missing documentation; however, City staff continues outreach and has communicated shortcomings with said developer on the dates mentioned in FY 23 corrective action plan and also July 2, 2024, July 16, 2024, July 18, 2024, September 3, 2024, September 10, 2024, September 11, 2024, September 18, 2024, October 30, 2024, November 4, 2024, and December 2, 2024. The City informed the developer that continued non-compliance will result in escalation to the City Attorney, and escalation is currently underway. The City has updated procedures to add layers of review and increase frequency of communication with developers to ensure timely submission and efforts to obtain necessary documents. The City is confident that these measures will demonstrate compliance with eligibility requirements and resolve the auditor’s concerns.
Finding Number: 2024-001 Finding Title : Internal Controls and Compliance over Eligibility for Multifamily Housing Projects Compliance Requirement(s): Eligibility Classification: Material Weakness Programs: Home Investment Partnerships Program ALN #: 14.239 Pass-through entity: N/A – Direct Award Federal Agency: Department of Housing and Urban Development Federal Award Numbers: M20-MC060518, M21-MP060518, M21-MC060518, M22-MC060518, M23-MC060518 Federal Award Year: 2020, 2021, 2022, 2023 Criteria or specific requirement (including statutory, regulatory, or other citation) 24 CFR92.252 Qualification as affordable housing: Rental housing - (e) Periods of affordability. The HOME-assisted units must meet the affordability requirements for not less than the applicable period, beginning after project completion. (1) The affordability requirements: (i) Apply without regard to the term of any loan or mortgage, repayment of the HOME investment, or the transfer of ownership. (ii) Must be imposed by a deed restriction, a covenant running with the land, an agreement restricting the use of the property, or other mechanisms approved by HUD and must give the participating jurisdiction the right to require specific performance (except that the participating jurisdiction may provide that the affordability restrictions may terminate upon foreclosure or transfer in lieu of foreclosure); and (iii) Must be recorded in accordance with State recordation laws. (2) The participating jurisdiction may use purchase options, rights of first refusal or other preemptive rights to purchase the housing before foreclosure or deed in lieu of foreclosure to preserve affordability. (3) The affordability restrictions shall be revived according to the original terms if, during the original affordability period, the owner of record before the foreclosure, or deed in lieu of foreclosure, or any entity that includes the former owner or those with whom the former owner has or had family or business ties, obtains an ownership interest in the project or property. (4) The termination of the restrictions on the project does not terminate the participating jurisdiction's repayment obligation under § 92.503(b). (h) Tenant income. The income of each tenant must be determined initially in accordance with §92.203(a)(1)(i). In addition, each year during the period of affordability the project owner must re-examine each tenant's annual income in accordance with one of the options in § 92.203 selected by the participating jurisdiction. An owner of a multifamily project with an affordability period of ten years or more who re-examines tenant's annual income through a statement and certification in accordance with § 92.203(b)(1)(ii), must examine the income of each tenant, in accordance with § 92.203(b)(1)(i), every sixth year of the affordability period, except that, for units that receive Federal or State project-based rental subsidy, the owner must accept the income determination pursuant to § 92.203(a)(1). 24 CFR 92.203 Income determinations - (b) Required Documentation for Annual Income Calculations (1) For families who are tenants in HOME-assisted housing and not receiving HOME tenant-based rental assistance, the participating jurisdiction must initially determine annual income using the method in paragraph (b)(1)(i) of this section. For subsequent income determinations during the period of affordability, the participating jurisdiction may use any one of the following methods in accordance with §92.252(h): (i) Examine at least two months of source documents evidencing annual income (e.g., wage statement, interest statement, and unemployment compensation statement) for the family. (ii) Obtain from the family a written statement of the amount of the family's annual income and family size, along with a certification that the information is complete and accurate. The certification must state that the family will provide source documents upon request. (iii) Obtain a written statement from the administrator of a government program under which the family receives benefits, and which examines each year the annual income of the family. The statement must indicate the tenant's family size and state the amount of the family's annual income; or alternatively, the statement must indicate the current dollar limit for very low- or low-income families for the family size of the tenant and state that the tenant's annual income does not exceed this limit. Title 45 US Code of Federal Regulations Part 75 (45 CFR part 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HHS Awards, section 75.303 also states that nonfederal entities must 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. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designated to ensure compliance with Federal laws, regulations and program compliance requirements. Effective internal controls should include procedures to ensure eligibility criteria are met and documented. Condition The City was unable to collect documents from the property manager to ensure that individuals who occupied HOME assisted units were eligible tenants for four of the eight properties selected for testing from a population of seventy-four properties. The four properties for which documents could not be collected included a total of forty-two units, all related to the same development group. The City was unable to obtain the necessary documentation from the development groups property manager to verify household income for each tenant. As a result, it could not determine compliance with income eligibility, maximum rent limits, or minimum set-aside requirements for units designated for eligible individuals. Cause The City’s attempts to contact the development group for these properties have been unsuccessful, the city was therefore unable to obtain the required documents to assess each family's income which is needed for determining income eligibility, compliance with maximum rent requirements or minimum set-aside requirements for units designated for eligible individuals. The City has made continued attempts to contact the development group, though they have not yet been successful in obtaining the information. Effect or potential effect The lack of information available from the development group has meant the City is without the information needed to evaluate the properties and their related tenants for compliance with HUD eligibility criteria. Questioned costs None Context The City had eighteen outstanding loans with this development group for Multi Family Construction projects as of the fiscal year end, carrying a balance of $9.5m. This represents 12% of the 154 HOME Loans and their related $79.3m outstanding balances. Identification as a repeat finding if applicable 2023-002 Recommendation We recommend the City continue its attempts to obtain the necessary documents from the developer and exercising its rights to enforce compliance through the terms of its contractual arrangement when necessary. Additionally, we recommend the City enhance policies and/or procedure for addressing unresponsiveness among developers to establish a structure for clear communication, expectations, an escalation process, and consistent documentation requirements. Views of responsible officials and planned corrective actions The City continues to monitor HOME-assisted units to ensure eligibility with income requirements. Since the last audit period, the developer has not yet complied with multiple requests from the City to provide missing documentation; however, City staff continues outreach and has communicated shortcomings with said developer on the dates mentioned in FY 23 corrective action plan and also July 2, 2024, July 16, 2024, July 18, 2024, September 3, 2024, September 10, 2024, September 11, 2024, September 18, 2024, October 30, 2024, November 4, 2024, and December 2, 2024. The City informed the developer that continued non-compliance will result in escalation to the City Attorney, and escalation is currently underway. The City has updated procedures to add layers of review and increase frequency of communication with developers to ensure timely submission and efforts to obtain necessary documents. The City is confident that these measures will demonstrate compliance with eligibility requirements and resolve the auditor’s concerns.
Finding Number: 2024-001 Finding Title : Internal Controls and Compliance over Eligibility for Multifamily Housing Projects Compliance Requirement(s): Eligibility Classification: Material Weakness Programs: Home Investment Partnerships Program ALN #: 14.239 Pass-through entity: N/A – Direct Award Federal Agency: Department of Housing and Urban Development Federal Award Numbers: M20-MC060518, M21-MP060518, M21-MC060518, M22-MC060518, M23-MC060518 Federal Award Year: 2020, 2021, 2022, 2023 Criteria or specific requirement (including statutory, regulatory, or other citation) 24 CFR92.252 Qualification as affordable housing: Rental housing - (e) Periods of affordability. The HOME-assisted units must meet the affordability requirements for not less than the applicable period, beginning after project completion. (1) The affordability requirements: (i) Apply without regard to the term of any loan or mortgage, repayment of the HOME investment, or the transfer of ownership. (ii) Must be imposed by a deed restriction, a covenant running with the land, an agreement restricting the use of the property, or other mechanisms approved by HUD and must give the participating jurisdiction the right to require specific performance (except that the participating jurisdiction may provide that the affordability restrictions may terminate upon foreclosure or transfer in lieu of foreclosure); and (iii) Must be recorded in accordance with State recordation laws. (2) The participating jurisdiction may use purchase options, rights of first refusal or other preemptive rights to purchase the housing before foreclosure or deed in lieu of foreclosure to preserve affordability. (3) The affordability restrictions shall be revived according to the original terms if, during the original affordability period, the owner of record before the foreclosure, or deed in lieu of foreclosure, or any entity that includes the former owner or those with whom the former owner has or had family or business ties, obtains an ownership interest in the project or property. (4) The termination of the restrictions on the project does not terminate the participating jurisdiction's repayment obligation under § 92.503(b). (h) Tenant income. The income of each tenant must be determined initially in accordance with §92.203(a)(1)(i). In addition, each year during the period of affordability the project owner must re-examine each tenant's annual income in accordance with one of the options in § 92.203 selected by the participating jurisdiction. An owner of a multifamily project with an affordability period of ten years or more who re-examines tenant's annual income through a statement and certification in accordance with § 92.203(b)(1)(ii), must examine the income of each tenant, in accordance with § 92.203(b)(1)(i), every sixth year of the affordability period, except that, for units that receive Federal or State project-based rental subsidy, the owner must accept the income determination pursuant to § 92.203(a)(1). 24 CFR 92.203 Income determinations - (b) Required Documentation for Annual Income Calculations (1) For families who are tenants in HOME-assisted housing and not receiving HOME tenant-based rental assistance, the participating jurisdiction must initially determine annual income using the method in paragraph (b)(1)(i) of this section. For subsequent income determinations during the period of affordability, the participating jurisdiction may use any one of the following methods in accordance with §92.252(h): (i) Examine at least two months of source documents evidencing annual income (e.g., wage statement, interest statement, and unemployment compensation statement) for the family. (ii) Obtain from the family a written statement of the amount of the family's annual income and family size, along with a certification that the information is complete and accurate. The certification must state that the family will provide source documents upon request. (iii) Obtain a written statement from the administrator of a government program under which the family receives benefits, and which examines each year the annual income of the family. The statement must indicate the tenant's family size and state the amount of the family's annual income; or alternatively, the statement must indicate the current dollar limit for very low- or low-income families for the family size of the tenant and state that the tenant's annual income does not exceed this limit. Title 45 US Code of Federal Regulations Part 75 (45 CFR part 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HHS Awards, section 75.303 also states that nonfederal entities must 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. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designated to ensure compliance with Federal laws, regulations and program compliance requirements. Effective internal controls should include procedures to ensure eligibility criteria are met and documented. Condition The City was unable to collect documents from the property manager to ensure that individuals who occupied HOME assisted units were eligible tenants for four of the eight properties selected for testing from a population of seventy-four properties. The four properties for which documents could not be collected included a total of forty-two units, all related to the same development group. The City was unable to obtain the necessary documentation from the development groups property manager to verify household income for each tenant. As a result, it could not determine compliance with income eligibility, maximum rent limits, or minimum set-aside requirements for units designated for eligible individuals. Cause The City’s attempts to contact the development group for these properties have been unsuccessful, the city was therefore unable to obtain the required documents to assess each family's income which is needed for determining income eligibility, compliance with maximum rent requirements or minimum set-aside requirements for units designated for eligible individuals. The City has made continued attempts to contact the development group, though they have not yet been successful in obtaining the information. Effect or potential effect The lack of information available from the development group has meant the City is without the information needed to evaluate the properties and their related tenants for compliance with HUD eligibility criteria. Questioned costs None Context The City had eighteen outstanding loans with this development group for Multi Family Construction projects as of the fiscal year end, carrying a balance of $9.5m. This represents 12% of the 154 HOME Loans and their related $79.3m outstanding balances. Identification as a repeat finding if applicable 2023-002 Recommendation We recommend the City continue its attempts to obtain the necessary documents from the developer and exercising its rights to enforce compliance through the terms of its contractual arrangement when necessary. Additionally, we recommend the City enhance policies and/or procedure for addressing unresponsiveness among developers to establish a structure for clear communication, expectations, an escalation process, and consistent documentation requirements. Views of responsible officials and planned corrective actions The City continues to monitor HOME-assisted units to ensure eligibility with income requirements. Since the last audit period, the developer has not yet complied with multiple requests from the City to provide missing documentation; however, City staff continues outreach and has communicated shortcomings with said developer on the dates mentioned in FY 23 corrective action plan and also July 2, 2024, July 16, 2024, July 18, 2024, September 3, 2024, September 10, 2024, September 11, 2024, September 18, 2024, October 30, 2024, November 4, 2024, and December 2, 2024. The City informed the developer that continued non-compliance will result in escalation to the City Attorney, and escalation is currently underway. The City has updated procedures to add layers of review and increase frequency of communication with developers to ensure timely submission and efforts to obtain necessary documents. The City is confident that these measures will demonstrate compliance with eligibility requirements and resolve the auditor’s concerns.
Finding Number: 2024-001 Finding Title : Internal Controls and Compliance over Eligibility for Multifamily Housing Projects Compliance Requirement(s): Eligibility Classification: Material Weakness Programs: Home Investment Partnerships Program ALN #: 14.239 Pass-through entity: N/A – Direct Award Federal Agency: Department of Housing and Urban Development Federal Award Numbers: M20-MC060518, M21-MP060518, M21-MC060518, M22-MC060518, M23-MC060518 Federal Award Year: 2020, 2021, 2022, 2023 Criteria or specific requirement (including statutory, regulatory, or other citation) 24 CFR92.252 Qualification as affordable housing: Rental housing - (e) Periods of affordability. The HOME-assisted units must meet the affordability requirements for not less than the applicable period, beginning after project completion. (1) The affordability requirements: (i) Apply without regard to the term of any loan or mortgage, repayment of the HOME investment, or the transfer of ownership. (ii) Must be imposed by a deed restriction, a covenant running with the land, an agreement restricting the use of the property, or other mechanisms approved by HUD and must give the participating jurisdiction the right to require specific performance (except that the participating jurisdiction may provide that the affordability restrictions may terminate upon foreclosure or transfer in lieu of foreclosure); and (iii) Must be recorded in accordance with State recordation laws. (2) The participating jurisdiction may use purchase options, rights of first refusal or other preemptive rights to purchase the housing before foreclosure or deed in lieu of foreclosure to preserve affordability. (3) The affordability restrictions shall be revived according to the original terms if, during the original affordability period, the owner of record before the foreclosure, or deed in lieu of foreclosure, or any entity that includes the former owner or those with whom the former owner has or had family or business ties, obtains an ownership interest in the project or property. (4) The termination of the restrictions on the project does not terminate the participating jurisdiction's repayment obligation under § 92.503(b). (h) Tenant income. The income of each tenant must be determined initially in accordance with §92.203(a)(1)(i). In addition, each year during the period of affordability the project owner must re-examine each tenant's annual income in accordance with one of the options in § 92.203 selected by the participating jurisdiction. An owner of a multifamily project with an affordability period of ten years or more who re-examines tenant's annual income through a statement and certification in accordance with § 92.203(b)(1)(ii), must examine the income of each tenant, in accordance with § 92.203(b)(1)(i), every sixth year of the affordability period, except that, for units that receive Federal or State project-based rental subsidy, the owner must accept the income determination pursuant to § 92.203(a)(1). 24 CFR 92.203 Income determinations - (b) Required Documentation for Annual Income Calculations (1) For families who are tenants in HOME-assisted housing and not receiving HOME tenant-based rental assistance, the participating jurisdiction must initially determine annual income using the method in paragraph (b)(1)(i) of this section. For subsequent income determinations during the period of affordability, the participating jurisdiction may use any one of the following methods in accordance with §92.252(h): (i) Examine at least two months of source documents evidencing annual income (e.g., wage statement, interest statement, and unemployment compensation statement) for the family. (ii) Obtain from the family a written statement of the amount of the family's annual income and family size, along with a certification that the information is complete and accurate. The certification must state that the family will provide source documents upon request. (iii) Obtain a written statement from the administrator of a government program under which the family receives benefits, and which examines each year the annual income of the family. The statement must indicate the tenant's family size and state the amount of the family's annual income; or alternatively, the statement must indicate the current dollar limit for very low- or low-income families for the family size of the tenant and state that the tenant's annual income does not exceed this limit. Title 45 US Code of Federal Regulations Part 75 (45 CFR part 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HHS Awards, section 75.303 also states that nonfederal entities must 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. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designated to ensure compliance with Federal laws, regulations and program compliance requirements. Effective internal controls should include procedures to ensure eligibility criteria are met and documented. Condition The City was unable to collect documents from the property manager to ensure that individuals who occupied HOME assisted units were eligible tenants for four of the eight properties selected for testing from a population of seventy-four properties. The four properties for which documents could not be collected included a total of forty-two units, all related to the same development group. The City was unable to obtain the necessary documentation from the development groups property manager to verify household income for each tenant. As a result, it could not determine compliance with income eligibility, maximum rent limits, or minimum set-aside requirements for units designated for eligible individuals. Cause The City’s attempts to contact the development group for these properties have been unsuccessful, the city was therefore unable to obtain the required documents to assess each family's income which is needed for determining income eligibility, compliance with maximum rent requirements or minimum set-aside requirements for units designated for eligible individuals. The City has made continued attempts to contact the development group, though they have not yet been successful in obtaining the information. Effect or potential effect The lack of information available from the development group has meant the City is without the information needed to evaluate the properties and their related tenants for compliance with HUD eligibility criteria. Questioned costs None Context The City had eighteen outstanding loans with this development group for Multi Family Construction projects as of the fiscal year end, carrying a balance of $9.5m. This represents 12% of the 154 HOME Loans and their related $79.3m outstanding balances. Identification as a repeat finding if applicable 2023-002 Recommendation We recommend the City continue its attempts to obtain the necessary documents from the developer and exercising its rights to enforce compliance through the terms of its contractual arrangement when necessary. Additionally, we recommend the City enhance policies and/or procedure for addressing unresponsiveness among developers to establish a structure for clear communication, expectations, an escalation process, and consistent documentation requirements. Views of responsible officials and planned corrective actions The City continues to monitor HOME-assisted units to ensure eligibility with income requirements. Since the last audit period, the developer has not yet complied with multiple requests from the City to provide missing documentation; however, City staff continues outreach and has communicated shortcomings with said developer on the dates mentioned in FY 23 corrective action plan and also July 2, 2024, July 16, 2024, July 18, 2024, September 3, 2024, September 10, 2024, September 11, 2024, September 18, 2024, October 30, 2024, November 4, 2024, and December 2, 2024. The City informed the developer that continued non-compliance will result in escalation to the City Attorney, and escalation is currently underway. The City has updated procedures to add layers of review and increase frequency of communication with developers to ensure timely submission and efforts to obtain necessary documents. The City is confident that these measures will demonstrate compliance with eligibility requirements and resolve the auditor’s concerns.
Finding Number: 2024-001 Finding Title : Internal Controls and Compliance over Eligibility for Multifamily Housing Projects Compliance Requirement(s): Eligibility Classification: Material Weakness Programs: Home Investment Partnerships Program ALN #: 14.239 Pass-through entity: N/A – Direct Award Federal Agency: Department of Housing and Urban Development Federal Award Numbers: M20-MC060518, M21-MP060518, M21-MC060518, M22-MC060518, M23-MC060518 Federal Award Year: 2020, 2021, 2022, 2023 Criteria or specific requirement (including statutory, regulatory, or other citation) 24 CFR92.252 Qualification as affordable housing: Rental housing - (e) Periods of affordability. The HOME-assisted units must meet the affordability requirements for not less than the applicable period, beginning after project completion. (1) The affordability requirements: (i) Apply without regard to the term of any loan or mortgage, repayment of the HOME investment, or the transfer of ownership. (ii) Must be imposed by a deed restriction, a covenant running with the land, an agreement restricting the use of the property, or other mechanisms approved by HUD and must give the participating jurisdiction the right to require specific performance (except that the participating jurisdiction may provide that the affordability restrictions may terminate upon foreclosure or transfer in lieu of foreclosure); and (iii) Must be recorded in accordance with State recordation laws. (2) The participating jurisdiction may use purchase options, rights of first refusal or other preemptive rights to purchase the housing before foreclosure or deed in lieu of foreclosure to preserve affordability. (3) The affordability restrictions shall be revived according to the original terms if, during the original affordability period, the owner of record before the foreclosure, or deed in lieu of foreclosure, or any entity that includes the former owner or those with whom the former owner has or had family or business ties, obtains an ownership interest in the project or property. (4) The termination of the restrictions on the project does not terminate the participating jurisdiction's repayment obligation under § 92.503(b). (h) Tenant income. The income of each tenant must be determined initially in accordance with §92.203(a)(1)(i). In addition, each year during the period of affordability the project owner must re-examine each tenant's annual income in accordance with one of the options in § 92.203 selected by the participating jurisdiction. An owner of a multifamily project with an affordability period of ten years or more who re-examines tenant's annual income through a statement and certification in accordance with § 92.203(b)(1)(ii), must examine the income of each tenant, in accordance with § 92.203(b)(1)(i), every sixth year of the affordability period, except that, for units that receive Federal or State project-based rental subsidy, the owner must accept the income determination pursuant to § 92.203(a)(1). 24 CFR 92.203 Income determinations - (b) Required Documentation for Annual Income Calculations (1) For families who are tenants in HOME-assisted housing and not receiving HOME tenant-based rental assistance, the participating jurisdiction must initially determine annual income using the method in paragraph (b)(1)(i) of this section. For subsequent income determinations during the period of affordability, the participating jurisdiction may use any one of the following methods in accordance with §92.252(h): (i) Examine at least two months of source documents evidencing annual income (e.g., wage statement, interest statement, and unemployment compensation statement) for the family. (ii) Obtain from the family a written statement of the amount of the family's annual income and family size, along with a certification that the information is complete and accurate. The certification must state that the family will provide source documents upon request. (iii) Obtain a written statement from the administrator of a government program under which the family receives benefits, and which examines each year the annual income of the family. The statement must indicate the tenant's family size and state the amount of the family's annual income; or alternatively, the statement must indicate the current dollar limit for very low- or low-income families for the family size of the tenant and state that the tenant's annual income does not exceed this limit. Title 45 US Code of Federal Regulations Part 75 (45 CFR part 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HHS Awards, section 75.303 also states that nonfederal entities must 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. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designated to ensure compliance with Federal laws, regulations and program compliance requirements. Effective internal controls should include procedures to ensure eligibility criteria are met and documented. Condition The City was unable to collect documents from the property manager to ensure that individuals who occupied HOME assisted units were eligible tenants for four of the eight properties selected for testing from a population of seventy-four properties. The four properties for which documents could not be collected included a total of forty-two units, all related to the same development group. The City was unable to obtain the necessary documentation from the development groups property manager to verify household income for each tenant. As a result, it could not determine compliance with income eligibility, maximum rent limits, or minimum set-aside requirements for units designated for eligible individuals. Cause The City’s attempts to contact the development group for these properties have been unsuccessful, the city was therefore unable to obtain the required documents to assess each family's income which is needed for determining income eligibility, compliance with maximum rent requirements or minimum set-aside requirements for units designated for eligible individuals. The City has made continued attempts to contact the development group, though they have not yet been successful in obtaining the information. Effect or potential effect The lack of information available from the development group has meant the City is without the information needed to evaluate the properties and their related tenants for compliance with HUD eligibility criteria. Questioned costs None Context The City had eighteen outstanding loans with this development group for Multi Family Construction projects as of the fiscal year end, carrying a balance of $9.5m. This represents 12% of the 154 HOME Loans and their related $79.3m outstanding balances. Identification as a repeat finding if applicable 2023-002 Recommendation We recommend the City continue its attempts to obtain the necessary documents from the developer and exercising its rights to enforce compliance through the terms of its contractual arrangement when necessary. Additionally, we recommend the City enhance policies and/or procedure for addressing unresponsiveness among developers to establish a structure for clear communication, expectations, an escalation process, and consistent documentation requirements. Views of responsible officials and planned corrective actions The City continues to monitor HOME-assisted units to ensure eligibility with income requirements. Since the last audit period, the developer has not yet complied with multiple requests from the City to provide missing documentation; however, City staff continues outreach and has communicated shortcomings with said developer on the dates mentioned in FY 23 corrective action plan and also July 2, 2024, July 16, 2024, July 18, 2024, September 3, 2024, September 10, 2024, September 11, 2024, September 18, 2024, October 30, 2024, November 4, 2024, and December 2, 2024. The City informed the developer that continued non-compliance will result in escalation to the City Attorney, and escalation is currently underway. The City has updated procedures to add layers of review and increase frequency of communication with developers to ensure timely submission and efforts to obtain necessary documents. The City is confident that these measures will demonstrate compliance with eligibility requirements and resolve the auditor’s concerns.
Finding Number: 2024-002 Finding Title: Internal Controls and Compliance regarding the timeliness of Housing Quality Standards Inspections Compliance Requirement(s): Special Tests – Housing Quality Standards Classification: Material Weakness Programs: Home Investment Partnerships Program ALN #: 14.239 Pass-through entity: N/A – Direct Award Federal Agency: Department of Housing and Urban Development Federal Award Numbers: M20-MC060518, M21-MP060518, M21-MC060518, M22-MC060518, M23-MC060518 Federal Award Year: 2020, 2021, 2022, 2023 Criteria or specific requirement (including statutory, regulatory, or other citation) § 92.251 Property standards and inspections - (3) Ongoing inspections of HOME-assisted rental housing. During the period of affordability, the participating jurisdiction must perform on-site inspections of HOME-assisted rental housing to determine compliance with the property standards in paragraph (f)(1) of this section and to verify the information submitted by owners in accordance with the requirements of § 92.252. The participating jurisdiction must perform inspections in accordance with its established inspection procedures. These procedures, at minimum, must include the following requirements: … (iii) Units inspected. Inspections must be based on a random sample of the HOME-assisted units in the project with a mix of unit sizes (e.g., a mix of one-bedroom, two-bedroom, and three-bedroom units) in accordance with the chart contained in this paragraph. All inspections must include the inspectable areas for each building containing HOME-assisted units. For projects with one-to-four HOME-assisted units, the participating jurisdiction must inspect 100 percent of the HOME-assisted units and the inspectable areas for each building with HOME-assisted units. HOMEfires - Vol. 3 No. 2, February 2001 - Q: The HOME Final Rule states that each Participating Jurisdiction must perform on-site inspections of HOME-assisted rental housing. How frequently should these inspections be performed? How should each PJ determine the number of units that must be inspected? A: During the affordability period, HOME-assisted rental projects must be inspected regularly to ensure that they continue to meet or exceed the property standards outlined in 24 CFR 92.251. Section 92.504 (d)(1) of the HOME final rule establishes a schedule for on-site inspections based on the total number of units in the project. The schedule is as follows: Projects containing one to four units must be inspected every three years Five-to-twenty-five-unit projects must be inspected every two years; and Projects with twenty-six or more units must be inspected annually. Please note that it is the total number of units in the project rather than the number of HOME-assisted units that determines the monitoring schedule. Section 92.504 (d)(1) also states that the inspections must be based on "a sufficient sample" of units. The Office of Affordable Housing has recommended that each PJ adopt the standard practice of inspecting fifteen to twenty percent of the HOME-assisted units in a project, and a minimum of one unit in every building. For identified in sample units, the PJ should inspect the remaining units to ensure that all HOME-assisted units comply with established property standards. The participating jurisdiction must establish written inspection procedures. The procedures must include detailed inspection checklists, a description of how and by whom inspections will be carried out, and procedures for training and certifying qualified inspectors. For ongoing property inspections, the procedures must also describe how frequently the property will be inspected, consistent with this section and § 92.209. 2 CFR 200.303 - Additionally, non-Federal entities receiving Federal awards are required to establish and maintain internal controls designated to ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure housing quality standards are appropriately performed and documented. Condition The City maintains a log to track housing quality standards inspections. The log lists all the projects, properties, total units, HOME units, required frequency of inspections, upcoming inspection due dates, and details on inspections including the unit number, date, and other details. Our testing included eight of a total seventy-four properties, none of which were inspected late. In reviewing the log, forty-two properties with 455 associated HOME units had either completed inspections late based on their required inspection date or were not yet completed and past their required inspection due date. Additionally 10 properties did not comply with HUDs 20% requirements for sampling with incorrect inspection frequency requirements listed in the log, and another 9 items did not meet the required sampling sizes as noted in Table 1 Paragraph (f)(3)(iii)—minimum Inspection Sample Size for Home Rental Housing Project in 24 CFR 92.251. Cause The City is working through a backlog of inspections due to staffing constraints which occurred in the prior year that caused a knock-on effect to inspections in the current year. Effect or potential effect Late or delayed inspections could lead to unidentified issues with housing leading to increased costs and non-compliance with HUD requirements related to the inspection process. Questioned costs None Context The City is currently responsible for seventy-four properties which include 1948 units, 1054 of which are HOME units. The City completed 227 inspections during the year per the log. Identification as a repeat finding if applicable 2023-003 Recommendation We recommend the City continue with its steps towards addressing resource constraints and implement a periodic review of the inspection log for accuracy, completeness and earlier identification of late inspections. Views of responsible officials and planned corrective actions Ensuring compliance with HUD requirements continues to be a central priority, and the City is actively enhancing our procedures to strengthen the Housing Quality Standards (HQS) process. The City is working to reduce the backlog of inspections by September 30, 2025, which requires additional effort in order to complete both the prior year inspections in addition to completing the current year inspections in a timely manner. To this end, the City has increased the number of properties inspected each fiscal year. For example, during the FY23 audit period, 204 inspections occurred. In the FY24 period, the number of inspections increased to 227. As of May 2025, the City has inspected 187 units and anticipates a total of 250 inspections will be completed by the end of FY25, thereby eliminating the current backlog and any late inspections. The Community Development Department implemented more proactive measures, including hiring an in-house inspector and an active master inspection log to track and target upcoming inspections. These efforts have resulted in a more streamlined, data-informed approach to HQS compliance, as evidenced by a significant reduction in the inspection backlog. The master inspection log is also being leveraged to optimize inspection scheduling and ensure that the required HOME units per property are inspected as required. To reinforce this approach, the City instituted a structured, monthly review of the log to improve data accuracy, completeness, and early identification of potential delays. The City is confident that these measures will demonstrate compliance with the HQS standards and resolve the auditor’s concerns.
Finding Number: 2024-002 Finding Title: Internal Controls and Compliance regarding the timeliness of Housing Quality Standards Inspections Compliance Requirement(s): Special Tests – Housing Quality Standards Classification: Material Weakness Programs: Home Investment Partnerships Program ALN #: 14.239 Pass-through entity: N/A – Direct Award Federal Agency: Department of Housing and Urban Development Federal Award Numbers: M20-MC060518, M21-MP060518, M21-MC060518, M22-MC060518, M23-MC060518 Federal Award Year: 2020, 2021, 2022, 2023 Criteria or specific requirement (including statutory, regulatory, or other citation) § 92.251 Property standards and inspections - (3) Ongoing inspections of HOME-assisted rental housing. During the period of affordability, the participating jurisdiction must perform on-site inspections of HOME-assisted rental housing to determine compliance with the property standards in paragraph (f)(1) of this section and to verify the information submitted by owners in accordance with the requirements of § 92.252. The participating jurisdiction must perform inspections in accordance with its established inspection procedures. These procedures, at minimum, must include the following requirements: … (iii) Units inspected. Inspections must be based on a random sample of the HOME-assisted units in the project with a mix of unit sizes (e.g., a mix of one-bedroom, two-bedroom, and three-bedroom units) in accordance with the chart contained in this paragraph. All inspections must include the inspectable areas for each building containing HOME-assisted units. For projects with one-to-four HOME-assisted units, the participating jurisdiction must inspect 100 percent of the HOME-assisted units and the inspectable areas for each building with HOME-assisted units. HOMEfires - Vol. 3 No. 2, February 2001 - Q: The HOME Final Rule states that each Participating Jurisdiction must perform on-site inspections of HOME-assisted rental housing. How frequently should these inspections be performed? How should each PJ determine the number of units that must be inspected? A: During the affordability period, HOME-assisted rental projects must be inspected regularly to ensure that they continue to meet or exceed the property standards outlined in 24 CFR 92.251. Section 92.504 (d)(1) of the HOME final rule establishes a schedule for on-site inspections based on the total number of units in the project. The schedule is as follows: Projects containing one to four units must be inspected every three years Five-to-twenty-five-unit projects must be inspected every two years; and Projects with twenty-six or more units must be inspected annually. Please note that it is the total number of units in the project rather than the number of HOME-assisted units that determines the monitoring schedule. Section 92.504 (d)(1) also states that the inspections must be based on "a sufficient sample" of units. The Office of Affordable Housing has recommended that each PJ adopt the standard practice of inspecting fifteen to twenty percent of the HOME-assisted units in a project, and a minimum of one unit in every building. For identified in sample units, the PJ should inspect the remaining units to ensure that all HOME-assisted units comply with established property standards. The participating jurisdiction must establish written inspection procedures. The procedures must include detailed inspection checklists, a description of how and by whom inspections will be carried out, and procedures for training and certifying qualified inspectors. For ongoing property inspections, the procedures must also describe how frequently the property will be inspected, consistent with this section and § 92.209. 2 CFR 200.303 - Additionally, non-Federal entities receiving Federal awards are required to establish and maintain internal controls designated to ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure housing quality standards are appropriately performed and documented. Condition The City maintains a log to track housing quality standards inspections. The log lists all the projects, properties, total units, HOME units, required frequency of inspections, upcoming inspection due dates, and details on inspections including the unit number, date, and other details. Our testing included eight of a total seventy-four properties, none of which were inspected late. In reviewing the log, forty-two properties with 455 associated HOME units had either completed inspections late based on their required inspection date or were not yet completed and past their required inspection due date. Additionally 10 properties did not comply with HUDs 20% requirements for sampling with incorrect inspection frequency requirements listed in the log, and another 9 items did not meet the required sampling sizes as noted in Table 1 Paragraph (f)(3)(iii)—minimum Inspection Sample Size for Home Rental Housing Project in 24 CFR 92.251. Cause The City is working through a backlog of inspections due to staffing constraints which occurred in the prior year that caused a knock-on effect to inspections in the current year. Effect or potential effect Late or delayed inspections could lead to unidentified issues with housing leading to increased costs and non-compliance with HUD requirements related to the inspection process. Questioned costs None Context The City is currently responsible for seventy-four properties which include 1948 units, 1054 of which are HOME units. The City completed 227 inspections during the year per the log. Identification as a repeat finding if applicable 2023-003 Recommendation We recommend the City continue with its steps towards addressing resource constraints and implement a periodic review of the inspection log for accuracy, completeness and earlier identification of late inspections. Views of responsible officials and planned corrective actions Ensuring compliance with HUD requirements continues to be a central priority, and the City is actively enhancing our procedures to strengthen the Housing Quality Standards (HQS) process. The City is working to reduce the backlog of inspections by September 30, 2025, which requires additional effort in order to complete both the prior year inspections in addition to completing the current year inspections in a timely manner. To this end, the City has increased the number of properties inspected each fiscal year. For example, during the FY23 audit period, 204 inspections occurred. In the FY24 period, the number of inspections increased to 227. As of May 2025, the City has inspected 187 units and anticipates a total of 250 inspections will be completed by the end of FY25, thereby eliminating the current backlog and any late inspections. The Community Development Department implemented more proactive measures, including hiring an in-house inspector and an active master inspection log to track and target upcoming inspections. These efforts have resulted in a more streamlined, data-informed approach to HQS compliance, as evidenced by a significant reduction in the inspection backlog. The master inspection log is also being leveraged to optimize inspection scheduling and ensure that the required HOME units per property are inspected as required. To reinforce this approach, the City instituted a structured, monthly review of the log to improve data accuracy, completeness, and early identification of potential delays. The City is confident that these measures will demonstrate compliance with the HQS standards and resolve the auditor’s concerns.