Finding Number: 2023-025 Prior Year Finding Number: 2022-014 Compliance Requirement: Eligibility Program: Government Department/Agency: U.S. Department of Health and Human Services Low Income Home Energy Assistance Program ALN: 93.568 Award #: Various Award Year: 10/01/2022 – 09/30/2023 Department of Energy and Environment (DOEE) 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 OMB Compliance Supplement states that “Grant recipients may provide assistance to (a) households in which one or more individuals are receiving Temporary Assistance for Needy Families (TANF), Supplemental Security Income (SSI), Supplemental Nutrition Assistance Program (SNAP) benefits, or certain needs-tested veterans’ benefits; or (b) households with incomes which do not exceed the greater of 150 percent of the state’s established poverty level, or 60 percent of the state median income. Grantees may establish lower income eligibility criteria, but no household may be excluded solely on the basis of income if the household income is less than 110 percent of the state’s poverty level (42 USC 8624(b)(2)). Grantees must give priority to those households with the highest home energy costs or needs in relation to income and household size (42 USC 8624(b)(5)).” Per 42 U.S. Code Section 8624(b)(2): “The chief executive officer of each State shall certify that the State agrees to make payments under this subchapter only with respect to: (A) Households in which 1 or more individuals are receiving: (i) Assistance under the State program foundered under part A of the title IV of the Social Security Act; (ii) supplemental security income payments under title XVI of the Social Security Act; (iii) supplemental nutrition assistance program benefits under the Food and Nutrition Act of 2008; or (iv) payments under section 1315, 1521, 1541, or 1542 of title 38, or under section 306 of the Veterans’ and Survivors’ Pension Improvement Act of 1978; or (B) Households with incomes which do not exceed the greater of: (i) An amount equal to 150 percent of the poverty level for such State; or (ii) An amount equal to 60 percent of the State median income.” Condition – During our review of 60 eligibility samples, we noted the following exceptions: • DOEE is not performing review of all individual's application. DOEE's policy is to perform secondary reviews of a minimum of 25% of all applications each fiscal year, however, there is no documentation how these policies and procedures were implemented and how they are covering 25% minimum of the population. • The total population initially provided did not reconcile to SEFA. • For 1 sample selected, DOEE was not able to provide sufficient supports to verify that the address mentioned on the beneficiary letter and the gas bill belongs to the same person. Questioned Costs – Not determinable. Context – This is a condition identified per review of DOEE’s compliance with specified requirements for eligibility using a statistically valid sample. Effect – Without proper review, inaccurate benefit amount or ineligible participant may receive benefits even if not eligible. Also, the total eligibility population may not be complete. Cause – It appears that DOEE’s internal controls were not operating effectively over the eligibility household income population. Recommendation – We recommend that DOEE strengthen their existing policies and procedures to ensure the review of the initial application household information including household incomes, household sizes, etc. are correctly recorded into the system based on supporting documentation. In addition, proper supporting documentation should be put in place to document the department’s control over review of applicant’s benefit application. Further, DOEE should review the eligibility population and reconcile to SEFA. Related Noncompliance – Material noncompliance. Views of Responsible Officials and Planned Corrective Actions – DOEE agrees with the conditions and recommendations of 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: 2023-026 Prior Year Finding Number: 2022-015 Compliance Requirement: Matching, Level of Effort, Earmarking Program: Government Department/Agency: U.S. Department of Health and Human Services Low Income Home Energy Assistance Program ALN: 93.568 Award #: Various Award Year: 10/01/2022 – 09/30/2023 Department of Energy and Environment (DOEE) 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 Compliance Supplement on earmarking requirement, a) Planning and Administrative Costs, (1) No more than 10 percent of a state’s LIHEAP funds for a federal fiscal year may be used for planning and administrative costs, including both direct and indirect costs. This limitation applies, in the aggregate, to planning and administrative costs at both the state and subrecipient levels. This cap may not be exceeded by supplementing with other federal funds (42 USC 8624(b)(9)(A); 45 CFR section 96.88(a)). b) Weatherization – No more than 15 percent of the greater of the funds allotted or the funds available to the grant recipient for a federal fiscal year may be used for low-cost residential weatherization or other energy-related home repairs. The secretary may grant a waiver beginning April 1st, and the grant recipient may then obligate and spend up to 25 percent for residential weatherization or energy-related home repairs (42 USC 8624(k)). c) Energy Need Reduction Services – No more than 5 percent of the LIHEAP funds may be used to provide services that encourage and enable households to reduce their home energy needs and, thereby, the need for energy assistance. Such services may include needs assessments, counseling, and assistance with energy vendors (42 USC 8624(b)(16)). Condition – During our review of two (2) samples, although DOEE met the earmarking requirement, there was no evidence of review was performed. Questioned Costs – Not determinable. Context – This is a condition identified per review of DOEE’s compliance with specified requirements for earmarking calculations. Effect – Without proper internal controls and policies and procedures in place to monitor and review, DOEE was not in compliance with the earmarking requirements. Cause – DOEE does not have adequate controls in place to ensure that earmarking requirements are being properly calculated and reviewed and the required documentation is not being maintained to evidence compliance with the requirements. Recommendation – We recommend that DOEE strengthen their existing policies and procedures to ensure the review of the earmarking calculations are performed. Further, proper supporting documentation should be put in place to document the department’s control over review of such calculations. Related Noncompliance – Noncompliance. Views of Responsible Officials and Planned Corrective Actions – DOEE agrees with the conditions and recommendations of 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: 2023-027 Prior Year Finding Number: 2022-016 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Program: Government Department/Agency: U.S. Department of Health and Human Services Foster Care – Title IV-E ALN: 93.658 Award #: Various Award Year: 10/01/2022 – 09/30/2023 Child and Family Services Agency (CFSA) 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. Based on CFSA’s Human Resources Administration Issuance: HR-06-1 dated May 12, 2006, staff must seek and receive advance written approval prior to working overtime. It also indicates that in emergency situations requiring an immediate response, the employee shall make every reasonable attempt to obtain advance approval by an appropriate manager or supervisor. CFSA uses a Random Moment Study (RMS) to allocate the administrative costs to the Foster Care program. The study entails selecting a sample of social workers on a quarterly basis to participate in the RMS study where the social workers are required to notate what they were doing at the sample moment. Subsequently, the supervisors of these social workers review and validate their responses. validation of the responses adds an extra layer of reliability to the data collected. It ensures that the information provided by social workers is accurate and reflective of their actual activities. This validation process helps maintain the integrity of the study and ensures that the results are trustworthy in making decisions when determining the RMS percentage utilization in the allocation of the administrative costs. Condition – During our review of the payroll process regarding the review and approval of time and attendance, we noted the following in our sample of 60 items: • For three (3) out of the sample, CFSA did not have proper internal controls and policies and procedures in place to ensure that authorization forms evidencing the preapproval of overtime are maintained. • For five (5) out of the sample, validation of the Random Moment Study was not performed. Questioned Costs – Not determinable. Context – This is a condition identified per review of CFSA’s compliance with specified requirements using a statistically valid sample. Effect – Without proper internal controls and policies and procedures in place to ensure maintenance of records increase the risk of disagreements between employer and employee regarding the employee’s correct payment. Additionally, the failure to validate the RMS could lead to inaccurate results, impacting the study’s effectiveness in allocating administrative costs. Cause – CFSA did not have proper internal controls and policies and procedures in place to ensure that authorization forms evidencing the preapproval of overtime are maintained. Additionally, CFSA did not follow its internal controls, policies and procedures to ensure the accuracy and consistent documentation of the RMS validation. Recommendation - We recommend that CFSA strengthen its policies, procedures, and controls to ensure that pre-authorization of overtime is maintained. Furthermore, we recommend that CFSA enhance its procedures to ensure the verification process is performed and maintained and the supervisors maintain consistent documentation of the RMS validation. Related Noncompliance – Noncompliance. Views of Responsible Officials and Planned Corrective Actions – CFSA concurs with the finding. The issues related to pre-approval of overtime for the three employees in question pertained to pay periods that pre-dated CFSA’s corrective action on this same issue that resulted from the fiscal year 2022 Single Audit. Corrective action on this issue, therefore, has already been taken. With respect to the RMS, the Agency notes that while supervisory social worker validation response rates must improve, CFSA’s contracted cost allocation partner performs a 100% quality assurance review of each and every response to verify internal consistency and accuracy. 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: 2023-028 Prior Year Finding Number: 2022-017 Compliance Requirement: Eligibility Program: Government Department/Agency: U.S. Department of Health and Human Services Foster Care – Title IV-E ALN: 93.658 Award #: Various Award Year: 10/01/2022 – 09/30/2023 Child and Family Services Agency (CFSA) 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. 45 CFR Section 92.20(b)(2), “Accounting records, "Grantees and sub grantees must maintain records which adequately identify the source and application of funds provided for financially assisted activities. These records must contain information pertaining to grant or subgrant awards and authorizations, obligations, unobligated balances, assets, liabilities, outlays or expenditures, and income.” 45 CFR Section 1356.30(a) states, “The Title IV-E agency must provide documentation that criminal records checks have been conducted with respect to prospective foster and adoptive parents.” 42 U.S. Code Section 671(a)(20)(A), “In order for a State to be eligible for payments under this part, it shall have a plan approved by the Secretary which provides procedures for criminal records checks of national crime information databases for any prospective foster or adoptive parent before the foster or adoptive parent may be finally approved for placement of a child regardless of whether foster care maintenance payments or adoption assistance payments are to be made on behalf of the child under the State plan.” Furthermore, per 45 CFR Section 1356.21(a), “Statutory and regulatory requirements of the Federal foster care program, To implement the foster care maintenance payments program provisions of the title IV-E plan and to be eligible to receive Federal financial participation (FFP) for foster care maintenance payments under this part, a Title IV-E agency must meet the requirements of this section, 45 CFR 1356.22, 45 CFR 1356.30, and Parts 472, 475(1), 475(4), 475(5), 475(6).” Condition – During our audit we noted that in fiscal year 2023, the Foster Care program had total disbursements of $2,825,300 for 3,438 maintenance payments. We selected a sample of 60 participants representing disbursed federal funds totaling $48,217, we noted the following deficiencies: • For two (2) of 60 samples, CFSA was unable to provide valid providers licenses for verification. • For twenty-three (23) of 60 samples, CFSA did not provide complete evidence of the household composition; therefore, we were unable to determine whether background checks such as criminal record checks and fingerprint-based checks from the national crime information databases was performed for each member residing the home. These deficiencies represent 43% of the total disbursements tested. Questioned Costs – Known amount is $20,856. Context – This is a condition identified per review of CFSA’s compliance with specified requirements using a statistically valid sample. Effect – CFSA was not in compliance with the eligibility requirements of the Foster Care program. Cause – CFSA does not have adequate controls in place to ensure that the required eligibility documentation is maintained to evidence compliance with eligibility requirements. Recommendation - We recommend CFSA reevaluate and strengthen its existing policies and procedures over the review and maintenance of appropriate documentation to ensure compliance with eligibility requirements in accordance with the program. Related Noncompliance – Material noncompliance. Views of Responsible Officials and Planned Corrective Actions – CFSA concurs with the findings pertaining to the two licensing issues. In both instances, the foster care providers in question had indeed met all applicable licensing requirements and were licensed in the FACES.net interim Comprehensive Child Welfare Information System (CCWIS), but the certificates themselves were not issued. Regarding the issue related to household composition, CFSA concurs with the finding. The finding is in reference to other adults residing in the foster home and not the licensed foster parents themselves. The District’s local licensing regulations require that CFSA conduct criminal background checks of other adults in the home during initial licensure of foster parents and then during each re-licensure cycle. CFSA provided background check documentation for other adults in homes in which they were applicable, but the household composition checklists, which delineate “other adults” residing in the home, were in some cases incomplete or unsigned by the licensing worker. 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: 2023-029 Prior Year Finding Number: N/A Compliance Requirement: Special Tests and Provisions – Payment Rate Setting and Application Program: Government Department/Agency: U.S. Department of Health and Human Services Foster Care – Title IV-E ALN: 93.658 Award #: Various Award Year: 10/01/2022 – 09/30/2023 Child and Family Services Agency (CFSA) 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 CFSA’s policies and procedures, providers must submit quarterly reports within 45 days of the end of each Federal fiscal year quarter. Upon receipt of quarterly reports from the provider, the Business Services Administration Program Manager reviews each Expenditure Detail Spreadsheet for compliance, accuracy and reasonableness. Condition – Our assessment of the special tests and provisions requirement, revealed that while the selected providers’ quarterly reports displayed no deficiencies, CFSA was unable to provide documentation evidencing the review and approval of the quarterly reports for all 40 transactions that were tested. Questioned Costs – Not determinable. Context – This is a condition identified per review of CFSA’s compliance with specified requirements using a statistically valid sample. Effect – The absence of documentation specifying who reviews and approves the quarterly reports compromises accountability and creates ambiguity in identifying the responsible parties in instances of errors or discrepancies. Cause – CFSA does not have adequate controls in place to ensure that review and approval of provider’s quarterly reports are documented. Recommendation - We recommend CFSA strengthen its policies and procedures to address the review and approval process for the provider’s quarterly reports. Related Noncompliance – Material noncompliance. Views of Responsible Officials and Planned Corrective Actions – CFSA concurs with this finding. The Agency also notes that quarterly cost reports are submitted to a central repository email inbox that is staffed by the five members of the BSA invoicing/cost reporting team. Each member maintains a provider-specific portfolio and is responsible for review and approval of provider cost reports within that portfolio. Moreover, the providers prepare these cost reports in close collaboration with CFSA’s Business Services Administration such that issues and questions are generally already addressed prior to submission. There is correspondence when corrections or inconsistencies need to be addressed, but there has been no formal correspondence when the reports are acceptable as 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: 2023-030 Prior Year Finding Number: N/A Compliance Requirement: Eligibility Program: Government Department/Agency: U.S. Department of Health and Human Services Children’s Health Insurance Program ALN: 93.767 Award #: Various Award Year: 10/01/2022 – 09/30/2023 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.” Condition – During testing over beneficiary eligibility for the CHIP benefits, we noted that the District’s Economic Security Administration (ESA) was unable to provide sufficient documentation to support the beneficiary’s eligibility determination during the fiscal year 2023 audit. Specifically, out of a sample of 40 participant files tested, we noted the following exception: • For one (1) participant file, 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: 2023-031 Prior Year Finding Number: N/A Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Program: Government Department/Agency: U.S. Department of Health and Human Services Medicaid Cluster ALN 93.775, 93.777, 93.778 Award #: Various Award Year: 10/01/2022 – 09/30/2023 Department of Health Care Finance (DHCF) 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 Section 1927 of the Social Security Act (42 USC 1396r-8): Drug manufacturers are required to provide a listing to CMS of all covered outpatient drugs and; and on a quarterly basis, are required to provide their average manufacturer’s price and their best prices for each covered outpatient drug. Based on these data, CMS calculates a unit rebate amount for each drug, which it then provides to States. Each State agency under this subchapter shall report to each manufacturer not later than 60 days after the end of each rebate period and in a form consistent with a standard reporting format established by the Secretary, information on the total number of units of each dosage form and strength and package size of each covered outpatient drug dispensed after December 31, 1990, for which payment was made under the plan during the period, and shall promptly transmit a copy of such report to the Secretary. The CMS Medicaid Drug Rebate Data Guide requires that upon receipt of a quarterly invoice, labelers have 37 calendar days from the invoice postmark date to pay rebates before interest begins to accrue. In those instances where states have used a meter to postmark the envelope and the United States Postal Service (USPS) or common mail carrier has also postmarked the envelope, the postmark date of the USPS or common mail carrier should be used to track the interest start date. For invoices that are submitted electronically, states should be able to identify the date on which the electronic invoice was received in order to properly track the interest start date. Interest stops accruing on the postmark date of the labeler’s mailed check, the date the state applies a credit to the labeler, or the date on which a state provides written acknowledgment to the labeler of the resolution. On the 38th day from the date interest originally began accruing, any unpaid interest becomes principal and interest accrues on the new principal amount beginning on the 38th day after that. Condition – During our review of 60 samples of drug rebates, we noted that for one (1) rebate, the manufacturer did not pay the rebate within 37 days after receiving the invoice from the DHCF, however, no interest was calculated and charged to the drug manufacturer. Questioned Costs – Not determinable. Context – This is a condition identified per review of DHCF’s compliance with the drug rebates requirements using a statistically valid sample. Effect – Without adequate policies and procedures in place, there is no assurance that drug rebates are paid, or interest is assessed when rebates are not paid timely. Cause – The manufacturer didn’t receive their invoice and the contractor reproduced it for them. The mail date was not updated correctly in their system thus causing no interest to be calculated. Recommendation - We recommend that DHCF establish policies and procedures to ensure that the mail date of invoices to manufacturers are correctly updated in the system to ensure interest is calculated and assessed when drug rebates are not paid timely. Related Noncompliance – Noncompliance. Views of Responsible Officials and Planned Corrective Actions – DHCF agrees 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: 2023-032 Prior Year Finding Number: 2022-020 Compliance Requirement: Eligibility Program: Government Department/Agency: U.S. Department of Health and Human Services Medicaid Cluster ALN: 93.775, 93.777, 93.778 Award #: Various Award Year: 10/01/2022 – 09/30/2023 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.” 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 during the fiscal year 2023 audit. Specifically, out of a sample of 132 participant files tested, we noted the following exception: • For twenty (20) 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 – Material 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: 2023-031 Prior Year Finding Number: N/A Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Program: Government Department/Agency: U.S. Department of Health and Human Services Medicaid Cluster ALN 93.775, 93.777, 93.778 Award #: Various Award Year: 10/01/2022 – 09/30/2023 Department of Health Care Finance (DHCF) 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 Section 1927 of the Social Security Act (42 USC 1396r-8): Drug manufacturers are required to provide a listing to CMS of all covered outpatient drugs and; and on a quarterly basis, are required to provide their average manufacturer’s price and their best prices for each covered outpatient drug. Based on these data, CMS calculates a unit rebate amount for each drug, which it then provides to States. Each State agency under this subchapter shall report to each manufacturer not later than 60 days after the end of each rebate period and in a form consistent with a standard reporting format established by the Secretary, information on the total number of units of each dosage form and strength and package size of each covered outpatient drug dispensed after December 31, 1990, for which payment was made under the plan during the period, and shall promptly transmit a copy of such report to the Secretary. The CMS Medicaid Drug Rebate Data Guide requires that upon receipt of a quarterly invoice, labelers have 37 calendar days from the invoice postmark date to pay rebates before interest begins to accrue. In those instances where states have used a meter to postmark the envelope and the United States Postal Service (USPS) or common mail carrier has also postmarked the envelope, the postmark date of the USPS or common mail carrier should be used to track the interest start date. For invoices that are submitted electronically, states should be able to identify the date on which the electronic invoice was received in order to properly track the interest start date. Interest stops accruing on the postmark date of the labeler’s mailed check, the date the state applies a credit to the labeler, or the date on which a state provides written acknowledgment to the labeler of the resolution. On the 38th day from the date interest originally began accruing, any unpaid interest becomes principal and interest accrues on the new principal amount beginning on the 38th day after that. Condition – During our review of 60 samples of drug rebates, we noted that for one (1) rebate, the manufacturer did not pay the rebate within 37 days after receiving the invoice from the DHCF, however, no interest was calculated and charged to the drug manufacturer. Questioned Costs – Not determinable. Context – This is a condition identified per review of DHCF’s compliance with the drug rebates requirements using a statistically valid sample. Effect – Without adequate policies and procedures in place, there is no assurance that drug rebates are paid, or interest is assessed when rebates are not paid timely. Cause – The manufacturer didn’t receive their invoice and the contractor reproduced it for them. The mail date was not updated correctly in their system thus causing no interest to be calculated. Recommendation - We recommend that DHCF establish policies and procedures to ensure that the mail date of invoices to manufacturers are correctly updated in the system to ensure interest is calculated and assessed when drug rebates are not paid timely. Related Noncompliance – Noncompliance. Views of Responsible Officials and Planned Corrective Actions – DHCF agrees 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: 2023-032 Prior Year Finding Number: 2022-020 Compliance Requirement: Eligibility Program: Government Department/Agency: U.S. Department of Health and Human Services Medicaid Cluster ALN: 93.775, 93.777, 93.778 Award #: Various Award Year: 10/01/2022 – 09/30/2023 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.” 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 during the fiscal year 2023 audit. Specifically, out of a sample of 132 participant files tested, we noted the following exception: • For twenty (20) 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 – Material 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: 2023-031 Prior Year Finding Number: N/A Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Program: Government Department/Agency: U.S. Department of Health and Human Services Medicaid Cluster ALN 93.775, 93.777, 93.778 Award #: Various Award Year: 10/01/2022 – 09/30/2023 Department of Health Care Finance (DHCF) 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 Section 1927 of the Social Security Act (42 USC 1396r-8): Drug manufacturers are required to provide a listing to CMS of all covered outpatient drugs and; and on a quarterly basis, are required to provide their average manufacturer’s price and their best prices for each covered outpatient drug. Based on these data, CMS calculates a unit rebate amount for each drug, which it then provides to States. Each State agency under this subchapter shall report to each manufacturer not later than 60 days after the end of each rebate period and in a form consistent with a standard reporting format established by the Secretary, information on the total number of units of each dosage form and strength and package size of each covered outpatient drug dispensed after December 31, 1990, for which payment was made under the plan during the period, and shall promptly transmit a copy of such report to the Secretary. The CMS Medicaid Drug Rebate Data Guide requires that upon receipt of a quarterly invoice, labelers have 37 calendar days from the invoice postmark date to pay rebates before interest begins to accrue. In those instances where states have used a meter to postmark the envelope and the United States Postal Service (USPS) or common mail carrier has also postmarked the envelope, the postmark date of the USPS or common mail carrier should be used to track the interest start date. For invoices that are submitted electronically, states should be able to identify the date on which the electronic invoice was received in order to properly track the interest start date. Interest stops accruing on the postmark date of the labeler’s mailed check, the date the state applies a credit to the labeler, or the date on which a state provides written acknowledgment to the labeler of the resolution. On the 38th day from the date interest originally began accruing, any unpaid interest becomes principal and interest accrues on the new principal amount beginning on the 38th day after that. Condition – During our review of 60 samples of drug rebates, we noted that for one (1) rebate, the manufacturer did not pay the rebate within 37 days after receiving the invoice from the DHCF, however, no interest was calculated and charged to the drug manufacturer. Questioned Costs – Not determinable. Context – This is a condition identified per review of DHCF’s compliance with the drug rebates requirements using a statistically valid sample. Effect – Without adequate policies and procedures in place, there is no assurance that drug rebates are paid, or interest is assessed when rebates are not paid timely. Cause – The manufacturer didn’t receive their invoice and the contractor reproduced it for them. The mail date was not updated correctly in their system thus causing no interest to be calculated. Recommendation - We recommend that DHCF establish policies and procedures to ensure that the mail date of invoices to manufacturers are correctly updated in the system to ensure interest is calculated and assessed when drug rebates are not paid timely. Related Noncompliance – Noncompliance. Views of Responsible Officials and Planned Corrective Actions – DHCF agrees 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: 2023-032 Prior Year Finding Number: 2022-020 Compliance Requirement: Eligibility Program: Government Department/Agency: U.S. Department of Health and Human Services Medicaid Cluster ALN: 93.775, 93.777, 93.778 Award #: Various Award Year: 10/01/2022 – 09/30/2023 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.” 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 during the fiscal year 2023 audit. Specifically, out of a sample of 132 participant files tested, we noted the following exception: • For twenty (20) 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 – Material 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: 2023-031 Prior Year Finding Number: N/A Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Program: Government Department/Agency: U.S. Department of Health and Human Services Medicaid Cluster ALN 93.775, 93.777, 93.778 Award #: Various Award Year: 10/01/2022 – 09/30/2023 Department of Health Care Finance (DHCF) 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 Section 1927 of the Social Security Act (42 USC 1396r-8): Drug manufacturers are required to provide a listing to CMS of all covered outpatient drugs and; and on a quarterly basis, are required to provide their average manufacturer’s price and their best prices for each covered outpatient drug. Based on these data, CMS calculates a unit rebate amount for each drug, which it then provides to States. Each State agency under this subchapter shall report to each manufacturer not later than 60 days after the end of each rebate period and in a form consistent with a standard reporting format established by the Secretary, information on the total number of units of each dosage form and strength and package size of each covered outpatient drug dispensed after December 31, 1990, for which payment was made under the plan during the period, and shall promptly transmit a copy of such report to the Secretary. The CMS Medicaid Drug Rebate Data Guide requires that upon receipt of a quarterly invoice, labelers have 37 calendar days from the invoice postmark date to pay rebates before interest begins to accrue. In those instances where states have used a meter to postmark the envelope and the United States Postal Service (USPS) or common mail carrier has also postmarked the envelope, the postmark date of the USPS or common mail carrier should be used to track the interest start date. For invoices that are submitted electronically, states should be able to identify the date on which the electronic invoice was received in order to properly track the interest start date. Interest stops accruing on the postmark date of the labeler’s mailed check, the date the state applies a credit to the labeler, or the date on which a state provides written acknowledgment to the labeler of the resolution. On the 38th day from the date interest originally began accruing, any unpaid interest becomes principal and interest accrues on the new principal amount beginning on the 38th day after that. Condition – During our review of 60 samples of drug rebates, we noted that for one (1) rebate, the manufacturer did not pay the rebate within 37 days after receiving the invoice from the DHCF, however, no interest was calculated and charged to the drug manufacturer. Questioned Costs – Not determinable. Context – This is a condition identified per review of DHCF’s compliance with the drug rebates requirements using a statistically valid sample. Effect – Without adequate policies and procedures in place, there is no assurance that drug rebates are paid, or interest is assessed when rebates are not paid timely. Cause – The manufacturer didn’t receive their invoice and the contractor reproduced it for them. The mail date was not updated correctly in their system thus causing no interest to be calculated. Recommendation - We recommend that DHCF establish policies and procedures to ensure that the mail date of invoices to manufacturers are correctly updated in the system to ensure interest is calculated and assessed when drug rebates are not paid timely. Related Noncompliance – Noncompliance. Views of Responsible Officials and Planned Corrective Actions – DHCF agrees 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: 2023-032 Prior Year Finding Number: 2022-020 Compliance Requirement: Eligibility Program: Government Department/Agency: U.S. Department of Health and Human Services Medicaid Cluster ALN: 93.775, 93.777, 93.778 Award #: Various Award Year: 10/01/2022 – 09/30/2023 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.” 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 during the fiscal year 2023 audit. Specifically, out of a sample of 132 participant files tested, we noted the following exception: • For twenty (20) 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 – Material 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: 2023-031 Prior Year Finding Number: N/A Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Program: Government Department/Agency: U.S. Department of Health and Human Services Medicaid Cluster ALN 93.775, 93.777, 93.778 Award #: Various Award Year: 10/01/2022 – 09/30/2023 Department of Health Care Finance (DHCF) 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 Section 1927 of the Social Security Act (42 USC 1396r-8): Drug manufacturers are required to provide a listing to CMS of all covered outpatient drugs and; and on a quarterly basis, are required to provide their average manufacturer’s price and their best prices for each covered outpatient drug. Based on these data, CMS calculates a unit rebate amount for each drug, which it then provides to States. Each State agency under this subchapter shall report to each manufacturer not later than 60 days after the end of each rebate period and in a form consistent with a standard reporting format established by the Secretary, information on the total number of units of each dosage form and strength and package size of each covered outpatient drug dispensed after December 31, 1990, for which payment was made under the plan during the period, and shall promptly transmit a copy of such report to the Secretary. The CMS Medicaid Drug Rebate Data Guide requires that upon receipt of a quarterly invoice, labelers have 37 calendar days from the invoice postmark date to pay rebates before interest begins to accrue. In those instances where states have used a meter to postmark the envelope and the United States Postal Service (USPS) or common mail carrier has also postmarked the envelope, the postmark date of the USPS or common mail carrier should be used to track the interest start date. For invoices that are submitted electronically, states should be able to identify the date on which the electronic invoice was received in order to properly track the interest start date. Interest stops accruing on the postmark date of the labeler’s mailed check, the date the state applies a credit to the labeler, or the date on which a state provides written acknowledgment to the labeler of the resolution. On the 38th day from the date interest originally began accruing, any unpaid interest becomes principal and interest accrues on the new principal amount beginning on the 38th day after that. Condition – During our review of 60 samples of drug rebates, we noted that for one (1) rebate, the manufacturer did not pay the rebate within 37 days after receiving the invoice from the DHCF, however, no interest was calculated and charged to the drug manufacturer. Questioned Costs – Not determinable. Context – This is a condition identified per review of DHCF’s compliance with the drug rebates requirements using a statistically valid sample. Effect – Without adequate policies and procedures in place, there is no assurance that drug rebates are paid, or interest is assessed when rebates are not paid timely. Cause – The manufacturer didn’t receive their invoice and the contractor reproduced it for them. The mail date was not updated correctly in their system thus causing no interest to be calculated. Recommendation - We recommend that DHCF establish policies and procedures to ensure that the mail date of invoices to manufacturers are correctly updated in the system to ensure interest is calculated and assessed when drug rebates are not paid timely. Related Noncompliance – Noncompliance. Views of Responsible Officials and Planned Corrective Actions – DHCF agrees 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: 2023-032 Prior Year Finding Number: 2022-020 Compliance Requirement: Eligibility Program: Government Department/Agency: U.S. Department of Health and Human Services Medicaid Cluster ALN: 93.775, 93.777, 93.778 Award #: Various Award Year: 10/01/2022 – 09/30/2023 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.” 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 during the fiscal year 2023 audit. Specifically, out of a sample of 132 participant files tested, we noted the following exception: • For twenty (20) 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 – Material 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: 2023-033 Prior Year Finding Number: N/A Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Program: Government Department/Agency: U.S. Department of Health and Human Services Opioid STR ALN: 93.788 Award #: Various Award Year: 09/30/2020 – 09/29/2024 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 for the Activities Allowed or Unallowed and Allowable Costs/Cost Principles, we noted the following in our sample of sixty-four (64) items: • For one (1) out of the 64 samples, DBH did not provide adequate supporting documentation for year-end accrual for subrecipient expenditures amounting to $238,548. Questioned Costs – Known amount is $238,548. 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 $7,294,191. Effect – Lack of supporting documentation could result in disallowances of costs and DBH may have drawn down federal monies in excess of the expenditures incurred. Cause – DBH did not have adequate controls in place to ensure that expenditures accrued were actually incurred by the subrecipient. 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: 2023-034 Prior Year Finding Number: N/A Compliance Requirement: Cash Management Program: Government Department/Agency: U.S. Department of Health and Human Services Opioid STR ALN: 93.788 Award #: Various Award Year: 09/30/2020 – 09/29/2024 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 OMB Compliance Supplement states that when entities are funded on a reimbursement basis, program costs must be incurred prior to the date of the reimbursement request. Condition – During our testing of individual draws of federal funds, we noted that for one (1) of three (3) samples tested, the amount drawn exceeded the expenditures incurred. Cash draws appear to have exceed expenditures and DBH remitted $0 interest and/or refunds were remitted to the Federal government by DBH. In addition, we noted management did not provide a complete reconciliation between the cash drawdown schedule to the Schedule of Expenditures of Federal Awards (SEFA). 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 was $9,262,365 and only supported by expenditures of $9,161,518, thus overdrawing by $100,847. Total drawdowns selected for testing amounted to $24,170,641. Effect – DBH is not in compliance with cash management requirements. Requests for federal funds for the program were not based on the amount of actual disbursements and requests did not support the actual expenditures. This could subject DBH to sanctions, other penalties, or a repayment of part of the grant award amounts. In addition, noncompliance could subject the agency to paying interest charges on these draws. Cause – DBH did not have adequate controls in place to ensure that expenditures accrued were actually incurred by the subrecipient. 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: 2023-035 Prior Year Finding Number: N/A Compliance Requirement: Reporting Program: Government Department/Agency: U.S. Department of Health and Human Services Opioid STR ALN: 93.788 Award #: Various Award Year: 09/30/2020 – 09/29/2024 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 Awardee Performance and Integrity Information System (FAPIIS) Reporting Compliance: In accordance with the regulatory requirements provided at 45 CFR 75.113 and Appendix XII to 45 CFR Part 75, recipients that have currently active Federal grants, cooperative agreements, and procurement contracts with cumulative total value greater than $10,000,000 must report and maintain information in the System for Award Management (SAM) about civil, criminal, and administrative proceedings in connection with the award or performance of a Federal award that reached final disposition within the most recent five-year period or affirm that there is no new information to report. The recipient must also make semiannual disclosures regarding such proceedings. Proceedings information will be made publicly available in the designated integrity and performance system (currently the FAPIIS). Federal Funding Accountability and Transparency Act (FFATA) Reporting Compliance: The FFATA (Pub. L. No. 109-282, as amended by Section 6202 of Public Law 110-252, hereafter referred as the “Transparency Act” that are codified in 2 CFR Part 170) requires prime recipients of federal awards who make first-tier subawards to report the subaward on the Federal Funding Accountability and Transparency Subaward Reporting System (FSRS) website maintained by the federal Office of Management and Budget. Under the requirements of 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more on the FSRS website. Prime recipients must report by the end of the month following the month in which the obligation is made. It is management’s responsibility to design and implement internal controls to reasonably ensure compliance with laws and regulations and to ensure management’s objectives are achieved. Federal Financial Report (FFR) Controls over Reporting Compliance: In addition, 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: • FAPIIS Reporting Compliance: During our testing of FAPIIS reporting for fiscal year ended September 30, 2023, it was noted that the program’s reporting regarding civil, criminal, and administrative proceedings in connection with the award or performance of a Federal award that reached final disposition within the most recent five-year period or affirmation that there was no new information to report was not submitted by the DBH program management. • FFATA Reporting Compliance: During our testing of FFATA reporting, it was noted that reports were not submitted by the DBH program management. DBH program management was not aware of FFATA reporting requirement and did not report subawards within the FSRS website during the award year. None of the ten subawards selected for testing were reported to FSRS. Total subawards tested were $3,559,912, and $0 was reported as required by FFATA requirements. • 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 have documentation of the control over compliance, as well as the review and approval of the Financial Reporting Report (FFR or SF-425). • PPR Reporting Compliance: We found DBH did not have documentation for the information, and the source of the information, it used in its Opioid program’s Performance Progress Report. Information as reported on the reports is unsupported as management did not retain the underlying data. • 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, 2023, DBH incurred $12,800,130 in subrecipient expenditures for this program and incorrectly reported that there were no subrecipient expenditures on the draft SEFA. The error was subsequently identified and corrected as a result of the audit process. While the subrecipient expenditure column was not accurate, the total expenditure column was accurately reported. 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, the Opioid STR program: • FAPIIS Reporting Compliance: DBH management did not report the necessary FAPIIS information for Opioid STR in accordance with Federal requirements. • FFATA Reporting Compliance: DBH management did not report the necessary FFATA report for Opioid STR first-tier subawards over $30,000 to the FFATA Subaward Reporting System in accordance with FFATA requirements. • FFR Controls over Reporting Compliance: There is an increased risk of errors occurring and going 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 found 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 FAPIIS, FFATA, FFR, PPR and SEFA were properly reported, and the reports were properly reviewed and approved. Recommendation – We recommend the following: • FAPIIS Reporting Compliance: We recommend DBH to evaluate its 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. Further, we recommend that DBH collect, and report complete and accurate information regarding FAPIIS. • FFATA Reporting Compliance: We recommend DBH to 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 on the FSRS website. Further, we recommend DBH collect and report on the FSRS website complete and accurate information regarding subawards made for all programs subject to the Transparency Act. • FFR Controls over Reporting Compliance: We recommend DBH to design and implement procedures to ensure sufficient documentation is maintained that supports the review and approval of the FFR. • PPR Reporting Compliance: We recommend DBH to 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 to ensure that agency personnel receive proper training on subrecipient versus vendor determination; as well as review its existing policies and procedures for preparing the Schedule of Expenditures of Federal Awards to ensure that it is complete and accurate. Related Noncompliance – Material noncompliance. Views of Responsible Officials and Planned Corrective Actions – DBH agrees with these findings and plans to address reporting requirements to ensure that the FAPIIS, FFATA, FFR, PPR and SEFA are completed accurately and on the required schedule. 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: 2023-036 Prior Year Finding Number: N/A Compliance Requirement: Subrecipient Monitoring Program: Government Department/Agency: U.S. Department of Health and Human Services Opioid STR ALN: 93.788 Award #: Various Award Year: 09/30/2020 – 09/29/2024 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. Eligibility of Subrecipients: The Substance Abuse and Mental Health Services Administration (SAMHSA) promulgated the Funding Opportunity Announcement (FOA) No. TI-20-012 to seek applicants for the Opioid STR federal program. Page 67 of the FOA states “Subrecipient means a non-Federal entity that receives a subaward from a pass-through entity to carry out part of a Federal award, including a portion of the scope of work or objectives. Grant recipients are responsible for ensuring that all subrecipients comply with the terms and conditions of the award, per 45 CFR Section 75.101.” This provision indicates that 45 CFR Section 75.202 applies to all grant agreements, including subawards. 45 CFR Section 75.202(b) requires the federal awarding agency must provide certain information about the federal award and states, in part (5), General Eligibility Requirements, The statutory, regulatory or other eligibility factors or considerations that determine the applicant’s qualification for Federal awards under the program (e.g., type of non-Federal entity). Earmarking Requirements for Subrecipients: Award recipients must continue to 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. Monitoring of Subrecipients: Uniform Guidance in 2 CFR Section 200.331(a) requires that pass-through entities must: ensure that every subaward is clearly identified to the subrecipient as a subaward and includes certain information outlined in the section noted above, pre-award assessment, indirect cost rated for the award, assistance listing number, finding and award follow-up and other pertinent actions. Also, in accordance with the requirements of 2 CFR Section 1402.300, 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 – During our testing of Subrecipient Monitoring compliance requirement, we noted the following: For Eligibility of Subrecipients: We identified ten (10) instances out of ten (10) tested, in which the subrecipients’ eligibility determination was not documented or maintained. 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 three (3) out of ten (10) samples selected for testing, the awardees exceeded the ten (10) percent funding limitation for administrative costs/indirect costs. Also, 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. Monitoring of Subrecipients: Although, DBH performs risk assessment and site visits to monitor subrecipients, we noted three (3) instances out of ten (10) samples, in which the subrecipients’ site visit and/or risk assessment was not documented or maintained. In addition, DBH did not track subrecipient costs versus vendor costs within their financial reporting system, which resulted to issues in verifying the completeness and accuracy of subrecipient population. 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 agrees with the findings and will put controls into place to resolve the issues. 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: 2023-037 Prior Year Finding Number: N/A Compliance Requirement: Special Tests and Provisions – Key Employees Program: Government Department/Agency: U.S. Department of Health and Human Services Opioid STR ALN: 93.788 Award #: Various Award Year: 09/30/2020 – 09/29/2024 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. 2 CFR 200.508(d) says an auditee must “provide the auditor with access to personnel, accounts, books, records, supporting documentation, and other information as needed for the auditor to perform the audit required by this part.” The grant agreements provide that the State must maintain certain key personnel. Key personnel are organization staff members or consultants/subrecipients who must be part of the project regardless of whether they receive a salary or compensation from the project. These individuals must make a substantial contribution to the execution of the project. Key Personnel for this program are the Project Director, Project Coordinator, and Data Coordinator at a 1.0 FTE (100 percent level of effort) for each position. This position requires prior approval by SAMHSA after a review of staff credentials and job descriptions. Any changes to key personnel, including level of effort involving separation from the project for more than three months or a 25 percent reduction in time dedicated to the project, requires prior approval, and must be submitted as a post-award amendment. Condition – During our testing of the key personnel requirement, we noted that for three (3) key employees tested out of three (3), we were unable to review documentation to support that the employee worked 100% on the award as required by the grant agreement. Questioned Costs – None. Context – This is a condition identified per review of DBH’s compliance with specified requirements using a statistically valid sample. Effect – There is a risk that employees are working on the program that are not approved by the granting agency. Cause – Management has not established internal control policies and procedures around communicating to the employees that they are being assigned to the Opioid program. Recommendation – We recommend that DBH develop and implement policies, procedures and controls to ensure proper documentation of the required and actual time and effort from key employees in accordance with grant requirements. Related Noncompliance – Noncompliance. Views of Responsible Officials and Planned Corrective Actions – DBH agrees with the findings and will put controls into place to resolve the issues. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
of Health and Human Services Federal Assistance Listing #93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year – Period 4 TIN #390992883 Reporting Material Weakness in Internal Control Over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Condition: The Medical Center’s narrative outlining lost revenues did not accurately reflect the calculation utilized for the lost revenue calculated and reported to the Department of Health and Human Services (HHS). Cause: The Medical Center did not have an adequate internal control policy in place to ensure that the lost revenue calculation was consistent with its submitted lost revenue calculation memos. Effect: There is a potential that the lost revenue calculation may contain errors based upon the narrative outlining the calculation. Questioned Costs: None. Context: All key line items were tested on the Period 4 HHS special report. Repeat Finding from Prior Years: Yes, finding 2021-004. Recommendation: We recommend the Medical Center implement procedures to ensure the narrative submitted to HHS be consistent with the calculation of lost revenue claimed on the reports to HHS. Views of Responsible Officials: Management agrees with the finding.
Department of Health and Human Services Federal Assistance Listing #93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year – Period 4 TIN #390992883 Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Reporting Material Weakness in Internal Control Over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Condition: During our testing, there was no documentation of review and approval of the expenditure listing, lost revenue calculation, or the HHS Period 4 report. Cause: The Medical Center did not have an adequate internal control policy in place to ensure review and approval of expenditures and lost revenue claimed under the federal program, and the HHS Period 4 report was documented. Effect: Without a secondary review and approval, there is a possibility that ineligible expenditures or lost revenue may be claimed under the program and the HHS Period 4 report may not be accurately completed. Questioned Costs: None reported. Context: A nonstatistical sample of 14 expenditures was selected for testing, which accounted for $493,531 of $2,074,596 direct program expenditures. There was one lost revenue calculation, one expenditure detail and one HHS Period 4 report and all three were tested. Repeat Finding from Prior Years: Yes, finding 2021-005. Recommendation: We recommend that the Medical Center enhance internal control policies to ensure the expenditure listing, lost revenue calculation, and HHS reports are reviewed and approved to ensure that all payments are necessary, correct, meet the requirements of the federal program, and are properly recorded in the reports required to be submitted to the federal agency. Views of Responsible Officials: Management agrees with the finding.
Finding 2023-001 – Reporting – Federal Funding Accountability and Transparency Act (FFATA) Identification of the federal program: Federal Agency: United States Agency for International Development Assistance Listing: 98.001 – USAID Foreign Assistance for Programs Overseas 98.U04 – USAID Foreign Assistance for Economic Growth Federal Award Identification Number 98.001 – 7200AA19CA00002; 72066418CA00001; 72044020CA00002; 72049218CA00008; 72060822CA00002; 72066322CA00005 98.U04 – 72026320C00005 Award Year: FY 2022 – 2023 Criteria or specific requirement (including statutory, regulatory or other citation): 2 CFR Section 200.303 of the Uniform Guidance states the following regarding internal control: “The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).”Family Health International Schedule of Findings and Questioned Costs (continued) Year Ended September 30, 2023 2311-4384437 80 Section III – Federal Award Findings and Questioned Costs (continued) As per 2 CFR Part 170, direct recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). The subaward information should be reported no later than the end of the month following the month in which the obligation was made. Condition: We noted the following matters during our testing of the Federal Funding Accountability and Transparency Act (FFATA) reporting compliance requirements: See chart/table in the schedule of findings and questioned costs Cause: A thorough review of the required data elements prior to submission of the reports did not occur consistently in FY 2023. In addition, a detailed review of all new subaward agreements and/or modifications made during FY 2023 was not performed to identify reports that should have been submitted. Effect or Potential Effect: FHI 360 did not report accurate information or did not submit the required reports for first-tier subawards of $30,000 or more causing them not to be in compliance with federal reporting requirements. Questioned Costs: NoneFamily Health International Schedule of Findings and Questioned Costs (continued) Year Ended September 30, 2023 2311-4384437 82 Section III – Federal Award Findings and Questioned Costs (continued) Context: Under the Transparency Act reporting requirements, each FFATA report includes the following key data elements: 1) Subawardee name, 2) Subawardee DUNS #, 3) Amount of Subaward, 4) Subaward Obligation/Action Date, 5) Subaward Number, 6) Subaward Project Description, 7) Subawardee Names and Compensation of Highly Compensated Officers, if thresholds are met and 8) Date of Report Submission. Testing of the FFATA reports included each of these data elements as well as verifying for timely submissions. The table presented above lists the specific data elements where errors were detected as well as any untimely or non-submission of the reports. Total federal expenditures under 98.001 and 98.U04 were $ 509,476,610 and $3,502,691, respectively, for the year ended September 30, 2023. Identification as a Repeat Finding: This is a repeat finding from prior year (2022-001). Recommendation: We recommend FHI 360 strengthen its internal controls and procedures over FFATA reporting to ensure they are both timely and accurately submitted to be in compliance with the federal reporting requirements. Views of Responsible Officials: Management will implement additional actions to enhance and strengthen previous year actions including global communications and meetings with key management teams, targeted and detailed refresher training on FFATA requirements and completion of the FSRS template via an e-module, and additional review of FFATA submissions via a centralized team to identify prospective transactions and perform a final review of data quality prior to data entry in FSRS. The additional review will focus on completeness and accuracy of submitted data and timeliness of submissions. Management notes there were prior year FFATA findings related to timeliness of submissions which EY concluded upon in May 2023, during the current fiscal period. The corrective action plan in response to the prior year findings was immediately developed and implemented. This fiscal year’s control exceptions related to timeliness were prior to the material findings being concluded upon and the corrective action plan being implemented
Finding 2023-001 – Reporting – Federal Funding Accountability and Transparency Act (FFATA) Identification of the federal program: Federal Agency: United States Agency for International Development Assistance Listing: 98.001 – USAID Foreign Assistance for Programs Overseas 98.U04 – USAID Foreign Assistance for Economic Growth Federal Award Identification Number 98.001 – 7200AA19CA00002; 72066418CA00001; 72044020CA00002; 72049218CA00008; 72060822CA00002; 72066322CA00005 98.U04 – 72026320C00005 Award Year: FY 2022 – 2023 Criteria or specific requirement (including statutory, regulatory or other citation): 2 CFR Section 200.303 of the Uniform Guidance states the following regarding internal control: “The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).”Family Health International Schedule of Findings and Questioned Costs (continued) Year Ended September 30, 2023 2311-4384437 80 Section III – Federal Award Findings and Questioned Costs (continued) As per 2 CFR Part 170, direct recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). The subaward information should be reported no later than the end of the month following the month in which the obligation was made. Condition: We noted the following matters during our testing of the Federal Funding Accountability and Transparency Act (FFATA) reporting compliance requirements: See chart/table in the schedule of findings and questioned costs Cause: A thorough review of the required data elements prior to submission of the reports did not occur consistently in FY 2023. In addition, a detailed review of all new subaward agreements and/or modifications made during FY 2023 was not performed to identify reports that should have been submitted. Effect or Potential Effect: FHI 360 did not report accurate information or did not submit the required reports for first-tier subawards of $30,000 or more causing them not to be in compliance with federal reporting requirements. Questioned Costs: NoneFamily Health International Schedule of Findings and Questioned Costs (continued) Year Ended September 30, 2023 2311-4384437 82 Section III – Federal Award Findings and Questioned Costs (continued) Context: Under the Transparency Act reporting requirements, each FFATA report includes the following key data elements: 1) Subawardee name, 2) Subawardee DUNS #, 3) Amount of Subaward, 4) Subaward Obligation/Action Date, 5) Subaward Number, 6) Subaward Project Description, 7) Subawardee Names and Compensation of Highly Compensated Officers, if thresholds are met and 8) Date of Report Submission. Testing of the FFATA reports included each of these data elements as well as verifying for timely submissions. The table presented above lists the specific data elements where errors were detected as well as any untimely or non-submission of the reports. Total federal expenditures under 98.001 and 98.U04 were $ 509,476,610 and $3,502,691, respectively, for the year ended September 30, 2023. Identification as a Repeat Finding: This is a repeat finding from prior year (2022-001). Recommendation: We recommend FHI 360 strengthen its internal controls and procedures over FFATA reporting to ensure they are both timely and accurately submitted to be in compliance with the federal reporting requirements. Views of Responsible Officials: Management will implement additional actions to enhance and strengthen previous year actions including global communications and meetings with key management teams, targeted and detailed refresher training on FFATA requirements and completion of the FSRS template via an e-module, and additional review of FFATA submissions via a centralized team to identify prospective transactions and perform a final review of data quality prior to data entry in FSRS. The additional review will focus on completeness and accuracy of submitted data and timeliness of submissions. Management notes there were prior year FFATA findings related to timeliness of submissions which EY concluded upon in May 2023, during the current fiscal period. The corrective action plan in response to the prior year findings was immediately developed and implemented. This fiscal year’s control exceptions related to timeliness were prior to the material findings being concluded upon and the corrective action plan being implemented
Finding 2023-002 – Procurement and Suspension and Debarment Identification of the federal program: Federal Agency: Department of Health and Human Services – Centers for Disease Control and Prevention United States Department of State Assistance Listing: 93.U02 – National Health Initiatives, Strategies and Action Plans for Infectious Diseases 19.415 – Professional and Cultural Exchange Programs – Citizen Exchanges Federal Award Identification Number: 93.U02 – HHSD2002015M88157B – 75D30120F08105 19.415 – SECAGD22CA0060 Award Year: FY 2022 – 2023 Criteria or specific requirement (including statutory, regulatory or other citation): 2 CFR Section 200.303 of the Uniform Guidance states the following regarding internal control: “The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the FederalFamily Health International Schedule of Findings and Questioned Costs (continued) Year Ended September 30, 2023 2311-4384437 84 Section III – Federal Award Findings and Questioned Costs (continued) Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Condition: During our testing of procurement and suspension and debarment compliance requirements we noted the following: • Under 93.U02, we noted for 5 transactions out of 25 tested, FHI 360 relied on the screening for suspension and debarment performed by a third-party service provider without having any additional control to validate that these specific vendors were part of the screening performed by the third-party service provider in their continuous monitoring procedures. • Under 19.415, we noted for 1 transaction out of 25 samples tested, FHI 360 did not perform the screening of the vendor prior to setting up the vendor in the system and executing the contract. Cause: Under 93.U02, FHI 360 performed suspension and debarment checks in prior periods and therefore relied on the “continuous monitoring” performed by its third-party service provider to monitor the suspension and debarment status. Under 19.415, FHI 360 performed suspension and debarment check after setting up the vendor in the system and executing the contract. Effect or Potential Effect: Under 93.U02, In the absence of having additional controls in place to verify and validate that the continuous monitoring performed by the third-party service provider includes all vendors and suppliers, FHI 360 could potentially contract with a vendor who is suspended or debarred and not detect the non-compliance timely. Similarly, under 19.415, FHI 360 could execute a contract with a vendor who is suspended or debarred. Questioned costs: NoneFamily Health International Schedule of Findings and Questioned Costs (continued) Year Ended September 30, 2023 2311-4384437 85 Section III – Federal Award Findings and Questioned Costs (continued) Context: FHI 360 internally performs suspension and debarment checks of its vendors and suppliers. FHI 360 also utilizes a third-party service provider to perform continuous monitoring of its vendors and suppliers for suspension and debarment and receives a daily monitoring report. Although, FHI 360 received a daily monitoring report from the service provider that showed there were no matches for vendors enrolled throughout the fiscal period, the third-party service provider does not have a SOC 1 report and there were no additional controls FHI implemented to rely on the completeness of the results provided by the third-party service provider. The total amount of procurement transactions subject to suspension and debarment screening under 19.415 for FY 2023 is $1,154,561. Total expenditures reported on the Schedule of Expenditures of Federal Awards is $4,981,200. The total amount of procurement transactions subject to suspension and debarment screening under 93.U02 for FY 2023 is $3,3319,092. Total expenditures reported on the Schedule of Expenditures of Federal Awards is $9,160,477. Identification as a Repeat Finding: This is not a repeat finding from prior year. Recommendation: We recommend FHI 360 monitor new vendor set up in the system and ensure the screening for suspension and debarment is performed prior to executing a contract with a vendor. We recommend FHI 360 implement additional validation controls, when relying on continuous monitoring for suspension and debarment checks performed by any third-party service provider.Family Health International Schedule of Findings and Questioned Costs (continued) Year Ended September 30, 2023 2311-4384437 86 Section III – Federal Award Findings and Questioned Costs (continued) Views of Responsible Officials: Management will reemphasize its established policies and procedures around the restricted party screenings’ (RPS) importance highlighting the timeliness component of when the RPS is required. Management will implement additional controls to ensure the suite of controls around its use of the third party service provider adequately minimizes any related risks. Specifically, we will periodically perform RPS via the service provider and the source databases to confirm results are the same. We will also periodically compare the complete list of active vendors within our internal vendor management systems reconciles to the list of vendors within the service provider where we are relying on continuous monitoring.
Finding 2023-002 – Procurement and Suspension and Debarment Identification of the federal program: Federal Agency: Department of Health and Human Services – Centers for Disease Control and Prevention United States Department of State Assistance Listing: 93.U02 – National Health Initiatives, Strategies and Action Plans for Infectious Diseases 19.415 – Professional and Cultural Exchange Programs – Citizen Exchanges Federal Award Identification Number: 93.U02 – HHSD2002015M88157B – 75D30120F08105 19.415 – SECAGD22CA0060 Award Year: FY 2022 – 2023 Criteria or specific requirement (including statutory, regulatory or other citation): 2 CFR Section 200.303 of the Uniform Guidance states the following regarding internal control: “The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the FederalFamily Health International Schedule of Findings and Questioned Costs (continued) Year Ended September 30, 2023 2311-4384437 84 Section III – Federal Award Findings and Questioned Costs (continued) Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Condition: During our testing of procurement and suspension and debarment compliance requirements we noted the following: • Under 93.U02, we noted for 5 transactions out of 25 tested, FHI 360 relied on the screening for suspension and debarment performed by a third-party service provider without having any additional control to validate that these specific vendors were part of the screening performed by the third-party service provider in their continuous monitoring procedures. • Under 19.415, we noted for 1 transaction out of 25 samples tested, FHI 360 did not perform the screening of the vendor prior to setting up the vendor in the system and executing the contract. Cause: Under 93.U02, FHI 360 performed suspension and debarment checks in prior periods and therefore relied on the “continuous monitoring” performed by its third-party service provider to monitor the suspension and debarment status. Under 19.415, FHI 360 performed suspension and debarment check after setting up the vendor in the system and executing the contract. Effect or Potential Effect: Under 93.U02, In the absence of having additional controls in place to verify and validate that the continuous monitoring performed by the third-party service provider includes all vendors and suppliers, FHI 360 could potentially contract with a vendor who is suspended or debarred and not detect the non-compliance timely. Similarly, under 19.415, FHI 360 could execute a contract with a vendor who is suspended or debarred. Questioned costs: NoneFamily Health International Schedule of Findings and Questioned Costs (continued) Year Ended September 30, 2023 2311-4384437 85 Section III – Federal Award Findings and Questioned Costs (continued) Context: FHI 360 internally performs suspension and debarment checks of its vendors and suppliers. FHI 360 also utilizes a third-party service provider to perform continuous monitoring of its vendors and suppliers for suspension and debarment and receives a daily monitoring report. Although, FHI 360 received a daily monitoring report from the service provider that showed there were no matches for vendors enrolled throughout the fiscal period, the third-party service provider does not have a SOC 1 report and there were no additional controls FHI implemented to rely on the completeness of the results provided by the third-party service provider. The total amount of procurement transactions subject to suspension and debarment screening under 19.415 for FY 2023 is $1,154,561. Total expenditures reported on the Schedule of Expenditures of Federal Awards is $4,981,200. The total amount of procurement transactions subject to suspension and debarment screening under 93.U02 for FY 2023 is $3,3319,092. Total expenditures reported on the Schedule of Expenditures of Federal Awards is $9,160,477. Identification as a Repeat Finding: This is not a repeat finding from prior year. Recommendation: We recommend FHI 360 monitor new vendor set up in the system and ensure the screening for suspension and debarment is performed prior to executing a contract with a vendor. We recommend FHI 360 implement additional validation controls, when relying on continuous monitoring for suspension and debarment checks performed by any third-party service provider.Family Health International Schedule of Findings and Questioned Costs (continued) Year Ended September 30, 2023 2311-4384437 86 Section III – Federal Award Findings and Questioned Costs (continued) Views of Responsible Officials: Management will reemphasize its established policies and procedures around the restricted party screenings’ (RPS) importance highlighting the timeliness component of when the RPS is required. Management will implement additional controls to ensure the suite of controls around its use of the third party service provider adequately minimizes any related risks. Specifically, we will periodically perform RPS via the service provider and the source databases to confirm results are the same. We will also periodically compare the complete list of active vendors within our internal vendor management systems reconciles to the list of vendors within the service provider where we are relying on continuous monitoring.
Finding 2023-001 – Reporting – Federal Funding Accountability and Transparency Act (FFATA) Identification of the federal program: Federal Agency: United States Agency for International Development Assistance Listing: 98.001 – USAID Foreign Assistance for Programs Overseas 98.U04 – USAID Foreign Assistance for Economic Growth Federal Award Identification Number 98.001 – 7200AA19CA00002; 72066418CA00001; 72044020CA00002; 72049218CA00008; 72060822CA00002; 72066322CA00005 98.U04 – 72026320C00005 Award Year: FY 2022 – 2023 Criteria or specific requirement (including statutory, regulatory or other citation): 2 CFR Section 200.303 of the Uniform Guidance states the following regarding internal control: “The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).”Family Health International Schedule of Findings and Questioned Costs (continued) Year Ended September 30, 2023 2311-4384437 80 Section III – Federal Award Findings and Questioned Costs (continued) As per 2 CFR Part 170, direct recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). The subaward information should be reported no later than the end of the month following the month in which the obligation was made. Condition: We noted the following matters during our testing of the Federal Funding Accountability and Transparency Act (FFATA) reporting compliance requirements: See chart/table in the schedule of findings and questioned costs Cause: A thorough review of the required data elements prior to submission of the reports did not occur consistently in FY 2023. In addition, a detailed review of all new subaward agreements and/or modifications made during FY 2023 was not performed to identify reports that should have been submitted. Effect or Potential Effect: FHI 360 did not report accurate information or did not submit the required reports for first-tier subawards of $30,000 or more causing them not to be in compliance with federal reporting requirements. Questioned Costs: NoneFamily Health International Schedule of Findings and Questioned Costs (continued) Year Ended September 30, 2023 2311-4384437 82 Section III – Federal Award Findings and Questioned Costs (continued) Context: Under the Transparency Act reporting requirements, each FFATA report includes the following key data elements: 1) Subawardee name, 2) Subawardee DUNS #, 3) Amount of Subaward, 4) Subaward Obligation/Action Date, 5) Subaward Number, 6) Subaward Project Description, 7) Subawardee Names and Compensation of Highly Compensated Officers, if thresholds are met and 8) Date of Report Submission. Testing of the FFATA reports included each of these data elements as well as verifying for timely submissions. The table presented above lists the specific data elements where errors were detected as well as any untimely or non-submission of the reports. Total federal expenditures under 98.001 and 98.U04 were $ 509,476,610 and $3,502,691, respectively, for the year ended September 30, 2023. Identification as a Repeat Finding: This is a repeat finding from prior year (2022-001). Recommendation: We recommend FHI 360 strengthen its internal controls and procedures over FFATA reporting to ensure they are both timely and accurately submitted to be in compliance with the federal reporting requirements. Views of Responsible Officials: Management will implement additional actions to enhance and strengthen previous year actions including global communications and meetings with key management teams, targeted and detailed refresher training on FFATA requirements and completion of the FSRS template via an e-module, and additional review of FFATA submissions via a centralized team to identify prospective transactions and perform a final review of data quality prior to data entry in FSRS. The additional review will focus on completeness and accuracy of submitted data and timeliness of submissions. Management notes there were prior year FFATA findings related to timeliness of submissions which EY concluded upon in May 2023, during the current fiscal period. The corrective action plan in response to the prior year findings was immediately developed and implemented. This fiscal year’s control exceptions related to timeliness were prior to the material findings being concluded upon and the corrective action plan being implemented
Finding 2023-001 – Reporting – Federal Funding Accountability and Transparency Act (FFATA) Identification of the federal program: Federal Agency: United States Agency for International Development Assistance Listing: 98.001 – USAID Foreign Assistance for Programs Overseas 98.U04 – USAID Foreign Assistance for Economic Growth Federal Award Identification Number 98.001 – 7200AA19CA00002; 72066418CA00001; 72044020CA00002; 72049218CA00008; 72060822CA00002; 72066322CA00005 98.U04 – 72026320C00005 Award Year: FY 2022 – 2023 Criteria or specific requirement (including statutory, regulatory or other citation): 2 CFR Section 200.303 of the Uniform Guidance states the following regarding internal control: “The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).”Family Health International Schedule of Findings and Questioned Costs (continued) Year Ended September 30, 2023 2311-4384437 80 Section III – Federal Award Findings and Questioned Costs (continued) As per 2 CFR Part 170, direct recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). The subaward information should be reported no later than the end of the month following the month in which the obligation was made. Condition: We noted the following matters during our testing of the Federal Funding Accountability and Transparency Act (FFATA) reporting compliance requirements: See chart/table in the schedule of findings and questioned costs Cause: A thorough review of the required data elements prior to submission of the reports did not occur consistently in FY 2023. In addition, a detailed review of all new subaward agreements and/or modifications made during FY 2023 was not performed to identify reports that should have been submitted. Effect or Potential Effect: FHI 360 did not report accurate information or did not submit the required reports for first-tier subawards of $30,000 or more causing them not to be in compliance with federal reporting requirements. Questioned Costs: NoneFamily Health International Schedule of Findings and Questioned Costs (continued) Year Ended September 30, 2023 2311-4384437 82 Section III – Federal Award Findings and Questioned Costs (continued) Context: Under the Transparency Act reporting requirements, each FFATA report includes the following key data elements: 1) Subawardee name, 2) Subawardee DUNS #, 3) Amount of Subaward, 4) Subaward Obligation/Action Date, 5) Subaward Number, 6) Subaward Project Description, 7) Subawardee Names and Compensation of Highly Compensated Officers, if thresholds are met and 8) Date of Report Submission. Testing of the FFATA reports included each of these data elements as well as verifying for timely submissions. The table presented above lists the specific data elements where errors were detected as well as any untimely or non-submission of the reports. Total federal expenditures under 98.001 and 98.U04 were $ 509,476,610 and $3,502,691, respectively, for the year ended September 30, 2023. Identification as a Repeat Finding: This is a repeat finding from prior year (2022-001). Recommendation: We recommend FHI 360 strengthen its internal controls and procedures over FFATA reporting to ensure they are both timely and accurately submitted to be in compliance with the federal reporting requirements. Views of Responsible Officials: Management will implement additional actions to enhance and strengthen previous year actions including global communications and meetings with key management teams, targeted and detailed refresher training on FFATA requirements and completion of the FSRS template via an e-module, and additional review of FFATA submissions via a centralized team to identify prospective transactions and perform a final review of data quality prior to data entry in FSRS. The additional review will focus on completeness and accuracy of submitted data and timeliness of submissions. Management notes there were prior year FFATA findings related to timeliness of submissions which EY concluded upon in May 2023, during the current fiscal period. The corrective action plan in response to the prior year findings was immediately developed and implemented. This fiscal year’s control exceptions related to timeliness were prior to the material findings being concluded upon and the corrective action plan being implemented
Finding 2023-001 – Reporting – Federal Funding Accountability and Transparency Act (FFATA) Identification of the federal program: Federal Agency: United States Agency for International Development Assistance Listing: 98.001 – USAID Foreign Assistance for Programs Overseas 98.U04 – USAID Foreign Assistance for Economic Growth Federal Award Identification Number 98.001 – 7200AA19CA00002; 72066418CA00001; 72044020CA00002; 72049218CA00008; 72060822CA00002; 72066322CA00005 98.U04 – 72026320C00005 Award Year: FY 2022 – 2023 Criteria or specific requirement (including statutory, regulatory or other citation): 2 CFR Section 200.303 of the Uniform Guidance states the following regarding internal control: “The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).”Family Health International Schedule of Findings and Questioned Costs (continued) Year Ended September 30, 2023 2311-4384437 80 Section III – Federal Award Findings and Questioned Costs (continued) As per 2 CFR Part 170, direct recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). The subaward information should be reported no later than the end of the month following the month in which the obligation was made. Condition: We noted the following matters during our testing of the Federal Funding Accountability and Transparency Act (FFATA) reporting compliance requirements: See chart/table in the schedule of findings and questioned costs Cause: A thorough review of the required data elements prior to submission of the reports did not occur consistently in FY 2023. In addition, a detailed review of all new subaward agreements and/or modifications made during FY 2023 was not performed to identify reports that should have been submitted. Effect or Potential Effect: FHI 360 did not report accurate information or did not submit the required reports for first-tier subawards of $30,000 or more causing them not to be in compliance with federal reporting requirements. Questioned Costs: NoneFamily Health International Schedule of Findings and Questioned Costs (continued) Year Ended September 30, 2023 2311-4384437 82 Section III – Federal Award Findings and Questioned Costs (continued) Context: Under the Transparency Act reporting requirements, each FFATA report includes the following key data elements: 1) Subawardee name, 2) Subawardee DUNS #, 3) Amount of Subaward, 4) Subaward Obligation/Action Date, 5) Subaward Number, 6) Subaward Project Description, 7) Subawardee Names and Compensation of Highly Compensated Officers, if thresholds are met and 8) Date of Report Submission. Testing of the FFATA reports included each of these data elements as well as verifying for timely submissions. The table presented above lists the specific data elements where errors were detected as well as any untimely or non-submission of the reports. Total federal expenditures under 98.001 and 98.U04 were $ 509,476,610 and $3,502,691, respectively, for the year ended September 30, 2023. Identification as a Repeat Finding: This is a repeat finding from prior year (2022-001). Recommendation: We recommend FHI 360 strengthen its internal controls and procedures over FFATA reporting to ensure they are both timely and accurately submitted to be in compliance with the federal reporting requirements. Views of Responsible Officials: Management will implement additional actions to enhance and strengthen previous year actions including global communications and meetings with key management teams, targeted and detailed refresher training on FFATA requirements and completion of the FSRS template via an e-module, and additional review of FFATA submissions via a centralized team to identify prospective transactions and perform a final review of data quality prior to data entry in FSRS. The additional review will focus on completeness and accuracy of submitted data and timeliness of submissions. Management notes there were prior year FFATA findings related to timeliness of submissions which EY concluded upon in May 2023, during the current fiscal period. The corrective action plan in response to the prior year findings was immediately developed and implemented. This fiscal year’s control exceptions related to timeliness were prior to the material findings being concluded upon and the corrective action plan being implemented
Finding 2023-001 – Reporting – Federal Funding Accountability and Transparency Act (FFATA) Identification of the federal program: Federal Agency: United States Agency for International Development Assistance Listing: 98.001 – USAID Foreign Assistance for Programs Overseas 98.U04 – USAID Foreign Assistance for Economic Growth Federal Award Identification Number 98.001 – 7200AA19CA00002; 72066418CA00001; 72044020CA00002; 72049218CA00008; 72060822CA00002; 72066322CA00005 98.U04 – 72026320C00005 Award Year: FY 2022 – 2023 Criteria or specific requirement (including statutory, regulatory or other citation): 2 CFR Section 200.303 of the Uniform Guidance states the following regarding internal control: “The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).”Family Health International Schedule of Findings and Questioned Costs (continued) Year Ended September 30, 2023 2311-4384437 80 Section III – Federal Award Findings and Questioned Costs (continued) As per 2 CFR Part 170, direct recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). The subaward information should be reported no later than the end of the month following the month in which the obligation was made. Condition: We noted the following matters during our testing of the Federal Funding Accountability and Transparency Act (FFATA) reporting compliance requirements: See chart/table in the schedule of findings and questioned costs Cause: A thorough review of the required data elements prior to submission of the reports did not occur consistently in FY 2023. In addition, a detailed review of all new subaward agreements and/or modifications made during FY 2023 was not performed to identify reports that should have been submitted. Effect or Potential Effect: FHI 360 did not report accurate information or did not submit the required reports for first-tier subawards of $30,000 or more causing them not to be in compliance with federal reporting requirements. Questioned Costs: NoneFamily Health International Schedule of Findings and Questioned Costs (continued) Year Ended September 30, 2023 2311-4384437 82 Section III – Federal Award Findings and Questioned Costs (continued) Context: Under the Transparency Act reporting requirements, each FFATA report includes the following key data elements: 1) Subawardee name, 2) Subawardee DUNS #, 3) Amount of Subaward, 4) Subaward Obligation/Action Date, 5) Subaward Number, 6) Subaward Project Description, 7) Subawardee Names and Compensation of Highly Compensated Officers, if thresholds are met and 8) Date of Report Submission. Testing of the FFATA reports included each of these data elements as well as verifying for timely submissions. The table presented above lists the specific data elements where errors were detected as well as any untimely or non-submission of the reports. Total federal expenditures under 98.001 and 98.U04 were $ 509,476,610 and $3,502,691, respectively, for the year ended September 30, 2023. Identification as a Repeat Finding: This is a repeat finding from prior year (2022-001). Recommendation: We recommend FHI 360 strengthen its internal controls and procedures over FFATA reporting to ensure they are both timely and accurately submitted to be in compliance with the federal reporting requirements. Views of Responsible Officials: Management will implement additional actions to enhance and strengthen previous year actions including global communications and meetings with key management teams, targeted and detailed refresher training on FFATA requirements and completion of the FSRS template via an e-module, and additional review of FFATA submissions via a centralized team to identify prospective transactions and perform a final review of data quality prior to data entry in FSRS. The additional review will focus on completeness and accuracy of submitted data and timeliness of submissions. Management notes there were prior year FFATA findings related to timeliness of submissions which EY concluded upon in May 2023, during the current fiscal period. The corrective action plan in response to the prior year findings was immediately developed and implemented. This fiscal year’s control exceptions related to timeliness were prior to the material findings being concluded upon and the corrective action plan being implemented
Finding 2023-001 – Reporting – Federal Funding Accountability and Transparency Act (FFATA) Identification of the federal program: Federal Agency: United States Agency for International Development Assistance Listing: 98.001 – USAID Foreign Assistance for Programs Overseas 98.U04 – USAID Foreign Assistance for Economic Growth Federal Award Identification Number 98.001 – 7200AA19CA00002; 72066418CA00001; 72044020CA00002; 72049218CA00008; 72060822CA00002; 72066322CA00005 98.U04 – 72026320C00005 Award Year: FY 2022 – 2023 Criteria or specific requirement (including statutory, regulatory or other citation): 2 CFR Section 200.303 of the Uniform Guidance states the following regarding internal control: “The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).”Family Health International Schedule of Findings and Questioned Costs (continued) Year Ended September 30, 2023 2311-4384437 80 Section III – Federal Award Findings and Questioned Costs (continued) As per 2 CFR Part 170, direct recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). The subaward information should be reported no later than the end of the month following the month in which the obligation was made. Condition: We noted the following matters during our testing of the Federal Funding Accountability and Transparency Act (FFATA) reporting compliance requirements: See chart/table in the schedule of findings and questioned costs Cause: A thorough review of the required data elements prior to submission of the reports did not occur consistently in FY 2023. In addition, a detailed review of all new subaward agreements and/or modifications made during FY 2023 was not performed to identify reports that should have been submitted. Effect or Potential Effect: FHI 360 did not report accurate information or did not submit the required reports for first-tier subawards of $30,000 or more causing them not to be in compliance with federal reporting requirements. Questioned Costs: NoneFamily Health International Schedule of Findings and Questioned Costs (continued) Year Ended September 30, 2023 2311-4384437 82 Section III – Federal Award Findings and Questioned Costs (continued) Context: Under the Transparency Act reporting requirements, each FFATA report includes the following key data elements: 1) Subawardee name, 2) Subawardee DUNS #, 3) Amount of Subaward, 4) Subaward Obligation/Action Date, 5) Subaward Number, 6) Subaward Project Description, 7) Subawardee Names and Compensation of Highly Compensated Officers, if thresholds are met and 8) Date of Report Submission. Testing of the FFATA reports included each of these data elements as well as verifying for timely submissions. The table presented above lists the specific data elements where errors were detected as well as any untimely or non-submission of the reports. Total federal expenditures under 98.001 and 98.U04 were $ 509,476,610 and $3,502,691, respectively, for the year ended September 30, 2023. Identification as a Repeat Finding: This is a repeat finding from prior year (2022-001). Recommendation: We recommend FHI 360 strengthen its internal controls and procedures over FFATA reporting to ensure they are both timely and accurately submitted to be in compliance with the federal reporting requirements. Views of Responsible Officials: Management will implement additional actions to enhance and strengthen previous year actions including global communications and meetings with key management teams, targeted and detailed refresher training on FFATA requirements and completion of the FSRS template via an e-module, and additional review of FFATA submissions via a centralized team to identify prospective transactions and perform a final review of data quality prior to data entry in FSRS. The additional review will focus on completeness and accuracy of submitted data and timeliness of submissions. Management notes there were prior year FFATA findings related to timeliness of submissions which EY concluded upon in May 2023, during the current fiscal period. The corrective action plan in response to the prior year findings was immediately developed and implemented. This fiscal year’s control exceptions related to timeliness were prior to the material findings being concluded upon and the corrective action plan being implemented
Finding 2023-001 – Reporting – Federal Funding Accountability and Transparency Act (FFATA) Identification of the federal program: Federal Agency: United States Agency for International Development Assistance Listing: 98.001 – USAID Foreign Assistance for Programs Overseas 98.U04 – USAID Foreign Assistance for Economic Growth Federal Award Identification Number 98.001 – 7200AA19CA00002; 72066418CA00001; 72044020CA00002; 72049218CA00008; 72060822CA00002; 72066322CA00005 98.U04 – 72026320C00005 Award Year: FY 2022 – 2023 Criteria or specific requirement (including statutory, regulatory or other citation): 2 CFR Section 200.303 of the Uniform Guidance states the following regarding internal control: “The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).”Family Health International Schedule of Findings and Questioned Costs (continued) Year Ended September 30, 2023 2311-4384437 80 Section III – Federal Award Findings and Questioned Costs (continued) As per 2 CFR Part 170, direct recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). The subaward information should be reported no later than the end of the month following the month in which the obligation was made. Condition: We noted the following matters during our testing of the Federal Funding Accountability and Transparency Act (FFATA) reporting compliance requirements: See chart/table in the schedule of findings and questioned costs Cause: A thorough review of the required data elements prior to submission of the reports did not occur consistently in FY 2023. In addition, a detailed review of all new subaward agreements and/or modifications made during FY 2023 was not performed to identify reports that should have been submitted. Effect or Potential Effect: FHI 360 did not report accurate information or did not submit the required reports for first-tier subawards of $30,000 or more causing them not to be in compliance with federal reporting requirements. Questioned Costs: NoneFamily Health International Schedule of Findings and Questioned Costs (continued) Year Ended September 30, 2023 2311-4384437 82 Section III – Federal Award Findings and Questioned Costs (continued) Context: Under the Transparency Act reporting requirements, each FFATA report includes the following key data elements: 1) Subawardee name, 2) Subawardee DUNS #, 3) Amount of Subaward, 4) Subaward Obligation/Action Date, 5) Subaward Number, 6) Subaward Project Description, 7) Subawardee Names and Compensation of Highly Compensated Officers, if thresholds are met and 8) Date of Report Submission. Testing of the FFATA reports included each of these data elements as well as verifying for timely submissions. The table presented above lists the specific data elements where errors were detected as well as any untimely or non-submission of the reports. Total federal expenditures under 98.001 and 98.U04 were $ 509,476,610 and $3,502,691, respectively, for the year ended September 30, 2023. Identification as a Repeat Finding: This is a repeat finding from prior year (2022-001). Recommendation: We recommend FHI 360 strengthen its internal controls and procedures over FFATA reporting to ensure they are both timely and accurately submitted to be in compliance with the federal reporting requirements. Views of Responsible Officials: Management will implement additional actions to enhance and strengthen previous year actions including global communications and meetings with key management teams, targeted and detailed refresher training on FFATA requirements and completion of the FSRS template via an e-module, and additional review of FFATA submissions via a centralized team to identify prospective transactions and perform a final review of data quality prior to data entry in FSRS. The additional review will focus on completeness and accuracy of submitted data and timeliness of submissions. Management notes there were prior year FFATA findings related to timeliness of submissions which EY concluded upon in May 2023, during the current fiscal period. The corrective action plan in response to the prior year findings was immediately developed and implemented. This fiscal year’s control exceptions related to timeliness were prior to the material findings being concluded upon and the corrective action plan being implemented
Criteria: Per section 3401(a) of the American Rescue Plan (ARP) Act of 2021, ARP funds shall be available for reimbursement for: (a) payroll of public transportation entities, (b) operating costs to maintain service due to lost revenue due as a result of the coronavirus public health emergency, and (c) paying administrative leave of operations or contractor personnel due to reductions of service. In addition, Title 2 CFR § 200.303 requires the recipient of federal funds establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Moreover, Title 2 CFR 200.403 (a) and (b) state that 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 2 CFR part 200, subpart E, and (b) conform to any limitations or exclusions set forth in 2 CFR part 200, subpart E or in the Federal award as to types or amount of cost items. Condition: As part of audit procedures over a sample of 25 non-payroll transactions we identified one transaction for $8,510 relating to legislative consulting services which was not an allowable activity under the grant agreement. As a result of further review of the general ledger account in which the above item was recorded, we identified 13 additional transactions for similar unallowable activities representing $581,987. We did not identify any indirect costs that were associated with these unallowable costs. Total questioned cost identified through the audit procedures performed was approximately $590,403. Total expenditures for the Federal Transit Cluster were approximately $243,258,597. Cause: Historically, grants received by METRO have generally been specific to specified projects, which allowed METRO to establish projects in advance for tracking, accumulating, and approving/monitoring costs incurred. As such, METRO’s internal controls are designed with this project-based focus in mind. In the current year METRO received this grant which allows them to seek reimbursement for certain prior year costs not already reimbursed by the Federal government. Given the broad nature of costs allowed under this grant and the ability to seek reimbursement for prior year costs, management identified costs which were included in general ledger accounts not typically subject to detailed allowability assessments in accordance with federal requirements, and as a result METRO inadvertently placed an increased reliance on the knowledge of grants department personnel to understand the nature of general ledger accounts and transactions, as well as an increased reliance on reviewers identifying unallowable costs in the summary of expenditures submitted for reimbursement. Effect: Certain of the costs incurred and submitted for reimbursement by METRO were unallowable. Auditor’s Recommendation: METRO should establish appropriate processes and controls to guide grant personnel in the aggregation of grant costs. In particular, management should focus on the processes and controls associated with grants for which predefined projects are not established in advance of incurring grant related expenditures.
Criteria: Per section 3401(a) of the American Rescue Plan (ARP) Act of 2021, ARP funds shall be available for reimbursement for: (a) payroll of public transportation entities, (b) operating costs to maintain service due to lost revenue due as a result of the coronavirus public health emergency, and (c) paying administrative leave of operations or contractor personnel due to reductions of service. In addition, Title 2 CFR § 200.303 requires the recipient of federal funds establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Moreover, Title 2 CFR 200.403 (a) and (b) state that 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 2 CFR part 200, subpart E, and (b) conform to any limitations or exclusions set forth in 2 CFR part 200, subpart E or in the Federal award as to types or amount of cost items. Condition: As part of audit procedures over a sample of 25 non-payroll transactions we identified one transaction for $8,510 relating to legislative consulting services which was not an allowable activity under the grant agreement. As a result of further review of the general ledger account in which the above item was recorded, we identified 13 additional transactions for similar unallowable activities representing $581,987. We did not identify any indirect costs that were associated with these unallowable costs. Total questioned cost identified through the audit procedures performed was approximately $590,403. Total expenditures for the Federal Transit Cluster were approximately $243,258,597. Cause: Historically, grants received by METRO have generally been specific to specified projects, which allowed METRO to establish projects in advance for tracking, accumulating, and approving/monitoring costs incurred. As such, METRO’s internal controls are designed with this project-based focus in mind. In the current year METRO received this grant which allows them to seek reimbursement for certain prior year costs not already reimbursed by the Federal government. Given the broad nature of costs allowed under this grant and the ability to seek reimbursement for prior year costs, management identified costs which were included in general ledger accounts not typically subject to detailed allowability assessments in accordance with federal requirements, and as a result METRO inadvertently placed an increased reliance on the knowledge of grants department personnel to understand the nature of general ledger accounts and transactions, as well as an increased reliance on reviewers identifying unallowable costs in the summary of expenditures submitted for reimbursement. Effect: Certain of the costs incurred and submitted for reimbursement by METRO were unallowable. Auditor’s Recommendation: METRO should establish appropriate processes and controls to guide grant personnel in the aggregation of grant costs. In particular, management should focus on the processes and controls associated with grants for which predefined projects are not established in advance of incurring grant related expenditures.
Criteria: Per section 3401(a) of the American Rescue Plan (ARP) Act of 2021, ARP funds shall be available for reimbursement for: (a) payroll of public transportation entities, (b) operating costs to maintain service due to lost revenue due as a result of the coronavirus public health emergency, and (c) paying administrative leave of operations or contractor personnel due to reductions of service. In addition, Title 2 CFR § 200.303 requires the recipient of federal funds establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Moreover, Title 2 CFR 200.403 (a) and (b) state that 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 2 CFR part 200, subpart E, and (b) conform to any limitations or exclusions set forth in 2 CFR part 200, subpart E or in the Federal award as to types or amount of cost items. Condition: As part of audit procedures over a sample of 25 non-payroll transactions we identified one transaction for $8,510 relating to legislative consulting services which was not an allowable activity under the grant agreement. As a result of further review of the general ledger account in which the above item was recorded, we identified 13 additional transactions for similar unallowable activities representing $581,987. We did not identify any indirect costs that were associated with these unallowable costs. Total questioned cost identified through the audit procedures performed was approximately $590,403. Total expenditures for the Federal Transit Cluster were approximately $243,258,597. Cause: Historically, grants received by METRO have generally been specific to specified projects, which allowed METRO to establish projects in advance for tracking, accumulating, and approving/monitoring costs incurred. As such, METRO’s internal controls are designed with this project-based focus in mind. In the current year METRO received this grant which allows them to seek reimbursement for certain prior year costs not already reimbursed by the Federal government. Given the broad nature of costs allowed under this grant and the ability to seek reimbursement for prior year costs, management identified costs which were included in general ledger accounts not typically subject to detailed allowability assessments in accordance with federal requirements, and as a result METRO inadvertently placed an increased reliance on the knowledge of grants department personnel to understand the nature of general ledger accounts and transactions, as well as an increased reliance on reviewers identifying unallowable costs in the summary of expenditures submitted for reimbursement. Effect: Certain of the costs incurred and submitted for reimbursement by METRO were unallowable. Auditor’s Recommendation: METRO should establish appropriate processes and controls to guide grant personnel in the aggregation of grant costs. In particular, management should focus on the processes and controls associated with grants for which predefined projects are not established in advance of incurring grant related expenditures.
Criteria: Per section 3401(a) of the American Rescue Plan (ARP) Act of 2021, ARP funds shall be available for reimbursement for: (a) payroll of public transportation entities, (b) operating costs to maintain service due to lost revenue due as a result of the coronavirus public health emergency, and (c) paying administrative leave of operations or contractor personnel due to reductions of service. In addition, Title 2 CFR § 200.303 requires the recipient of federal funds establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Moreover, Title 2 CFR 200.403 (a) and (b) state that 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 2 CFR part 200, subpart E, and (b) conform to any limitations or exclusions set forth in 2 CFR part 200, subpart E or in the Federal award as to types or amount of cost items. Condition: As part of audit procedures over a sample of 25 non-payroll transactions we identified one transaction for $8,510 relating to legislative consulting services which was not an allowable activity under the grant agreement. As a result of further review of the general ledger account in which the above item was recorded, we identified 13 additional transactions for similar unallowable activities representing $581,987. We did not identify any indirect costs that were associated with these unallowable costs. Total questioned cost identified through the audit procedures performed was approximately $590,403. Total expenditures for the Federal Transit Cluster were approximately $243,258,597. Cause: Historically, grants received by METRO have generally been specific to specified projects, which allowed METRO to establish projects in advance for tracking, accumulating, and approving/monitoring costs incurred. As such, METRO’s internal controls are designed with this project-based focus in mind. In the current year METRO received this grant which allows them to seek reimbursement for certain prior year costs not already reimbursed by the Federal government. Given the broad nature of costs allowed under this grant and the ability to seek reimbursement for prior year costs, management identified costs which were included in general ledger accounts not typically subject to detailed allowability assessments in accordance with federal requirements, and as a result METRO inadvertently placed an increased reliance on the knowledge of grants department personnel to understand the nature of general ledger accounts and transactions, as well as an increased reliance on reviewers identifying unallowable costs in the summary of expenditures submitted for reimbursement. Effect: Certain of the costs incurred and submitted for reimbursement by METRO were unallowable. Auditor’s Recommendation: METRO should establish appropriate processes and controls to guide grant personnel in the aggregation of grant costs. In particular, management should focus on the processes and controls associated with grants for which predefined projects are not established in advance of incurring grant related expenditures.
Item 2023‐002 Written policies, procedures, and standards of conduct COVID 19 – Coronavirus State and Local Fiscal Recovery Fund Assistance Listing Number 21.027 U.S. Department of Treasury Grant period: Year ended September 30, 2023 Questioned Costs – $0 Condition – The City does not have all of the written policies, procedures and standards of conduct required by UG. Criteria – 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.” Grantees should have written policies, procedures, and standards of conduct as required by 2 CFR 200, Subparts D & E of the Uniform Guidance. 2 CFR 200, Subparts D & E requires the non‐ Federal entity to establish and maintain written policies, procedures, and standards of conduct including internal controls over the Federal awards that provides reasonable assurance that the non‐ Federal entity is managing the Federal statutes, regulations, and the terms and conditions of the Federal award. Specific requirements relate to the following: § 200.302 Financial management § 200.305 Payment § 200.319 Competition § 200.320 Methods of procurement to be followed § 200.430 Compensation—personal services § 200.431 Compensation—fringe benefits Cause of Condition – The City has failed to prepare written policies, procedures, and standards of conduct as required by 2 CFR 200, Subparts D & E of the Uniform Guidance. Potential Effect of Condition – Lack of written policies, procedures, and standards of conduct could result in noncompliance related to federal awards. Recommendation – We recommend that the City implement the required written policies and procedures. Management’s Response – Management agrees with the finding and will implement the necessary written policies to comply with the UG. Management anticipates completion by September 30, 2024.
Item 2023‐003 Performance Reporting – Annual Project and Expenditure Report Coronavirus State and Local Fiscal Recovery Fund ALN# 21.027 U.S. Department of Treasury Grant period – Year ended September 30, 2023 Criteria – 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.” Grantees should have controls in place to ensure that required reporting requirements under the compliance supplement are satisfied. 2 CFR 200.328 requires the City to file the Annual Project and Expenditure Report under the Performance Reporting requirement of the grant. Condition – Adequate controls were not in place to ensure that annual reporting was filed in accordance with performance reporting requirements. Cause – Changes in leadership roles at the grantee led to a lack of sufficient controls over the communication of the reporting requirement to ensure the accuracy and completeness of performance reporting under the grant. Effect – Lack of notification of the reporting requirement could lead to disallowed costs. We noted that the annual report was subsequently submitted to the grantor. However, our audit disclosed no instances of unallowable costs. Questioned Costs – Not determinable. Recommendation – We recommend the strengthening of controls to ensure annual reporting required under the compliance supplement is performed in a timely manner. Management’s Response – The City will strengthen the controls in place to provide assurance that annual reporting is performed timely in accordance with program guidelines.
Finding No. 2023-004: Internal Control over Period of Performance – Significant Deficiency in Internal Control over Compliance U.S. Agency for International Development, USAID Foreign Assistant for Programs Overseas, Assistance Listing Number 98.001. Criteria As per the Code of Federal Regulations (CFR) § 200.303 Internal controls, the non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). This includes ensuring that expenses are incurred during the period of performance stated in the federal award. Context During our testing over the period of performance, we noted 3 payroll charges that were recorded to the grant after the period of performance on the grant award had ended. The Organization was able to replace the $1,824 in payroll charges with eligible consultant charges incurred during the period to support the recognition of this total. Cause This was due to a breakdown in internal control over the review and approval of charges incurred by the appropriate personnel for amounts charged against the federal award. Effect Charging expenditures incurred outside of the award period can result in refusal of these reimbursements by the federal grantor as well as the possibility of loss of grant funding for future periods. Questioned Costs None Recommendation We recommend that the Organization review and enhance its current internal control procedures over its financial close process specifically related to the period of performance around federal awards to ensure that there are procedures in place to ensure that the expenditures claimed fall within the appropriate period of the federal award and are recognized in the correct period in accordance with generally accepted accounting principles on a timely basis. Views of Responsible Officials and Planned Corrective Actions See Corrective Action Plan
Item 2023‐001 – Suspension and Debarment (Repeat) COVID-19 Coronavirus State and Local Fiscal Recovery – ALN # 21.027 U.S. Department of Treasury Federal Award Year ‐ 2021 Criteria – 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.” Non‐Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. “Covered transactions” include those procurement contracts for goods and services awarded under a nonprocurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220. All nonprocurement transactions entered into by a recipient (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR section 180.215. Condition – Adequate controls were not in place to provide for proper review of covered transactions for suspension and debarment. Covered transactions, over $25,000 paid with grant funding were not reviewed for suspension and debarment. Cause – The County lacked sufficient controls to ensure evidence of compliance with suspension and debarment. Questioned Costs – Not determinable Effect – Failure to properly verify that a potential vendor has not been suspended or debarred could result in unallowable expenditures and disallowed costs. Recommendation – We recommend that controls should be put into place to better monitor and document the compliance of vendors for suspension and debarment. Management’s Response – Management agrees with the finding. The County will implement additional controls to ensure there is evidence of review of covered transactions over $25,000 for suspension and debarment prior to payment. Deputy Clerk, Finance will be responsible for the corrective action and anticipates completion of corrective action will be taken before September 30, 2024.
Item 2023‐001 (Originally of 2022‐001) Special Tests and Provisions – Wage Rate Requirements Education Stabilization Fund (ESF) ALN# 84.425 (Repeated) U.S. Department of Education Passed through the State Department of Education Grant period – Years ended September 30, 2022 and September 30, 2023 (84.425U) (84.425D) Criteria – Grantees should have controls in place to ensure that contractors and subcontractors are notified of the requirement to pay prevailing wage rates to all laborers and mechanics employed on construction contracts in excess of $2,000 financed by federal assistance funds and to submit weekly certified payrolls for each week in which contract work is performed. 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.” 2 CFR 200.326 and 29 CFR Part 5, Labor Standards Provisions Applicable to Contracts Governing Federally Financed and Assisted Construction (DOL Regulations) require the contractor or subcontractor to submit to the nonfederal entity weekly, for each week in which any contract work is performed, a copy of the payroll and a statement of compliance (certified payrolls). Condition – Adequate controls were not in place to ensure that contractors and subcontractors were notified of the requirements to comply with the wage rate requirements and provided timely certified payrolls throughout the construction projects. Cause – A clause describing the Wage Rate Requirements was not added to the construction contracts. There was a lack of sufficient controls over the communication of this requirement to ensure the accuracy and completeness of the certified payrolls being provided to the Board. Effect – Lack of notification of the wage rate requirements to the contractors and subcontractors could lead to disallowed costs. We noted that payments to contractors did not have supporting documentation of certified payrolls. However, our audit disclosed no instances of unallowable costs. Questioned Costs – $110,029. Recommendation – We recommend the strengthening of controls to ensure the prevailing wage rate clauses are included in the contracts and that certified payrolls are received for each week in which construction work is performed. Management’s Response – The Board will strengthen the controls in place to provide assurance that proper prevailing wage rate clauses are added to construction contracts and certified payrolls are received from each week in which construction work is performed.
Item 2023‐001 (Originally of 2022‐001) Special Tests and Provisions – Wage Rate Requirements Education Stabilization Fund (ESF) ALN# 84.425 (Repeated) U.S. Department of Education Passed through the State Department of Education Grant period – Years ended September 30, 2022 and September 30, 2023 (84.425U) (84.425D) Criteria – Grantees should have controls in place to ensure that contractors and subcontractors are notified of the requirement to pay prevailing wage rates to all laborers and mechanics employed on construction contracts in excess of $2,000 financed by federal assistance funds and to submit weekly certified payrolls for each week in which contract work is performed. 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.” 2 CFR 200.326 and 29 CFR Part 5, Labor Standards Provisions Applicable to Contracts Governing Federally Financed and Assisted Construction (DOL Regulations) require the contractor or subcontractor to submit to the nonfederal entity weekly, for each week in which any contract work is performed, a copy of the payroll and a statement of compliance (certified payrolls). Condition – Adequate controls were not in place to ensure that contractors and subcontractors were notified of the requirements to comply with the wage rate requirements and provided timely certified payrolls throughout the construction projects. Cause – A clause describing the Wage Rate Requirements was not added to the construction contracts. There was a lack of sufficient controls over the communication of this requirement to ensure the accuracy and completeness of the certified payrolls being provided to the Board. Effect – Lack of notification of the wage rate requirements to the contractors and subcontractors could lead to disallowed costs. We noted that payments to contractors did not have supporting documentation of certified payrolls. However, our audit disclosed no instances of unallowable costs. Questioned Costs – $110,029. Recommendation – We recommend the strengthening of controls to ensure the prevailing wage rate clauses are included in the contracts and that certified payrolls are received for each week in which construction work is performed. Management’s Response – The Board will strengthen the controls in place to provide assurance that proper prevailing wage rate clauses are added to construction contracts and certified payrolls are received from each week in which construction work is performed.
Item 2023‐002 – Equipment and Real Property Management Education Stabilization Fund (ESF) ALN# 84.425 U.S. Department of Education Passed through the State Department of Education Grant period – Year ended September 30, 2023 (84.425U) (84.425D) Criteria – Grantees should have controls in place to ensure that all capital equipment or improvements to land, building, or equipment that were purchased with grant funds received prior approval prior to encumbrance of the expenditure. 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.” 2 CFR 200.313 and 2 CFR 200.439 requires that the following rules of allow ability must apply to equipment and other capital expenditures “Capital expenditures for special purpose equipment are allowable as direct costs, provided that items with a unit cost of $5,000 or more have the prior written approval of the Federal awarding agency or pass‐through entity.” Condition – Adequate controls were not in place to ensure that prior approval for capital expenditures for equipment acquisition or improvements to land, buildings, or equipment was obtained prior to incurring the expenditure. Cause – Certain Capital Equipment and improvements to building expenditures were not included in the approved budget to grantor. There was a lack of sufficient controls over the review of capital expenditures to ensure that they were included in the approved budget. Effect – Lack of approval over equipment and capital improvements could lead to disallowed costs. We noted that certain equipment and improvement projects were not included in approved budget for ESSER Funds. Questioned Costs – $33,716 Recommendation – We recommend the strengthening of controls to ensure that proper approval is received prior to the acquisition of improvements to land, building or equipment. Management’s Response – The Board will strengthen the controls in place to provide assurance that proper approval is obtained from grantor agency prior to the purchase of equipment and real property.
Item 2023‐002 – Equipment and Real Property Management Education Stabilization Fund (ESF) ALN# 84.425 U.S. Department of Education Passed through the State Department of Education Grant period – Year ended September 30, 2023 (84.425U) (84.425D) Criteria – Grantees should have controls in place to ensure that all capital equipment or improvements to land, building, or equipment that were purchased with grant funds received prior approval prior to encumbrance of the expenditure. 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.” 2 CFR 200.313 and 2 CFR 200.439 requires that the following rules of allow ability must apply to equipment and other capital expenditures “Capital expenditures for special purpose equipment are allowable as direct costs, provided that items with a unit cost of $5,000 or more have the prior written approval of the Federal awarding agency or pass‐through entity.” Condition – Adequate controls were not in place to ensure that prior approval for capital expenditures for equipment acquisition or improvements to land, buildings, or equipment was obtained prior to incurring the expenditure. Cause – Certain Capital Equipment and improvements to building expenditures were not included in the approved budget to grantor. There was a lack of sufficient controls over the review of capital expenditures to ensure that they were included in the approved budget. Effect – Lack of approval over equipment and capital improvements could lead to disallowed costs. We noted that certain equipment and improvement projects were not included in approved budget for ESSER Funds. Questioned Costs – $33,716 Recommendation – We recommend the strengthening of controls to ensure that proper approval is received prior to the acquisition of improvements to land, building or equipment. Management’s Response – The Board will strengthen the controls in place to provide assurance that proper approval is obtained from grantor agency prior to the purchase of equipment and real property.
Item 2023-003: Reporting [See table in report] Federal and state agencies: • 93.231, 93.479, 93.772 – U.S. Department of Health and Human Services • 435.566 – Wisconsin Department of Health Services • 445.65859 – Wisconsin Department of Workforce Development Pass-through entity: None Criteria: The Organization is required to comply with 2 CFR section 200.303 which requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provides 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: During our testing of reporting requirements, we noted that there was no documentation that reports were reviewed prior to submission to grantor. Cause: Staffing changes in the finance department. A review is performed, however this review is not documented due to the electronic filing of the reports. Due to these events, management has not documented review of the reports. Effect: Likelihood of inaccurate reporting is increased when reports are not thoroughly reviewed. Questioned costs: None Prevalence: The population of reports subject to reporting requirements included 28 reports. For 13 of the 13 reports tested, the Organization did not have documentation showing the reports were reviewed. The sample size of 13 was determined using guidance in the American Institute of Certified Public Accountants (AICPA) Audit and Accounting Guide—Government Auditing Standards and Single Audits. Our sample was not a statistical sample. Repeat finding: No Recommendation: We recommend that the Organization review their processes to ensure review of all reports required are accurately reviewed and documented. Views of responsible officials of the auditee: We agree with the above finding and our response is included in the corrective action plan.
Item 2023-003: Reporting [See table in report] Federal and state agencies: • 93.231, 93.479, 93.772 – U.S. Department of Health and Human Services • 435.566 – Wisconsin Department of Health Services • 445.65859 – Wisconsin Department of Workforce Development Pass-through entity: None Criteria: The Organization is required to comply with 2 CFR section 200.303 which requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provides 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: During our testing of reporting requirements, we noted that there was no documentation that reports were reviewed prior to submission to grantor. Cause: Staffing changes in the finance department. A review is performed, however this review is not documented due to the electronic filing of the reports. Due to these events, management has not documented review of the reports. Effect: Likelihood of inaccurate reporting is increased when reports are not thoroughly reviewed. Questioned costs: None Prevalence: The population of reports subject to reporting requirements included 28 reports. For 13 of the 13 reports tested, the Organization did not have documentation showing the reports were reviewed. The sample size of 13 was determined using guidance in the American Institute of Certified Public Accountants (AICPA) Audit and Accounting Guide—Government Auditing Standards and Single Audits. Our sample was not a statistical sample. Repeat finding: No Recommendation: We recommend that the Organization review their processes to ensure review of all reports required are accurately reviewed and documented. Views of responsible officials of the auditee: We agree with the above finding and our response is included in the corrective action plan.
Item 2023-003: Reporting [See table in report] Federal and state agencies: • 93.231, 93.479, 93.772 – U.S. Department of Health and Human Services • 435.566 – Wisconsin Department of Health Services • 445.65859 – Wisconsin Department of Workforce Development Pass-through entity: None Criteria: The Organization is required to comply with 2 CFR section 200.303 which requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provides 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: During our testing of reporting requirements, we noted that there was no documentation that reports were reviewed prior to submission to grantor. Cause: Staffing changes in the finance department. A review is performed, however this review is not documented due to the electronic filing of the reports. Due to these events, management has not documented review of the reports. Effect: Likelihood of inaccurate reporting is increased when reports are not thoroughly reviewed. Questioned costs: None Prevalence: The population of reports subject to reporting requirements included 28 reports. For 13 of the 13 reports tested, the Organization did not have documentation showing the reports were reviewed. The sample size of 13 was determined using guidance in the American Institute of Certified Public Accountants (AICPA) Audit and Accounting Guide—Government Auditing Standards and Single Audits. Our sample was not a statistical sample. Repeat finding: No Recommendation: We recommend that the Organization review their processes to ensure review of all reports required are accurately reviewed and documented. Views of responsible officials of the auditee: We agree with the above finding and our response is included in the corrective action plan.
Item 2023-003: Reporting [See table in report] Federal and state agencies: • 93.231, 93.479, 93.772 – U.S. Department of Health and Human Services • 435.566 – Wisconsin Department of Health Services • 445.65859 – Wisconsin Department of Workforce Development Pass-through entity: None Criteria: The Organization is required to comply with 2 CFR section 200.303 which requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provides 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: During our testing of reporting requirements, we noted that there was no documentation that reports were reviewed prior to submission to grantor. Cause: Staffing changes in the finance department. A review is performed, however this review is not documented due to the electronic filing of the reports. Due to these events, management has not documented review of the reports. Effect: Likelihood of inaccurate reporting is increased when reports are not thoroughly reviewed. Questioned costs: None Prevalence: The population of reports subject to reporting requirements included 28 reports. For 13 of the 13 reports tested, the Organization did not have documentation showing the reports were reviewed. The sample size of 13 was determined using guidance in the American Institute of Certified Public Accountants (AICPA) Audit and Accounting Guide—Government Auditing Standards and Single Audits. Our sample was not a statistical sample. Repeat finding: No Recommendation: We recommend that the Organization review their processes to ensure review of all reports required are accurately reviewed and documented. Views of responsible officials of the auditee: We agree with the above finding and our response is included in the corrective action plan.
Section III – Federal Award Findings and Questioned Costs Finding 2023-002: Overdrawn Federal Funding Compliance Requirement: Allowable Costs/Costs Principles and Cash Management Type: Material Noncompliance and Material Weakness over Internal Control Federal Agency: U.S. Department of Health and Human Services AL Numbers and Titles: 93.809 – National Center for Chronic Disease Prevention and Health Promotion Federal Award Number: NU58DP006510 Questioned Costs: $380,644 Repeat Finding: No Criteria: NACDD requests funds from the U.S. Department of Health and Human Services under the advance payment method. In accordance with 45 CFR 74.22, cash advances to a recipient organization shall be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the recipient organization in carrying out the purpose of the approved program or project. The timing and amount of cash advances shall be as close as is administratively feasible to the actual disbursements by the recipient organization for direct program or project costs and the proportionate share of any allowable indirect costs. According to 2 CFR §200.403 - §200.405 (Allowable Costs/Cost Principles), costs must be necessary, reasonable, and allocable to the federal award. Additionally, Section 200.303 of the Uniform Guidance indicates that the nonfederal entity 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. The Uniform Guidance also indicates that these internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” (Green Book) issued by the Comptroller General of the United States or the “Internal Control Integrated Framework,” issued by COSO. The Office of Management and Budget (OMB) has clarified that the references to the Green Book and COSO were only provided as best practices and not requirements. Condition: During our testing, we identified duplicated federal award expenditures amounting to $380,644, resulting in overdrawn federal funds by $380,644. The excess cash on hand was not returned to the funding source in a timely manner. Cause: This issue occurred due to inadequate controls over the recording of expenses and the drawdown of federal funds. 28 ASSOCIATION OF STATE AND TERRITORIAL CHRONIC DISEASE PROGRAM DIRECTORS D/B/A THE NATIONAL ASSOCIATION OF CHRONIC DISEASE DIRECTORS SCHEDULE OF FINDINGS AND QUESTIONED COSTS - Continued Section III – Federal Award Findings and Questioned Costs – continued Finding 2023-002: Overdrawn Federal Funding - continued Effect: NACDD is not in compliance with federal regulations concerning allowable costs, disbursement of federal funds and excess cash. In addition, a lack of adequate controls over allowable costs and cash management could result in a reasonable possibility that NACDD would not detect errors in the normal course of performing duties and correct them in a timely manner. Recommendation: We recommend that management conduct regular reconciliations of grant expenses to identify and correct duplicate entries promptly and review cash management practices to prevent overdraws on federal funds. Views of Responsible Officials Corrective Actions: Management agrees with this finding. Please refer to the Corrective Action Plan.