Special Tests and Provisions – Penalty for Refusal to Work Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Temporary Assistance for Needy Families (TANF) ALN: 93.558 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 2301TXTANF, 2301TXTAN3, 2201TXTANF, and 2201TXTAN3 October 1, 2022 – September 30, 2023 and October 1, 2021 – September 30, 2022 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that it 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 the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 45 CFR 261.14, if an individual refuses to engage in work required under section 407 of the Act, the State must reduce or terminate the amount of assistance payable to the family, subject to any good cause or other exceptions the State may establish. Such a reduction is governed by the provisions of § 261.16. The State must, at a minimum, reduce the amount of assistance otherwise payable to the family pro rata with respect to any period during the month in which the individual refuses to work. The State may impose a greater reduction, including terminating assistance. A State that fails to impose penalties on individuals in accordance with the provisions of section 407(e) of the Act may be subject to the State penalty specified at § 261.54. The State’s policy is to reduce benefits 100% for non_x0002_cooperation. Condition: HHSC works with the Texas Workforce Commission (TWC) to administer the CHOICES program at the Texas Local Workforce Development Boards (Workforce Boards). TWC sends sanctions initiated by the Workforce Boards to HHSC within seven calendar days of the date of non-cooperation. Subsequently, HHSC has five working days to process and apply the sanction as per policy. A sample of 40 beneficiaries who should have had their benefits reduced was selected for review, which resulted in the following: For two cases, the benefits were not reduced timely by one month, resulting in an overpayments of $654. For one case, the benefits were not reduced timely by three months, resulting in an overpayment of $1,179. Questioned costs: $1,833. Context: See “Condition.” Cause: Upon receipt of the sanctions from TWC, HHSC did not apply them within the timeline set by policy. Effect: Non-cooperating beneficiaries received TANF benefit payments they were not entitled to. Repeat finding: No Recommendation: Sanction requests should be applied timely per policy to ensure ineligible beneficiaries do not receive benefits. Views of responsible officials: HHSC concurs with the finding.
Eligibility Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Temporary Assistance for Needy Families ALN: 93.558 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 2301TXTANF, 2301TXTAN3, 2201TXTANF, 2201TXTAN3, 2101TXTANF, 2101TXTAN3 October 1, 2022 – September 30, 2023, October 1, 2021 – September 30, 2022, and October 1, 2020 – September 30, 2021 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should 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). According to United States Codes, Chapter 8 Aliens and Nationality, Chapter 14 – Restricting Welfare and Public Benefits of Aliens, §1611 Aliens who are not qualified aliens ineligible for Federal public benefits is as follows: (a) In general notwithstanding any other provision of law and except as provided in subsection (b), an alien who is not a qualified alien (as defined in section 1641 of this title) is not eligible for any Federal public benefit (as defined in subsection (c)). Condition: According to the DFPS’s Child Protective Services Handbook 2720 Responding to the Eligibility Statements CPS June 2020, IMPACT automatically makes the Emergency Assistance (EA) Eligibility Application/Determination section available when the caseworker completes the Risk Assessment tool and the risk level is ‘high’ or ‘very high.’ The caseworker completes this section, which contains three statements that each require a response of ‘YES’ in order for the child to be eligible for EA benefits. For one of 40 payments to program participants, we noted one of the three statements was answered ‘NO’ in IMPACT, which should have resulted in the determination that the child does not meet the emergency assistance eligibility criteria. However, the child and family were technically eligible for EA at closure of the investigation stage based on documentation. DFPS’s sandbox database reflects a conclusion that the child does meet the emergency assistance eligibility criteria indicating that the three statements had a response of ‘yes ‘at the time of stage closure. However, we were unable to verify a response of ‘yes’ for all three statements in IMPACT. Additionally, during our testing of 40 individual payments to program participants, we noted one participant being eligible based on the EA eligibility criteria in IMPACT. However, the child was not a U.S. citizen, qualified alien, or permanent resident and was ineligible to receive EA benefits. Questioned costs: $842.18. Context: See “Condition.” Cause: Exception related to statements in IMPACT was caused by system limitations. Exceptions related to eligibility determinations were due to management oversight. Effect: Failure to review and maintain accurate information may result in payments made to ineligible participants or overpayments to eligible participants. Repeat finding: 2022-002 Recommendation: DFPS should strengthen its internal controls and remedy system limitations to ensure accurate data is maintained in IMPACT. DFPS should also strengthen its internal controls over eligibility determinations. Views of responsible officials: DFPS acknowledges the incorrect EA Eligibility Determination was marked for question #2 in the EA Eligibility Application/Determination section in IMPACT. The caseworker marked no, but the answer should have been marked yes. Despite this system-generated discrepancy, interviews with family that were documented in the investigation report, did confirm the child was genuinely eligible for Emergency Assistance (EA). Notably, the child did not receive funding during the initial year but was later deemed eligible upon recertification a year later, without a clear understanding of the root cause for why the child was determined to be eligible at recertification. Citizenship: DFPS acknowledges the child was determined to be Emergency Assistance (EA) eligible based on (EA) eligibility criteria in IMPACT. DFPS also agrees the child was a not a US Citizen and therefore was not eligible to receive EA Benefits.
Allowable Costs/Cost Principles – Cost Allocations, Matching, Level of Effort, Earmarking (CHIP Only) Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture U.S. Department of Education Social Security Administration Federal Program Title: Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) Temporary Assistance for Needy Families (TANF) Social Services Block Grant (SSBG) Children’s Health Insurance Program (CHIP) Block Grants for Community Mental Health Services (MHBG) Block Grants for Prevention and Treatment of Substance Abuse (SABG) Medicaid Cluster Aging Cluster (nonmajor) Disability Insurance/SSI Cluster (nonmajor) Money Follows the Person Rebalancing Demonstration (nonmajor) CCDF Cluster (nonmajor) SNAP Cluster (nonmajor) Special Education-Grants for Infants and Families (nonmajor) ALN: 10.557 93.558 93.667 93.767 93.958 93.959 93.775, 93.777, 93.778 93.044, 93.045, 93.053 (nonmajor) 96.001, 96.006 (nonmajor) 93.791 (nonmajor) 93.575, 93.596, 93.489 (nonmajor) 10.551, 10.561 (nonmajor) 84.181 (nonmajor) Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: WIC 6TX700527, 6TX700507 October 1, 2020 – September 30, 2022, October 1, 2021 – September 30, 2023, October 1, 2021 – September 30, 2022, October 1, 2022 – September 30, 2023, October 1, 2022 – September 30, 2024 TANF 2301TXTANF, 2301TXTAN3, 2201TXTANF, and 2201TXTAN3 October 1, 2022 – September 30, 2023 and October 1, 2021 – September 30, 2022 SSBG 2301TXSOSR, 2201TXSOSR and 2101TXSOSR October 1, 2022 – September 30, 2024, October 1, 2021 – September 30, 2023 CHIP 2105TX5021, 2205TX5021, 2305TX3002, 2305TX5021 October 1, 2020 – September 30, 2022, October 1, 2021 – September 30, 2023, October 1, 2022 – September 30, 2024 MHBG 1B09SM087345, 6B09SM087345-01M001, 6B09SM087345-01M002, 6B09SM087345-01M003, 1B09SM087322-01,1B09SM085994-01, 6B09SM085994-01M001, 6B09SM085994-01M002, 6B09SM085994-01M003, 1B09SM083999 -01, 6B09SM083999-01M001, 1B09SM083830-01, 6B09SM083830- 01M001 October 1, 2022 – September 30, 2024, October 17, 2022 – October 16, 2024, October 1, 2021 – September 30, 2023, March 15, 2021 – March 14, 2024, March 15, 2021 – March 14, 2023, and October 1, 2020 – September 30, 2022 SABG 1B08TI085835-01,6B08TI085835-01M001, 6B08TI084673-01M001, 6B08TI084673-01M002, 1B08TI084673-01, 6B08TI083478-01 6B08TI083478- 01M002, 6B08TI083478-01M003, 6B08TI083478-01M004 October 1, 2022 – September 30, 2024, October 1, 2021 – September 30, 2023, and October 1, 2020 – September 30, 2022 Medicaid Cluster 2205TX5ADM, 2205TX5MAP, 2205TXIMPL; 2305TX5ADM, 2305TX5MAP, 2305TXIMPL October 1, 2021 – September 30, 2022, October 1, 2022 – September 30, 2023 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that it 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 the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 45 CFR Section 95.507, the State shall submit a cost allocation plan for the State agency as required below to the Director, Division of Cost Allocation (DCA), in the appropriate HHS Regional Office. The plan shall describe the procedures used to identify, measure, and allocate all costs to each of the programs operated by the State agency. The cost allocation plan shall contain the procedures used to identify, measure, and allocate all costs to each benefitting program and activity. Per 45 CFR Section 95.509, the State shall promptly amend the cost allocation plan and submit the amended plan to the Director, DCA, if any of the following events occur, including if other changes occur which make the allocation basis or procedures in the approval cost allocation plan invalid. Condition: HHSC’s approved Public Assistance Cost Allocation Plan (PACAP) expenditures and revenues are initially allocated based on an estimate of Project ID percentages. After actual base statistical data is available, expenditures are reallocated and adjustments between estimated and actual costs are made. The adjustments will result in costs claimed for each period being allocated based on actual base statistics for the same period. Data is updated either by voucher, monthly, quarterly, semi-annually, or annually, depending on the Project ID. HHSC experienced significant delays in updating factors. By the end of the fiscal year, cost allocations had been updated only through August 2022. Although there is no documented policy over when the FMAP should be updated, HHSC will allocate costs at the FMAP that is in effect at the time of the transaction and will reallocate the transactions using the FMAP in effect at the time of the reallocation. This procedure was not followed in 2023 when the costs for four of 40 sample allocations tested in the CHIP program were allocated using a rate other than the current one in effect resulting in noncompliance with matching requirements. Questioned costs: Unknown Context: See “Condition.” Cause: HHSC’s General Ledger Unit is responsible for cost allocations. At the start of fiscal year 2023, the Unit suffered a loss of more than half of its staff due to turnover. Additionally, the current Federal Medical Assistance Percentage (FMAP) rates were in a stepdown process whereby the rate changed quarterly as opposed to yearly which intensified the workload. In addition, since transformation, the number of Public Assistance Cost Allocation Plan (PACAP) methodologies (Project IDs) has increased by 243%. These methodologies have become increasingly more complex, now including over 80 dependent factors of which some comprise more than 100 fund sources each. This huge increase in both volume and complexity has greatly increased calculation labor and risk of error. Effect: Failure to update factor allocations timely can result in questioned costs. Repeat finding: 2022-010, 2021-004, 2020-016, 2019-006, 2018-005, 2017-009, and 2016-024 Recommendation: HHSC should allocate adequate resources to ensure factor allocations are performed and reallocations are updated timely in order to present accurate information. Views of responsible officials: HHSC concurs with the finding.
Reporting – FFATA Subawards Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Temporary Assistance for Needy Families Social Services Block Grant Block Grants for Community Mental Health Services Block Grants for Prevention and Treatment of Substance Abuse ALN: 93.558 93.667 93.958 93.959 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: TANF 2301TXTANF, 2301TXTAN3, 2201TXTANF, and 2201TXTAN3 October 1, 2022 – September 30, 2023 and October 1, 2021 – September 30, 2022 SSBG 2301TXSOSR, 2201TXSOSR and 2101TXSOSR October 1, 2022 – September 30, 2024, October 1, 2021 – September 30, 2023, and October 1, 2020 – September 30, 2022 MHBG 1B09SM085994-01, 6B09SM085994-01M001, 6B09SM085994-01M002, 6B09SM083999-01M001, 6B09SM083830-01M001 October 1, 2021 – September 30, 2023, March 15, 2021 – March 14, 2024, and October 1, 2020 – September 30, 2022 SABG 1B08TI085835-01,6B08TI085835-01M001, 6B08TI084673-01M001, 6B08TI084673-01M002, 1B08TI084673-01, 6B08TI083478-01M003 October 1, 2022 – September 30, 2024, October 1, 2021 – September 30, 2023, and October 1, 2020 – September 30, 2022 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that it 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 the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109- 282), as amended by Section 6202 of Public Law 110-252, recipients (i.e., 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) no later than the last day of the month following the month in which the subaward/subaward amendment obligation was made or the subcontract award/subcontract modification was made. Condition: The HHSC Federal Funds Office (FFO) is responsible for submitting all required subawards in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). A standard FFATA Reporting template has been created by the FFO that includes all required elements to be submitted. Program departments must complete and submit the template to the FFO for all federal subawards with amounts over $30,000 by the 15th of every month to be included in that month’s submission. Currently, it is the responsibility of the individual program departments to ensure that each obligating action at or over $30,000 is reported in the FFATA Reporting Template no later than the end of the next month in which the obligation was made. Due to system limitations, there is no central tracking of award obligations. Thus, HHSC was unable to provide a population of first-tier subawards of $30,000 or more that were obligated during the fiscal year and required to be submitted in FSRS. Accordingly, we were unable to select a sample and test for internal controls over compliance or compliance. Questioned costs: None. Context: See “Condition.” Cause: CAPPS-FIN, HHSC’s system of record, does not have the capability to track the date of obligation of federal awards. Effect: Failure to report all subawards $30,000 or greater in FSRS will result in noncompliance with terms of the federal grant guidelines. Repeat finding: 2022-013, 2021-007 Recommendation: HHSC should implement functionality into CAPPS-FIN to track when obligations of federal awards are made so that the agency is able to retrieve a list of all subawards by obligation date in order to monitor compliance with the Federal Funding Accountability and Transparency Act. Views of responsible officials: HHSC agrees with the finding but does not concur with the recommendation insofar as it makes a specific designation of CAPPS-Financials as the system to ensure compliance.
Subrecipient Monitoring Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Temporary Assistance for Needy Families Social Services Block Grant Block Grants for Community Mental Health Services ALN: 93.558 93.667 93.958 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: TANF 2301TXTANF, 2301TXTAN3, 2201TXTANF, and 2201TXTAN3 October 1, 2022 – September 30, 2023 and October 1, 2021 – September 30, 2022 SSBG 2301TXSOSR, 2201TXSOSR and 2101TXSOSR October 1, 2022 – September 30, 2024, October 1, 2021 – September 30, 2023, and October 1, 2020 – September 30, 2022 MHBG 1B09SM087345, 6B09SM087345-01M001, 6B09SM087345-01M002, 6B09SM087345-01M003, 1B09SM087322-01,1B09SM085994-01, 6B09SM085994-01M001, 6B09SM085994-01M002, 6B09SM085994-01M003, 1B09SM083999 -01, 6B09SM083999-01M001, 1B09SM083830-01, 6B09SM083830- 01M001 October 1, 2022 – September 30, 2024, October 17, 2022 – October 16, 2024, October 1, 2021 – September 30, 2023, March 15, 2021 – March 14, 2024, March 15, 2021 – March 14, 2023, and October 1, 2020 – September 30, 2022 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that it 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 the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR section 200.332(a), all pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes certain information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes: Subrecipient’s unique entity identifier (UEI) Federal award identification number (FAIN) Federal award date of award to the recipient by the federal agency Assistance listings number and title Indirect cost rate for the federal award (including if the de minimis rate is charged) Condition: Audit procedures included a review of a sample of subrecipient contracts for required information with the following results noted: TANF – For a sample of 17, the contracts did not include: UEI (one sample) FAIN (four samples) Federal award date (four samples) Assistance listings numbers and title (four samples) Indirect cost rate, including if the de minimis rate is charged (four samples) SSBG – For 11 of 19 samples, the contract did not include neither the FAIN nor the federal award date of award to the recipient by the federal agency. MHBG – For 7 of 8 samples, the contract did not include neither the FAIN nor the federal award date of award to the recipient by the federal agency. Questioned costs: None. Context: See “Condition.” Cause: Current internal controls in place to ensure a review of subaward agreements is taking place to verify that all required elements are included per 2 CFR 200 §200.332 are not at the correct precision level. Effect: Providing incomplete information to subrecipients may result in inaccurate reporting by the subrecipients and ultimately by HHSC. Repeat Finding: No Recommendation: We recommend management enhance existing controls around the review of all subaward agreements to ensure that all pass-through agreements include each of the required elements by 2 CFR §200.332. Views of responsible officials: Temporary Assistance for Needy Families (TANF) - HHSC concurs with the finding. Social Services Block Grants (SSBG)/ Mental Health Block Grants (MHBG) - HHSC concurs with the finding.
Special Tests and Provisions – Penalty for Refusal to Work Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Temporary Assistance for Needy Families (TANF) ALN: 93.558 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 2301TXTANF, 2301TXTAN3, 2201TXTANF, and 2201TXTAN3 October 1, 2022 – September 30, 2023 and October 1, 2021 – September 30, 2022 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that it 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 the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 45 CFR 261.14, if an individual refuses to engage in work required under section 407 of the Act, the State must reduce or terminate the amount of assistance payable to the family, subject to any good cause or other exceptions the State may establish. Such a reduction is governed by the provisions of § 261.16. The State must, at a minimum, reduce the amount of assistance otherwise payable to the family pro rata with respect to any period during the month in which the individual refuses to work. The State may impose a greater reduction, including terminating assistance. A State that fails to impose penalties on individuals in accordance with the provisions of section 407(e) of the Act may be subject to the State penalty specified at § 261.54. The State’s policy is to reduce benefits 100% for non_x0002_cooperation. Condition: HHSC works with the Texas Workforce Commission (TWC) to administer the CHOICES program at the Texas Local Workforce Development Boards (Workforce Boards). TWC sends sanctions initiated by the Workforce Boards to HHSC within seven calendar days of the date of non-cooperation. Subsequently, HHSC has five working days to process and apply the sanction as per policy. A sample of 40 beneficiaries who should have had their benefits reduced was selected for review, which resulted in the following: For two cases, the benefits were not reduced timely by one month, resulting in an overpayments of $654. For one case, the benefits were not reduced timely by three months, resulting in an overpayment of $1,179. Questioned costs: $1,833. Context: See “Condition.” Cause: Upon receipt of the sanctions from TWC, HHSC did not apply them within the timeline set by policy. Effect: Non-cooperating beneficiaries received TANF benefit payments they were not entitled to. Repeat finding: No Recommendation: Sanction requests should be applied timely per policy to ensure ineligible beneficiaries do not receive benefits. Views of responsible officials: HHSC concurs with the finding.
Eligibility Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Temporary Assistance for Needy Families ALN: 93.558 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 2301TXTANF, 2301TXTAN3, 2201TXTANF, 2201TXTAN3, 2101TXTANF, 2101TXTAN3 October 1, 2022 – September 30, 2023, October 1, 2021 – September 30, 2022, and October 1, 2020 – September 30, 2021 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should 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). According to United States Codes, Chapter 8 Aliens and Nationality, Chapter 14 – Restricting Welfare and Public Benefits of Aliens, §1611 Aliens who are not qualified aliens ineligible for Federal public benefits is as follows: (a) In general notwithstanding any other provision of law and except as provided in subsection (b), an alien who is not a qualified alien (as defined in section 1641 of this title) is not eligible for any Federal public benefit (as defined in subsection (c)). Condition: According to the DFPS’s Child Protective Services Handbook 2720 Responding to the Eligibility Statements CPS June 2020, IMPACT automatically makes the Emergency Assistance (EA) Eligibility Application/Determination section available when the caseworker completes the Risk Assessment tool and the risk level is ‘high’ or ‘very high.’ The caseworker completes this section, which contains three statements that each require a response of ‘YES’ in order for the child to be eligible for EA benefits. For one of 40 payments to program participants, we noted one of the three statements was answered ‘NO’ in IMPACT, which should have resulted in the determination that the child does not meet the emergency assistance eligibility criteria. However, the child and family were technically eligible for EA at closure of the investigation stage based on documentation. DFPS’s sandbox database reflects a conclusion that the child does meet the emergency assistance eligibility criteria indicating that the three statements had a response of ‘yes ‘at the time of stage closure. However, we were unable to verify a response of ‘yes’ for all three statements in IMPACT. Additionally, during our testing of 40 individual payments to program participants, we noted one participant being eligible based on the EA eligibility criteria in IMPACT. However, the child was not a U.S. citizen, qualified alien, or permanent resident and was ineligible to receive EA benefits. Questioned costs: $842.18. Context: See “Condition.” Cause: Exception related to statements in IMPACT was caused by system limitations. Exceptions related to eligibility determinations were due to management oversight. Effect: Failure to review and maintain accurate information may result in payments made to ineligible participants or overpayments to eligible participants. Repeat finding: 2022-002 Recommendation: DFPS should strengthen its internal controls and remedy system limitations to ensure accurate data is maintained in IMPACT. DFPS should also strengthen its internal controls over eligibility determinations. Views of responsible officials: DFPS acknowledges the incorrect EA Eligibility Determination was marked for question #2 in the EA Eligibility Application/Determination section in IMPACT. The caseworker marked no, but the answer should have been marked yes. Despite this system-generated discrepancy, interviews with family that were documented in the investigation report, did confirm the child was genuinely eligible for Emergency Assistance (EA). Notably, the child did not receive funding during the initial year but was later deemed eligible upon recertification a year later, without a clear understanding of the root cause for why the child was determined to be eligible at recertification. Citizenship: DFPS acknowledges the child was determined to be Emergency Assistance (EA) eligible based on (EA) eligibility criteria in IMPACT. DFPS also agrees the child was a not a US Citizen and therefore was not eligible to receive EA Benefits.
Allowable Costs/Cost Principles – Cost Allocations, Matching, Level of Effort, Earmarking (CHIP Only) Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture U.S. Department of Education Social Security Administration Federal Program Title: Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) Temporary Assistance for Needy Families (TANF) Social Services Block Grant (SSBG) Children’s Health Insurance Program (CHIP) Block Grants for Community Mental Health Services (MHBG) Block Grants for Prevention and Treatment of Substance Abuse (SABG) Medicaid Cluster Aging Cluster (nonmajor) Disability Insurance/SSI Cluster (nonmajor) Money Follows the Person Rebalancing Demonstration (nonmajor) CCDF Cluster (nonmajor) SNAP Cluster (nonmajor) Special Education-Grants for Infants and Families (nonmajor) ALN: 10.557 93.558 93.667 93.767 93.958 93.959 93.775, 93.777, 93.778 93.044, 93.045, 93.053 (nonmajor) 96.001, 96.006 (nonmajor) 93.791 (nonmajor) 93.575, 93.596, 93.489 (nonmajor) 10.551, 10.561 (nonmajor) 84.181 (nonmajor) Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: WIC 6TX700527, 6TX700507 October 1, 2020 – September 30, 2022, October 1, 2021 – September 30, 2023, October 1, 2021 – September 30, 2022, October 1, 2022 – September 30, 2023, October 1, 2022 – September 30, 2024 TANF 2301TXTANF, 2301TXTAN3, 2201TXTANF, and 2201TXTAN3 October 1, 2022 – September 30, 2023 and October 1, 2021 – September 30, 2022 SSBG 2301TXSOSR, 2201TXSOSR and 2101TXSOSR October 1, 2022 – September 30, 2024, October 1, 2021 – September 30, 2023 CHIP 2105TX5021, 2205TX5021, 2305TX3002, 2305TX5021 October 1, 2020 – September 30, 2022, October 1, 2021 – September 30, 2023, October 1, 2022 – September 30, 2024 MHBG 1B09SM087345, 6B09SM087345-01M001, 6B09SM087345-01M002, 6B09SM087345-01M003, 1B09SM087322-01,1B09SM085994-01, 6B09SM085994-01M001, 6B09SM085994-01M002, 6B09SM085994-01M003, 1B09SM083999 -01, 6B09SM083999-01M001, 1B09SM083830-01, 6B09SM083830- 01M001 October 1, 2022 – September 30, 2024, October 17, 2022 – October 16, 2024, October 1, 2021 – September 30, 2023, March 15, 2021 – March 14, 2024, March 15, 2021 – March 14, 2023, and October 1, 2020 – September 30, 2022 SABG 1B08TI085835-01,6B08TI085835-01M001, 6B08TI084673-01M001, 6B08TI084673-01M002, 1B08TI084673-01, 6B08TI083478-01 6B08TI083478- 01M002, 6B08TI083478-01M003, 6B08TI083478-01M004 October 1, 2022 – September 30, 2024, October 1, 2021 – September 30, 2023, and October 1, 2020 – September 30, 2022 Medicaid Cluster 2205TX5ADM, 2205TX5MAP, 2205TXIMPL; 2305TX5ADM, 2305TX5MAP, 2305TXIMPL October 1, 2021 – September 30, 2022, October 1, 2022 – September 30, 2023 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that it 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 the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 45 CFR Section 95.507, the State shall submit a cost allocation plan for the State agency as required below to the Director, Division of Cost Allocation (DCA), in the appropriate HHS Regional Office. The plan shall describe the procedures used to identify, measure, and allocate all costs to each of the programs operated by the State agency. The cost allocation plan shall contain the procedures used to identify, measure, and allocate all costs to each benefitting program and activity. Per 45 CFR Section 95.509, the State shall promptly amend the cost allocation plan and submit the amended plan to the Director, DCA, if any of the following events occur, including if other changes occur which make the allocation basis or procedures in the approval cost allocation plan invalid. Condition: HHSC’s approved Public Assistance Cost Allocation Plan (PACAP) expenditures and revenues are initially allocated based on an estimate of Project ID percentages. After actual base statistical data is available, expenditures are reallocated and adjustments between estimated and actual costs are made. The adjustments will result in costs claimed for each period being allocated based on actual base statistics for the same period. Data is updated either by voucher, monthly, quarterly, semi-annually, or annually, depending on the Project ID. HHSC experienced significant delays in updating factors. By the end of the fiscal year, cost allocations had been updated only through August 2022. Although there is no documented policy over when the FMAP should be updated, HHSC will allocate costs at the FMAP that is in effect at the time of the transaction and will reallocate the transactions using the FMAP in effect at the time of the reallocation. This procedure was not followed in 2023 when the costs for four of 40 sample allocations tested in the CHIP program were allocated using a rate other than the current one in effect resulting in noncompliance with matching requirements. Questioned costs: Unknown Context: See “Condition.” Cause: HHSC’s General Ledger Unit is responsible for cost allocations. At the start of fiscal year 2023, the Unit suffered a loss of more than half of its staff due to turnover. Additionally, the current Federal Medical Assistance Percentage (FMAP) rates were in a stepdown process whereby the rate changed quarterly as opposed to yearly which intensified the workload. In addition, since transformation, the number of Public Assistance Cost Allocation Plan (PACAP) methodologies (Project IDs) has increased by 243%. These methodologies have become increasingly more complex, now including over 80 dependent factors of which some comprise more than 100 fund sources each. This huge increase in both volume and complexity has greatly increased calculation labor and risk of error. Effect: Failure to update factor allocations timely can result in questioned costs. Repeat finding: 2022-010, 2021-004, 2020-016, 2019-006, 2018-005, 2017-009, and 2016-024 Recommendation: HHSC should allocate adequate resources to ensure factor allocations are performed and reallocations are updated timely in order to present accurate information. Views of responsible officials: HHSC concurs with the finding.
Reporting – FFATA Subawards Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Temporary Assistance for Needy Families Social Services Block Grant Block Grants for Community Mental Health Services Block Grants for Prevention and Treatment of Substance Abuse ALN: 93.558 93.667 93.958 93.959 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: TANF 2301TXTANF, 2301TXTAN3, 2201TXTANF, and 2201TXTAN3 October 1, 2022 – September 30, 2023 and October 1, 2021 – September 30, 2022 SSBG 2301TXSOSR, 2201TXSOSR and 2101TXSOSR October 1, 2022 – September 30, 2024, October 1, 2021 – September 30, 2023, and October 1, 2020 – September 30, 2022 MHBG 1B09SM085994-01, 6B09SM085994-01M001, 6B09SM085994-01M002, 6B09SM083999-01M001, 6B09SM083830-01M001 October 1, 2021 – September 30, 2023, March 15, 2021 – March 14, 2024, and October 1, 2020 – September 30, 2022 SABG 1B08TI085835-01,6B08TI085835-01M001, 6B08TI084673-01M001, 6B08TI084673-01M002, 1B08TI084673-01, 6B08TI083478-01M003 October 1, 2022 – September 30, 2024, October 1, 2021 – September 30, 2023, and October 1, 2020 – September 30, 2022 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that it 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 the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109- 282), as amended by Section 6202 of Public Law 110-252, recipients (i.e., 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) no later than the last day of the month following the month in which the subaward/subaward amendment obligation was made or the subcontract award/subcontract modification was made. Condition: The HHSC Federal Funds Office (FFO) is responsible for submitting all required subawards in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). A standard FFATA Reporting template has been created by the FFO that includes all required elements to be submitted. Program departments must complete and submit the template to the FFO for all federal subawards with amounts over $30,000 by the 15th of every month to be included in that month’s submission. Currently, it is the responsibility of the individual program departments to ensure that each obligating action at or over $30,000 is reported in the FFATA Reporting Template no later than the end of the next month in which the obligation was made. Due to system limitations, there is no central tracking of award obligations. Thus, HHSC was unable to provide a population of first-tier subawards of $30,000 or more that were obligated during the fiscal year and required to be submitted in FSRS. Accordingly, we were unable to select a sample and test for internal controls over compliance or compliance. Questioned costs: None. Context: See “Condition.” Cause: CAPPS-FIN, HHSC’s system of record, does not have the capability to track the date of obligation of federal awards. Effect: Failure to report all subawards $30,000 or greater in FSRS will result in noncompliance with terms of the federal grant guidelines. Repeat finding: 2022-013, 2021-007 Recommendation: HHSC should implement functionality into CAPPS-FIN to track when obligations of federal awards are made so that the agency is able to retrieve a list of all subawards by obligation date in order to monitor compliance with the Federal Funding Accountability and Transparency Act. Views of responsible officials: HHSC agrees with the finding but does not concur with the recommendation insofar as it makes a specific designation of CAPPS-Financials as the system to ensure compliance.
Subrecipient Monitoring Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Temporary Assistance for Needy Families Social Services Block Grant Block Grants for Community Mental Health Services ALN: 93.558 93.667 93.958 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: TANF 2301TXTANF, 2301TXTAN3, 2201TXTANF, and 2201TXTAN3 October 1, 2022 – September 30, 2023 and October 1, 2021 – September 30, 2022 SSBG 2301TXSOSR, 2201TXSOSR and 2101TXSOSR October 1, 2022 – September 30, 2024, October 1, 2021 – September 30, 2023, and October 1, 2020 – September 30, 2022 MHBG 1B09SM087345, 6B09SM087345-01M001, 6B09SM087345-01M002, 6B09SM087345-01M003, 1B09SM087322-01,1B09SM085994-01, 6B09SM085994-01M001, 6B09SM085994-01M002, 6B09SM085994-01M003, 1B09SM083999 -01, 6B09SM083999-01M001, 1B09SM083830-01, 6B09SM083830- 01M001 October 1, 2022 – September 30, 2024, October 17, 2022 – October 16, 2024, October 1, 2021 – September 30, 2023, March 15, 2021 – March 14, 2024, March 15, 2021 – March 14, 2023, and October 1, 2020 – September 30, 2022 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that it 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 the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR section 200.332(a), all pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes certain information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes: Subrecipient’s unique entity identifier (UEI) Federal award identification number (FAIN) Federal award date of award to the recipient by the federal agency Assistance listings number and title Indirect cost rate for the federal award (including if the de minimis rate is charged) Condition: Audit procedures included a review of a sample of subrecipient contracts for required information with the following results noted: TANF – For a sample of 17, the contracts did not include: UEI (one sample) FAIN (four samples) Federal award date (four samples) Assistance listings numbers and title (four samples) Indirect cost rate, including if the de minimis rate is charged (four samples) SSBG – For 11 of 19 samples, the contract did not include neither the FAIN nor the federal award date of award to the recipient by the federal agency. MHBG – For 7 of 8 samples, the contract did not include neither the FAIN nor the federal award date of award to the recipient by the federal agency. Questioned costs: None. Context: See “Condition.” Cause: Current internal controls in place to ensure a review of subaward agreements is taking place to verify that all required elements are included per 2 CFR 200 §200.332 are not at the correct precision level. Effect: Providing incomplete information to subrecipients may result in inaccurate reporting by the subrecipients and ultimately by HHSC. Repeat Finding: No Recommendation: We recommend management enhance existing controls around the review of all subaward agreements to ensure that all pass-through agreements include each of the required elements by 2 CFR §200.332. Views of responsible officials: Temporary Assistance for Needy Families (TANF) - HHSC concurs with the finding. Social Services Block Grants (SSBG)/ Mental Health Block Grants (MHBG) - HHSC concurs with the finding.
Special Tests and Provisions – Penalty for Refusal to Work Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Temporary Assistance for Needy Families (TANF) ALN: 93.558 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 2301TXTANF, 2301TXTAN3, 2201TXTANF, and 2201TXTAN3 October 1, 2022 – September 30, 2023 and October 1, 2021 – September 30, 2022 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that it 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 the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 45 CFR 261.14, if an individual refuses to engage in work required under section 407 of the Act, the State must reduce or terminate the amount of assistance payable to the family, subject to any good cause or other exceptions the State may establish. Such a reduction is governed by the provisions of § 261.16. The State must, at a minimum, reduce the amount of assistance otherwise payable to the family pro rata with respect to any period during the month in which the individual refuses to work. The State may impose a greater reduction, including terminating assistance. A State that fails to impose penalties on individuals in accordance with the provisions of section 407(e) of the Act may be subject to the State penalty specified at § 261.54. The State’s policy is to reduce benefits 100% for non_x0002_cooperation. Condition: HHSC works with the Texas Workforce Commission (TWC) to administer the CHOICES program at the Texas Local Workforce Development Boards (Workforce Boards). TWC sends sanctions initiated by the Workforce Boards to HHSC within seven calendar days of the date of non-cooperation. Subsequently, HHSC has five working days to process and apply the sanction as per policy. A sample of 40 beneficiaries who should have had their benefits reduced was selected for review, which resulted in the following: For two cases, the benefits were not reduced timely by one month, resulting in an overpayments of $654. For one case, the benefits were not reduced timely by three months, resulting in an overpayment of $1,179. Questioned costs: $1,833. Context: See “Condition.” Cause: Upon receipt of the sanctions from TWC, HHSC did not apply them within the timeline set by policy. Effect: Non-cooperating beneficiaries received TANF benefit payments they were not entitled to. Repeat finding: No Recommendation: Sanction requests should be applied timely per policy to ensure ineligible beneficiaries do not receive benefits. Views of responsible officials: HHSC concurs with the finding.
Allowable Costs/Cost Principles – Cost Allocations, Matching, Level of Effort, Earmarking (CHIP Only) Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture U.S. Department of Education Social Security Administration Federal Program Title: Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) Temporary Assistance for Needy Families (TANF) Social Services Block Grant (SSBG) Children’s Health Insurance Program (CHIP) Block Grants for Community Mental Health Services (MHBG) Block Grants for Prevention and Treatment of Substance Abuse (SABG) Medicaid Cluster Aging Cluster (nonmajor) Disability Insurance/SSI Cluster (nonmajor) Money Follows the Person Rebalancing Demonstration (nonmajor) CCDF Cluster (nonmajor) SNAP Cluster (nonmajor) Special Education-Grants for Infants and Families (nonmajor) ALN: 10.557 93.558 93.667 93.767 93.958 93.959 93.775, 93.777, 93.778 93.044, 93.045, 93.053 (nonmajor) 96.001, 96.006 (nonmajor) 93.791 (nonmajor) 93.575, 93.596, 93.489 (nonmajor) 10.551, 10.561 (nonmajor) 84.181 (nonmajor) Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: WIC 6TX700527, 6TX700507 October 1, 2020 – September 30, 2022, October 1, 2021 – September 30, 2023, October 1, 2021 – September 30, 2022, October 1, 2022 – September 30, 2023, October 1, 2022 – September 30, 2024 TANF 2301TXTANF, 2301TXTAN3, 2201TXTANF, and 2201TXTAN3 October 1, 2022 – September 30, 2023 and October 1, 2021 – September 30, 2022 SSBG 2301TXSOSR, 2201TXSOSR and 2101TXSOSR October 1, 2022 – September 30, 2024, October 1, 2021 – September 30, 2023 CHIP 2105TX5021, 2205TX5021, 2305TX3002, 2305TX5021 October 1, 2020 – September 30, 2022, October 1, 2021 – September 30, 2023, October 1, 2022 – September 30, 2024 MHBG 1B09SM087345, 6B09SM087345-01M001, 6B09SM087345-01M002, 6B09SM087345-01M003, 1B09SM087322-01,1B09SM085994-01, 6B09SM085994-01M001, 6B09SM085994-01M002, 6B09SM085994-01M003, 1B09SM083999 -01, 6B09SM083999-01M001, 1B09SM083830-01, 6B09SM083830- 01M001 October 1, 2022 – September 30, 2024, October 17, 2022 – October 16, 2024, October 1, 2021 – September 30, 2023, March 15, 2021 – March 14, 2024, March 15, 2021 – March 14, 2023, and October 1, 2020 – September 30, 2022 SABG 1B08TI085835-01,6B08TI085835-01M001, 6B08TI084673-01M001, 6B08TI084673-01M002, 1B08TI084673-01, 6B08TI083478-01 6B08TI083478- 01M002, 6B08TI083478-01M003, 6B08TI083478-01M004 October 1, 2022 – September 30, 2024, October 1, 2021 – September 30, 2023, and October 1, 2020 – September 30, 2022 Medicaid Cluster 2205TX5ADM, 2205TX5MAP, 2205TXIMPL; 2305TX5ADM, 2305TX5MAP, 2305TXIMPL October 1, 2021 – September 30, 2022, October 1, 2022 – September 30, 2023 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that it 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 the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 45 CFR Section 95.507, the State shall submit a cost allocation plan for the State agency as required below to the Director, Division of Cost Allocation (DCA), in the appropriate HHS Regional Office. The plan shall describe the procedures used to identify, measure, and allocate all costs to each of the programs operated by the State agency. The cost allocation plan shall contain the procedures used to identify, measure, and allocate all costs to each benefitting program and activity. Per 45 CFR Section 95.509, the State shall promptly amend the cost allocation plan and submit the amended plan to the Director, DCA, if any of the following events occur, including if other changes occur which make the allocation basis or procedures in the approval cost allocation plan invalid. Condition: HHSC’s approved Public Assistance Cost Allocation Plan (PACAP) expenditures and revenues are initially allocated based on an estimate of Project ID percentages. After actual base statistical data is available, expenditures are reallocated and adjustments between estimated and actual costs are made. The adjustments will result in costs claimed for each period being allocated based on actual base statistics for the same period. Data is updated either by voucher, monthly, quarterly, semi-annually, or annually, depending on the Project ID. HHSC experienced significant delays in updating factors. By the end of the fiscal year, cost allocations had been updated only through August 2022. Although there is no documented policy over when the FMAP should be updated, HHSC will allocate costs at the FMAP that is in effect at the time of the transaction and will reallocate the transactions using the FMAP in effect at the time of the reallocation. This procedure was not followed in 2023 when the costs for four of 40 sample allocations tested in the CHIP program were allocated using a rate other than the current one in effect resulting in noncompliance with matching requirements. Questioned costs: Unknown Context: See “Condition.” Cause: HHSC’s General Ledger Unit is responsible for cost allocations. At the start of fiscal year 2023, the Unit suffered a loss of more than half of its staff due to turnover. Additionally, the current Federal Medical Assistance Percentage (FMAP) rates were in a stepdown process whereby the rate changed quarterly as opposed to yearly which intensified the workload. In addition, since transformation, the number of Public Assistance Cost Allocation Plan (PACAP) methodologies (Project IDs) has increased by 243%. These methodologies have become increasingly more complex, now including over 80 dependent factors of which some comprise more than 100 fund sources each. This huge increase in both volume and complexity has greatly increased calculation labor and risk of error. Effect: Failure to update factor allocations timely can result in questioned costs. Repeat finding: 2022-010, 2021-004, 2020-016, 2019-006, 2018-005, 2017-009, and 2016-024 Recommendation: HHSC should allocate adequate resources to ensure factor allocations are performed and reallocations are updated timely in order to present accurate information. Views of responsible officials: HHSC concurs with the finding.
Reporting – FFATA Subawards Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Temporary Assistance for Needy Families Social Services Block Grant Block Grants for Community Mental Health Services Block Grants for Prevention and Treatment of Substance Abuse ALN: 93.558 93.667 93.958 93.959 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: TANF 2301TXTANF, 2301TXTAN3, 2201TXTANF, and 2201TXTAN3 October 1, 2022 – September 30, 2023 and October 1, 2021 – September 30, 2022 SSBG 2301TXSOSR, 2201TXSOSR and 2101TXSOSR October 1, 2022 – September 30, 2024, October 1, 2021 – September 30, 2023, and October 1, 2020 – September 30, 2022 MHBG 1B09SM085994-01, 6B09SM085994-01M001, 6B09SM085994-01M002, 6B09SM083999-01M001, 6B09SM083830-01M001 October 1, 2021 – September 30, 2023, March 15, 2021 – March 14, 2024, and October 1, 2020 – September 30, 2022 SABG 1B08TI085835-01,6B08TI085835-01M001, 6B08TI084673-01M001, 6B08TI084673-01M002, 1B08TI084673-01, 6B08TI083478-01M003 October 1, 2022 – September 30, 2024, October 1, 2021 – September 30, 2023, and October 1, 2020 – September 30, 2022 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that it 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 the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109- 282), as amended by Section 6202 of Public Law 110-252, recipients (i.e., 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) no later than the last day of the month following the month in which the subaward/subaward amendment obligation was made or the subcontract award/subcontract modification was made. Condition: The HHSC Federal Funds Office (FFO) is responsible for submitting all required subawards in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). A standard FFATA Reporting template has been created by the FFO that includes all required elements to be submitted. Program departments must complete and submit the template to the FFO for all federal subawards with amounts over $30,000 by the 15th of every month to be included in that month’s submission. Currently, it is the responsibility of the individual program departments to ensure that each obligating action at or over $30,000 is reported in the FFATA Reporting Template no later than the end of the next month in which the obligation was made. Due to system limitations, there is no central tracking of award obligations. Thus, HHSC was unable to provide a population of first-tier subawards of $30,000 or more that were obligated during the fiscal year and required to be submitted in FSRS. Accordingly, we were unable to select a sample and test for internal controls over compliance or compliance. Questioned costs: None. Context: See “Condition.” Cause: CAPPS-FIN, HHSC’s system of record, does not have the capability to track the date of obligation of federal awards. Effect: Failure to report all subawards $30,000 or greater in FSRS will result in noncompliance with terms of the federal grant guidelines. Repeat finding: 2022-013, 2021-007 Recommendation: HHSC should implement functionality into CAPPS-FIN to track when obligations of federal awards are made so that the agency is able to retrieve a list of all subawards by obligation date in order to monitor compliance with the Federal Funding Accountability and Transparency Act. Views of responsible officials: HHSC agrees with the finding but does not concur with the recommendation insofar as it makes a specific designation of CAPPS-Financials as the system to ensure compliance.
Subrecipient Monitoring Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Temporary Assistance for Needy Families Social Services Block Grant Block Grants for Community Mental Health Services ALN: 93.558 93.667 93.958 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: TANF 2301TXTANF, 2301TXTAN3, 2201TXTANF, and 2201TXTAN3 October 1, 2022 – September 30, 2023 and October 1, 2021 – September 30, 2022 SSBG 2301TXSOSR, 2201TXSOSR and 2101TXSOSR October 1, 2022 – September 30, 2024, October 1, 2021 – September 30, 2023, and October 1, 2020 – September 30, 2022 MHBG 1B09SM087345, 6B09SM087345-01M001, 6B09SM087345-01M002, 6B09SM087345-01M003, 1B09SM087322-01,1B09SM085994-01, 6B09SM085994-01M001, 6B09SM085994-01M002, 6B09SM085994-01M003, 1B09SM083999 -01, 6B09SM083999-01M001, 1B09SM083830-01, 6B09SM083830- 01M001 October 1, 2022 – September 30, 2024, October 17, 2022 – October 16, 2024, October 1, 2021 – September 30, 2023, March 15, 2021 – March 14, 2024, March 15, 2021 – March 14, 2023, and October 1, 2020 – September 30, 2022 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that it 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 the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR section 200.332(a), all pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes certain information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes: Subrecipient’s unique entity identifier (UEI) Federal award identification number (FAIN) Federal award date of award to the recipient by the federal agency Assistance listings number and title Indirect cost rate for the federal award (including if the de minimis rate is charged) Condition: Audit procedures included a review of a sample of subrecipient contracts for required information with the following results noted: TANF – For a sample of 17, the contracts did not include: UEI (one sample) FAIN (four samples) Federal award date (four samples) Assistance listings numbers and title (four samples) Indirect cost rate, including if the de minimis rate is charged (four samples) SSBG – For 11 of 19 samples, the contract did not include neither the FAIN nor the federal award date of award to the recipient by the federal agency. MHBG – For 7 of 8 samples, the contract did not include neither the FAIN nor the federal award date of award to the recipient by the federal agency. Questioned costs: None. Context: See “Condition.” Cause: Current internal controls in place to ensure a review of subaward agreements is taking place to verify that all required elements are included per 2 CFR 200 §200.332 are not at the correct precision level. Effect: Providing incomplete information to subrecipients may result in inaccurate reporting by the subrecipients and ultimately by HHSC. Repeat Finding: No Recommendation: We recommend management enhance existing controls around the review of all subaward agreements to ensure that all pass-through agreements include each of the required elements by 2 CFR §200.332. Views of responsible officials: Temporary Assistance for Needy Families (TANF) - HHSC concurs with the finding. Social Services Block Grants (SSBG)/ Mental Health Block Grants (MHBG) - HHSC concurs with the finding.
Reporting Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Social Services Block Grant ALN: 93.667 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 2301TXSOSR, 2201TXSOSR and 2101TXSOSR October 1, 2022 – September 30, 2024, October 1, 2021 – September 30, 2023 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that it 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 the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR 200.334, 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_x0002_through entity in the case of a subrecipient. Federal awarding agencies and pass-through entities must not impose any other record retention requirements upon non-Federal entities. Title 42 USC 1397e requires states and territories to submit to the federal administering agency, the Office of Community Services, an annual Post Expenditure Report no later than six months following the close of the fiscal year. The report includes certain critical key line information including: 1. The number of eligible individuals who received services paid for in part or in whole with federal funds under the SSBG. 2. The amount of Social Services Block Grant funds spent in providing each service. Condition: During testing of key line items noted above in the FY2022 Annual Post Expenditure Report submitted in March 2023, we noted the following variances between the amounts reported and supporting documentation: Key Line Item 1 Children Family Planning Services – variance of 1,796 Prevention and Intervention – variance of 9,866 Protective Services – Children – variance of 13,511 Adults Age 59 Years and Younger Family Planning Services – variance of 107,476 Prevention and Intervention – variance of 19,398 Protective Services – Adults – variance of 21,973 Other Services – variance of 10,733 Adults Age 60 Years and Older Family Planning Services – variance of 4,549 Prevention and Intervention – variance of 868 Protective Services – Adults – variance of 71,969 Other Services – variance of 14,408 Adults of Unknown Age Prevention and Intervention – variance of 151 Key Line Item 2 SSBG Allocation Foster Care Services – Children – variance of ($77,124) Information & Referral – variance of $2,116 Protective Services – Adults – variance of ($59,467) Protective Services – Children – variance of ($114,243) Funds Transferred into SSBG Protective Services – Children – variance of ($6,948,063) Expenditures of All Other Federal, State, and Local Funds Family Planning Services – variance of $172,504,171 Foster Care Services – Children – variance of $674,230,152 Information & Referral – variance of $35,508,405 Protective Services – Adults – variance of $67,694,139 Protective Services – Children – variance of $1,145,408,512 Other Services – $171,788,478 Questioned costs: None. Context: See “Condition.” Cause: Current internal controls are not at the correct precision level to ensure the completeness and accuracy of the report. Additionally, HHSC did not follow current policies and procedures regarding record retention. More specifically, all variances listed for key line item 1 were due to lack of supporting documentation except for the Protective Services – Children variance of 13,511, which was the difference between amounts reported and supporting documentation provided. All variances for key line item 2 were due to lack of supporting documentation except the four amounts listed under SSBG Allocation, which are a result difference between amounts reported and supporting documentation provided. Effect: Improperly designed internal controls over reporting may result in a misstatement of amounts reported on federal reports. In addition, failure to maintain adequate documentation pertinent to a federal award may result in noncompliance with grant terms and conditions. Repeat Finding: No Recommendation: We recommend management revise its internal controls to reconcile expenditures reported on federal reports to federal expenditures in the general ledger. Additionally, HHSC should implement or revise policies and procedures to ensure documentation is maintained for a period of at least three years from the date of submission of the final expenditure report for the grant in accordance with 2 CFR 200.334. Views of responsible officials: HHSC concurs with the finding.
Allowable Costs/Cost Principles – Cost Allocations, Matching, Level of Effort, Earmarking (CHIP Only) Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture U.S. Department of Education Social Security Administration Federal Program Title: Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) Temporary Assistance for Needy Families (TANF) Social Services Block Grant (SSBG) Children’s Health Insurance Program (CHIP) Block Grants for Community Mental Health Services (MHBG) Block Grants for Prevention and Treatment of Substance Abuse (SABG) Medicaid Cluster Aging Cluster (nonmajor) Disability Insurance/SSI Cluster (nonmajor) Money Follows the Person Rebalancing Demonstration (nonmajor) CCDF Cluster (nonmajor) SNAP Cluster (nonmajor) Special Education-Grants for Infants and Families (nonmajor) ALN: 10.557 93.558 93.667 93.767 93.958 93.959 93.775, 93.777, 93.778 93.044, 93.045, 93.053 (nonmajor) 96.001, 96.006 (nonmajor) 93.791 (nonmajor) 93.575, 93.596, 93.489 (nonmajor) 10.551, 10.561 (nonmajor) 84.181 (nonmajor) Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: WIC 6TX700527, 6TX700507 October 1, 2020 – September 30, 2022, October 1, 2021 – September 30, 2023, October 1, 2021 – September 30, 2022, October 1, 2022 – September 30, 2023, October 1, 2022 – September 30, 2024 TANF 2301TXTANF, 2301TXTAN3, 2201TXTANF, and 2201TXTAN3 October 1, 2022 – September 30, 2023 and October 1, 2021 – September 30, 2022 SSBG 2301TXSOSR, 2201TXSOSR and 2101TXSOSR October 1, 2022 – September 30, 2024, October 1, 2021 – September 30, 2023 CHIP 2105TX5021, 2205TX5021, 2305TX3002, 2305TX5021 October 1, 2020 – September 30, 2022, October 1, 2021 – September 30, 2023, October 1, 2022 – September 30, 2024 MHBG 1B09SM087345, 6B09SM087345-01M001, 6B09SM087345-01M002, 6B09SM087345-01M003, 1B09SM087322-01,1B09SM085994-01, 6B09SM085994-01M001, 6B09SM085994-01M002, 6B09SM085994-01M003, 1B09SM083999 -01, 6B09SM083999-01M001, 1B09SM083830-01, 6B09SM083830- 01M001 October 1, 2022 – September 30, 2024, October 17, 2022 – October 16, 2024, October 1, 2021 – September 30, 2023, March 15, 2021 – March 14, 2024, March 15, 2021 – March 14, 2023, and October 1, 2020 – September 30, 2022 SABG 1B08TI085835-01,6B08TI085835-01M001, 6B08TI084673-01M001, 6B08TI084673-01M002, 1B08TI084673-01, 6B08TI083478-01 6B08TI083478- 01M002, 6B08TI083478-01M003, 6B08TI083478-01M004 October 1, 2022 – September 30, 2024, October 1, 2021 – September 30, 2023, and October 1, 2020 – September 30, 2022 Medicaid Cluster 2205TX5ADM, 2205TX5MAP, 2205TXIMPL; 2305TX5ADM, 2305TX5MAP, 2305TXIMPL October 1, 2021 – September 30, 2022, October 1, 2022 – September 30, 2023 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that it 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 the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 45 CFR Section 95.507, the State shall submit a cost allocation plan for the State agency as required below to the Director, Division of Cost Allocation (DCA), in the appropriate HHS Regional Office. The plan shall describe the procedures used to identify, measure, and allocate all costs to each of the programs operated by the State agency. The cost allocation plan shall contain the procedures used to identify, measure, and allocate all costs to each benefitting program and activity. Per 45 CFR Section 95.509, the State shall promptly amend the cost allocation plan and submit the amended plan to the Director, DCA, if any of the following events occur, including if other changes occur which make the allocation basis or procedures in the approval cost allocation plan invalid. Condition: HHSC’s approved Public Assistance Cost Allocation Plan (PACAP) expenditures and revenues are initially allocated based on an estimate of Project ID percentages. After actual base statistical data is available, expenditures are reallocated and adjustments between estimated and actual costs are made. The adjustments will result in costs claimed for each period being allocated based on actual base statistics for the same period. Data is updated either by voucher, monthly, quarterly, semi-annually, or annually, depending on the Project ID. HHSC experienced significant delays in updating factors. By the end of the fiscal year, cost allocations had been updated only through August 2022. Although there is no documented policy over when the FMAP should be updated, HHSC will allocate costs at the FMAP that is in effect at the time of the transaction and will reallocate the transactions using the FMAP in effect at the time of the reallocation. This procedure was not followed in 2023 when the costs for four of 40 sample allocations tested in the CHIP program were allocated using a rate other than the current one in effect resulting in noncompliance with matching requirements. Questioned costs: Unknown Context: See “Condition.” Cause: HHSC’s General Ledger Unit is responsible for cost allocations. At the start of fiscal year 2023, the Unit suffered a loss of more than half of its staff due to turnover. Additionally, the current Federal Medical Assistance Percentage (FMAP) rates were in a stepdown process whereby the rate changed quarterly as opposed to yearly which intensified the workload. In addition, since transformation, the number of Public Assistance Cost Allocation Plan (PACAP) methodologies (Project IDs) has increased by 243%. These methodologies have become increasingly more complex, now including over 80 dependent factors of which some comprise more than 100 fund sources each. This huge increase in both volume and complexity has greatly increased calculation labor and risk of error. Effect: Failure to update factor allocations timely can result in questioned costs. Repeat finding: 2022-010, 2021-004, 2020-016, 2019-006, 2018-005, 2017-009, and 2016-024 Recommendation: HHSC should allocate adequate resources to ensure factor allocations are performed and reallocations are updated timely in order to present accurate information. Views of responsible officials: HHSC concurs with the finding.
Eligibility Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Children’s Health Insurance Program (CHIP) ALN: 93.767 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 2105TX5021, 2205TX5021, 2305TX3002, 2305TX5021 October 1, 2020 – September 30, 2022, October 1, 2021 – September 30, 2023, October 1, 2022 – September 30, 2024 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that it 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 the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 42 CFR 435.912(c)(3), the determination of eligibility for any applicant may not exceed (except in unusual circumstances such as an administrative or other emergency beyond the agency’s control): Ninety days for applicants who apply for Medicaid on the basis of disability; and Forty-five days for all other applicants. Condition: Audit procedures included a review of 40 CHIP eligibility applications submitted by fiscal year 2023 for benefit recipients to determine whether the eligibility determination was made within 45 days. Of the 40 applications, we identified eight applications for which the eligibility determination was not made within 45 days. The eligibility determinations of these eight applications were made within 46-75 days of the submission date and did not have an administrative or other emergency circumstance. Questioned costs: None. Context: See “Condition.” Cause: Current policies and procedures surrounding the timely processing of benefit applications are not being properly implemented. Effect: Failure to process CHIP applications in a timely manner may lead to recipients not receiving benefits timely and noncompliance with grant award terms and conditions. Repeat finding: No Recommendation: HHSC should enforce existing application processing procedures to ensure all applications are reviewed and an eligibility determination is made within the required timeline. Views of responsible officials: HHSC concurs with the finding.
Special Tests and Provisions – Provider Eligibility – Lack of Documentation Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Children’s Health Insurance Program ALN: 93.767 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 2105TX5021, 2205TX5021, 2305TX3002, 2305TX5021 October 1, 2020 – September 30, 2022, October 1, 2021 – September 30, 2023, October 1, 2022 – September 30, 2024 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance. Criteria or specific requirement: Per 2 CFR 200.303, a non-Federal entity must: Establish and maintain effective internal controls over federal awards that provide reasonable assurance they are managing federal awards in compliance with federal statutes, regulations, and the provisions of contracts or grant agreements that could have a material effect on each of its federal programs. Per 2 CFR 200.334, 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. Federal awarding agencies and pass-through entities must not impose any other record retention requirements upon non-Federal entities. In order to comply with federal provider eligibility requirements, HHSC must adhere to various subsections of 42 CFR Section 455 including but not limited to: § 455.104 – HHSC must require that disclosing entities, fiscal agents, and managed care entities provide the following disclosures: The name and address of any person (individual or corporation) with an ownership or control interest in the disclosing entity, fiscal agent, or managed care entity. The address for corporate entities must include as applicable primary business address, every business location, and P.O. Box address. Date of birth and Social Security Number (in the case of an individual). Other tax identification number (in the case of a corporation) with an ownership or control interest in the disclosing entity (or fiscal agent or managed care entity) or in any subcontractor in which the disclosing entity (or fiscal agent or managed care entity) has a 5 percent or more interest. Whether the person (individual or corporation) with an ownership or control interest in the disclosing entity (or fiscal agent or managed care entity) is related to another person with ownership or control interest in the disclosing entity as a spouse, parent, child, or sibling; or whether the person (individual or corporation) with an ownership or control interest in any subcontractor in which the disclosing entity (or fiscal agent or managed care entity) has a 5 percent or more interest is related to another person with ownership or control interest in the disclosing entity as a spouse, parent, child, or sibling. The name of any other disclosing entity (or fiscal agent or managed care entity) in which an owner of the disclosing entity (or fiscal agent or managed care entity) has an ownership or control interest. The name, address, date of birth, and Social Security Number of any managing employee of the disclosing entity (or fiscal agent or managed care entity). § 455.105 – HHSC must enter into an agreement with each provider under which the provider agrees to furnish to it the following information related to business transactions within 35 days of request: The ownership of any subcontractor with whom the provider has had business transactions totaling more than $25,000 during the 12-month period ending on the date of the request; and Any significant business transactions between the provider and any wholly owned supplier, or between the provider and any subcontractor, during the 5-year period ending on the date of the request. § 455.106 – Before HHSC enters into or renews a provider agreement, or at any time upon written request by HHSC, the provider must disclose to HHSC the identity of any person who: Has ownership or control interest in the provider, or is an agent or managing employee of the provider; and Has been convicted of a criminal offense related to that person's involvement in any program under Medicare, Medicaid, or the title XX services program since the inception of those programs. § 455.410 – HHSC must require all ordering or referring physicians or other professionals providing services under the State plan or under a waiver of the plan to be enrolled as participating providers. § 455.412 – HHSC must: Have a method for verifying that any provider purporting to be licensed in accordance with the laws of any State is licensed by such State. Confirm that the provider's license has not expired and that there are no current limitations on the provider's license. § 455.414 – HHSC must revalidate the enrollment of all providers regardless of provider type at least every five years. § 455.432 – HHSC must: Conduct pre-enrollment and post-enrollment site visits of providers who are designated as “moderate” or “high” categorical risks to the Medicaid program. Require any enrolled provider to permit CMS, its agents, its designated contractors, or HHSC to conduct unannounced on-site inspections of any and all provider locations. § 455.434 – HHSC must: Require providers to consent to criminal background checks including fingerprinting when required to do so under State law or by the level of screening based on risk of fraud, waste or abuse as determined for that category of provider. Establish categorical risk levels for providers and provider categories who pose an increased financial risk of fraud, waste or abuse to the Medicaid program. o Upon HHSC determining that a provider, or a person with a 5 percent or more direct or indirect ownership interest in the provider, meets HHSC's criteria hereunder for criminal background checks as a “high” risk to the Medicaid program, HHSC will require that each such provider or person submit fingerprints, in a form and manner to be determined by HHSC, within 30 days upon request from CMS or HHSC. § 455.436 – HHSC must confirm the identity and determine the exclusion status of providers and any person with an ownership or control interest or who is an agent or managing employee of the provider through routine checks of Federal databases. Upon enrollment and reenrollment, HHSC must check the Social Security Administration's Death Master File (SSADMF), the National Plan and Provider Enumeration System (NPPES), the List of Excluded Individuals/Entities (LEIE), the Excluded Parties List System (EPLS), and any such other databases as the Secretary may prescribe. During the period the provider is enrolled, HHSC must check the LEIE and EPLS no less frequently than monthly. § 455.434 – HHSC must screen all initial applications, including applications for a new practice location, and any applications received in response to a re-enrollment or revalidation of enrollment request based on a categorical risk level of “limited,” “moderate,” or “high.” If a provider could fit within more than one risk level described in this section, the highest level of screening is applicable. Condition: Various departments within and contractors of HHSC are responsible for ensuring medical providers are properly licensed, screened, and enrolled in the Medicaid Program including Contract Administration and Provider Monitoring (CAPM), Access and Eligibility Services (AES), Procurement and Contracting Services, and the Texas Medicaid and Healthcare Partnership. Audit procedures included a review of 60 providers for CHIP, which resulted in one exception for the following: A copy of the completed application was not included in the file. Enrollment of the provider was not completed within the last 5 years. Verification of the provider’s license was not included in the file. Required information on ownership and control was not disclosed. Supporting documentation was not included in the file indicating the SSADMF database was checked at the time of the most recent enrollment. Supporting documentation was not included in the file indicating the NPPES database was checked at the time of the most recent enrollment. Supporting documentation was not included in the file indicating the LEIE database was checked at the time of the most recent enrollment. Supporting documentation was not included in the file indicating the EPLS database was checked at the time of the most recent enrollment. Supporting documentation was not included in the file indicating the provider was categorized during screening as limited, moderate, or high risk. A copy of the provider agreement was not included in the files. Supporting documentation was not included indicating a pre- or post-enrollment site visit was conducted as required for providers designated as moderate or high risk. Supporting documentation was not included indicating the provider disclosed the identity of any person who had been convicted of a criminal offense related to that person's involvement in any program under Medicare, Medicaid, or the Title XX services program since the inception of those programs. Questioned costs: None. Context: See “Condition.” Cause: HHSC does not have adequate procedures in place to ensure required documentation is obtained and maintained to comply with federal provider eligibility requirements. Effect: Failure to obtain and maintain adequate documentation during the provider screening and enrollment process may result in otherwise ineligible or fraudulent providers receiving CHIP funds. Repeat Finding: No Recommendation: HHSC should implement controls to ensure: Documentation is maintained for at least the length of the providers’ current enrollment period or three years, whichever is greater in accordance with 2 CFR 200.334. Provider licenses are verified during enrollment. Providers are re-enrolled at least once every five years. Provider agreements are obtained, and the proper disclosures are made. Providers are categorized according to risk level and pre- and post-enrollment site visits are conducted as required for those deemed moderate or high risk. Relevant federal databases are checked during initial enrollment and at least monthly for all providers currently enrolled in CHIP. Views of responsible officials: HHSC concurs with the finding.
Allowable Costs/Cost Principles – Cost Allocations, Matching, Level of Effort, Earmarking (CHIP Only) Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture U.S. Department of Education Social Security Administration Federal Program Title: Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) Temporary Assistance for Needy Families (TANF) Social Services Block Grant (SSBG) Children’s Health Insurance Program (CHIP) Block Grants for Community Mental Health Services (MHBG) Block Grants for Prevention and Treatment of Substance Abuse (SABG) Medicaid Cluster Aging Cluster (nonmajor) Disability Insurance/SSI Cluster (nonmajor) Money Follows the Person Rebalancing Demonstration (nonmajor) CCDF Cluster (nonmajor) SNAP Cluster (nonmajor) Special Education-Grants for Infants and Families (nonmajor) ALN: 10.557 93.558 93.667 93.767 93.958 93.959 93.775, 93.777, 93.778 93.044, 93.045, 93.053 (nonmajor) 96.001, 96.006 (nonmajor) 93.791 (nonmajor) 93.575, 93.596, 93.489 (nonmajor) 10.551, 10.561 (nonmajor) 84.181 (nonmajor) Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: WIC 6TX700527, 6TX700507 October 1, 2020 – September 30, 2022, October 1, 2021 – September 30, 2023, October 1, 2021 – September 30, 2022, October 1, 2022 – September 30, 2023, October 1, 2022 – September 30, 2024 TANF 2301TXTANF, 2301TXTAN3, 2201TXTANF, and 2201TXTAN3 October 1, 2022 – September 30, 2023 and October 1, 2021 – September 30, 2022 SSBG 2301TXSOSR, 2201TXSOSR and 2101TXSOSR October 1, 2022 – September 30, 2024, October 1, 2021 – September 30, 2023 CHIP 2105TX5021, 2205TX5021, 2305TX3002, 2305TX5021 October 1, 2020 – September 30, 2022, October 1, 2021 – September 30, 2023, October 1, 2022 – September 30, 2024 MHBG 1B09SM087345, 6B09SM087345-01M001, 6B09SM087345-01M002, 6B09SM087345-01M003, 1B09SM087322-01,1B09SM085994-01, 6B09SM085994-01M001, 6B09SM085994-01M002, 6B09SM085994-01M003, 1B09SM083999 -01, 6B09SM083999-01M001, 1B09SM083830-01, 6B09SM083830- 01M001 October 1, 2022 – September 30, 2024, October 17, 2022 – October 16, 2024, October 1, 2021 – September 30, 2023, March 15, 2021 – March 14, 2024, March 15, 2021 – March 14, 2023, and October 1, 2020 – September 30, 2022 SABG 1B08TI085835-01,6B08TI085835-01M001, 6B08TI084673-01M001, 6B08TI084673-01M002, 1B08TI084673-01, 6B08TI083478-01 6B08TI083478- 01M002, 6B08TI083478-01M003, 6B08TI083478-01M004 October 1, 2022 – September 30, 2024, October 1, 2021 – September 30, 2023, and October 1, 2020 – September 30, 2022 Medicaid Cluster 2205TX5ADM, 2205TX5MAP, 2205TXIMPL; 2305TX5ADM, 2305TX5MAP, 2305TXIMPL October 1, 2021 – September 30, 2022, October 1, 2022 – September 30, 2023 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that it 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 the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 45 CFR Section 95.507, the State shall submit a cost allocation plan for the State agency as required below to the Director, Division of Cost Allocation (DCA), in the appropriate HHS Regional Office. The plan shall describe the procedures used to identify, measure, and allocate all costs to each of the programs operated by the State agency. The cost allocation plan shall contain the procedures used to identify, measure, and allocate all costs to each benefitting program and activity. Per 45 CFR Section 95.509, the State shall promptly amend the cost allocation plan and submit the amended plan to the Director, DCA, if any of the following events occur, including if other changes occur which make the allocation basis or procedures in the approval cost allocation plan invalid. Condition: HHSC’s approved Public Assistance Cost Allocation Plan (PACAP) expenditures and revenues are initially allocated based on an estimate of Project ID percentages. After actual base statistical data is available, expenditures are reallocated and adjustments between estimated and actual costs are made. The adjustments will result in costs claimed for each period being allocated based on actual base statistics for the same period. Data is updated either by voucher, monthly, quarterly, semi-annually, or annually, depending on the Project ID. HHSC experienced significant delays in updating factors. By the end of the fiscal year, cost allocations had been updated only through August 2022. Although there is no documented policy over when the FMAP should be updated, HHSC will allocate costs at the FMAP that is in effect at the time of the transaction and will reallocate the transactions using the FMAP in effect at the time of the reallocation. This procedure was not followed in 2023 when the costs for four of 40 sample allocations tested in the CHIP program were allocated using a rate other than the current one in effect resulting in noncompliance with matching requirements. Questioned costs: Unknown Context: See “Condition.” Cause: HHSC’s General Ledger Unit is responsible for cost allocations. At the start of fiscal year 2023, the Unit suffered a loss of more than half of its staff due to turnover. Additionally, the current Federal Medical Assistance Percentage (FMAP) rates were in a stepdown process whereby the rate changed quarterly as opposed to yearly which intensified the workload. In addition, since transformation, the number of Public Assistance Cost Allocation Plan (PACAP) methodologies (Project IDs) has increased by 243%. These methodologies have become increasingly more complex, now including over 80 dependent factors of which some comprise more than 100 fund sources each. This huge increase in both volume and complexity has greatly increased calculation labor and risk of error. Effect: Failure to update factor allocations timely can result in questioned costs. Repeat finding: 2022-010, 2021-004, 2020-016, 2019-006, 2018-005, 2017-009, and 2016-024 Recommendation: HHSC should allocate adequate resources to ensure factor allocations are performed and reallocations are updated timely in order to present accurate information. Views of responsible officials: HHSC concurs with the finding.
Eligibility Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Children’s Health Insurance Program (CHIP) ALN: 93.767 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 2105TX5021, 2205TX5021, 2305TX3002, 2305TX5021 October 1, 2020 – September 30, 2022, October 1, 2021 – September 30, 2023, October 1, 2022 – September 30, 2024 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that it 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 the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 42 CFR 435.912(c)(3), the determination of eligibility for any applicant may not exceed (except in unusual circumstances such as an administrative or other emergency beyond the agency’s control): Ninety days for applicants who apply for Medicaid on the basis of disability; and Forty-five days for all other applicants. Condition: Audit procedures included a review of 40 CHIP eligibility applications submitted by fiscal year 2023 for benefit recipients to determine whether the eligibility determination was made within 45 days. Of the 40 applications, we identified eight applications for which the eligibility determination was not made within 45 days. The eligibility determinations of these eight applications were made within 46-75 days of the submission date and did not have an administrative or other emergency circumstance. Questioned costs: None. Context: See “Condition.” Cause: Current policies and procedures surrounding the timely processing of benefit applications are not being properly implemented. Effect: Failure to process CHIP applications in a timely manner may lead to recipients not receiving benefits timely and noncompliance with grant award terms and conditions. Repeat finding: No Recommendation: HHSC should enforce existing application processing procedures to ensure all applications are reviewed and an eligibility determination is made within the required timeline. Views of responsible officials: HHSC concurs with the finding.
Special Tests and Provisions – Provider Eligibility – Lack of Documentation Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Children’s Health Insurance Program ALN: 93.767 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 2105TX5021, 2205TX5021, 2305TX3002, 2305TX5021 October 1, 2020 – September 30, 2022, October 1, 2021 – September 30, 2023, October 1, 2022 – September 30, 2024 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance. Criteria or specific requirement: Per 2 CFR 200.303, a non-Federal entity must: Establish and maintain effective internal controls over federal awards that provide reasonable assurance they are managing federal awards in compliance with federal statutes, regulations, and the provisions of contracts or grant agreements that could have a material effect on each of its federal programs. Per 2 CFR 200.334, 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. Federal awarding agencies and pass-through entities must not impose any other record retention requirements upon non-Federal entities. In order to comply with federal provider eligibility requirements, HHSC must adhere to various subsections of 42 CFR Section 455 including but not limited to: § 455.104 – HHSC must require that disclosing entities, fiscal agents, and managed care entities provide the following disclosures: The name and address of any person (individual or corporation) with an ownership or control interest in the disclosing entity, fiscal agent, or managed care entity. The address for corporate entities must include as applicable primary business address, every business location, and P.O. Box address. Date of birth and Social Security Number (in the case of an individual). Other tax identification number (in the case of a corporation) with an ownership or control interest in the disclosing entity (or fiscal agent or managed care entity) or in any subcontractor in which the disclosing entity (or fiscal agent or managed care entity) has a 5 percent or more interest. Whether the person (individual or corporation) with an ownership or control interest in the disclosing entity (or fiscal agent or managed care entity) is related to another person with ownership or control interest in the disclosing entity as a spouse, parent, child, or sibling; or whether the person (individual or corporation) with an ownership or control interest in any subcontractor in which the disclosing entity (or fiscal agent or managed care entity) has a 5 percent or more interest is related to another person with ownership or control interest in the disclosing entity as a spouse, parent, child, or sibling. The name of any other disclosing entity (or fiscal agent or managed care entity) in which an owner of the disclosing entity (or fiscal agent or managed care entity) has an ownership or control interest. The name, address, date of birth, and Social Security Number of any managing employee of the disclosing entity (or fiscal agent or managed care entity). § 455.105 – HHSC must enter into an agreement with each provider under which the provider agrees to furnish to it the following information related to business transactions within 35 days of request: The ownership of any subcontractor with whom the provider has had business transactions totaling more than $25,000 during the 12-month period ending on the date of the request; and Any significant business transactions between the provider and any wholly owned supplier, or between the provider and any subcontractor, during the 5-year period ending on the date of the request. § 455.106 – Before HHSC enters into or renews a provider agreement, or at any time upon written request by HHSC, the provider must disclose to HHSC the identity of any person who: Has ownership or control interest in the provider, or is an agent or managing employee of the provider; and Has been convicted of a criminal offense related to that person's involvement in any program under Medicare, Medicaid, or the title XX services program since the inception of those programs. § 455.410 – HHSC must require all ordering or referring physicians or other professionals providing services under the State plan or under a waiver of the plan to be enrolled as participating providers. § 455.412 – HHSC must: Have a method for verifying that any provider purporting to be licensed in accordance with the laws of any State is licensed by such State. Confirm that the provider's license has not expired and that there are no current limitations on the provider's license. § 455.414 – HHSC must revalidate the enrollment of all providers regardless of provider type at least every five years. § 455.432 – HHSC must: Conduct pre-enrollment and post-enrollment site visits of providers who are designated as “moderate” or “high” categorical risks to the Medicaid program. Require any enrolled provider to permit CMS, its agents, its designated contractors, or HHSC to conduct unannounced on-site inspections of any and all provider locations. § 455.434 – HHSC must: Require providers to consent to criminal background checks including fingerprinting when required to do so under State law or by the level of screening based on risk of fraud, waste or abuse as determined for that category of provider. Establish categorical risk levels for providers and provider categories who pose an increased financial risk of fraud, waste or abuse to the Medicaid program. o Upon HHSC determining that a provider, or a person with a 5 percent or more direct or indirect ownership interest in the provider, meets HHSC's criteria hereunder for criminal background checks as a “high” risk to the Medicaid program, HHSC will require that each such provider or person submit fingerprints, in a form and manner to be determined by HHSC, within 30 days upon request from CMS or HHSC. § 455.436 – HHSC must confirm the identity and determine the exclusion status of providers and any person with an ownership or control interest or who is an agent or managing employee of the provider through routine checks of Federal databases. Upon enrollment and reenrollment, HHSC must check the Social Security Administration's Death Master File (SSADMF), the National Plan and Provider Enumeration System (NPPES), the List of Excluded Individuals/Entities (LEIE), the Excluded Parties List System (EPLS), and any such other databases as the Secretary may prescribe. During the period the provider is enrolled, HHSC must check the LEIE and EPLS no less frequently than monthly. § 455.434 – HHSC must screen all initial applications, including applications for a new practice location, and any applications received in response to a re-enrollment or revalidation of enrollment request based on a categorical risk level of “limited,” “moderate,” or “high.” If a provider could fit within more than one risk level described in this section, the highest level of screening is applicable. Condition: Various departments within and contractors of HHSC are responsible for ensuring medical providers are properly licensed, screened, and enrolled in the Medicaid Program including Contract Administration and Provider Monitoring (CAPM), Access and Eligibility Services (AES), Procurement and Contracting Services, and the Texas Medicaid and Healthcare Partnership. Audit procedures included a review of 60 providers for CHIP, which resulted in one exception for the following: A copy of the completed application was not included in the file. Enrollment of the provider was not completed within the last 5 years. Verification of the provider’s license was not included in the file. Required information on ownership and control was not disclosed. Supporting documentation was not included in the file indicating the SSADMF database was checked at the time of the most recent enrollment. Supporting documentation was not included in the file indicating the NPPES database was checked at the time of the most recent enrollment. Supporting documentation was not included in the file indicating the LEIE database was checked at the time of the most recent enrollment. Supporting documentation was not included in the file indicating the EPLS database was checked at the time of the most recent enrollment. Supporting documentation was not included in the file indicating the provider was categorized during screening as limited, moderate, or high risk. A copy of the provider agreement was not included in the files. Supporting documentation was not included indicating a pre- or post-enrollment site visit was conducted as required for providers designated as moderate or high risk. Supporting documentation was not included indicating the provider disclosed the identity of any person who had been convicted of a criminal offense related to that person's involvement in any program under Medicare, Medicaid, or the Title XX services program since the inception of those programs. Questioned costs: None. Context: See “Condition.” Cause: HHSC does not have adequate procedures in place to ensure required documentation is obtained and maintained to comply with federal provider eligibility requirements. Effect: Failure to obtain and maintain adequate documentation during the provider screening and enrollment process may result in otherwise ineligible or fraudulent providers receiving CHIP funds. Repeat Finding: No Recommendation: HHSC should implement controls to ensure: Documentation is maintained for at least the length of the providers’ current enrollment period or three years, whichever is greater in accordance with 2 CFR 200.334. Provider licenses are verified during enrollment. Providers are re-enrolled at least once every five years. Provider agreements are obtained, and the proper disclosures are made. Providers are categorized according to risk level and pre- and post-enrollment site visits are conducted as required for those deemed moderate or high risk. Relevant federal databases are checked during initial enrollment and at least monthly for all providers currently enrolled in CHIP. Views of responsible officials: HHSC concurs with the finding.
Allowable Costs/Cost Principles – Cost Allocations, Matching, Level of Effort, Earmarking (CHIP Only) Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture U.S. Department of Education Social Security Administration Federal Program Title: Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) Temporary Assistance for Needy Families (TANF) Social Services Block Grant (SSBG) Children’s Health Insurance Program (CHIP) Block Grants for Community Mental Health Services (MHBG) Block Grants for Prevention and Treatment of Substance Abuse (SABG) Medicaid Cluster Aging Cluster (nonmajor) Disability Insurance/SSI Cluster (nonmajor) Money Follows the Person Rebalancing Demonstration (nonmajor) CCDF Cluster (nonmajor) SNAP Cluster (nonmajor) Special Education-Grants for Infants and Families (nonmajor) ALN: 10.557 93.558 93.667 93.767 93.958 93.959 93.775, 93.777, 93.778 93.044, 93.045, 93.053 (nonmajor) 96.001, 96.006 (nonmajor) 93.791 (nonmajor) 93.575, 93.596, 93.489 (nonmajor) 10.551, 10.561 (nonmajor) 84.181 (nonmajor) Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: WIC 6TX700527, 6TX700507 October 1, 2020 – September 30, 2022, October 1, 2021 – September 30, 2023, October 1, 2021 – September 30, 2022, October 1, 2022 – September 30, 2023, October 1, 2022 – September 30, 2024 TANF 2301TXTANF, 2301TXTAN3, 2201TXTANF, and 2201TXTAN3 October 1, 2022 – September 30, 2023 and October 1, 2021 – September 30, 2022 SSBG 2301TXSOSR, 2201TXSOSR and 2101TXSOSR October 1, 2022 – September 30, 2024, October 1, 2021 – September 30, 2023 CHIP 2105TX5021, 2205TX5021, 2305TX3002, 2305TX5021 October 1, 2020 – September 30, 2022, October 1, 2021 – September 30, 2023, October 1, 2022 – September 30, 2024 MHBG 1B09SM087345, 6B09SM087345-01M001, 6B09SM087345-01M002, 6B09SM087345-01M003, 1B09SM087322-01,1B09SM085994-01, 6B09SM085994-01M001, 6B09SM085994-01M002, 6B09SM085994-01M003, 1B09SM083999 -01, 6B09SM083999-01M001, 1B09SM083830-01, 6B09SM083830- 01M001 October 1, 2022 – September 30, 2024, October 17, 2022 – October 16, 2024, October 1, 2021 – September 30, 2023, March 15, 2021 – March 14, 2024, March 15, 2021 – March 14, 2023, and October 1, 2020 – September 30, 2022 SABG 1B08TI085835-01,6B08TI085835-01M001, 6B08TI084673-01M001, 6B08TI084673-01M002, 1B08TI084673-01, 6B08TI083478-01 6B08TI083478- 01M002, 6B08TI083478-01M003, 6B08TI083478-01M004 October 1, 2022 – September 30, 2024, October 1, 2021 – September 30, 2023, and October 1, 2020 – September 30, 2022 Medicaid Cluster 2205TX5ADM, 2205TX5MAP, 2205TXIMPL; 2305TX5ADM, 2305TX5MAP, 2305TXIMPL October 1, 2021 – September 30, 2022, October 1, 2022 – September 30, 2023 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that it 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 the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 45 CFR Section 95.507, the State shall submit a cost allocation plan for the State agency as required below to the Director, Division of Cost Allocation (DCA), in the appropriate HHS Regional Office. The plan shall describe the procedures used to identify, measure, and allocate all costs to each of the programs operated by the State agency. The cost allocation plan shall contain the procedures used to identify, measure, and allocate all costs to each benefitting program and activity. Per 45 CFR Section 95.509, the State shall promptly amend the cost allocation plan and submit the amended plan to the Director, DCA, if any of the following events occur, including if other changes occur which make the allocation basis or procedures in the approval cost allocation plan invalid. Condition: HHSC’s approved Public Assistance Cost Allocation Plan (PACAP) expenditures and revenues are initially allocated based on an estimate of Project ID percentages. After actual base statistical data is available, expenditures are reallocated and adjustments between estimated and actual costs are made. The adjustments will result in costs claimed for each period being allocated based on actual base statistics for the same period. Data is updated either by voucher, monthly, quarterly, semi-annually, or annually, depending on the Project ID. HHSC experienced significant delays in updating factors. By the end of the fiscal year, cost allocations had been updated only through August 2022. Although there is no documented policy over when the FMAP should be updated, HHSC will allocate costs at the FMAP that is in effect at the time of the transaction and will reallocate the transactions using the FMAP in effect at the time of the reallocation. This procedure was not followed in 2023 when the costs for four of 40 sample allocations tested in the CHIP program were allocated using a rate other than the current one in effect resulting in noncompliance with matching requirements. Questioned costs: Unknown Context: See “Condition.” Cause: HHSC’s General Ledger Unit is responsible for cost allocations. At the start of fiscal year 2023, the Unit suffered a loss of more than half of its staff due to turnover. Additionally, the current Federal Medical Assistance Percentage (FMAP) rates were in a stepdown process whereby the rate changed quarterly as opposed to yearly which intensified the workload. In addition, since transformation, the number of Public Assistance Cost Allocation Plan (PACAP) methodologies (Project IDs) has increased by 243%. These methodologies have become increasingly more complex, now including over 80 dependent factors of which some comprise more than 100 fund sources each. This huge increase in both volume and complexity has greatly increased calculation labor and risk of error. Effect: Failure to update factor allocations timely can result in questioned costs. Repeat finding: 2022-010, 2021-004, 2020-016, 2019-006, 2018-005, 2017-009, and 2016-024 Recommendation: HHSC should allocate adequate resources to ensure factor allocations are performed and reallocations are updated timely in order to present accurate information. Views of responsible officials: HHSC concurs with the finding.
Allowable Costs/Cost Principles – Cost Allocations, Matching, Level of Effort, Earmarking (CHIP Only) Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture U.S. Department of Education Social Security Administration Federal Program Title: Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) Temporary Assistance for Needy Families (TANF) Social Services Block Grant (SSBG) Children’s Health Insurance Program (CHIP) Block Grants for Community Mental Health Services (MHBG) Block Grants for Prevention and Treatment of Substance Abuse (SABG) Medicaid Cluster Aging Cluster (nonmajor) Disability Insurance/SSI Cluster (nonmajor) Money Follows the Person Rebalancing Demonstration (nonmajor) CCDF Cluster (nonmajor) SNAP Cluster (nonmajor) Special Education-Grants for Infants and Families (nonmajor) ALN: 10.557 93.558 93.667 93.767 93.958 93.959 93.775, 93.777, 93.778 93.044, 93.045, 93.053 (nonmajor) 96.001, 96.006 (nonmajor) 93.791 (nonmajor) 93.575, 93.596, 93.489 (nonmajor) 10.551, 10.561 (nonmajor) 84.181 (nonmajor) Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: WIC 6TX700527, 6TX700507 October 1, 2020 – September 30, 2022, October 1, 2021 – September 30, 2023, October 1, 2021 – September 30, 2022, October 1, 2022 – September 30, 2023, October 1, 2022 – September 30, 2024 TANF 2301TXTANF, 2301TXTAN3, 2201TXTANF, and 2201TXTAN3 October 1, 2022 – September 30, 2023 and October 1, 2021 – September 30, 2022 SSBG 2301TXSOSR, 2201TXSOSR and 2101TXSOSR October 1, 2022 – September 30, 2024, October 1, 2021 – September 30, 2023 CHIP 2105TX5021, 2205TX5021, 2305TX3002, 2305TX5021 October 1, 2020 – September 30, 2022, October 1, 2021 – September 30, 2023, October 1, 2022 – September 30, 2024 MHBG 1B09SM087345, 6B09SM087345-01M001, 6B09SM087345-01M002, 6B09SM087345-01M003, 1B09SM087322-01,1B09SM085994-01, 6B09SM085994-01M001, 6B09SM085994-01M002, 6B09SM085994-01M003, 1B09SM083999 -01, 6B09SM083999-01M001, 1B09SM083830-01, 6B09SM083830- 01M001 October 1, 2022 – September 30, 2024, October 17, 2022 – October 16, 2024, October 1, 2021 – September 30, 2023, March 15, 2021 – March 14, 2024, March 15, 2021 – March 14, 2023, and October 1, 2020 – September 30, 2022 SABG 1B08TI085835-01,6B08TI085835-01M001, 6B08TI084673-01M001, 6B08TI084673-01M002, 1B08TI084673-01, 6B08TI083478-01 6B08TI083478- 01M002, 6B08TI083478-01M003, 6B08TI083478-01M004 October 1, 2022 – September 30, 2024, October 1, 2021 – September 30, 2023, and October 1, 2020 – September 30, 2022 Medicaid Cluster 2205TX5ADM, 2205TX5MAP, 2205TXIMPL; 2305TX5ADM, 2305TX5MAP, 2305TXIMPL October 1, 2021 – September 30, 2022, October 1, 2022 – September 30, 2023 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that it 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 the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 45 CFR Section 95.507, the State shall submit a cost allocation plan for the State agency as required below to the Director, Division of Cost Allocation (DCA), in the appropriate HHS Regional Office. The plan shall describe the procedures used to identify, measure, and allocate all costs to each of the programs operated by the State agency. The cost allocation plan shall contain the procedures used to identify, measure, and allocate all costs to each benefitting program and activity. Per 45 CFR Section 95.509, the State shall promptly amend the cost allocation plan and submit the amended plan to the Director, DCA, if any of the following events occur, including if other changes occur which make the allocation basis or procedures in the approval cost allocation plan invalid. Condition: HHSC’s approved Public Assistance Cost Allocation Plan (PACAP) expenditures and revenues are initially allocated based on an estimate of Project ID percentages. After actual base statistical data is available, expenditures are reallocated and adjustments between estimated and actual costs are made. The adjustments will result in costs claimed for each period being allocated based on actual base statistics for the same period. Data is updated either by voucher, monthly, quarterly, semi-annually, or annually, depending on the Project ID. HHSC experienced significant delays in updating factors. By the end of the fiscal year, cost allocations had been updated only through August 2022. Although there is no documented policy over when the FMAP should be updated, HHSC will allocate costs at the FMAP that is in effect at the time of the transaction and will reallocate the transactions using the FMAP in effect at the time of the reallocation. This procedure was not followed in 2023 when the costs for four of 40 sample allocations tested in the CHIP program were allocated using a rate other than the current one in effect resulting in noncompliance with matching requirements. Questioned costs: Unknown Context: See “Condition.” Cause: HHSC’s General Ledger Unit is responsible for cost allocations. At the start of fiscal year 2023, the Unit suffered a loss of more than half of its staff due to turnover. Additionally, the current Federal Medical Assistance Percentage (FMAP) rates were in a stepdown process whereby the rate changed quarterly as opposed to yearly which intensified the workload. In addition, since transformation, the number of Public Assistance Cost Allocation Plan (PACAP) methodologies (Project IDs) has increased by 243%. These methodologies have become increasingly more complex, now including over 80 dependent factors of which some comprise more than 100 fund sources each. This huge increase in both volume and complexity has greatly increased calculation labor and risk of error. Effect: Failure to update factor allocations timely can result in questioned costs. Repeat finding: 2022-010, 2021-004, 2020-016, 2019-006, 2018-005, 2017-009, and 2016-024 Recommendation: HHSC should allocate adequate resources to ensure factor allocations are performed and reallocations are updated timely in order to present accurate information. Views of responsible officials: HHSC concurs with the finding.
Reporting – FFATA Subawards Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Temporary Assistance for Needy Families Social Services Block Grant Block Grants for Community Mental Health Services Block Grants for Prevention and Treatment of Substance Abuse ALN: 93.558 93.667 93.958 93.959 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: TANF 2301TXTANF, 2301TXTAN3, 2201TXTANF, and 2201TXTAN3 October 1, 2022 – September 30, 2023 and October 1, 2021 – September 30, 2022 SSBG 2301TXSOSR, 2201TXSOSR and 2101TXSOSR October 1, 2022 – September 30, 2024, October 1, 2021 – September 30, 2023, and October 1, 2020 – September 30, 2022 MHBG 1B09SM085994-01, 6B09SM085994-01M001, 6B09SM085994-01M002, 6B09SM083999-01M001, 6B09SM083830-01M001 October 1, 2021 – September 30, 2023, March 15, 2021 – March 14, 2024, and October 1, 2020 – September 30, 2022 SABG 1B08TI085835-01,6B08TI085835-01M001, 6B08TI084673-01M001, 6B08TI084673-01M002, 1B08TI084673-01, 6B08TI083478-01M003 October 1, 2022 – September 30, 2024, October 1, 2021 – September 30, 2023, and October 1, 2020 – September 30, 2022 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that it 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 the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109- 282), as amended by Section 6202 of Public Law 110-252, recipients (i.e., 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) no later than the last day of the month following the month in which the subaward/subaward amendment obligation was made or the subcontract award/subcontract modification was made. Condition: The HHSC Federal Funds Office (FFO) is responsible for submitting all required subawards in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). A standard FFATA Reporting template has been created by the FFO that includes all required elements to be submitted. Program departments must complete and submit the template to the FFO for all federal subawards with amounts over $30,000 by the 15th of every month to be included in that month’s submission. Currently, it is the responsibility of the individual program departments to ensure that each obligating action at or over $30,000 is reported in the FFATA Reporting Template no later than the end of the next month in which the obligation was made. Due to system limitations, there is no central tracking of award obligations. Thus, HHSC was unable to provide a population of first-tier subawards of $30,000 or more that were obligated during the fiscal year and required to be submitted in FSRS. Accordingly, we were unable to select a sample and test for internal controls over compliance or compliance. Questioned costs: None. Context: See “Condition.” Cause: CAPPS-FIN, HHSC’s system of record, does not have the capability to track the date of obligation of federal awards. Effect: Failure to report all subawards $30,000 or greater in FSRS will result in noncompliance with terms of the federal grant guidelines. Repeat finding: 2022-013, 2021-007 Recommendation: HHSC should implement functionality into CAPPS-FIN to track when obligations of federal awards are made so that the agency is able to retrieve a list of all subawards by obligation date in order to monitor compliance with the Federal Funding Accountability and Transparency Act. Views of responsible officials: HHSC agrees with the finding but does not concur with the recommendation insofar as it makes a specific designation of CAPPS-Financials as the system to ensure compliance.
Subrecipient Monitoring Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Temporary Assistance for Needy Families Social Services Block Grant Block Grants for Community Mental Health Services ALN: 93.558 93.667 93.958 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: TANF 2301TXTANF, 2301TXTAN3, 2201TXTANF, and 2201TXTAN3 October 1, 2022 – September 30, 2023 and October 1, 2021 – September 30, 2022 SSBG 2301TXSOSR, 2201TXSOSR and 2101TXSOSR October 1, 2022 – September 30, 2024, October 1, 2021 – September 30, 2023, and October 1, 2020 – September 30, 2022 MHBG 1B09SM087345, 6B09SM087345-01M001, 6B09SM087345-01M002, 6B09SM087345-01M003, 1B09SM087322-01,1B09SM085994-01, 6B09SM085994-01M001, 6B09SM085994-01M002, 6B09SM085994-01M003, 1B09SM083999 -01, 6B09SM083999-01M001, 1B09SM083830-01, 6B09SM083830- 01M001 October 1, 2022 – September 30, 2024, October 17, 2022 – October 16, 2024, October 1, 2021 – September 30, 2023, March 15, 2021 – March 14, 2024, March 15, 2021 – March 14, 2023, and October 1, 2020 – September 30, 2022 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that it 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 the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR section 200.332(a), all pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes certain information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes: Subrecipient’s unique entity identifier (UEI) Federal award identification number (FAIN) Federal award date of award to the recipient by the federal agency Assistance listings number and title Indirect cost rate for the federal award (including if the de minimis rate is charged) Condition: Audit procedures included a review of a sample of subrecipient contracts for required information with the following results noted: TANF – For a sample of 17, the contracts did not include: UEI (one sample) FAIN (four samples) Federal award date (four samples) Assistance listings numbers and title (four samples) Indirect cost rate, including if the de minimis rate is charged (four samples) SSBG – For 11 of 19 samples, the contract did not include neither the FAIN nor the federal award date of award to the recipient by the federal agency. MHBG – For 7 of 8 samples, the contract did not include neither the FAIN nor the federal award date of award to the recipient by the federal agency. Questioned costs: None. Context: See “Condition.” Cause: Current internal controls in place to ensure a review of subaward agreements is taking place to verify that all required elements are included per 2 CFR 200 §200.332 are not at the correct precision level. Effect: Providing incomplete information to subrecipients may result in inaccurate reporting by the subrecipients and ultimately by HHSC. Repeat Finding: No Recommendation: We recommend management enhance existing controls around the review of all subaward agreements to ensure that all pass-through agreements include each of the required elements by 2 CFR §200.332. Views of responsible officials: Temporary Assistance for Needy Families (TANF) - HHSC concurs with the finding. Social Services Block Grants (SSBG)/ Mental Health Block Grants (MHBG) - HHSC concurs with the finding.
Period of Performance Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Block Grants for Community Mental Health Services ALN: 93.958 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 1B09SM087345, 6B09SM087345, 1B09SM087322-01 October 1, 2022 – September 30, 2024, October 17,2022 – October 16, 2024 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that it 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 the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR 200.403(h) cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to § 200.308(e)(3). Condition: For projects with period of performance beginning dates during the fiscal year, audit procedures included testing transactions posted to the general ledger during the first month of the award. We noted the following instances of noncompliance: For the two sampled transactions, totaling $56,997, one of the expenditures, totaling $31,254, was related to costs incurred prior to the period of performance begin date. Questioned costs: $31,254. Context: See “Condition.” Cause: Current controls are not at the correct precision level to detect costs charged outside of the period of performance. Effect: Ineffective internal controls may result in questioned costs and noncompliance with the terms of the grant. Repeat finding: No Recommendation: HHSC should enhance and/or modify existing controls to ensure that costs charged to a project have service dates within the period of performance stated in the federal award. Views of responsible officials: HHSC concurs with the finding.
Allowable Costs/Cost Principles – Cost Allocations, Matching, Level of Effort, Earmarking (CHIP Only) Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture U.S. Department of Education Social Security Administration Federal Program Title: Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) Temporary Assistance for Needy Families (TANF) Social Services Block Grant (SSBG) Children’s Health Insurance Program (CHIP) Block Grants for Community Mental Health Services (MHBG) Block Grants for Prevention and Treatment of Substance Abuse (SABG) Medicaid Cluster Aging Cluster (nonmajor) Disability Insurance/SSI Cluster (nonmajor) Money Follows the Person Rebalancing Demonstration (nonmajor) CCDF Cluster (nonmajor) SNAP Cluster (nonmajor) Special Education-Grants for Infants and Families (nonmajor) ALN: 10.557 93.558 93.667 93.767 93.958 93.959 93.775, 93.777, 93.778 93.044, 93.045, 93.053 (nonmajor) 96.001, 96.006 (nonmajor) 93.791 (nonmajor) 93.575, 93.596, 93.489 (nonmajor) 10.551, 10.561 (nonmajor) 84.181 (nonmajor) Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: WIC 6TX700527, 6TX700507 October 1, 2020 – September 30, 2022, October 1, 2021 – September 30, 2023, October 1, 2021 – September 30, 2022, October 1, 2022 – September 30, 2023, October 1, 2022 – September 30, 2024 TANF 2301TXTANF, 2301TXTAN3, 2201TXTANF, and 2201TXTAN3 October 1, 2022 – September 30, 2023 and October 1, 2021 – September 30, 2022 SSBG 2301TXSOSR, 2201TXSOSR and 2101TXSOSR October 1, 2022 – September 30, 2024, October 1, 2021 – September 30, 2023 CHIP 2105TX5021, 2205TX5021, 2305TX3002, 2305TX5021 October 1, 2020 – September 30, 2022, October 1, 2021 – September 30, 2023, October 1, 2022 – September 30, 2024 MHBG 1B09SM087345, 6B09SM087345-01M001, 6B09SM087345-01M002, 6B09SM087345-01M003, 1B09SM087322-01,1B09SM085994-01, 6B09SM085994-01M001, 6B09SM085994-01M002, 6B09SM085994-01M003, 1B09SM083999 -01, 6B09SM083999-01M001, 1B09SM083830-01, 6B09SM083830- 01M001 October 1, 2022 – September 30, 2024, October 17, 2022 – October 16, 2024, October 1, 2021 – September 30, 2023, March 15, 2021 – March 14, 2024, March 15, 2021 – March 14, 2023, and October 1, 2020 – September 30, 2022 SABG 1B08TI085835-01,6B08TI085835-01M001, 6B08TI084673-01M001, 6B08TI084673-01M002, 1B08TI084673-01, 6B08TI083478-01 6B08TI083478- 01M002, 6B08TI083478-01M003, 6B08TI083478-01M004 October 1, 2022 – September 30, 2024, October 1, 2021 – September 30, 2023, and October 1, 2020 – September 30, 2022 Medicaid Cluster 2205TX5ADM, 2205TX5MAP, 2205TXIMPL; 2305TX5ADM, 2305TX5MAP, 2305TXIMPL October 1, 2021 – September 30, 2022, October 1, 2022 – September 30, 2023 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that it 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 the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 45 CFR Section 95.507, the State shall submit a cost allocation plan for the State agency as required below to the Director, Division of Cost Allocation (DCA), in the appropriate HHS Regional Office. The plan shall describe the procedures used to identify, measure, and allocate all costs to each of the programs operated by the State agency. The cost allocation plan shall contain the procedures used to identify, measure, and allocate all costs to each benefitting program and activity. Per 45 CFR Section 95.509, the State shall promptly amend the cost allocation plan and submit the amended plan to the Director, DCA, if any of the following events occur, including if other changes occur which make the allocation basis or procedures in the approval cost allocation plan invalid. Condition: HHSC’s approved Public Assistance Cost Allocation Plan (PACAP) expenditures and revenues are initially allocated based on an estimate of Project ID percentages. After actual base statistical data is available, expenditures are reallocated and adjustments between estimated and actual costs are made. The adjustments will result in costs claimed for each period being allocated based on actual base statistics for the same period. Data is updated either by voucher, monthly, quarterly, semi-annually, or annually, depending on the Project ID. HHSC experienced significant delays in updating factors. By the end of the fiscal year, cost allocations had been updated only through August 2022. Although there is no documented policy over when the FMAP should be updated, HHSC will allocate costs at the FMAP that is in effect at the time of the transaction and will reallocate the transactions using the FMAP in effect at the time of the reallocation. This procedure was not followed in 2023 when the costs for four of 40 sample allocations tested in the CHIP program were allocated using a rate other than the current one in effect resulting in noncompliance with matching requirements. Questioned costs: Unknown Context: See “Condition.” Cause: HHSC’s General Ledger Unit is responsible for cost allocations. At the start of fiscal year 2023, the Unit suffered a loss of more than half of its staff due to turnover. Additionally, the current Federal Medical Assistance Percentage (FMAP) rates were in a stepdown process whereby the rate changed quarterly as opposed to yearly which intensified the workload. In addition, since transformation, the number of Public Assistance Cost Allocation Plan (PACAP) methodologies (Project IDs) has increased by 243%. These methodologies have become increasingly more complex, now including over 80 dependent factors of which some comprise more than 100 fund sources each. This huge increase in both volume and complexity has greatly increased calculation labor and risk of error. Effect: Failure to update factor allocations timely can result in questioned costs. Repeat finding: 2022-010, 2021-004, 2020-016, 2019-006, 2018-005, 2017-009, and 2016-024 Recommendation: HHSC should allocate adequate resources to ensure factor allocations are performed and reallocations are updated timely in order to present accurate information. Views of responsible officials: HHSC concurs with the finding.
Reporting – FFATA Subawards Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Temporary Assistance for Needy Families Social Services Block Grant Block Grants for Community Mental Health Services Block Grants for Prevention and Treatment of Substance Abuse ALN: 93.558 93.667 93.958 93.959 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: TANF 2301TXTANF, 2301TXTAN3, 2201TXTANF, and 2201TXTAN3 October 1, 2022 – September 30, 2023 and October 1, 2021 – September 30, 2022 SSBG 2301TXSOSR, 2201TXSOSR and 2101TXSOSR October 1, 2022 – September 30, 2024, October 1, 2021 – September 30, 2023, and October 1, 2020 – September 30, 2022 MHBG 1B09SM085994-01, 6B09SM085994-01M001, 6B09SM085994-01M002, 6B09SM083999-01M001, 6B09SM083830-01M001 October 1, 2021 – September 30, 2023, March 15, 2021 – March 14, 2024, and October 1, 2020 – September 30, 2022 SABG 1B08TI085835-01,6B08TI085835-01M001, 6B08TI084673-01M001, 6B08TI084673-01M002, 1B08TI084673-01, 6B08TI083478-01M003 October 1, 2022 – September 30, 2024, October 1, 2021 – September 30, 2023, and October 1, 2020 – September 30, 2022 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that it 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 the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109- 282), as amended by Section 6202 of Public Law 110-252, recipients (i.e., 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) no later than the last day of the month following the month in which the subaward/subaward amendment obligation was made or the subcontract award/subcontract modification was made. Condition: The HHSC Federal Funds Office (FFO) is responsible for submitting all required subawards in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). A standard FFATA Reporting template has been created by the FFO that includes all required elements to be submitted. Program departments must complete and submit the template to the FFO for all federal subawards with amounts over $30,000 by the 15th of every month to be included in that month’s submission. Currently, it is the responsibility of the individual program departments to ensure that each obligating action at or over $30,000 is reported in the FFATA Reporting Template no later than the end of the next month in which the obligation was made. Due to system limitations, there is no central tracking of award obligations. Thus, HHSC was unable to provide a population of first-tier subawards of $30,000 or more that were obligated during the fiscal year and required to be submitted in FSRS. Accordingly, we were unable to select a sample and test for internal controls over compliance or compliance. Questioned costs: None. Context: See “Condition.” Cause: CAPPS-FIN, HHSC’s system of record, does not have the capability to track the date of obligation of federal awards. Effect: Failure to report all subawards $30,000 or greater in FSRS will result in noncompliance with terms of the federal grant guidelines. Repeat finding: 2022-013, 2021-007 Recommendation: HHSC should implement functionality into CAPPS-FIN to track when obligations of federal awards are made so that the agency is able to retrieve a list of all subawards by obligation date in order to monitor compliance with the Federal Funding Accountability and Transparency Act. Views of responsible officials: HHSC agrees with the finding but does not concur with the recommendation insofar as it makes a specific designation of CAPPS-Financials as the system to ensure compliance.
Subrecipient Monitoring Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Temporary Assistance for Needy Families Social Services Block Grant Block Grants for Community Mental Health Services ALN: 93.558 93.667 93.958 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: TANF 2301TXTANF, 2301TXTAN3, 2201TXTANF, and 2201TXTAN3 October 1, 2022 – September 30, 2023 and October 1, 2021 – September 30, 2022 SSBG 2301TXSOSR, 2201TXSOSR and 2101TXSOSR October 1, 2022 – September 30, 2024, October 1, 2021 – September 30, 2023, and October 1, 2020 – September 30, 2022 MHBG 1B09SM087345, 6B09SM087345-01M001, 6B09SM087345-01M002, 6B09SM087345-01M003, 1B09SM087322-01,1B09SM085994-01, 6B09SM085994-01M001, 6B09SM085994-01M002, 6B09SM085994-01M003, 1B09SM083999 -01, 6B09SM083999-01M001, 1B09SM083830-01, 6B09SM083830- 01M001 October 1, 2022 – September 30, 2024, October 17, 2022 – October 16, 2024, October 1, 2021 – September 30, 2023, March 15, 2021 – March 14, 2024, March 15, 2021 – March 14, 2023, and October 1, 2020 – September 30, 2022 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that it 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 the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR section 200.332(a), all pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes certain information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes: Subrecipient’s unique entity identifier (UEI) Federal award identification number (FAIN) Federal award date of award to the recipient by the federal agency Assistance listings number and title Indirect cost rate for the federal award (including if the de minimis rate is charged) Condition: Audit procedures included a review of a sample of subrecipient contracts for required information with the following results noted: TANF – For a sample of 17, the contracts did not include: UEI (one sample) FAIN (four samples) Federal award date (four samples) Assistance listings numbers and title (four samples) Indirect cost rate, including if the de minimis rate is charged (four samples) SSBG – For 11 of 19 samples, the contract did not include neither the FAIN nor the federal award date of award to the recipient by the federal agency. MHBG – For 7 of 8 samples, the contract did not include neither the FAIN nor the federal award date of award to the recipient by the federal agency. Questioned costs: None. Context: See “Condition.” Cause: Current internal controls in place to ensure a review of subaward agreements is taking place to verify that all required elements are included per 2 CFR 200 §200.332 are not at the correct precision level. Effect: Providing incomplete information to subrecipients may result in inaccurate reporting by the subrecipients and ultimately by HHSC. Repeat Finding: No Recommendation: We recommend management enhance existing controls around the review of all subaward agreements to ensure that all pass-through agreements include each of the required elements by 2 CFR §200.332. Views of responsible officials: Temporary Assistance for Needy Families (TANF) - HHSC concurs with the finding. Social Services Block Grants (SSBG)/ Mental Health Block Grants (MHBG) - HHSC concurs with the finding.
Period of Performance Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Block Grants for Community Mental Health Services ALN: 93.958 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 1B09SM087345, 6B09SM087345, 1B09SM087322-01 October 1, 2022 – September 30, 2024, October 17,2022 – October 16, 2024 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that it 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 the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR 200.403(h) cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to § 200.308(e)(3). Condition: For projects with period of performance beginning dates during the fiscal year, audit procedures included testing transactions posted to the general ledger during the first month of the award. We noted the following instances of noncompliance: For the two sampled transactions, totaling $56,997, one of the expenditures, totaling $31,254, was related to costs incurred prior to the period of performance begin date. Questioned costs: $31,254. Context: See “Condition.” Cause: Current controls are not at the correct precision level to detect costs charged outside of the period of performance. Effect: Ineffective internal controls may result in questioned costs and noncompliance with the terms of the grant. Repeat finding: No Recommendation: HHSC should enhance and/or modify existing controls to ensure that costs charged to a project have service dates within the period of performance stated in the federal award. Views of responsible officials: HHSC concurs with the finding.
Allowable Costs/Cost Principles – Cost Allocations, Matching, Level of Effort, Earmarking (CHIP Only) Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture U.S. Department of Education Social Security Administration Federal Program Title: Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) Temporary Assistance for Needy Families (TANF) Social Services Block Grant (SSBG) Children’s Health Insurance Program (CHIP) Block Grants for Community Mental Health Services (MHBG) Block Grants for Prevention and Treatment of Substance Abuse (SABG) Medicaid Cluster Aging Cluster (nonmajor) Disability Insurance/SSI Cluster (nonmajor) Money Follows the Person Rebalancing Demonstration (nonmajor) CCDF Cluster (nonmajor) SNAP Cluster (nonmajor) Special Education-Grants for Infants and Families (nonmajor) ALN: 10.557 93.558 93.667 93.767 93.958 93.959 93.775, 93.777, 93.778 93.044, 93.045, 93.053 (nonmajor) 96.001, 96.006 (nonmajor) 93.791 (nonmajor) 93.575, 93.596, 93.489 (nonmajor) 10.551, 10.561 (nonmajor) 84.181 (nonmajor) Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: WIC 6TX700527, 6TX700507 October 1, 2020 – September 30, 2022, October 1, 2021 – September 30, 2023, October 1, 2021 – September 30, 2022, October 1, 2022 – September 30, 2023, October 1, 2022 – September 30, 2024 TANF 2301TXTANF, 2301TXTAN3, 2201TXTANF, and 2201TXTAN3 October 1, 2022 – September 30, 2023 and October 1, 2021 – September 30, 2022 SSBG 2301TXSOSR, 2201TXSOSR and 2101TXSOSR October 1, 2022 – September 30, 2024, October 1, 2021 – September 30, 2023 CHIP 2105TX5021, 2205TX5021, 2305TX3002, 2305TX5021 October 1, 2020 – September 30, 2022, October 1, 2021 – September 30, 2023, October 1, 2022 – September 30, 2024 MHBG 1B09SM087345, 6B09SM087345-01M001, 6B09SM087345-01M002, 6B09SM087345-01M003, 1B09SM087322-01,1B09SM085994-01, 6B09SM085994-01M001, 6B09SM085994-01M002, 6B09SM085994-01M003, 1B09SM083999 -01, 6B09SM083999-01M001, 1B09SM083830-01, 6B09SM083830- 01M001 October 1, 2022 – September 30, 2024, October 17, 2022 – October 16, 2024, October 1, 2021 – September 30, 2023, March 15, 2021 – March 14, 2024, March 15, 2021 – March 14, 2023, and October 1, 2020 – September 30, 2022 SABG 1B08TI085835-01,6B08TI085835-01M001, 6B08TI084673-01M001, 6B08TI084673-01M002, 1B08TI084673-01, 6B08TI083478-01 6B08TI083478- 01M002, 6B08TI083478-01M003, 6B08TI083478-01M004 October 1, 2022 – September 30, 2024, October 1, 2021 – September 30, 2023, and October 1, 2020 – September 30, 2022 Medicaid Cluster 2205TX5ADM, 2205TX5MAP, 2205TXIMPL; 2305TX5ADM, 2305TX5MAP, 2305TXIMPL October 1, 2021 – September 30, 2022, October 1, 2022 – September 30, 2023 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that it 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 the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 45 CFR Section 95.507, the State shall submit a cost allocation plan for the State agency as required below to the Director, Division of Cost Allocation (DCA), in the appropriate HHS Regional Office. The plan shall describe the procedures used to identify, measure, and allocate all costs to each of the programs operated by the State agency. The cost allocation plan shall contain the procedures used to identify, measure, and allocate all costs to each benefitting program and activity. Per 45 CFR Section 95.509, the State shall promptly amend the cost allocation plan and submit the amended plan to the Director, DCA, if any of the following events occur, including if other changes occur which make the allocation basis or procedures in the approval cost allocation plan invalid. Condition: HHSC’s approved Public Assistance Cost Allocation Plan (PACAP) expenditures and revenues are initially allocated based on an estimate of Project ID percentages. After actual base statistical data is available, expenditures are reallocated and adjustments between estimated and actual costs are made. The adjustments will result in costs claimed for each period being allocated based on actual base statistics for the same period. Data is updated either by voucher, monthly, quarterly, semi-annually, or annually, depending on the Project ID. HHSC experienced significant delays in updating factors. By the end of the fiscal year, cost allocations had been updated only through August 2022. Although there is no documented policy over when the FMAP should be updated, HHSC will allocate costs at the FMAP that is in effect at the time of the transaction and will reallocate the transactions using the FMAP in effect at the time of the reallocation. This procedure was not followed in 2023 when the costs for four of 40 sample allocations tested in the CHIP program were allocated using a rate other than the current one in effect resulting in noncompliance with matching requirements. Questioned costs: Unknown Context: See “Condition.” Cause: HHSC’s General Ledger Unit is responsible for cost allocations. At the start of fiscal year 2023, the Unit suffered a loss of more than half of its staff due to turnover. Additionally, the current Federal Medical Assistance Percentage (FMAP) rates were in a stepdown process whereby the rate changed quarterly as opposed to yearly which intensified the workload. In addition, since transformation, the number of Public Assistance Cost Allocation Plan (PACAP) methodologies (Project IDs) has increased by 243%. These methodologies have become increasingly more complex, now including over 80 dependent factors of which some comprise more than 100 fund sources each. This huge increase in both volume and complexity has greatly increased calculation labor and risk of error. Effect: Failure to update factor allocations timely can result in questioned costs. Repeat finding: 2022-010, 2021-004, 2020-016, 2019-006, 2018-005, 2017-009, and 2016-024 Recommendation: HHSC should allocate adequate resources to ensure factor allocations are performed and reallocations are updated timely in order to present accurate information. Views of responsible officials: HHSC concurs with the finding.
Reporting – FFATA Subawards Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Temporary Assistance for Needy Families Social Services Block Grant Block Grants for Community Mental Health Services Block Grants for Prevention and Treatment of Substance Abuse ALN: 93.558 93.667 93.958 93.959 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: TANF 2301TXTANF, 2301TXTAN3, 2201TXTANF, and 2201TXTAN3 October 1, 2022 – September 30, 2023 and October 1, 2021 – September 30, 2022 SSBG 2301TXSOSR, 2201TXSOSR and 2101TXSOSR October 1, 2022 – September 30, 2024, October 1, 2021 – September 30, 2023, and October 1, 2020 – September 30, 2022 MHBG 1B09SM085994-01, 6B09SM085994-01M001, 6B09SM085994-01M002, 6B09SM083999-01M001, 6B09SM083830-01M001 October 1, 2021 – September 30, 2023, March 15, 2021 – March 14, 2024, and October 1, 2020 – September 30, 2022 SABG 1B08TI085835-01,6B08TI085835-01M001, 6B08TI084673-01M001, 6B08TI084673-01M002, 1B08TI084673-01, 6B08TI083478-01M003 October 1, 2022 – September 30, 2024, October 1, 2021 – September 30, 2023, and October 1, 2020 – September 30, 2022 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that it 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 the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109- 282), as amended by Section 6202 of Public Law 110-252, recipients (i.e., 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) no later than the last day of the month following the month in which the subaward/subaward amendment obligation was made or the subcontract award/subcontract modification was made. Condition: The HHSC Federal Funds Office (FFO) is responsible for submitting all required subawards in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). A standard FFATA Reporting template has been created by the FFO that includes all required elements to be submitted. Program departments must complete and submit the template to the FFO for all federal subawards with amounts over $30,000 by the 15th of every month to be included in that month’s submission. Currently, it is the responsibility of the individual program departments to ensure that each obligating action at or over $30,000 is reported in the FFATA Reporting Template no later than the end of the next month in which the obligation was made. Due to system limitations, there is no central tracking of award obligations. Thus, HHSC was unable to provide a population of first-tier subawards of $30,000 or more that were obligated during the fiscal year and required to be submitted in FSRS. Accordingly, we were unable to select a sample and test for internal controls over compliance or compliance. Questioned costs: None. Context: See “Condition.” Cause: CAPPS-FIN, HHSC’s system of record, does not have the capability to track the date of obligation of federal awards. Effect: Failure to report all subawards $30,000 or greater in FSRS will result in noncompliance with terms of the federal grant guidelines. Repeat finding: 2022-013, 2021-007 Recommendation: HHSC should implement functionality into CAPPS-FIN to track when obligations of federal awards are made so that the agency is able to retrieve a list of all subawards by obligation date in order to monitor compliance with the Federal Funding Accountability and Transparency Act. Views of responsible officials: HHSC agrees with the finding but does not concur with the recommendation insofar as it makes a specific designation of CAPPS-Financials as the system to ensure compliance.
Subrecipient Monitoring Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Temporary Assistance for Needy Families Social Services Block Grant Block Grants for Community Mental Health Services ALN: 93.558 93.667 93.958 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: TANF 2301TXTANF, 2301TXTAN3, 2201TXTANF, and 2201TXTAN3 October 1, 2022 – September 30, 2023 and October 1, 2021 – September 30, 2022 SSBG 2301TXSOSR, 2201TXSOSR and 2101TXSOSR October 1, 2022 – September 30, 2024, October 1, 2021 – September 30, 2023, and October 1, 2020 – September 30, 2022 MHBG 1B09SM087345, 6B09SM087345-01M001, 6B09SM087345-01M002, 6B09SM087345-01M003, 1B09SM087322-01,1B09SM085994-01, 6B09SM085994-01M001, 6B09SM085994-01M002, 6B09SM085994-01M003, 1B09SM083999 -01, 6B09SM083999-01M001, 1B09SM083830-01, 6B09SM083830- 01M001 October 1, 2022 – September 30, 2024, October 17, 2022 – October 16, 2024, October 1, 2021 – September 30, 2023, March 15, 2021 – March 14, 2024, March 15, 2021 – March 14, 2023, and October 1, 2020 – September 30, 2022 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that it 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 the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR section 200.332(a), all pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes certain information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes: Subrecipient’s unique entity identifier (UEI) Federal award identification number (FAIN) Federal award date of award to the recipient by the federal agency Assistance listings number and title Indirect cost rate for the federal award (including if the de minimis rate is charged) Condition: Audit procedures included a review of a sample of subrecipient contracts for required information with the following results noted: TANF – For a sample of 17, the contracts did not include: UEI (one sample) FAIN (four samples) Federal award date (four samples) Assistance listings numbers and title (four samples) Indirect cost rate, including if the de minimis rate is charged (four samples) SSBG – For 11 of 19 samples, the contract did not include neither the FAIN nor the federal award date of award to the recipient by the federal agency. MHBG – For 7 of 8 samples, the contract did not include neither the FAIN nor the federal award date of award to the recipient by the federal agency. Questioned costs: None. Context: See “Condition.” Cause: Current internal controls in place to ensure a review of subaward agreements is taking place to verify that all required elements are included per 2 CFR 200 §200.332 are not at the correct precision level. Effect: Providing incomplete information to subrecipients may result in inaccurate reporting by the subrecipients and ultimately by HHSC. Repeat Finding: No Recommendation: We recommend management enhance existing controls around the review of all subaward agreements to ensure that all pass-through agreements include each of the required elements by 2 CFR §200.332. Views of responsible officials: Temporary Assistance for Needy Families (TANF) - HHSC concurs with the finding. Social Services Block Grants (SSBG)/ Mental Health Block Grants (MHBG) - HHSC concurs with the finding.
Period of Performance Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Block Grants for Community Mental Health Services ALN: 93.958 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 1B09SM087345, 6B09SM087345, 1B09SM087322-01 October 1, 2022 – September 30, 2024, October 17,2022 – October 16, 2024 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that it 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 the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR 200.403(h) cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to § 200.308(e)(3). Condition: For projects with period of performance beginning dates during the fiscal year, audit procedures included testing transactions posted to the general ledger during the first month of the award. We noted the following instances of noncompliance: For the two sampled transactions, totaling $56,997, one of the expenditures, totaling $31,254, was related to costs incurred prior to the period of performance begin date. Questioned costs: $31,254. Context: See “Condition.” Cause: Current controls are not at the correct precision level to detect costs charged outside of the period of performance. Effect: Ineffective internal controls may result in questioned costs and noncompliance with the terms of the grant. Repeat finding: No Recommendation: HHSC should enhance and/or modify existing controls to ensure that costs charged to a project have service dates within the period of performance stated in the federal award. Views of responsible officials: HHSC concurs with the finding.
Allowable Costs/Cost Principles – Cost Allocations, Matching, Level of Effort, Earmarking (CHIP Only) Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture U.S. Department of Education Social Security Administration Federal Program Title: Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) Temporary Assistance for Needy Families (TANF) Social Services Block Grant (SSBG) Children’s Health Insurance Program (CHIP) Block Grants for Community Mental Health Services (MHBG) Block Grants for Prevention and Treatment of Substance Abuse (SABG) Medicaid Cluster Aging Cluster (nonmajor) Disability Insurance/SSI Cluster (nonmajor) Money Follows the Person Rebalancing Demonstration (nonmajor) CCDF Cluster (nonmajor) SNAP Cluster (nonmajor) Special Education-Grants for Infants and Families (nonmajor) ALN: 10.557 93.558 93.667 93.767 93.958 93.959 93.775, 93.777, 93.778 93.044, 93.045, 93.053 (nonmajor) 96.001, 96.006 (nonmajor) 93.791 (nonmajor) 93.575, 93.596, 93.489 (nonmajor) 10.551, 10.561 (nonmajor) 84.181 (nonmajor) Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: WIC 6TX700527, 6TX700507 October 1, 2020 – September 30, 2022, October 1, 2021 – September 30, 2023, October 1, 2021 – September 30, 2022, October 1, 2022 – September 30, 2023, October 1, 2022 – September 30, 2024 TANF 2301TXTANF, 2301TXTAN3, 2201TXTANF, and 2201TXTAN3 October 1, 2022 – September 30, 2023 and October 1, 2021 – September 30, 2022 SSBG 2301TXSOSR, 2201TXSOSR and 2101TXSOSR October 1, 2022 – September 30, 2024, October 1, 2021 – September 30, 2023 CHIP 2105TX5021, 2205TX5021, 2305TX3002, 2305TX5021 October 1, 2020 – September 30, 2022, October 1, 2021 – September 30, 2023, October 1, 2022 – September 30, 2024 MHBG 1B09SM087345, 6B09SM087345-01M001, 6B09SM087345-01M002, 6B09SM087345-01M003, 1B09SM087322-01,1B09SM085994-01, 6B09SM085994-01M001, 6B09SM085994-01M002, 6B09SM085994-01M003, 1B09SM083999 -01, 6B09SM083999-01M001, 1B09SM083830-01, 6B09SM083830- 01M001 October 1, 2022 – September 30, 2024, October 17, 2022 – October 16, 2024, October 1, 2021 – September 30, 2023, March 15, 2021 – March 14, 2024, March 15, 2021 – March 14, 2023, and October 1, 2020 – September 30, 2022 SABG 1B08TI085835-01,6B08TI085835-01M001, 6B08TI084673-01M001, 6B08TI084673-01M002, 1B08TI084673-01, 6B08TI083478-01 6B08TI083478- 01M002, 6B08TI083478-01M003, 6B08TI083478-01M004 October 1, 2022 – September 30, 2024, October 1, 2021 – September 30, 2023, and October 1, 2020 – September 30, 2022 Medicaid Cluster 2205TX5ADM, 2205TX5MAP, 2205TXIMPL; 2305TX5ADM, 2305TX5MAP, 2305TXIMPL October 1, 2021 – September 30, 2022, October 1, 2022 – September 30, 2023 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that it 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 the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 45 CFR Section 95.507, the State shall submit a cost allocation plan for the State agency as required below to the Director, Division of Cost Allocation (DCA), in the appropriate HHS Regional Office. The plan shall describe the procedures used to identify, measure, and allocate all costs to each of the programs operated by the State agency. The cost allocation plan shall contain the procedures used to identify, measure, and allocate all costs to each benefitting program and activity. Per 45 CFR Section 95.509, the State shall promptly amend the cost allocation plan and submit the amended plan to the Director, DCA, if any of the following events occur, including if other changes occur which make the allocation basis or procedures in the approval cost allocation plan invalid. Condition: HHSC’s approved Public Assistance Cost Allocation Plan (PACAP) expenditures and revenues are initially allocated based on an estimate of Project ID percentages. After actual base statistical data is available, expenditures are reallocated and adjustments between estimated and actual costs are made. The adjustments will result in costs claimed for each period being allocated based on actual base statistics for the same period. Data is updated either by voucher, monthly, quarterly, semi-annually, or annually, depending on the Project ID. HHSC experienced significant delays in updating factors. By the end of the fiscal year, cost allocations had been updated only through August 2022. Although there is no documented policy over when the FMAP should be updated, HHSC will allocate costs at the FMAP that is in effect at the time of the transaction and will reallocate the transactions using the FMAP in effect at the time of the reallocation. This procedure was not followed in 2023 when the costs for four of 40 sample allocations tested in the CHIP program were allocated using a rate other than the current one in effect resulting in noncompliance with matching requirements. Questioned costs: Unknown Context: See “Condition.” Cause: HHSC’s General Ledger Unit is responsible for cost allocations. At the start of fiscal year 2023, the Unit suffered a loss of more than half of its staff due to turnover. Additionally, the current Federal Medical Assistance Percentage (FMAP) rates were in a stepdown process whereby the rate changed quarterly as opposed to yearly which intensified the workload. In addition, since transformation, the number of Public Assistance Cost Allocation Plan (PACAP) methodologies (Project IDs) has increased by 243%. These methodologies have become increasingly more complex, now including over 80 dependent factors of which some comprise more than 100 fund sources each. This huge increase in both volume and complexity has greatly increased calculation labor and risk of error. Effect: Failure to update factor allocations timely can result in questioned costs. Repeat finding: 2022-010, 2021-004, 2020-016, 2019-006, 2018-005, 2017-009, and 2016-024 Recommendation: HHSC should allocate adequate resources to ensure factor allocations are performed and reallocations are updated timely in order to present accurate information. Views of responsible officials: HHSC concurs with the finding.
Reporting – FFATA Subawards Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Temporary Assistance for Needy Families Social Services Block Grant Block Grants for Community Mental Health Services Block Grants for Prevention and Treatment of Substance Abuse ALN: 93.558 93.667 93.958 93.959 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: TANF 2301TXTANF, 2301TXTAN3, 2201TXTANF, and 2201TXTAN3 October 1, 2022 – September 30, 2023 and October 1, 2021 – September 30, 2022 SSBG 2301TXSOSR, 2201TXSOSR and 2101TXSOSR October 1, 2022 – September 30, 2024, October 1, 2021 – September 30, 2023, and October 1, 2020 – September 30, 2022 MHBG 1B09SM085994-01, 6B09SM085994-01M001, 6B09SM085994-01M002, 6B09SM083999-01M001, 6B09SM083830-01M001 October 1, 2021 – September 30, 2023, March 15, 2021 – March 14, 2024, and October 1, 2020 – September 30, 2022 SABG 1B08TI085835-01,6B08TI085835-01M001, 6B08TI084673-01M001, 6B08TI084673-01M002, 1B08TI084673-01, 6B08TI083478-01M003 October 1, 2022 – September 30, 2024, October 1, 2021 – September 30, 2023, and October 1, 2020 – September 30, 2022 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that it 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 the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109- 282), as amended by Section 6202 of Public Law 110-252, recipients (i.e., 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) no later than the last day of the month following the month in which the subaward/subaward amendment obligation was made or the subcontract award/subcontract modification was made. Condition: The HHSC Federal Funds Office (FFO) is responsible for submitting all required subawards in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). A standard FFATA Reporting template has been created by the FFO that includes all required elements to be submitted. Program departments must complete and submit the template to the FFO for all federal subawards with amounts over $30,000 by the 15th of every month to be included in that month’s submission. Currently, it is the responsibility of the individual program departments to ensure that each obligating action at or over $30,000 is reported in the FFATA Reporting Template no later than the end of the next month in which the obligation was made. Due to system limitations, there is no central tracking of award obligations. Thus, HHSC was unable to provide a population of first-tier subawards of $30,000 or more that were obligated during the fiscal year and required to be submitted in FSRS. Accordingly, we were unable to select a sample and test for internal controls over compliance or compliance. Questioned costs: None. Context: See “Condition.” Cause: CAPPS-FIN, HHSC’s system of record, does not have the capability to track the date of obligation of federal awards. Effect: Failure to report all subawards $30,000 or greater in FSRS will result in noncompliance with terms of the federal grant guidelines. Repeat finding: 2022-013, 2021-007 Recommendation: HHSC should implement functionality into CAPPS-FIN to track when obligations of federal awards are made so that the agency is able to retrieve a list of all subawards by obligation date in order to monitor compliance with the Federal Funding Accountability and Transparency Act. Views of responsible officials: HHSC agrees with the finding but does not concur with the recommendation insofar as it makes a specific designation of CAPPS-Financials as the system to ensure compliance.
Allowable Costs/Cost Principles – Cost Allocations, Matching, Level of Effort, Earmarking (CHIP Only) Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture U.S. Department of Education Social Security Administration Federal Program Title: Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) Temporary Assistance for Needy Families (TANF) Social Services Block Grant (SSBG) Children’s Health Insurance Program (CHIP) Block Grants for Community Mental Health Services (MHBG) Block Grants for Prevention and Treatment of Substance Abuse (SABG) Medicaid Cluster Aging Cluster (nonmajor) Disability Insurance/SSI Cluster (nonmajor) Money Follows the Person Rebalancing Demonstration (nonmajor) CCDF Cluster (nonmajor) SNAP Cluster (nonmajor) Special Education-Grants for Infants and Families (nonmajor) ALN: 10.557 93.558 93.667 93.767 93.958 93.959 93.775, 93.777, 93.778 93.044, 93.045, 93.053 (nonmajor) 96.001, 96.006 (nonmajor) 93.791 (nonmajor) 93.575, 93.596, 93.489 (nonmajor) 10.551, 10.561 (nonmajor) 84.181 (nonmajor) Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: WIC 6TX700527, 6TX700507 October 1, 2020 – September 30, 2022, October 1, 2021 – September 30, 2023, October 1, 2021 – September 30, 2022, October 1, 2022 – September 30, 2023, October 1, 2022 – September 30, 2024 TANF 2301TXTANF, 2301TXTAN3, 2201TXTANF, and 2201TXTAN3 October 1, 2022 – September 30, 2023 and October 1, 2021 – September 30, 2022 SSBG 2301TXSOSR, 2201TXSOSR and 2101TXSOSR October 1, 2022 – September 30, 2024, October 1, 2021 – September 30, 2023 CHIP 2105TX5021, 2205TX5021, 2305TX3002, 2305TX5021 October 1, 2020 – September 30, 2022, October 1, 2021 – September 30, 2023, October 1, 2022 – September 30, 2024 MHBG 1B09SM087345, 6B09SM087345-01M001, 6B09SM087345-01M002, 6B09SM087345-01M003, 1B09SM087322-01,1B09SM085994-01, 6B09SM085994-01M001, 6B09SM085994-01M002, 6B09SM085994-01M003, 1B09SM083999 -01, 6B09SM083999-01M001, 1B09SM083830-01, 6B09SM083830- 01M001 October 1, 2022 – September 30, 2024, October 17, 2022 – October 16, 2024, October 1, 2021 – September 30, 2023, March 15, 2021 – March 14, 2024, March 15, 2021 – March 14, 2023, and October 1, 2020 – September 30, 2022 SABG 1B08TI085835-01,6B08TI085835-01M001, 6B08TI084673-01M001, 6B08TI084673-01M002, 1B08TI084673-01, 6B08TI083478-01 6B08TI083478- 01M002, 6B08TI083478-01M003, 6B08TI083478-01M004 October 1, 2022 – September 30, 2024, October 1, 2021 – September 30, 2023, and October 1, 2020 – September 30, 2022 Medicaid Cluster 2205TX5ADM, 2205TX5MAP, 2205TXIMPL; 2305TX5ADM, 2305TX5MAP, 2305TXIMPL October 1, 2021 – September 30, 2022, October 1, 2022 – September 30, 2023 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that it 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 the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 45 CFR Section 95.507, the State shall submit a cost allocation plan for the State agency as required below to the Director, Division of Cost Allocation (DCA), in the appropriate HHS Regional Office. The plan shall describe the procedures used to identify, measure, and allocate all costs to each of the programs operated by the State agency. The cost allocation plan shall contain the procedures used to identify, measure, and allocate all costs to each benefitting program and activity. Per 45 CFR Section 95.509, the State shall promptly amend the cost allocation plan and submit the amended plan to the Director, DCA, if any of the following events occur, including if other changes occur which make the allocation basis or procedures in the approval cost allocation plan invalid. Condition: HHSC’s approved Public Assistance Cost Allocation Plan (PACAP) expenditures and revenues are initially allocated based on an estimate of Project ID percentages. After actual base statistical data is available, expenditures are reallocated and adjustments between estimated and actual costs are made. The adjustments will result in costs claimed for each period being allocated based on actual base statistics for the same period. Data is updated either by voucher, monthly, quarterly, semi-annually, or annually, depending on the Project ID. HHSC experienced significant delays in updating factors. By the end of the fiscal year, cost allocations had been updated only through August 2022. Although there is no documented policy over when the FMAP should be updated, HHSC will allocate costs at the FMAP that is in effect at the time of the transaction and will reallocate the transactions using the FMAP in effect at the time of the reallocation. This procedure was not followed in 2023 when the costs for four of 40 sample allocations tested in the CHIP program were allocated using a rate other than the current one in effect resulting in noncompliance with matching requirements. Questioned costs: Unknown Context: See “Condition.” Cause: HHSC’s General Ledger Unit is responsible for cost allocations. At the start of fiscal year 2023, the Unit suffered a loss of more than half of its staff due to turnover. Additionally, the current Federal Medical Assistance Percentage (FMAP) rates were in a stepdown process whereby the rate changed quarterly as opposed to yearly which intensified the workload. In addition, since transformation, the number of Public Assistance Cost Allocation Plan (PACAP) methodologies (Project IDs) has increased by 243%. These methodologies have become increasingly more complex, now including over 80 dependent factors of which some comprise more than 100 fund sources each. This huge increase in both volume and complexity has greatly increased calculation labor and risk of error. Effect: Failure to update factor allocations timely can result in questioned costs. Repeat finding: 2022-010, 2021-004, 2020-016, 2019-006, 2018-005, 2017-009, and 2016-024 Recommendation: HHSC should allocate adequate resources to ensure factor allocations are performed and reallocations are updated timely in order to present accurate information. Views of responsible officials: HHSC concurs with the finding.
Reporting – FFATA Subawards Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Temporary Assistance for Needy Families Social Services Block Grant Block Grants for Community Mental Health Services Block Grants for Prevention and Treatment of Substance Abuse ALN: 93.558 93.667 93.958 93.959 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: TANF 2301TXTANF, 2301TXTAN3, 2201TXTANF, and 2201TXTAN3 October 1, 2022 – September 30, 2023 and October 1, 2021 – September 30, 2022 SSBG 2301TXSOSR, 2201TXSOSR and 2101TXSOSR October 1, 2022 – September 30, 2024, October 1, 2021 – September 30, 2023, and October 1, 2020 – September 30, 2022 MHBG 1B09SM085994-01, 6B09SM085994-01M001, 6B09SM085994-01M002, 6B09SM083999-01M001, 6B09SM083830-01M001 October 1, 2021 – September 30, 2023, March 15, 2021 – March 14, 2024, and October 1, 2020 – September 30, 2022 SABG 1B08TI085835-01,6B08TI085835-01M001, 6B08TI084673-01M001, 6B08TI084673-01M002, 1B08TI084673-01, 6B08TI083478-01M003 October 1, 2022 – September 30, 2024, October 1, 2021 – September 30, 2023, and October 1, 2020 – September 30, 2022 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that it 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 the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109- 282), as amended by Section 6202 of Public Law 110-252, recipients (i.e., 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) no later than the last day of the month following the month in which the subaward/subaward amendment obligation was made or the subcontract award/subcontract modification was made. Condition: The HHSC Federal Funds Office (FFO) is responsible for submitting all required subawards in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). A standard FFATA Reporting template has been created by the FFO that includes all required elements to be submitted. Program departments must complete and submit the template to the FFO for all federal subawards with amounts over $30,000 by the 15th of every month to be included in that month’s submission. Currently, it is the responsibility of the individual program departments to ensure that each obligating action at or over $30,000 is reported in the FFATA Reporting Template no later than the end of the next month in which the obligation was made. Due to system limitations, there is no central tracking of award obligations. Thus, HHSC was unable to provide a population of first-tier subawards of $30,000 or more that were obligated during the fiscal year and required to be submitted in FSRS. Accordingly, we were unable to select a sample and test for internal controls over compliance or compliance. Questioned costs: None. Context: See “Condition.” Cause: CAPPS-FIN, HHSC’s system of record, does not have the capability to track the date of obligation of federal awards. Effect: Failure to report all subawards $30,000 or greater in FSRS will result in noncompliance with terms of the federal grant guidelines. Repeat finding: 2022-013, 2021-007 Recommendation: HHSC should implement functionality into CAPPS-FIN to track when obligations of federal awards are made so that the agency is able to retrieve a list of all subawards by obligation date in order to monitor compliance with the Federal Funding Accountability and Transparency Act. Views of responsible officials: HHSC agrees with the finding but does not concur with the recommendation insofar as it makes a specific designation of CAPPS-Financials as the system to ensure compliance.
Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: U.S. Department of Homeland Security Federal Program Title: Disaster Grants-Public Assistance (Presidentially Declared Disasters) ALN: 97.036 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: FEMA-4332-DR, FEMA-3540-DR, FEMA-4485-DR, FEMA-4586-DR 2017, 2020, 2020, 2021 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that it 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 the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Federal Emergency Management Agency (FEMA) evaluates the eligibility of all costs claimed by the applicant. Not all costs incurred as a result of the incident are eligible. Chapter 4 of the Public Assistance Program and Policy Guide states that to be eligible, costs must be: Directly tied to the performance of eligible work. Adequately documented. Reduced by all applicable credits, such as insurance proceeds and salvage values. Authorized and not prohibited under federal, state, territorial, tribal, or local government laws or regulations. Consistent with applicant’s internal policies, regulations, and procedures that apply uniformly to both federal awards and other activities of the applicant; and Necessary and reasonable to accomplish the work properly and efficiently. Condition: Audit procedures included a sample of 60 expenditures, totaling $97,118,451, incurred during the fiscal year to validate allowability with the grant award. DSHS was unable to provide the project worksheets for seven out of the 60 samples, totaling $1,878,609. Thus, we were unable to verify that the costs were allowable per the project worksheets. For eight samples, totaling $561,562, the project worksheets associated with the transactions were not approved. Questioned costs: $2,440,171. Context: See “Condition.” Cause: FEMA project worksheets from the Texas COVID pandemic remain open. DSHS is continually adding and removing invoices from its claims with FEMA as final expenditures are deemed eligible and ineligible by FEMA and claims are reimbursed. Five of the invoices reported on the schedule of expenditures of federal awards and submitted for reimbursement were originally under a project worksheet but later withdrawn by DSHS as updated FEMA policies deemed certain costs ineligible. As a result, these transactions were no longer associated with a project worksheet at the time of audit fieldwork. Additionally, two invoices reported on the schedule of expenditures of federal awards had not been submitted to FEMA for reimbursement and do not have project worksheets associated with them at the time of audit fieldwork. Additionally, expenditures reported on the schedule of federal awards are not reconciled to allowable costs after ineligible expenditures are identified. Effect: Amounts reported on the schedule of expenditures of federal awards that are not reconciled to underlying allowable costs may result in disallowed costs. Repeat finding: No Recommendation: We recommend DSHS reconcile all program expenditures, whether they have been incurred, submitted for reimbursement, or reimbursed, to determine the amount to report on the schedule of expenditures of federal awards. Expenditures deemed to be ineligible subsequent to fiscal year end should be removed from the reported amount. Views of responsible officials: During the COVID-19 pandemic, DSHS’ primary focus was getting resources where they were needed most. The intensity of the pandemic resulted in significantly increased workloads and a need for rapid response. DSHS previously identified the need to review expenditures and ensure costs are allowable and align with required parameters. Because of the shifting of FEMA eligibility criteria over time, we agree that modifications are needed to ensure transactions comply with the most recent guidance.
Reporting – Financial and Special Reporting for FFATA Federal Agency: U.S. Department of Homeland Security Federal Program Title: Disaster Grants - Public Assistance (Presidentially Declared Disasters) ALN: 97.036 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: PA-06-TX-4485, PA-06-TX-4586 March 25, 2020 – March 25, 2028, February 19, 2021 – February 19, 2029 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non_x0002_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). Under the requirements of the Federal Funding Accountability and Transparency Act (Pub. L. No. 109-282), as amended by Section 6202 of Pub. L. No. 110-252, hereafter referred as the “Transparency Act” that are codified in 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 to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). The action is to be reported in FSRS no later than the last day of the month following the month in which the subaward/subaward amendment obligation was made or the subcontract award/subcontract modification was made. Condition: For one of the nine financial reports tested during the fiscal year, we noted the Texas Division of Emergency Management (TDEM) incorrectly reported total federal funds authorized amount of $14,451,281,005. TDEM should have reported total federal funds authorized amount of $14,450,861,018, resulting in a reported variance of $419,988. During our testing of special reporting for FFATA, we noted the following instances of noncompliance: See chart or table in the Schedule of Findings and Questioned Costs. Questioned costs: None. Context: See "Condition" Cause: Specific to financial reporting, the variance is due to a manual error in transferring data from the Smartlink report used to report the total federal funds authorized amount to the financial report. TDEM did not reduce the total federal funds authorized for the Hazard Mitigation projects included in the Smartlink report. The untimely submission of the FFATA report was due to the utilization of a new third-party application where gaps were later identified. Effect: Reporting inaccurate information on financial reports could impact the federal agency’s ability to accurately capture key information in order to assess the performance of the program. Failure to report all subawards $30,000 or greater in FSRS will result in noncompliance with terms of the federal grant guidelines. Repeat finding: No Recommendation: TDEM should enhance its internal controls to ensure manual errors on financial reports are identified and FFATA reports are identified in a timely manner in order to be reported in FSRS within the required timeline. Views of responsible officials: Specific to the financial reporting, it appears there was a malfunction with the federal system adhoc legacy inquiry reporting tool when generating federal financial reports containing the total federal funds authorized. The federal system’s malfunction produced a comingled program report which caused an overage in total federal funds authorized. TDEM no longer generates reports from the unreliable federal system adhoc legacy inquiry module. As of October 2023, we began utilizing the federal system APEX reports. TDEM has followed up with the Federal Support Center for the Payment Management System multiple times to determine what is causing the federal system to report inaccuracies, however they have failed to address the issue at hand, have stated that “soon the legacy adhoc will no longer be available”, and are encouraging grantees to only use the APEX reports – seemingly due to the inaccuracies, such as the one noted here, that the federal system generates. Regarding the FFATA reporting, a new automated report developed by a third-party vendor to streamline the reporting timeline was being utilized after an internal testing phase had transpired. A gap was later identified which inadvertently created the timing delay.
Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: U.S. Department of Homeland Security Federal Program Title: Disaster Grants-Public Assistance (Presidentially Declared Disasters) ALN: 97.036 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: FEMA-4332-DR, FEMA-3540-DR, FEMA-4485-DR, FEMA-4586-DR 2017, 2020, 2020, 2021 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that it 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 the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Federal Emergency Management Agency (FEMA) evaluates the eligibility of all costs claimed by the applicant. Not all costs incurred as a result of the incident are eligible. Chapter 4 of the Public Assistance Program and Policy Guide states that to be eligible, costs must be: Directly tied to the performance of eligible work. Adequately documented. Reduced by all applicable credits, such as insurance proceeds and salvage values. Authorized and not prohibited under federal, state, territorial, tribal, or local government laws or regulations. Consistent with applicant’s internal policies, regulations, and procedures that apply uniformly to both federal awards and other activities of the applicant; and Necessary and reasonable to accomplish the work properly and efficiently. Condition: Audit procedures included a sample of 60 expenditures, totaling $97,118,451, incurred during the fiscal year to validate allowability with the grant award. DSHS was unable to provide the project worksheets for seven out of the 60 samples, totaling $1,878,609. Thus, we were unable to verify that the costs were allowable per the project worksheets. For eight samples, totaling $561,562, the project worksheets associated with the transactions were not approved. Questioned costs: $2,440,171. Context: See “Condition.” Cause: FEMA project worksheets from the Texas COVID pandemic remain open. DSHS is continually adding and removing invoices from its claims with FEMA as final expenditures are deemed eligible and ineligible by FEMA and claims are reimbursed. Five of the invoices reported on the schedule of expenditures of federal awards and submitted for reimbursement were originally under a project worksheet but later withdrawn by DSHS as updated FEMA policies deemed certain costs ineligible. As a result, these transactions were no longer associated with a project worksheet at the time of audit fieldwork. Additionally, two invoices reported on the schedule of expenditures of federal awards had not been submitted to FEMA for reimbursement and do not have project worksheets associated with them at the time of audit fieldwork. Additionally, expenditures reported on the schedule of federal awards are not reconciled to allowable costs after ineligible expenditures are identified. Effect: Amounts reported on the schedule of expenditures of federal awards that are not reconciled to underlying allowable costs may result in disallowed costs. Repeat finding: No Recommendation: We recommend DSHS reconcile all program expenditures, whether they have been incurred, submitted for reimbursement, or reimbursed, to determine the amount to report on the schedule of expenditures of federal awards. Expenditures deemed to be ineligible subsequent to fiscal year end should be removed from the reported amount. Views of responsible officials: During the COVID-19 pandemic, DSHS’ primary focus was getting resources where they were needed most. The intensity of the pandemic resulted in significantly increased workloads and a need for rapid response. DSHS previously identified the need to review expenditures and ensure costs are allowable and align with required parameters. Because of the shifting of FEMA eligibility criteria over time, we agree that modifications are needed to ensure transactions comply with the most recent guidance.
Reporting – Financial and Special Reporting for FFATA Federal Agency: U.S. Department of Homeland Security Federal Program Title: Disaster Grants - Public Assistance (Presidentially Declared Disasters) ALN: 97.036 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: PA-06-TX-4485, PA-06-TX-4586 March 25, 2020 – March 25, 2028, February 19, 2021 – February 19, 2029 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non_x0002_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). Under the requirements of the Federal Funding Accountability and Transparency Act (Pub. L. No. 109-282), as amended by Section 6202 of Pub. L. No. 110-252, hereafter referred as the “Transparency Act” that are codified in 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 to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). The action is to be reported in FSRS no later than the last day of the month following the month in which the subaward/subaward amendment obligation was made or the subcontract award/subcontract modification was made. Condition: For one of the nine financial reports tested during the fiscal year, we noted the Texas Division of Emergency Management (TDEM) incorrectly reported total federal funds authorized amount of $14,451,281,005. TDEM should have reported total federal funds authorized amount of $14,450,861,018, resulting in a reported variance of $419,988. During our testing of special reporting for FFATA, we noted the following instances of noncompliance: See chart or table in the Schedule of Findings and Questioned Costs. Questioned costs: None. Context: See "Condition" Cause: Specific to financial reporting, the variance is due to a manual error in transferring data from the Smartlink report used to report the total federal funds authorized amount to the financial report. TDEM did not reduce the total federal funds authorized for the Hazard Mitigation projects included in the Smartlink report. The untimely submission of the FFATA report was due to the utilization of a new third-party application where gaps were later identified. Effect: Reporting inaccurate information on financial reports could impact the federal agency’s ability to accurately capture key information in order to assess the performance of the program. Failure to report all subawards $30,000 or greater in FSRS will result in noncompliance with terms of the federal grant guidelines. Repeat finding: No Recommendation: TDEM should enhance its internal controls to ensure manual errors on financial reports are identified and FFATA reports are identified in a timely manner in order to be reported in FSRS within the required timeline. Views of responsible officials: Specific to the financial reporting, it appears there was a malfunction with the federal system adhoc legacy inquiry reporting tool when generating federal financial reports containing the total federal funds authorized. The federal system’s malfunction produced a comingled program report which caused an overage in total federal funds authorized. TDEM no longer generates reports from the unreliable federal system adhoc legacy inquiry module. As of October 2023, we began utilizing the federal system APEX reports. TDEM has followed up with the Federal Support Center for the Payment Management System multiple times to determine what is causing the federal system to report inaccuracies, however they have failed to address the issue at hand, have stated that “soon the legacy adhoc will no longer be available”, and are encouraging grantees to only use the APEX reports – seemingly due to the inaccuracies, such as the one noted here, that the federal system generates. Regarding the FFATA reporting, a new automated report developed by a third-party vendor to streamline the reporting timeline was being utilized after an internal testing phase had transpired. A gap was later identified which inadvertently created the timing delay.
Allowable Costs/Cost Principles – Cost Allocations, Matching, Level of Effort, Earmarking (CHIP Only) Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture U.S. Department of Education Social Security Administration Federal Program Title: Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) Temporary Assistance for Needy Families (TANF) Social Services Block Grant (SSBG) Children’s Health Insurance Program (CHIP) Block Grants for Community Mental Health Services (MHBG) Block Grants for Prevention and Treatment of Substance Abuse (SABG) Medicaid Cluster Aging Cluster (nonmajor) Disability Insurance/SSI Cluster (nonmajor) Money Follows the Person Rebalancing Demonstration (nonmajor) CCDF Cluster (nonmajor) SNAP Cluster (nonmajor) Special Education-Grants for Infants and Families (nonmajor) ALN: 10.557 93.558 93.667 93.767 93.958 93.959 93.775, 93.777, 93.778 93.044, 93.045, 93.053 (nonmajor) 96.001, 96.006 (nonmajor) 93.791 (nonmajor) 93.575, 93.596, 93.489 (nonmajor) 10.551, 10.561 (nonmajor) 84.181 (nonmajor) Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: WIC 6TX700527, 6TX700507 October 1, 2020 – September 30, 2022, October 1, 2021 – September 30, 2023, October 1, 2021 – September 30, 2022, October 1, 2022 – September 30, 2023, October 1, 2022 – September 30, 2024 TANF 2301TXTANF, 2301TXTAN3, 2201TXTANF, and 2201TXTAN3 October 1, 2022 – September 30, 2023 and October 1, 2021 – September 30, 2022 SSBG 2301TXSOSR, 2201TXSOSR and 2101TXSOSR October 1, 2022 – September 30, 2024, October 1, 2021 – September 30, 2023 CHIP 2105TX5021, 2205TX5021, 2305TX3002, 2305TX5021 October 1, 2020 – September 30, 2022, October 1, 2021 – September 30, 2023, October 1, 2022 – September 30, 2024 MHBG 1B09SM087345, 6B09SM087345-01M001, 6B09SM087345-01M002, 6B09SM087345-01M003, 1B09SM087322-01,1B09SM085994-01, 6B09SM085994-01M001, 6B09SM085994-01M002, 6B09SM085994-01M003, 1B09SM083999 -01, 6B09SM083999-01M001, 1B09SM083830-01, 6B09SM083830- 01M001 October 1, 2022 – September 30, 2024, October 17, 2022 – October 16, 2024, October 1, 2021 – September 30, 2023, March 15, 2021 – March 14, 2024, March 15, 2021 – March 14, 2023, and October 1, 2020 – September 30, 2022 SABG 1B08TI085835-01,6B08TI085835-01M001, 6B08TI084673-01M001, 6B08TI084673-01M002, 1B08TI084673-01, 6B08TI083478-01 6B08TI083478- 01M002, 6B08TI083478-01M003, 6B08TI083478-01M004 October 1, 2022 – September 30, 2024, October 1, 2021 – September 30, 2023, and October 1, 2020 – September 30, 2022 Medicaid Cluster 2205TX5ADM, 2205TX5MAP, 2205TXIMPL; 2305TX5ADM, 2305TX5MAP, 2305TXIMPL October 1, 2021 – September 30, 2022, October 1, 2022 – September 30, 2023 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that it 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 the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 45 CFR Section 95.507, the State shall submit a cost allocation plan for the State agency as required below to the Director, Division of Cost Allocation (DCA), in the appropriate HHS Regional Office. The plan shall describe the procedures used to identify, measure, and allocate all costs to each of the programs operated by the State agency. The cost allocation plan shall contain the procedures used to identify, measure, and allocate all costs to each benefitting program and activity. Per 45 CFR Section 95.509, the State shall promptly amend the cost allocation plan and submit the amended plan to the Director, DCA, if any of the following events occur, including if other changes occur which make the allocation basis or procedures in the approval cost allocation plan invalid. Condition: HHSC’s approved Public Assistance Cost Allocation Plan (PACAP) expenditures and revenues are initially allocated based on an estimate of Project ID percentages. After actual base statistical data is available, expenditures are reallocated and adjustments between estimated and actual costs are made. The adjustments will result in costs claimed for each period being allocated based on actual base statistics for the same period. Data is updated either by voucher, monthly, quarterly, semi-annually, or annually, depending on the Project ID. HHSC experienced significant delays in updating factors. By the end of the fiscal year, cost allocations had been updated only through August 2022. Although there is no documented policy over when the FMAP should be updated, HHSC will allocate costs at the FMAP that is in effect at the time of the transaction and will reallocate the transactions using the FMAP in effect at the time of the reallocation. This procedure was not followed in 2023 when the costs for four of 40 sample allocations tested in the CHIP program were allocated using a rate other than the current one in effect resulting in noncompliance with matching requirements. Questioned costs: Unknown Context: See “Condition.” Cause: HHSC’s General Ledger Unit is responsible for cost allocations. At the start of fiscal year 2023, the Unit suffered a loss of more than half of its staff due to turnover. Additionally, the current Federal Medical Assistance Percentage (FMAP) rates were in a stepdown process whereby the rate changed quarterly as opposed to yearly which intensified the workload. In addition, since transformation, the number of Public Assistance Cost Allocation Plan (PACAP) methodologies (Project IDs) has increased by 243%. These methodologies have become increasingly more complex, now including over 80 dependent factors of which some comprise more than 100 fund sources each. This huge increase in both volume and complexity has greatly increased calculation labor and risk of error. Effect: Failure to update factor allocations timely can result in questioned costs. Repeat finding: 2022-010, 2021-004, 2020-016, 2019-006, 2018-005, 2017-009, and 2016-024 Recommendation: HHSC should allocate adequate resources to ensure factor allocations are performed and reallocations are updated timely in order to present accurate information. Views of responsible officials: HHSC concurs with the finding.
General Controls. The following compliance areas were impacted: Eligibility Reporting Special Tests and Provisions - Disbursements To or On Behalf of Students Special Tests and Provisions - Return of Title IV Funds Special Tests and Provisions - Enrollment Reporting Federal Agency: U.S. Department of Education Federal Program Title: Student Financial Assistance Cluster Assistance Listing Number: Cross-cutting Pass-Through Agency: N/A Award Number: Cross-cutting Award Period: July 1, 2022, to June 30, 2023 Statistically Valid Sample: No and not intended to be a statistically valid sample Type of Finding: Significant Deficiency Questioned Costs: None Repeat Finding: No General Controls: An institution must establish and maintain effective internal control over federal awards that provides reasonable assurance that the institution is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal award (Title 2, Code of Federal Regulations (CFR), Section 200.303(a)). Sam Houston State University (University) did not appropriately restrict access to its student information system. Specifically, the University did not always limit access to the student information system to only users who needed that access based on their job responsibilities. While the University had a process in place to review user access, that process was not adequately designed to ensure that the University granted the appropriate levels of access to all users based on the users’ job duties. Allowing users inappropriate or excessive access to systems increases the risk of unauthorized changes being made in those systems. In addition, the University did not have sufficient controls over its change management process for information systems. Specifically, 1 (14 percent) of 7 changes tested lacked documentation showing that the change was properly tested or validated before it was migrated to production. Not having sufficient controls over the change management process increases the risk of unauthorized programming changes being made to critical information systems that the University uses to administer student financial assistance. Recommendations: The University should: • Ensure that user access to its student information system is appropriately limited based on a user’s job responsibilities. • Strengthen its controls over its change management process to ensure adequate validation of changes prior to implementation. Views of Responsible Officials: The University acknowledges and agrees with the finding. Through analysis of the exceptions identified in the audit, the University will work to develop and implement corrective action to further improve the processes.
General Controls. The following compliance areas were impacted: Eligibility Reporting Special Tests and Provisions - Disbursements To or On Behalf of Students Special Tests and Provisions - Return of Title IV Funds Special Tests and Provisions - Enrollment Reporting Federal Agency: U.S. Department of Education Federal Program Title: Student Financial Assistance Cluster Assistance Listing Number: Cross-cutting Pass-Through Agency: N/A Award Number: Cross-cutting Award Period: July 1, 2022, to June 30, 2023 Statistically Valid Sample: No and not intended to be a statistically valid sample Type of Finding: Significant Deficiency Questioned Costs: None Repeat Finding: 2020-113, 2017-119, 2016-109 General Controls: An institution must establish and maintain effective internal control over federal awards that provides reasonable assurance that the institution is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal award (Title 2, Code of Federal Regulations (CFR), Section 200.303(a)). Texas Southern University (University) did not appropriately restrict user access to its student information system. Specifically, the University did not always ensure that (1) access to modify information and process transactions in the student information system and (2) administrative access at the network level was limited to only current employees and users who needed that access based on their job responsibilities. The University had a process to review user access to its systems; however, it did not always implement changes based on the results of that review. Allowing users inappropriate or excessive access to systems increases the risk of unauthorized changes being made to those systems. Recommendation: The University should ensure that user access to its student information system and administrative access to its network is appropriately limited to employees based on current job responsibilities. Views of Responsible Officials: The Office of Technology acknowledges and agrees with the finding.
General Controls. The following compliance areas were impacted: Eligibility Reporting Special Tests and Provisions - Disbursements To or On Behalf of Students Special Tests and Provisions - Return of Title IV Funds Special Tests and Provisions - Enrollment Reporting Federal Agency: U.S. Department of Education Federal Program Title: Student Financial Assistance Cluster Assistance Listing Number: Cross-cutting Pass-Through Agency: N/A Award Number: Cross-cutting Award Period: July 1, 2022, to June 30, 2023 Statistically Valid Sample: No and not intended to be a statistically valid sample Type of Finding: Significant Deficiency Questioned Costs: None Repeat Finding: No General Controls: An institution must establish and maintain effective internal control over federal awards that provides reasonable assurance that the institution is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal award (Title 2, Code of Federal Regulations (CFR), Section 200.303(a)). Texas Tech University (University) did not appropriately restrict user access to its student information system. Specifically, the University did not always limit access to the student information system to only users who needed that access based on their job responsibilities. While the University had a process in place to review user access, that process was not adequately designed to ensure that the University granted the appropriate level of access to all users based on the users’ job duties. Allowing users inappropriate or excessive access to systems increases the risk of unauthorized changes being made in those systems. Recommendation: The University should ensure that user access to its student information system is appropriately limited based on a user’s job responsibilities. Views of Responsible Officials: Texas Tech University acknowledges and agrees with the findings. Texas Tech University has worked to develop and implement corrective action to further improve processes.
General Controls. The following compliance areas were impacted: Eligibility Reporting Special Tests and Provisions - Disbursements To or On Behalf of Students Special Tests and Provisions - Return of Title IV Funds Special Tests and Provisions - Enrollment Reporting Federal Agency: U.S. Department of Education U.S. Department of Health and Human Services Federal Program Title: Student Financial Assistance Cluster Assistance Listing Number: Cross-cutting Pass-Through Agency: N/A Award Number: Cross-cutting Award Period: July 1, 2022, to June 30, 2023 Statistically Valid Sample: No and not intended to be a statistically valid sample Type of Finding: Significant Deficiency Questioned Costs: None Repeat Finding: 2020-142 General Controls: An institution must establish and maintain effective internal control over federal awards that provides reasonable assurance that the institution is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal award (Title 2, Code of Federal Regulations (CFR), Section 200.303(a)). The University of Texas at Arlington (University) did not appropriately restrict user access to its student information system. Specifically, a user was granted administrative access in the student information system, which included the ability to modify information and process transactions, such as authorizing and disbursing aid. The University did not remove the administrative access after the user’s specific job responsibilities no longer required that level of access. The University had a process to periodically review user access; however, that review was not sufficient to identify the inappropriate access. Allowing users inappropriate or excessive access to systems increases the risk of unauthorized changes being made in those systems. Recommendation: The University should ensure that user access to its student information system is appropriately limited based on a user’s job responsibilities. Views of Responsible Officials: To the point that The University of Texas at Arlington (University) did not appropriately restrict user access to its student information system. OIT and Financial Aid acknowledge that a user was given elevated access that was not removed when the assigned maintenance task was completed.
General Controls. The following compliance areas were impacted: Eligibility Reporting Special Tests and Provisions - Disbursements To or On Behalf of Students Special Tests and Provisions - Return of Title IV Funds Special Tests and Provisions - Enrollment Reporting Federal Agency: U.S. Department of Education U.S. Department of Health and Human Services Federal Program Title: Student Financial Assistance Cluster Assistance Listing Number: Cross-cutting Pass-Through Agency: N/A Award Number: Cross-cutting Award Period: July 1, 2022, to June 30, 2023 Statistically Valid Sample: No and not intended to be a statistically valid sample Type of Finding: Significant Deficiency Questioned Costs: None Repeat Finding: No General Controls: An institution must establish and maintain effective internal control over federal awards that provides reasonable assurance that the institution is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal award (Title 2, Code of Federal Regulations (CFR), Section 200.303(a)). The University of Texas at Austin (University) did not appropriately restrict user access to its student information system. Specifically, an employee retained the ability to modify student financial aid awards after transitioning from the Office of Student Financial Aid to another department within the University. Allowing users inappropriate or excessive access to systems increases the risk of unauthorized changes being made in those systems. In addition, the University did not have sufficient controls over its change management process for information systems. Specifically, one of the University’s departments did not enable the control designed to prevent developers from migrating their own code changes into production. Not having sufficient segregation of duties controls over the change management process increases the risk of unauthorized programming changes being made to critical information systems that the University uses to administer student financial assistance. Recommendations: The University should: • Ensure that user access to its student information system is appropriately limited based on a user’s job responsibilities. • Strengthen its controls over its change management process to ensure adequate segregation of duties. Views of Responsible Officials: The University acknowledges and agrees with the finding. In this case, the employee transitioned from the Office of Scholarships and Financial Aid (OSFA) to the Student Financial Aid implementation project. It was intended for this employee to retain his prior access for a time so he could help provide backstop support while his duties were transitioned to other employees within OSFA. This access should have been removed once his duties were successfully transitioned. Views of Responsible Officials: The University acknowledges and agrees with the finding. However, technical limitations in the current financial aid management system require that a particular mainframe programming library be exempted from the change control mechanisms that are used in all other libraries that can update student financial aid information.
General Controls. The following compliance areas were impacted: Eligibility Reporting Special Tests and Provisions - Disbursements To or On Behalf of Students Special Tests and Provisions - Return of Title IV Funds Special Tests and Provisions - Enrollment Reporting Federal Agency: U.S. Department of Education Federal Program Title: Student Financial Assistance Cluster Assistance Listing Number: Cross-cutting Pass-Through Agency: N/A Award Number: Cross-cutting Award Period: July 1, 2022, to June 30, 2023 Statistically Valid Sample: No and not intended to be a statistically valid sample Type of Finding: Significant Deficiency Questioned Costs: None Repeat Finding: No General Controls: An institution must establish and maintain effective internal control over federal awards that provides reasonable assurance that the institution is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal award (Title 2, Code of Federal Regulations (CFR), Section 200.303(a)). The University of Texas Permian Basin (University) did not appropriately restrict user access to its student information system. Specifically, the University did not always limit access to the student information system to only users who needed that access based on their job responsibilities. The University had a process to periodically review user access; however, that review was not sufficient to identify the inappropriate access. Allowing users inappropriate or excessive access to systems increases the risk of unauthorized changes being made in those systems. Recommendation: The University should ensure that user access to its student information system is appropriately limited based on a user’s job responsibilities. Views of Responsible Officials: The University acknowledges and agrees with the finding. Through analysis of the exceptions identified in the audit, the University has worked to implement further access limitations and enhanced its periodic review of access.
General Controls. The following compliance areas were impacted: Eligibility Reporting Special Tests and Provisions - Disbursements To or On Behalf of Students Special Tests and Provisions - Return of Title IV Funds Special Tests and Provisions - Enrollment Reporting Federal Agency: U.S. Department of Education Federal Program Title: Student Financial Assistance Cluster Assistance Listing Number: Cross-cutting Pass-Through Agency: N/A Award Number: Cross-cutting Award Period: July 1, 2022, to June 30, 2023 Statistically Valid Sample: No and not intended to be a statistically valid sample Type of Finding: Significant Deficiency Questioned Costs: None Repeat Finding: No General Controls: An institution must establish and maintain effective internal control over federal awards that provides reasonable assurance that the institution is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal award (Title 2, Code of Federal Regulations (CFR), Section 200.303(a)). Sam Houston State University (University) did not appropriately restrict access to its student information system. Specifically, the University did not always limit access to the student information system to only users who needed that access based on their job responsibilities. While the University had a process in place to review user access, that process was not adequately designed to ensure that the University granted the appropriate levels of access to all users based on the users’ job duties. Allowing users inappropriate or excessive access to systems increases the risk of unauthorized changes being made in those systems. In addition, the University did not have sufficient controls over its change management process for information systems. Specifically, 1 (14 percent) of 7 changes tested lacked documentation showing that the change was properly tested or validated before it was migrated to production. Not having sufficient controls over the change management process increases the risk of unauthorized programming changes being made to critical information systems that the University uses to administer student financial assistance. Recommendations: The University should: • Ensure that user access to its student information system is appropriately limited based on a user’s job responsibilities. • Strengthen its controls over its change management process to ensure adequate validation of changes prior to implementation. Views of Responsible Officials: The University acknowledges and agrees with the finding. Through analysis of the exceptions identified in the audit, the University will work to develop and implement corrective action to further improve the processes.