2023-015 Improve Controls over Managed Care Organization Financial Audits Compliance Requirement: Special Tests and Provisions Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: None AL Numbers and Titles: 93.767 – Children’s Health Insurance Program 93.778 - Medical Assistance Program (Medicaid: Title XIX) 93.778 – COVID -19 – Medical Assistance Program (Medicaid: Title XIX) Federal Award Number: 2205GA5MAP (Year 2022), 2305GA5MAP (Year 2023), 2205GA5021 (Year 2022), 2305GA5021 (Year 2023) Questioned Costs: None Identified Repeat of Prior Year Finding: 2022-012, 2021-028 Description: The Department of Community Health did not have adequate controls in place to ensure the required managed care financial audits are being conducted in accordance with compliance requirements. Background Information: The Department of Community Health (DCH) administers the State of Georgia’s Medicaid program that provides payments for medical assistance to low-income individuals. Medicaid is one of the State’s largest public assistance programs with federal and state funds totaling $17 billion for fiscal year 2023. The DCH is also responsible for administering the Children’s Health Insurance Program (CHIP) that provides child medical coverage to low-income families who exceed Medicaid income limits. The State may use managed care to deliver Medicaid and CHIP benefits and services. The DCH partners with private managed care organizations (MCO) that provide health services to members of Medicaid. Partnering with multiple organizations provides members with a choice of various health plans and allows them to choose the option that best fits their needs. As part of our fiscal year 2023 audit, we followed up on the DCH’s efforts to implement corrective action plans in response to the prior year findings in which we reported that the DCH did not have adequate controls in place to ensure the required managed care financial audits were being conducted and the results of the required periodic audits were posted on the State’s website. Although the DCH posted the required periodic audits on the State’s website, the DCH was unable to fully implement the corrective action plans related to updating the contracts prior to fiscal year-end. Criteria: As a recipient of federal awards, the DCH is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Pursuant to Title 42 CFR Section 438.3(m), the contract between the State and an MCO must require MCOs to submit audited financial reports specific to the Medicaid contract on an annual basis. The audit must be conducted in accordance with generally accepted accounting principles (GAAP) and generally accepted auditing standards. Additionally, pursuant to Title 42 CFR Section 438.602(e) and (g) and Title 42 CFR Section 457.1285, the DCH is required to conduct, or contract for an independent audit of the accuracy, truthfulness, and completeness of the encounter and financial data submitted by, or on behalf of, each MCO at least once every three years. Condition: Upon performing procedures associated with the MCO annual audited financial report submissions specific to Medicaid, it was noted that the contracts between the DCH and the MCOs did not contain the necessary clause requiring each MCO to submit their audited GAAP-basis financial report to the DCH. Cause: Staff turnover within the DCH led to delays in updating contract clauses and procedures associated with ensuring that each MCO submits audited GAAP-basis financial reports to the DCH in accordance with Medicaid regulations. Effect: Failure to ensure that appropriate clauses are included in contracts with the MCOs and that the MCOs are aware that audited GAAP-basis financial statements are to be submitted to the DCH increases the likelihood that inappropriate uses of Medicaid and CHIP funds may occur and not be detected by management in a timely manner. Furthermore, noncompliance with federal regulations may result in the grantor penalizing the DCH for noncompliance by suspending or terminating the award or withholding future awards. Recommendation: The DCH should revise the current contracts with the MCOs to include a clause requiring the MCOs to submit on an annual basis, to the DCH, audited GAAP-basis financial reports specific to the Medicaid contract. Views of Responsible Officials: We concur with this finding.
2023-015 Improve Controls over Managed Care Organization Financial Audits Compliance Requirement: Special Tests and Provisions Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: None AL Numbers and Titles: 93.767 – Children’s Health Insurance Program 93.778 - Medical Assistance Program (Medicaid: Title XIX) 93.778 – COVID -19 – Medical Assistance Program (Medicaid: Title XIX) Federal Award Number: 2205GA5MAP (Year 2022), 2305GA5MAP (Year 2023), 2205GA5021 (Year 2022), 2305GA5021 (Year 2023) Questioned Costs: None Identified Repeat of Prior Year Finding: 2022-012, 2021-028 Description: The Department of Community Health did not have adequate controls in place to ensure the required managed care financial audits are being conducted in accordance with compliance requirements. Background Information: The Department of Community Health (DCH) administers the State of Georgia’s Medicaid program that provides payments for medical assistance to low-income individuals. Medicaid is one of the State’s largest public assistance programs with federal and state funds totaling $17 billion for fiscal year 2023. The DCH is also responsible for administering the Children’s Health Insurance Program (CHIP) that provides child medical coverage to low-income families who exceed Medicaid income limits. The State may use managed care to deliver Medicaid and CHIP benefits and services. The DCH partners with private managed care organizations (MCO) that provide health services to members of Medicaid. Partnering with multiple organizations provides members with a choice of various health plans and allows them to choose the option that best fits their needs. As part of our fiscal year 2023 audit, we followed up on the DCH’s efforts to implement corrective action plans in response to the prior year findings in which we reported that the DCH did not have adequate controls in place to ensure the required managed care financial audits were being conducted and the results of the required periodic audits were posted on the State’s website. Although the DCH posted the required periodic audits on the State’s website, the DCH was unable to fully implement the corrective action plans related to updating the contracts prior to fiscal year-end. Criteria: As a recipient of federal awards, the DCH is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Pursuant to Title 42 CFR Section 438.3(m), the contract between the State and an MCO must require MCOs to submit audited financial reports specific to the Medicaid contract on an annual basis. The audit must be conducted in accordance with generally accepted accounting principles (GAAP) and generally accepted auditing standards. Additionally, pursuant to Title 42 CFR Section 438.602(e) and (g) and Title 42 CFR Section 457.1285, the DCH is required to conduct, or contract for an independent audit of the accuracy, truthfulness, and completeness of the encounter and financial data submitted by, or on behalf of, each MCO at least once every three years. Condition: Upon performing procedures associated with the MCO annual audited financial report submissions specific to Medicaid, it was noted that the contracts between the DCH and the MCOs did not contain the necessary clause requiring each MCO to submit their audited GAAP-basis financial report to the DCH. Cause: Staff turnover within the DCH led to delays in updating contract clauses and procedures associated with ensuring that each MCO submits audited GAAP-basis financial reports to the DCH in accordance with Medicaid regulations. Effect: Failure to ensure that appropriate clauses are included in contracts with the MCOs and that the MCOs are aware that audited GAAP-basis financial statements are to be submitted to the DCH increases the likelihood that inappropriate uses of Medicaid and CHIP funds may occur and not be detected by management in a timely manner. Furthermore, noncompliance with federal regulations may result in the grantor penalizing the DCH for noncompliance by suspending or terminating the award or withholding future awards. Recommendation: The DCH should revise the current contracts with the MCOs to include a clause requiring the MCOs to submit on an annual basis, to the DCH, audited GAAP-basis financial reports specific to the Medicaid contract. Views of Responsible Officials: We concur with this finding.
2023-015 Improve Controls over Managed Care Organization Financial Audits Compliance Requirement: Special Tests and Provisions Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: None AL Numbers and Titles: 93.767 – Children’s Health Insurance Program 93.778 - Medical Assistance Program (Medicaid: Title XIX) 93.778 – COVID -19 – Medical Assistance Program (Medicaid: Title XIX) Federal Award Number: 2205GA5MAP (Year 2022), 2305GA5MAP (Year 2023), 2205GA5021 (Year 2022), 2305GA5021 (Year 2023) Questioned Costs: None Identified Repeat of Prior Year Finding: 2022-012, 2021-028 Description: The Department of Community Health did not have adequate controls in place to ensure the required managed care financial audits are being conducted in accordance with compliance requirements. Background Information: The Department of Community Health (DCH) administers the State of Georgia’s Medicaid program that provides payments for medical assistance to low-income individuals. Medicaid is one of the State’s largest public assistance programs with federal and state funds totaling $17 billion for fiscal year 2023. The DCH is also responsible for administering the Children’s Health Insurance Program (CHIP) that provides child medical coverage to low-income families who exceed Medicaid income limits. The State may use managed care to deliver Medicaid and CHIP benefits and services. The DCH partners with private managed care organizations (MCO) that provide health services to members of Medicaid. Partnering with multiple organizations provides members with a choice of various health plans and allows them to choose the option that best fits their needs. As part of our fiscal year 2023 audit, we followed up on the DCH’s efforts to implement corrective action plans in response to the prior year findings in which we reported that the DCH did not have adequate controls in place to ensure the required managed care financial audits were being conducted and the results of the required periodic audits were posted on the State’s website. Although the DCH posted the required periodic audits on the State’s website, the DCH was unable to fully implement the corrective action plans related to updating the contracts prior to fiscal year-end. Criteria: As a recipient of federal awards, the DCH is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Pursuant to Title 42 CFR Section 438.3(m), the contract between the State and an MCO must require MCOs to submit audited financial reports specific to the Medicaid contract on an annual basis. The audit must be conducted in accordance with generally accepted accounting principles (GAAP) and generally accepted auditing standards. Additionally, pursuant to Title 42 CFR Section 438.602(e) and (g) and Title 42 CFR Section 457.1285, the DCH is required to conduct, or contract for an independent audit of the accuracy, truthfulness, and completeness of the encounter and financial data submitted by, or on behalf of, each MCO at least once every three years. Condition: Upon performing procedures associated with the MCO annual audited financial report submissions specific to Medicaid, it was noted that the contracts between the DCH and the MCOs did not contain the necessary clause requiring each MCO to submit their audited GAAP-basis financial report to the DCH. Cause: Staff turnover within the DCH led to delays in updating contract clauses and procedures associated with ensuring that each MCO submits audited GAAP-basis financial reports to the DCH in accordance with Medicaid regulations. Effect: Failure to ensure that appropriate clauses are included in contracts with the MCOs and that the MCOs are aware that audited GAAP-basis financial statements are to be submitted to the DCH increases the likelihood that inappropriate uses of Medicaid and CHIP funds may occur and not be detected by management in a timely manner. Furthermore, noncompliance with federal regulations may result in the grantor penalizing the DCH for noncompliance by suspending or terminating the award or withholding future awards. Recommendation: The DCH should revise the current contracts with the MCOs to include a clause requiring the MCOs to submit on an annual basis, to the DCH, audited GAAP-basis financial reports specific to the Medicaid contract. Views of Responsible Officials: We concur with this finding.
2023-015 Improve Controls over Managed Care Organization Financial Audits Compliance Requirement: Special Tests and Provisions Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: None AL Numbers and Titles: 93.767 – Children’s Health Insurance Program 93.778 - Medical Assistance Program (Medicaid: Title XIX) 93.778 – COVID -19 – Medical Assistance Program (Medicaid: Title XIX) Federal Award Number: 2205GA5MAP (Year 2022), 2305GA5MAP (Year 2023), 2205GA5021 (Year 2022), 2305GA5021 (Year 2023) Questioned Costs: None Identified Repeat of Prior Year Finding: 2022-012, 2021-028 Description: The Department of Community Health did not have adequate controls in place to ensure the required managed care financial audits are being conducted in accordance with compliance requirements. Background Information: The Department of Community Health (DCH) administers the State of Georgia’s Medicaid program that provides payments for medical assistance to low-income individuals. Medicaid is one of the State’s largest public assistance programs with federal and state funds totaling $17 billion for fiscal year 2023. The DCH is also responsible for administering the Children’s Health Insurance Program (CHIP) that provides child medical coverage to low-income families who exceed Medicaid income limits. The State may use managed care to deliver Medicaid and CHIP benefits and services. The DCH partners with private managed care organizations (MCO) that provide health services to members of Medicaid. Partnering with multiple organizations provides members with a choice of various health plans and allows them to choose the option that best fits their needs. As part of our fiscal year 2023 audit, we followed up on the DCH’s efforts to implement corrective action plans in response to the prior year findings in which we reported that the DCH did not have adequate controls in place to ensure the required managed care financial audits were being conducted and the results of the required periodic audits were posted on the State’s website. Although the DCH posted the required periodic audits on the State’s website, the DCH was unable to fully implement the corrective action plans related to updating the contracts prior to fiscal year-end. Criteria: As a recipient of federal awards, the DCH is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Pursuant to Title 42 CFR Section 438.3(m), the contract between the State and an MCO must require MCOs to submit audited financial reports specific to the Medicaid contract on an annual basis. The audit must be conducted in accordance with generally accepted accounting principles (GAAP) and generally accepted auditing standards. Additionally, pursuant to Title 42 CFR Section 438.602(e) and (g) and Title 42 CFR Section 457.1285, the DCH is required to conduct, or contract for an independent audit of the accuracy, truthfulness, and completeness of the encounter and financial data submitted by, or on behalf of, each MCO at least once every three years. Condition: Upon performing procedures associated with the MCO annual audited financial report submissions specific to Medicaid, it was noted that the contracts between the DCH and the MCOs did not contain the necessary clause requiring each MCO to submit their audited GAAP-basis financial report to the DCH. Cause: Staff turnover within the DCH led to delays in updating contract clauses and procedures associated with ensuring that each MCO submits audited GAAP-basis financial reports to the DCH in accordance with Medicaid regulations. Effect: Failure to ensure that appropriate clauses are included in contracts with the MCOs and that the MCOs are aware that audited GAAP-basis financial statements are to be submitted to the DCH increases the likelihood that inappropriate uses of Medicaid and CHIP funds may occur and not be detected by management in a timely manner. Furthermore, noncompliance with federal regulations may result in the grantor penalizing the DCH for noncompliance by suspending or terminating the award or withholding future awards. Recommendation: The DCH should revise the current contracts with the MCOs to include a clause requiring the MCOs to submit on an annual basis, to the DCH, audited GAAP-basis financial reports specific to the Medicaid contract. Views of Responsible Officials: We concur with this finding.
2023-016 Improve Controls over Medicaid Capitation Payment Rates Compliance Requirement: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: None AL Numbers and Titles: 93.778 - Medical Assistance Program (Medicaid: Title XIX) 93.778 – COVID -19 – Medical Assistance Program (Medicaid: Title XIX) Federal Award Number: 2205GA5MAP (Year: 2022), 2305GA5MAP (Year: 2023) Questioned Costs: None Identified Repeat of Prior Year Finding: 2022-017 Description: The Department of Community Health made Medicaid capitation payments for Medicaid Managed Care recipients using the improper payment rates. Background Information: The Department of Community Health (DCH) administers the State of Georgia’s Medicaid program that provides payments for medical assistance to low-income individuals. Medicaid is one of the State’s largest public assistance programs with federal and state funds totaling $17 billion for fiscal year 2023. The DCH, the State’s Medicaid agency, administers Georgia’s managed-care program. The program is a partnership between the DCH and private care management organizations (MCOs). The State pays a monthly fixed rate per person (capitation rate) without regard to the actual medical services utilized to cover the costs of Medicaid claims. Managed care is a prepaid, comprehensive system of medical and health care delivery, including preventive, primary, specialty and ancillary health care services. The program is designed to reduce the cost of providing health benefits, improve the quality of care and deliver health care to clients. Capitation payments for the year totaled $6 billion (federal and state). As part of our fiscal year 2023 audit, we followed up on the DCH’s efforts to implement a corrective action plan in response to the prior year finding in which we reported that the DCH made Medicaid capitation payments for Medicaid Managed Care recipients using the improper payment rates. While corrective action plans associated with overpayments were implemented during the period under review, the DCH was unable to fully implement their corrective action plan and correct all rates prior to fiscal year-end. Criteria: As a recipient of federal awards, the DCH is required to establish and maintain effective internal controls over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Section 200.303 – Internal Controls. The Uniform Guidance, Section 200.53 – Improper Payment states, “(a) Improper payment means any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements; and (b) Improper payment includes any payment to an ineligible party, any payment for an ineligible good or service, any duplicate payment, any payment for a good or service not received (except for such payments where authorized by law), any payment that does not account for credit for applicable discounts, and any payment where insufficient or lack of documentation prevents a reviewer from discerning whether a payment was proper.” Condition: Our audit of the Medicaid program revealed deficiencies in the capitation payments paid to MCOs for Managed Care members. For a population of 55 million capitation payments paid to MCOs for Managed Care members, auditors utilized data analytics to compare the approved payment rates that should have been used to the actual rates used during the fiscal year under review and identified all capitation overpayments and underpayments. Based upon this review, we identified 1.7 million underpayments totaling $6,351,416 during the fiscal year under review. Cause: In August 2021, the Centers for Medicare and Medicaid Services (CMS) approved the rates that should have been used to calculate capitation payments during the period under review. The DCH actuary, then, updated these rates to account for risk adjustments. However, these rates were not accurately implemented in the Georgia Medicaid Management Information System (GAMMIS) resulting in improper payments to MCOs. Effect: Without effective controls in place, the DCH increases its risk of providing improper payments to MCOs and not detecting improper payments. The improper payments resulted in noncompliance with federal regulations. In addition, grant provisions allow the grantor to penalize DCH for noncompliance by suspending or terminating the award or withholding future awards. This may prevent eligible individuals from receiving benefits in the future. Recommendation: The DCH management should dedicate the necessary resources to enter accurate rates within GAMMIS each year to ensure improper capitation payments are not made to MCOs for Managed Care members. Views of Responsible Officials: We concur with this finding.
2023-016 Improve Controls over Medicaid Capitation Payment Rates Compliance Requirement: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: None AL Numbers and Titles: 93.778 - Medical Assistance Program (Medicaid: Title XIX) 93.778 – COVID -19 – Medical Assistance Program (Medicaid: Title XIX) Federal Award Number: 2205GA5MAP (Year: 2022), 2305GA5MAP (Year: 2023) Questioned Costs: None Identified Repeat of Prior Year Finding: 2022-017 Description: The Department of Community Health made Medicaid capitation payments for Medicaid Managed Care recipients using the improper payment rates. Background Information: The Department of Community Health (DCH) administers the State of Georgia’s Medicaid program that provides payments for medical assistance to low-income individuals. Medicaid is one of the State’s largest public assistance programs with federal and state funds totaling $17 billion for fiscal year 2023. The DCH, the State’s Medicaid agency, administers Georgia’s managed-care program. The program is a partnership between the DCH and private care management organizations (MCOs). The State pays a monthly fixed rate per person (capitation rate) without regard to the actual medical services utilized to cover the costs of Medicaid claims. Managed care is a prepaid, comprehensive system of medical and health care delivery, including preventive, primary, specialty and ancillary health care services. The program is designed to reduce the cost of providing health benefits, improve the quality of care and deliver health care to clients. Capitation payments for the year totaled $6 billion (federal and state). As part of our fiscal year 2023 audit, we followed up on the DCH’s efforts to implement a corrective action plan in response to the prior year finding in which we reported that the DCH made Medicaid capitation payments for Medicaid Managed Care recipients using the improper payment rates. While corrective action plans associated with overpayments were implemented during the period under review, the DCH was unable to fully implement their corrective action plan and correct all rates prior to fiscal year-end. Criteria: As a recipient of federal awards, the DCH is required to establish and maintain effective internal controls over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Section 200.303 – Internal Controls. The Uniform Guidance, Section 200.53 – Improper Payment states, “(a) Improper payment means any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements; and (b) Improper payment includes any payment to an ineligible party, any payment for an ineligible good or service, any duplicate payment, any payment for a good or service not received (except for such payments where authorized by law), any payment that does not account for credit for applicable discounts, and any payment where insufficient or lack of documentation prevents a reviewer from discerning whether a payment was proper.” Condition: Our audit of the Medicaid program revealed deficiencies in the capitation payments paid to MCOs for Managed Care members. For a population of 55 million capitation payments paid to MCOs for Managed Care members, auditors utilized data analytics to compare the approved payment rates that should have been used to the actual rates used during the fiscal year under review and identified all capitation overpayments and underpayments. Based upon this review, we identified 1.7 million underpayments totaling $6,351,416 during the fiscal year under review. Cause: In August 2021, the Centers for Medicare and Medicaid Services (CMS) approved the rates that should have been used to calculate capitation payments during the period under review. The DCH actuary, then, updated these rates to account for risk adjustments. However, these rates were not accurately implemented in the Georgia Medicaid Management Information System (GAMMIS) resulting in improper payments to MCOs. Effect: Without effective controls in place, the DCH increases its risk of providing improper payments to MCOs and not detecting improper payments. The improper payments resulted in noncompliance with federal regulations. In addition, grant provisions allow the grantor to penalize DCH for noncompliance by suspending or terminating the award or withholding future awards. This may prevent eligible individuals from receiving benefits in the future. Recommendation: The DCH management should dedicate the necessary resources to enter accurate rates within GAMMIS each year to ensure improper capitation payments are not made to MCOs for Managed Care members. Views of Responsible Officials: We concur with this finding.
2023-016 Improve Controls over Medicaid Capitation Payment Rates Compliance Requirement: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: None AL Numbers and Titles: 93.778 - Medical Assistance Program (Medicaid: Title XIX) 93.778 – COVID -19 – Medical Assistance Program (Medicaid: Title XIX) Federal Award Number: 2205GA5MAP (Year: 2022), 2305GA5MAP (Year: 2023) Questioned Costs: None Identified Repeat of Prior Year Finding: 2022-017 Description: The Department of Community Health made Medicaid capitation payments for Medicaid Managed Care recipients using the improper payment rates. Background Information: The Department of Community Health (DCH) administers the State of Georgia’s Medicaid program that provides payments for medical assistance to low-income individuals. Medicaid is one of the State’s largest public assistance programs with federal and state funds totaling $17 billion for fiscal year 2023. The DCH, the State’s Medicaid agency, administers Georgia’s managed-care program. The program is a partnership between the DCH and private care management organizations (MCOs). The State pays a monthly fixed rate per person (capitation rate) without regard to the actual medical services utilized to cover the costs of Medicaid claims. Managed care is a prepaid, comprehensive system of medical and health care delivery, including preventive, primary, specialty and ancillary health care services. The program is designed to reduce the cost of providing health benefits, improve the quality of care and deliver health care to clients. Capitation payments for the year totaled $6 billion (federal and state). As part of our fiscal year 2023 audit, we followed up on the DCH’s efforts to implement a corrective action plan in response to the prior year finding in which we reported that the DCH made Medicaid capitation payments for Medicaid Managed Care recipients using the improper payment rates. While corrective action plans associated with overpayments were implemented during the period under review, the DCH was unable to fully implement their corrective action plan and correct all rates prior to fiscal year-end. Criteria: As a recipient of federal awards, the DCH is required to establish and maintain effective internal controls over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Section 200.303 – Internal Controls. The Uniform Guidance, Section 200.53 – Improper Payment states, “(a) Improper payment means any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements; and (b) Improper payment includes any payment to an ineligible party, any payment for an ineligible good or service, any duplicate payment, any payment for a good or service not received (except for such payments where authorized by law), any payment that does not account for credit for applicable discounts, and any payment where insufficient or lack of documentation prevents a reviewer from discerning whether a payment was proper.” Condition: Our audit of the Medicaid program revealed deficiencies in the capitation payments paid to MCOs for Managed Care members. For a population of 55 million capitation payments paid to MCOs for Managed Care members, auditors utilized data analytics to compare the approved payment rates that should have been used to the actual rates used during the fiscal year under review and identified all capitation overpayments and underpayments. Based upon this review, we identified 1.7 million underpayments totaling $6,351,416 during the fiscal year under review. Cause: In August 2021, the Centers for Medicare and Medicaid Services (CMS) approved the rates that should have been used to calculate capitation payments during the period under review. The DCH actuary, then, updated these rates to account for risk adjustments. However, these rates were not accurately implemented in the Georgia Medicaid Management Information System (GAMMIS) resulting in improper payments to MCOs. Effect: Without effective controls in place, the DCH increases its risk of providing improper payments to MCOs and not detecting improper payments. The improper payments resulted in noncompliance with federal regulations. In addition, grant provisions allow the grantor to penalize DCH for noncompliance by suspending or terminating the award or withholding future awards. This may prevent eligible individuals from receiving benefits in the future. Recommendation: The DCH management should dedicate the necessary resources to enter accurate rates within GAMMIS each year to ensure improper capitation payments are not made to MCOs for Managed Care members. Views of Responsible Officials: We concur with this finding.
2023-017 Improve Controls over Medicaid Capitation Payments for Medicare Members Compliance Requirement: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: None AL Numbers and Titles: 93.778 - Medical Assistance Program (Medicaid: Title XIX) 93.778 – COVID -19 – Medical Assistance Program (Medicaid: Title XIX) Federal Award Number: 2205GA5MAP (Year 2022), 2305GA5MAP (Year 2023) Questioned Costs: $42,411 Repeat of Prior Year Findings: 2022-015, 2021-030, 2020-026, 2019-023 Description: The Department of Community Health made improper capitation payments for Medicaid Managed Care members with Medicare insurance coverage. Background Information: The Department of Community Health (DCH) administers the State of Georgia’s Medicaid program that provides payments for medical assistance to low-income individuals. Medicaid is one of the State’s largest public assistance programs with federal and state funds totaling $17 billion for fiscal year 2023. The DCH, the State’s Medicaid agency, administers Georgia’s managed-care program. The program is a partnership between the DCH and private managed care organizations (MCOs). The State pays a monthly fixed rate per person (capitation rate) without regard to the actual medical services utilized to cover the costs of Medicaid claims. Managed care is a prepaid, comprehensive system of medical and health care delivery, including preventive, primary, specialty and ancillary health care services. The program is designed to reduce the cost of providing health benefits, improve the quality of care and deliver health care to clients. Capitation payments for the year totaled $6 billion (federal and state). As part of our fiscal year 2023 audit, we followed up on the DCH’s efforts to implement a corrective action plan in response to the prior year findings in which we reported that the DCH made improper capitation payments for Medicaid Managed Care members with Medicare insurance coverage. However, the DCH was unable to fully implement their corrective action plan and apply modifications to the Georgia Medicaid Management Information System (GAMMIS) prior to fiscal year-end. Criteria: As a recipient of federal awards, the DCH is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Section 200.303 – Internal Controls. The Uniform Guidance, Section 200.53 – Improper Payment states, “(a) Improper payment means any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements; and (b) Improper payment includes any payment to an ineligible party, any payment for an ineligible good or service, any duplicate payment, any payment for a good or service not received (except for such payments where authorized by law), any payment that does not account for credit for applicable discounts, and any payment where insufficient or lack of documentation prevents a reviewer from discerning whether a payment was proper.” Additionally, U.S. Code Title 42, Chapter 7 – Social Security, Subchapter XIX – Grants to States for Medical Assistance Programs, Section 1396u-2 – Provisions relating to managed care, states “a state may not require… the enrollment in a managed care entity of an individual who is a qualified Medicare beneficiary…” Furthermore, according to the DCH’s state plan, Medicare recipients should not be enrolled in managed care, and any monthly premium payments made for Medicare recipients are unallowable. Condition: Our audit of the Medicaid program revealed deficiencies in the capitation payments paid to MCOs for Managed Care members with Medicare insurance coverage. We obtained Medicare coverage information from the DCH for all Medicaid-eligible members. Using data analytics, we identified a total of 60 members who had Medicare coverage during the same month for which a monthly managed care capitation payment was made on their behalf. We tested all of these payments to determine if the DCH made monthly managed care premium payments for the members during the same time period the member’s Medicare coverage was effective. We found that the DCH made improper payments to MCOs for 59 out of the 60 members tested and these funds were not recouped. Additionally, we noted that for 59 out of 60 members tested, a retroactive Medicare effective date was issued, which was during the time period that managed care payments were made to MCOs. The DCH did discontinue paying the MCO after it received notification from Medicare of the member’s eligibility; however, they did not recoup the payments made to the MCOs for the retroactive period of Medicare coverage. Questioned Costs: Known questioned costs of $42,411 were identified for the capitation payments to MCOs for Managed Care members that were paid during the same time the Managed Care member was enrolled in Medicare. The Federal and State share of known questioned costs is approximately $30,824 and $11,587, respectively. Cause: The DCH completed modifications in GAMMIS to recoup capitation payments for Medicare eligible recipients; however, additional modifications are required and were not made due to the burden of the public health emergency. Effect: Without effective controls in place, the DCH increases its risk of providing and not detecting improper payments to MCOs. The improper capitation payments resulted in noncompliance with federal regulations and questioned costs. Improper payments could occur for an ineligible recipient that are unallowable and cannot be claimed for federal reimbursement. In addition, grant provisions allow the grantor to penalize the DCH for noncompliance by suspending or terminating the award or withholding future awards. Recommendation: The DCH management should continue to dedicate the necessary resources and execute their plan to ensure that modifications to retroactively recoup capitation payments from its MCOs upon receipt of notice that a member is eligible for Medicare are implemented appropriately within GAMMIS. The DCH should review Medicare effective dates for Managed Care members to determine whether potentially unallowable capitation payments have been identified. Additionally, the DCH should investigate and recover funds for all improper payments. The DCH should consult with the grantor to discuss whether the questioned costs identified in the audit should be repaid. Views of Responsible Officials: We concur with this finding.
2023-017 Improve Controls over Medicaid Capitation Payments for Medicare Members Compliance Requirement: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: None AL Numbers and Titles: 93.778 - Medical Assistance Program (Medicaid: Title XIX) 93.778 – COVID -19 – Medical Assistance Program (Medicaid: Title XIX) Federal Award Number: 2205GA5MAP (Year 2022), 2305GA5MAP (Year 2023) Questioned Costs: $42,411 Repeat of Prior Year Findings: 2022-015, 2021-030, 2020-026, 2019-023 Description: The Department of Community Health made improper capitation payments for Medicaid Managed Care members with Medicare insurance coverage. Background Information: The Department of Community Health (DCH) administers the State of Georgia’s Medicaid program that provides payments for medical assistance to low-income individuals. Medicaid is one of the State’s largest public assistance programs with federal and state funds totaling $17 billion for fiscal year 2023. The DCH, the State’s Medicaid agency, administers Georgia’s managed-care program. The program is a partnership between the DCH and private managed care organizations (MCOs). The State pays a monthly fixed rate per person (capitation rate) without regard to the actual medical services utilized to cover the costs of Medicaid claims. Managed care is a prepaid, comprehensive system of medical and health care delivery, including preventive, primary, specialty and ancillary health care services. The program is designed to reduce the cost of providing health benefits, improve the quality of care and deliver health care to clients. Capitation payments for the year totaled $6 billion (federal and state). As part of our fiscal year 2023 audit, we followed up on the DCH’s efforts to implement a corrective action plan in response to the prior year findings in which we reported that the DCH made improper capitation payments for Medicaid Managed Care members with Medicare insurance coverage. However, the DCH was unable to fully implement their corrective action plan and apply modifications to the Georgia Medicaid Management Information System (GAMMIS) prior to fiscal year-end. Criteria: As a recipient of federal awards, the DCH is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Section 200.303 – Internal Controls. The Uniform Guidance, Section 200.53 – Improper Payment states, “(a) Improper payment means any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements; and (b) Improper payment includes any payment to an ineligible party, any payment for an ineligible good or service, any duplicate payment, any payment for a good or service not received (except for such payments where authorized by law), any payment that does not account for credit for applicable discounts, and any payment where insufficient or lack of documentation prevents a reviewer from discerning whether a payment was proper.” Additionally, U.S. Code Title 42, Chapter 7 – Social Security, Subchapter XIX – Grants to States for Medical Assistance Programs, Section 1396u-2 – Provisions relating to managed care, states “a state may not require… the enrollment in a managed care entity of an individual who is a qualified Medicare beneficiary…” Furthermore, according to the DCH’s state plan, Medicare recipients should not be enrolled in managed care, and any monthly premium payments made for Medicare recipients are unallowable. Condition: Our audit of the Medicaid program revealed deficiencies in the capitation payments paid to MCOs for Managed Care members with Medicare insurance coverage. We obtained Medicare coverage information from the DCH for all Medicaid-eligible members. Using data analytics, we identified a total of 60 members who had Medicare coverage during the same month for which a monthly managed care capitation payment was made on their behalf. We tested all of these payments to determine if the DCH made monthly managed care premium payments for the members during the same time period the member’s Medicare coverage was effective. We found that the DCH made improper payments to MCOs for 59 out of the 60 members tested and these funds were not recouped. Additionally, we noted that for 59 out of 60 members tested, a retroactive Medicare effective date was issued, which was during the time period that managed care payments were made to MCOs. The DCH did discontinue paying the MCO after it received notification from Medicare of the member’s eligibility; however, they did not recoup the payments made to the MCOs for the retroactive period of Medicare coverage. Questioned Costs: Known questioned costs of $42,411 were identified for the capitation payments to MCOs for Managed Care members that were paid during the same time the Managed Care member was enrolled in Medicare. The Federal and State share of known questioned costs is approximately $30,824 and $11,587, respectively. Cause: The DCH completed modifications in GAMMIS to recoup capitation payments for Medicare eligible recipients; however, additional modifications are required and were not made due to the burden of the public health emergency. Effect: Without effective controls in place, the DCH increases its risk of providing and not detecting improper payments to MCOs. The improper capitation payments resulted in noncompliance with federal regulations and questioned costs. Improper payments could occur for an ineligible recipient that are unallowable and cannot be claimed for federal reimbursement. In addition, grant provisions allow the grantor to penalize the DCH for noncompliance by suspending or terminating the award or withholding future awards. Recommendation: The DCH management should continue to dedicate the necessary resources and execute their plan to ensure that modifications to retroactively recoup capitation payments from its MCOs upon receipt of notice that a member is eligible for Medicare are implemented appropriately within GAMMIS. The DCH should review Medicare effective dates for Managed Care members to determine whether potentially unallowable capitation payments have been identified. Additionally, the DCH should investigate and recover funds for all improper payments. The DCH should consult with the grantor to discuss whether the questioned costs identified in the audit should be repaid. Views of Responsible Officials: We concur with this finding.
2023-017 Improve Controls over Medicaid Capitation Payments for Medicare Members Compliance Requirement: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: None AL Numbers and Titles: 93.778 - Medical Assistance Program (Medicaid: Title XIX) 93.778 – COVID -19 – Medical Assistance Program (Medicaid: Title XIX) Federal Award Number: 2205GA5MAP (Year 2022), 2305GA5MAP (Year 2023) Questioned Costs: $42,411 Repeat of Prior Year Findings: 2022-015, 2021-030, 2020-026, 2019-023 Description: The Department of Community Health made improper capitation payments for Medicaid Managed Care members with Medicare insurance coverage. Background Information: The Department of Community Health (DCH) administers the State of Georgia’s Medicaid program that provides payments for medical assistance to low-income individuals. Medicaid is one of the State’s largest public assistance programs with federal and state funds totaling $17 billion for fiscal year 2023. The DCH, the State’s Medicaid agency, administers Georgia’s managed-care program. The program is a partnership between the DCH and private managed care organizations (MCOs). The State pays a monthly fixed rate per person (capitation rate) without regard to the actual medical services utilized to cover the costs of Medicaid claims. Managed care is a prepaid, comprehensive system of medical and health care delivery, including preventive, primary, specialty and ancillary health care services. The program is designed to reduce the cost of providing health benefits, improve the quality of care and deliver health care to clients. Capitation payments for the year totaled $6 billion (federal and state). As part of our fiscal year 2023 audit, we followed up on the DCH’s efforts to implement a corrective action plan in response to the prior year findings in which we reported that the DCH made improper capitation payments for Medicaid Managed Care members with Medicare insurance coverage. However, the DCH was unable to fully implement their corrective action plan and apply modifications to the Georgia Medicaid Management Information System (GAMMIS) prior to fiscal year-end. Criteria: As a recipient of federal awards, the DCH is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Section 200.303 – Internal Controls. The Uniform Guidance, Section 200.53 – Improper Payment states, “(a) Improper payment means any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements; and (b) Improper payment includes any payment to an ineligible party, any payment for an ineligible good or service, any duplicate payment, any payment for a good or service not received (except for such payments where authorized by law), any payment that does not account for credit for applicable discounts, and any payment where insufficient or lack of documentation prevents a reviewer from discerning whether a payment was proper.” Additionally, U.S. Code Title 42, Chapter 7 – Social Security, Subchapter XIX – Grants to States for Medical Assistance Programs, Section 1396u-2 – Provisions relating to managed care, states “a state may not require… the enrollment in a managed care entity of an individual who is a qualified Medicare beneficiary…” Furthermore, according to the DCH’s state plan, Medicare recipients should not be enrolled in managed care, and any monthly premium payments made for Medicare recipients are unallowable. Condition: Our audit of the Medicaid program revealed deficiencies in the capitation payments paid to MCOs for Managed Care members with Medicare insurance coverage. We obtained Medicare coverage information from the DCH for all Medicaid-eligible members. Using data analytics, we identified a total of 60 members who had Medicare coverage during the same month for which a monthly managed care capitation payment was made on their behalf. We tested all of these payments to determine if the DCH made monthly managed care premium payments for the members during the same time period the member’s Medicare coverage was effective. We found that the DCH made improper payments to MCOs for 59 out of the 60 members tested and these funds were not recouped. Additionally, we noted that for 59 out of 60 members tested, a retroactive Medicare effective date was issued, which was during the time period that managed care payments were made to MCOs. The DCH did discontinue paying the MCO after it received notification from Medicare of the member’s eligibility; however, they did not recoup the payments made to the MCOs for the retroactive period of Medicare coverage. Questioned Costs: Known questioned costs of $42,411 were identified for the capitation payments to MCOs for Managed Care members that were paid during the same time the Managed Care member was enrolled in Medicare. The Federal and State share of known questioned costs is approximately $30,824 and $11,587, respectively. Cause: The DCH completed modifications in GAMMIS to recoup capitation payments for Medicare eligible recipients; however, additional modifications are required and were not made due to the burden of the public health emergency. Effect: Without effective controls in place, the DCH increases its risk of providing and not detecting improper payments to MCOs. The improper capitation payments resulted in noncompliance with federal regulations and questioned costs. Improper payments could occur for an ineligible recipient that are unallowable and cannot be claimed for federal reimbursement. In addition, grant provisions allow the grantor to penalize the DCH for noncompliance by suspending or terminating the award or withholding future awards. Recommendation: The DCH management should continue to dedicate the necessary resources and execute their plan to ensure that modifications to retroactively recoup capitation payments from its MCOs upon receipt of notice that a member is eligible for Medicare are implemented appropriately within GAMMIS. The DCH should review Medicare effective dates for Managed Care members to determine whether potentially unallowable capitation payments have been identified. Additionally, the DCH should investigate and recover funds for all improper payments. The DCH should consult with the grantor to discuss whether the questioned costs identified in the audit should be repaid. Views of Responsible Officials: We concur with this finding.
2023-019 Strengthen Controls over NCCI Program Requirements Compliance Requirement: Special Tests and Provisions Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: None AL Numbers and Titles: 93.778 - Medical Assistance Program (Medicaid: Title XIX) 93.778 – COVID -19 – Medical Assistance Program (Medicaid: Title XIX) Federal Award Number: 2205GA5MAP (Year 2022), 2305GA5MAP (Year 2023) Questioned Costs: None Identified Repeat of Prior Year Findings: 2022-019 Description: The Department of Community Health does not have adequate controls in place to ensure the confidentiality agreements with contracted parties contain all required elements. Background Information: The Department of Community Health (DCH) administers the State of Georgia’s Medicaid program that provides payments for medical assistance to low-income individuals. Medicaid is one of the State’s largest public assistance programs with federal and state funds totaling $17 billion for fiscal year 2023. State Medicaid Agencies, including the DCH, are required to incorporate National Correct Coding Initiative (NCCI) methodologies into the state Medicaid programs pursuant to the requirements in Section 6507 of the Affordable Care Act. The purpose of the NCCI Program is to promote correct coding, prevent coding errors, prevent code manipulation, reduce improper payments and reduce the paid claims improper payment rate. As part of our fiscal year 2023 audit, we followed up on the DCH’s efforts to implement a corrective action plan in response to the prior year findings in which we reported that the DCH did not have adequate controls in place to ensure the confidentiality agreements with contracted parties contain all required elements. While the DCH drafted a new confidentiality agreement during the period under review, the DCH was unable to fully implement their corrective action plan and execute this agreement prior to fiscal year-end. Criteria: As a recipient of federal awards, the DCH is required to establish and maintain effective internal controls over federal awards that provide reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. In implementing NCCI methodologies, the DCH must follow additional requirements reflected within the NCCI Technical Guidance Manual for Medicaid Services. Specifically, Section 7.1.3 – Confidentiality Agreements Requirements for Contracted Parties of the NCCI Technical Guidance Manual for Medicaid Services requires the DCH to include specific elements in confidentiality agreements with contracted parties. Condition: Upon completing procedures to ensure that the DCH complied with NCCI requirements, auditors reviewed the confidentiality agreement in place between the DCH and Gainwell Technologies (Gainwell), the contracted party that the DCH utilized to perform duties, such as processing Medicaid claims, implementing NCCI edit files, and performing other pertinent activities related to the management of the State’s Medicaid program. It was noted that the confidentiality agreement in place between the DCH and Gainwell did not contain any of the seven required elements reflected in the NCCI Technical Guidance Manual for Medicaid Services. Cause: The DCH has experienced turnover over the past few fiscal years and was unable to make the appropriate modifications to the confidentiality agreement in place between the DCH and Gainwell to ensure that all required elements pursuant to the Medicaid NCCI Technical Guidance Manual were included within the agreement prior to fiscal year-end. Effect: The deficiency in internal controls over confidentiality agreements with contracted parties resulted in noncompliance with federal regulations. Additionally, failure to include appropriate elements in confidentiality agreements may lead to comprises associated with Medicaid beneficiaries’ personal information. Furthermore, noncompliance with federal regulations may result in the grantor penalizing the DCH for noncompliance by suspending or terminating the award or withholding future awards. Recommendation: The DCH should revise its confidentiality agreement with Gainwell to minimize the risk to the confidentiality, integrity and availability of the Medicaid NCCI files and data. The confidentiality agreement should include at a minimum the elements required pursuant to Section 7.1.3 of the NCCI Technical Guidance Manual for Medicaid Services. Views of Responsible Officials: We concur with this finding.
2023-019 Strengthen Controls over NCCI Program Requirements Compliance Requirement: Special Tests and Provisions Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: None AL Numbers and Titles: 93.778 - Medical Assistance Program (Medicaid: Title XIX) 93.778 – COVID -19 – Medical Assistance Program (Medicaid: Title XIX) Federal Award Number: 2205GA5MAP (Year 2022), 2305GA5MAP (Year 2023) Questioned Costs: None Identified Repeat of Prior Year Findings: 2022-019 Description: The Department of Community Health does not have adequate controls in place to ensure the confidentiality agreements with contracted parties contain all required elements. Background Information: The Department of Community Health (DCH) administers the State of Georgia’s Medicaid program that provides payments for medical assistance to low-income individuals. Medicaid is one of the State’s largest public assistance programs with federal and state funds totaling $17 billion for fiscal year 2023. State Medicaid Agencies, including the DCH, are required to incorporate National Correct Coding Initiative (NCCI) methodologies into the state Medicaid programs pursuant to the requirements in Section 6507 of the Affordable Care Act. The purpose of the NCCI Program is to promote correct coding, prevent coding errors, prevent code manipulation, reduce improper payments and reduce the paid claims improper payment rate. As part of our fiscal year 2023 audit, we followed up on the DCH’s efforts to implement a corrective action plan in response to the prior year findings in which we reported that the DCH did not have adequate controls in place to ensure the confidentiality agreements with contracted parties contain all required elements. While the DCH drafted a new confidentiality agreement during the period under review, the DCH was unable to fully implement their corrective action plan and execute this agreement prior to fiscal year-end. Criteria: As a recipient of federal awards, the DCH is required to establish and maintain effective internal controls over federal awards that provide reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. In implementing NCCI methodologies, the DCH must follow additional requirements reflected within the NCCI Technical Guidance Manual for Medicaid Services. Specifically, Section 7.1.3 – Confidentiality Agreements Requirements for Contracted Parties of the NCCI Technical Guidance Manual for Medicaid Services requires the DCH to include specific elements in confidentiality agreements with contracted parties. Condition: Upon completing procedures to ensure that the DCH complied with NCCI requirements, auditors reviewed the confidentiality agreement in place between the DCH and Gainwell Technologies (Gainwell), the contracted party that the DCH utilized to perform duties, such as processing Medicaid claims, implementing NCCI edit files, and performing other pertinent activities related to the management of the State’s Medicaid program. It was noted that the confidentiality agreement in place between the DCH and Gainwell did not contain any of the seven required elements reflected in the NCCI Technical Guidance Manual for Medicaid Services. Cause: The DCH has experienced turnover over the past few fiscal years and was unable to make the appropriate modifications to the confidentiality agreement in place between the DCH and Gainwell to ensure that all required elements pursuant to the Medicaid NCCI Technical Guidance Manual were included within the agreement prior to fiscal year-end. Effect: The deficiency in internal controls over confidentiality agreements with contracted parties resulted in noncompliance with federal regulations. Additionally, failure to include appropriate elements in confidentiality agreements may lead to comprises associated with Medicaid beneficiaries’ personal information. Furthermore, noncompliance with federal regulations may result in the grantor penalizing the DCH for noncompliance by suspending or terminating the award or withholding future awards. Recommendation: The DCH should revise its confidentiality agreement with Gainwell to minimize the risk to the confidentiality, integrity and availability of the Medicaid NCCI files and data. The confidentiality agreement should include at a minimum the elements required pursuant to Section 7.1.3 of the NCCI Technical Guidance Manual for Medicaid Services. Views of Responsible Officials: We concur with this finding.
2023-019 Strengthen Controls over NCCI Program Requirements Compliance Requirement: Special Tests and Provisions Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: None AL Numbers and Titles: 93.778 - Medical Assistance Program (Medicaid: Title XIX) 93.778 – COVID -19 – Medical Assistance Program (Medicaid: Title XIX) Federal Award Number: 2205GA5MAP (Year 2022), 2305GA5MAP (Year 2023) Questioned Costs: None Identified Repeat of Prior Year Findings: 2022-019 Description: The Department of Community Health does not have adequate controls in place to ensure the confidentiality agreements with contracted parties contain all required elements. Background Information: The Department of Community Health (DCH) administers the State of Georgia’s Medicaid program that provides payments for medical assistance to low-income individuals. Medicaid is one of the State’s largest public assistance programs with federal and state funds totaling $17 billion for fiscal year 2023. State Medicaid Agencies, including the DCH, are required to incorporate National Correct Coding Initiative (NCCI) methodologies into the state Medicaid programs pursuant to the requirements in Section 6507 of the Affordable Care Act. The purpose of the NCCI Program is to promote correct coding, prevent coding errors, prevent code manipulation, reduce improper payments and reduce the paid claims improper payment rate. As part of our fiscal year 2023 audit, we followed up on the DCH’s efforts to implement a corrective action plan in response to the prior year findings in which we reported that the DCH did not have adequate controls in place to ensure the confidentiality agreements with contracted parties contain all required elements. While the DCH drafted a new confidentiality agreement during the period under review, the DCH was unable to fully implement their corrective action plan and execute this agreement prior to fiscal year-end. Criteria: As a recipient of federal awards, the DCH is required to establish and maintain effective internal controls over federal awards that provide reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. In implementing NCCI methodologies, the DCH must follow additional requirements reflected within the NCCI Technical Guidance Manual for Medicaid Services. Specifically, Section 7.1.3 – Confidentiality Agreements Requirements for Contracted Parties of the NCCI Technical Guidance Manual for Medicaid Services requires the DCH to include specific elements in confidentiality agreements with contracted parties. Condition: Upon completing procedures to ensure that the DCH complied with NCCI requirements, auditors reviewed the confidentiality agreement in place between the DCH and Gainwell Technologies (Gainwell), the contracted party that the DCH utilized to perform duties, such as processing Medicaid claims, implementing NCCI edit files, and performing other pertinent activities related to the management of the State’s Medicaid program. It was noted that the confidentiality agreement in place between the DCH and Gainwell did not contain any of the seven required elements reflected in the NCCI Technical Guidance Manual for Medicaid Services. Cause: The DCH has experienced turnover over the past few fiscal years and was unable to make the appropriate modifications to the confidentiality agreement in place between the DCH and Gainwell to ensure that all required elements pursuant to the Medicaid NCCI Technical Guidance Manual were included within the agreement prior to fiscal year-end. Effect: The deficiency in internal controls over confidentiality agreements with contracted parties resulted in noncompliance with federal regulations. Additionally, failure to include appropriate elements in confidentiality agreements may lead to comprises associated with Medicaid beneficiaries’ personal information. Furthermore, noncompliance with federal regulations may result in the grantor penalizing the DCH for noncompliance by suspending or terminating the award or withholding future awards. Recommendation: The DCH should revise its confidentiality agreement with Gainwell to minimize the risk to the confidentiality, integrity and availability of the Medicaid NCCI files and data. The confidentiality agreement should include at a minimum the elements required pursuant to Section 7.1.3 of the NCCI Technical Guidance Manual for Medicaid Services. Views of Responsible Officials: We concur with this finding.
2023-021 Improve Controls over Period of Performance Compliance Requirement: Period of Performance Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: None AL Number and Title: 93.958 – Block Grants for Community Mental Health Federal Award Number: B09SM083833 (Year: 2021) Questioned Costs: $1,996,195.46 Repeat of Prior Year Finding: 2022-024 Description: The Georgia Department of Behavioral Health and Developmental Disabilities should improve internal controls to ensure that program costs are obligated within the period of performance and liquidated within the allowed time period. Background Information: The Community Mental Health Services Block Grant (MHBG) program was created to provide funds to states and territories to enable them to carry out their respective plans for providing comprehensive community-based mental health services for adults with serious mental illness and children with serious emotional disturbances. MHBG program funds are allocated to individual states based upon a formula. This funding may be distributed to cities, counties, or service providers within each state to carry out activities associated with the state plan. Funds associated with the MHBG program are administered by the Department of Behavioral Health and Developmental Disabilities (DBHDD). The DBHDD is responsible for becoming familiar with the performance period during which recipients must obligate and liquidate costs for this program. These periods typically align with the federal fiscal year of October 1 through September 30, and payments for costs incurred before a grant award’s beginning date or after the liquidation period are not allowed without the grantor’s prior approval. Criteria: As a recipient of federal awards, the DBHDD is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented, (h) Cost must be incurred during the approved budget period…” Additionally, provisions included in the Uniform Guidance, Section 200.77 state, “Period of performance means the time during which the non-Federal entity may incur new obligations to carry out the work authorized under the Federal award.” Further, the DBHDD’s policies 17-202 – Federal Fund Source and Parent Project Code Assignments and 17-203 – Federal Financial Report Preparation, Reconciliation, and Submission prescribe actions that must be taken by staff to ensure that costs are obligated, incurred, and liquidated within the appropriate period as specified in each grant award’s terms and conditions. Condition: Our audit of the MHBG program included a review of adjustments with performance period ending dates during the audit period to ensure that the amounts were obligated and liquidated within the appropriate time period. Two adjustments were identified as the population, and both were selected for testing. It was noted that both of these transactions were not liquidated within 90 days of the end of the period of performance as required. Additionally, these adjustments were not identified by the DBHDD and reclassified to an appropriate, subsequent award number as is reflected within the DBHDD’s internal policy. Questioned Costs: Known questioned costs of $1,996,195.46 related to the MHBG program were identified for expenditures that were paid outside of the allowable liquidation period. These known questioned costs related to expenditures were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs. Cause: While the DBHDD had established procedures in place to comply with the period of performance requirements for federal awards, human error and a lack of appropriate oversight contributed to the errors identified by auditors. Also, the DBHDD policy governing period of performance does not address the correction of errors in a timely manner as the policy only recommends that corrections be completed during the close-out process for the grant award. Effect: The deficiencies noted in the period of performance process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal period of performance requirements, the DBHDD is at a higher risk of making improper payments and performing inaccurate financial reporting. Recommendation: We recommend that the DBHDD: • Update policy, processes, and procedures associated with period of performance requirements to recommend corrections be made in a timely manner. • Follow currently established grant close-out processes and procedures associated with period of performance requirements. • Incorporate additional oversight, training, and/or staff to aid in the identification of the period of performance to ensure costs are associated with the correct fund source. Views of Responsible Officials: DBHDD concurs with the audit finding.
2023-023 Improve Controls over Reporting Compliance Requirement: Reporting Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: None AL Numbers and Titles: 93.958 – Block Grants for Community Mental Health Services 93.958 – COVID-19 – Block Grants for Community Mental Health Services 93.959 – Block Grants for Prevention and Treatment of Substance Abuse 93.959 – COVID-19 – Block Grants for Prevention and Treatment of Substance Abuse Federal Award Numbers: B09SM083833 (Year: 2021), B09SM086001 (Year: 2022), B09SM087352 (Year: 2023), 1B09SM084001-01 (Year: 2021), 1B09SM085388-01 (Year: 2021), 1B09SM085916-01 (Year: 2021), 1B08TI083934-01 (Year: 2022), B08TI084623 (Year: 2022), 1B08TI083442-01 (Year: 2021), B08TI084637 (Year: 2022), B08TI085799 (Year: 2023), 1B08TI083530-01 (Year: 2021) Questioned Costs: None Identified Repeat of Prior Year Finding: 2022-025 Description: The Georgia Department of Behavioral Health and Developmental Disabilities should improve internal controls over required financial and Federal Funding Accountability and Transparency Act reporting to ensure that information is reported appropriately and timely. Background Information: The Block Grant for Community Mental Health Services (MHBG) was created to provide funds to states and territories to enable them to carry out their respective plans for providing comprehensive community-based mental health services for adults with serious mental illness and children with serious emotional disturbances. MHBG program funds are allocated to individual states based upon a formula. This funding may be distributed to cities, counties, or service providers within each state to carry out activities associated with the state plan. The objective of the Substance Abuse Prevention and Treatment Block Grant (SABG) program is to provide funds to states, territories, and one Indian tribe for the purpose of planning, carrying out, and evaluating activities to prevent and treat Substance Abuse (SA) and other related activities as authorized by the statute. The Georgia Department of Behavioral Health and Developmental Disabilities (DBHDD) was designated as the custodian of the MHBG and SABG funds for the State of Georgia. In that capacity, the DBHDD was required to report details associated with the expenditures to the Substance Abuse and Mental Health Services Administration (SAMHSA). This expenditure information should be reflected on the SF-425 Federal Financial Report (FFR) and is required to be submitted not later than ninety (90) days after the end of the award obligation and expenditure period (i.e., the project period). Funds associated with the MHBG and SABG programs are provided to the DBHDD for allocation to eligible entities, including local health agencies, community-based organizations, and other public or private entities, through competitive subgrants. Because DBHDD subgrants MHBG and SABG program funds to various entities, the DBHDD must comply with the Federal Funding Accountability and Transparency Act of 2006 (FFATA). The FFATA requirements were signed into law on September 26, 2006 in an effort to give the American public access to information on how their tax dollars are being spent. This information, including information associated with the use of MHBG and SABG program funds, is accessible via the USASpending.gov website. Criteria: As a recipient of federal awards, the DBHDD is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Under the FFATA (Public Law 109-282), as codified in Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, recipients of grants or cooperative agreements, including DBHDD, who make first-tier subawards of $30,000 or more are required to register in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Subaward data, such as the subaward date, subawardee Data Universal Numbering System number, amount of subaward, subaward obligation/action date, date of report submission, and subaward number, are submitted through the FSRS and accessible to the general public through the USASpending.gov website. Condition: Our audit of the MHBG and SABG programs revealed there was no evidence of review and approval over the FFR and FFATA reports. Additionally, upon performing testing over FFATA reporting, auditors noted the following deficiencies: • A sample of eight first-tier subawards of $30,000 or more associated with the MHBG program was randomly selected for testing using a non-statistical sampling method. Auditors examined documentation to determine if the subrecipient’s information was properly reported on the USASpending.gov website. Testing revealed that one subaward was not reported totaling $562,372.54, four subaward amounts were overstated by $3,639,860.00, and all eight subawards were missing key elements and were not reported timely. • A sample of twenty-two subawards of $30,000 or more associated with the SABG program was randomly selected for testing using a non-statistical sampling method. Auditors examined documentation to determine if the subrecipient’s information was properly reported on the USASpending.gov website. Testing revealed that nine subawards were not reported totaling $3,870,970.00, two subaward amounts were overstated by $321,000.00, and all 22 subawards were missing key elements and were not reported timely. Cause: Formal internal control processes have not been established for the FFATA reporting requirement due in part to a lack of sufficient staffing at the agency. As a result, noncompliance occurred with respect to FFATA reporting. Additionally, control processes have not been documented for the FFR reports. Effect: The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA requirements was not achieved as the general public was unable to review accurate expenditure data associated with the State of Georgia’s MHBG and SABG programs. Furthermore, though it does not appear that inappropriate information was transmitted on the FFR reports, this could occur if appropriate controls are not documented and functioning properly. Recommendation: We recommend that the DBHDD: • Establish and document processes and procedures associated with the FFR and FFATA reporting requirements; • Incorporate additional oversight, training, and/or staff to aid in the identification of subawards to be reported and the reporting of appropriate data elements, as applicable, in a timely manner; and • Review, update, and maintain documentation of subaward agreements and the determination of whether each subaward should be entered into the FSRS in compliance with the FFATA reporting requirements. Views of Responsible Officials: DBHDD concurs with the audit finding.
2023-023 Improve Controls over Reporting Compliance Requirement: Reporting Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: None AL Numbers and Titles: 93.958 – Block Grants for Community Mental Health Services 93.958 – COVID-19 – Block Grants for Community Mental Health Services 93.959 – Block Grants for Prevention and Treatment of Substance Abuse 93.959 – COVID-19 – Block Grants for Prevention and Treatment of Substance Abuse Federal Award Numbers: B09SM083833 (Year: 2021), B09SM086001 (Year: 2022), B09SM087352 (Year: 2023), 1B09SM084001-01 (Year: 2021), 1B09SM085388-01 (Year: 2021), 1B09SM085916-01 (Year: 2021), 1B08TI083934-01 (Year: 2022), B08TI084623 (Year: 2022), 1B08TI083442-01 (Year: 2021), B08TI084637 (Year: 2022), B08TI085799 (Year: 2023), 1B08TI083530-01 (Year: 2021) Questioned Costs: None Identified Repeat of Prior Year Finding: 2022-025 Description: The Georgia Department of Behavioral Health and Developmental Disabilities should improve internal controls over required financial and Federal Funding Accountability and Transparency Act reporting to ensure that information is reported appropriately and timely. Background Information: The Block Grant for Community Mental Health Services (MHBG) was created to provide funds to states and territories to enable them to carry out their respective plans for providing comprehensive community-based mental health services for adults with serious mental illness and children with serious emotional disturbances. MHBG program funds are allocated to individual states based upon a formula. This funding may be distributed to cities, counties, or service providers within each state to carry out activities associated with the state plan. The objective of the Substance Abuse Prevention and Treatment Block Grant (SABG) program is to provide funds to states, territories, and one Indian tribe for the purpose of planning, carrying out, and evaluating activities to prevent and treat Substance Abuse (SA) and other related activities as authorized by the statute. The Georgia Department of Behavioral Health and Developmental Disabilities (DBHDD) was designated as the custodian of the MHBG and SABG funds for the State of Georgia. In that capacity, the DBHDD was required to report details associated with the expenditures to the Substance Abuse and Mental Health Services Administration (SAMHSA). This expenditure information should be reflected on the SF-425 Federal Financial Report (FFR) and is required to be submitted not later than ninety (90) days after the end of the award obligation and expenditure period (i.e., the project period). Funds associated with the MHBG and SABG programs are provided to the DBHDD for allocation to eligible entities, including local health agencies, community-based organizations, and other public or private entities, through competitive subgrants. Because DBHDD subgrants MHBG and SABG program funds to various entities, the DBHDD must comply with the Federal Funding Accountability and Transparency Act of 2006 (FFATA). The FFATA requirements were signed into law on September 26, 2006 in an effort to give the American public access to information on how their tax dollars are being spent. This information, including information associated with the use of MHBG and SABG program funds, is accessible via the USASpending.gov website. Criteria: As a recipient of federal awards, the DBHDD is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Under the FFATA (Public Law 109-282), as codified in Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, recipients of grants or cooperative agreements, including DBHDD, who make first-tier subawards of $30,000 or more are required to register in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Subaward data, such as the subaward date, subawardee Data Universal Numbering System number, amount of subaward, subaward obligation/action date, date of report submission, and subaward number, are submitted through the FSRS and accessible to the general public through the USASpending.gov website. Condition: Our audit of the MHBG and SABG programs revealed there was no evidence of review and approval over the FFR and FFATA reports. Additionally, upon performing testing over FFATA reporting, auditors noted the following deficiencies: • A sample of eight first-tier subawards of $30,000 or more associated with the MHBG program was randomly selected for testing using a non-statistical sampling method. Auditors examined documentation to determine if the subrecipient’s information was properly reported on the USASpending.gov website. Testing revealed that one subaward was not reported totaling $562,372.54, four subaward amounts were overstated by $3,639,860.00, and all eight subawards were missing key elements and were not reported timely. • A sample of twenty-two subawards of $30,000 or more associated with the SABG program was randomly selected for testing using a non-statistical sampling method. Auditors examined documentation to determine if the subrecipient’s information was properly reported on the USASpending.gov website. Testing revealed that nine subawards were not reported totaling $3,870,970.00, two subaward amounts were overstated by $321,000.00, and all 22 subawards were missing key elements and were not reported timely. Cause: Formal internal control processes have not been established for the FFATA reporting requirement due in part to a lack of sufficient staffing at the agency. As a result, noncompliance occurred with respect to FFATA reporting. Additionally, control processes have not been documented for the FFR reports. Effect: The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA requirements was not achieved as the general public was unable to review accurate expenditure data associated with the State of Georgia’s MHBG and SABG programs. Furthermore, though it does not appear that inappropriate information was transmitted on the FFR reports, this could occur if appropriate controls are not documented and functioning properly. Recommendation: We recommend that the DBHDD: • Establish and document processes and procedures associated with the FFR and FFATA reporting requirements; • Incorporate additional oversight, training, and/or staff to aid in the identification of subawards to be reported and the reporting of appropriate data elements, as applicable, in a timely manner; and • Review, update, and maintain documentation of subaward agreements and the determination of whether each subaward should be entered into the FSRS in compliance with the FFATA reporting requirements. Views of Responsible Officials: DBHDD concurs with the audit finding.
2023-022 Improve Controls over Period of Performance Compliance Requirement: Period of Performance Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: None AL Number and Title: 93.959 – Block Grants for Prevention and Treatment of Substance Abuse Federal Award Numbers: B08TI085799 (Year: 2023), 1B08TI083442-01 (Year: 2021) Questioned Costs: $221,131.74 Description: The Georgia Department of Behavioral Health and Developmental Disabilities should improve internal controls to ensure that program costs are obligated within the period of performance and liquidated within the allowed time period. Background Information: The objective of the Substance Abuse Prevention and Treatment Block Grant (SABG) program is to provide funds to states, territories, and one Indian tribe for the purpose of planning, carrying out, and evaluating activities to prevent and treat Substance Abuse (SA) and other related activities as authorized by the statute. Funds associated with the SABG program are administered by the Department of Behavioral Health and Developmental Disabilities (DBHDD). The DBHDD is responsible for becoming familiar with the performance period during which recipients must obligate and liquidate costs for this program. These periods typically align with the federal fiscal year of October 1 through September 30, and payments for costs incurred before a grant award’s beginning date or after the liquidation period are not allowed without the grantor’s prior approval. Criteria: As a recipient of federal awards, the DBHDD is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented, (h) Cost must be incurred during the approved budget period…” Additionally, provisions included in the Uniform Guidance, Section 200.77 state, “Period of performance means the time during which the non-Federal entity may incur new obligations to carry out the work authorized under the Federal award.” Further, the DBHDD’s policies 17-202 – Federal Fund Source and Parent Project Code Assignments and 17-203 – Federal Financial Report Preparation, Reconciliation, and Submission prescribe actions that must be taken by staff to ensure that costs are obligated, incurred, and liquidated within the appropriate period as specified in each grant award’s terms and conditions. Condition: Our audit of the SABG program included a review of expenditures with performance period beginning dates during the audit period to ensure that costs were not incurred before the allowable time period. Six expenditures were identified as the population and were all selected for testing. It was noted that three expenditures reviewed were incurred before the period of performance. In addition, our audit of the SABG program included a review of adjustments with a performance period ending date during the audit period. One adjustment was identified as the population and tested to ensure that the amounts were obligated and liquidated within the appropriate time period. It was noted that this transaction was not posted within 90 days of the end of the period of performance as required. Additionally, this expenditure was not identified by the DBHDD and reclassified to an appropriate, subsequent award number as is reflected within the DBHDD’s internal policy. Questioned Costs: Known questioned costs of $221,131.74 related to the SABG program were identified for expenditures that were incurred before the period of performance or paid outside of the allowable liquidation period. These known questioned costs related to expenditures were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs. Cause: While the DBHDD had established procedures in place to comply with the period of performance requirements for federal awards, human error and a lack of appropriate oversight contributed to the errors identified by auditors. Also, the DBHDD policy governing period of performance does not address the correction of errors in a timely manner as the policy only recommends that corrections be completed during the close-out process for the grant award. Effect: The deficiencies noted in the period of performance process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal period of performance requirements, the DBHDD is at a higher risk of making improper payments and performing inaccurate financial reporting. Recommendation: We recommend that the DBHDD: • Update policy, processes, and procedures associated with period of performance requirements to recommend corrections be made in a timely manner. • Follow currently established grant close-out processes and procedures associated with period of performance requirements. • Incorporate additional oversight, training, and/or staff to aid in the identification of the period of performance to ensure costs are associated with the correct fund source. Views of Responsible Officials: DBHDD concurs with the audit finding.
2023-023 Improve Controls over Reporting Compliance Requirement: Reporting Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: None AL Numbers and Titles: 93.958 – Block Grants for Community Mental Health Services 93.958 – COVID-19 – Block Grants for Community Mental Health Services 93.959 – Block Grants for Prevention and Treatment of Substance Abuse 93.959 – COVID-19 – Block Grants for Prevention and Treatment of Substance Abuse Federal Award Numbers: B09SM083833 (Year: 2021), B09SM086001 (Year: 2022), B09SM087352 (Year: 2023), 1B09SM084001-01 (Year: 2021), 1B09SM085388-01 (Year: 2021), 1B09SM085916-01 (Year: 2021), 1B08TI083934-01 (Year: 2022), B08TI084623 (Year: 2022), 1B08TI083442-01 (Year: 2021), B08TI084637 (Year: 2022), B08TI085799 (Year: 2023), 1B08TI083530-01 (Year: 2021) Questioned Costs: None Identified Repeat of Prior Year Finding: 2022-025 Description: The Georgia Department of Behavioral Health and Developmental Disabilities should improve internal controls over required financial and Federal Funding Accountability and Transparency Act reporting to ensure that information is reported appropriately and timely. Background Information: The Block Grant for Community Mental Health Services (MHBG) was created to provide funds to states and territories to enable them to carry out their respective plans for providing comprehensive community-based mental health services for adults with serious mental illness and children with serious emotional disturbances. MHBG program funds are allocated to individual states based upon a formula. This funding may be distributed to cities, counties, or service providers within each state to carry out activities associated with the state plan. The objective of the Substance Abuse Prevention and Treatment Block Grant (SABG) program is to provide funds to states, territories, and one Indian tribe for the purpose of planning, carrying out, and evaluating activities to prevent and treat Substance Abuse (SA) and other related activities as authorized by the statute. The Georgia Department of Behavioral Health and Developmental Disabilities (DBHDD) was designated as the custodian of the MHBG and SABG funds for the State of Georgia. In that capacity, the DBHDD was required to report details associated with the expenditures to the Substance Abuse and Mental Health Services Administration (SAMHSA). This expenditure information should be reflected on the SF-425 Federal Financial Report (FFR) and is required to be submitted not later than ninety (90) days after the end of the award obligation and expenditure period (i.e., the project period). Funds associated with the MHBG and SABG programs are provided to the DBHDD for allocation to eligible entities, including local health agencies, community-based organizations, and other public or private entities, through competitive subgrants. Because DBHDD subgrants MHBG and SABG program funds to various entities, the DBHDD must comply with the Federal Funding Accountability and Transparency Act of 2006 (FFATA). The FFATA requirements were signed into law on September 26, 2006 in an effort to give the American public access to information on how their tax dollars are being spent. This information, including information associated with the use of MHBG and SABG program funds, is accessible via the USASpending.gov website. Criteria: As a recipient of federal awards, the DBHDD is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Under the FFATA (Public Law 109-282), as codified in Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, recipients of grants or cooperative agreements, including DBHDD, who make first-tier subawards of $30,000 or more are required to register in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Subaward data, such as the subaward date, subawardee Data Universal Numbering System number, amount of subaward, subaward obligation/action date, date of report submission, and subaward number, are submitted through the FSRS and accessible to the general public through the USASpending.gov website. Condition: Our audit of the MHBG and SABG programs revealed there was no evidence of review and approval over the FFR and FFATA reports. Additionally, upon performing testing over FFATA reporting, auditors noted the following deficiencies: • A sample of eight first-tier subawards of $30,000 or more associated with the MHBG program was randomly selected for testing using a non-statistical sampling method. Auditors examined documentation to determine if the subrecipient’s information was properly reported on the USASpending.gov website. Testing revealed that one subaward was not reported totaling $562,372.54, four subaward amounts were overstated by $3,639,860.00, and all eight subawards were missing key elements and were not reported timely. • A sample of twenty-two subawards of $30,000 or more associated with the SABG program was randomly selected for testing using a non-statistical sampling method. Auditors examined documentation to determine if the subrecipient’s information was properly reported on the USASpending.gov website. Testing revealed that nine subawards were not reported totaling $3,870,970.00, two subaward amounts were overstated by $321,000.00, and all 22 subawards were missing key elements and were not reported timely. Cause: Formal internal control processes have not been established for the FFATA reporting requirement due in part to a lack of sufficient staffing at the agency. As a result, noncompliance occurred with respect to FFATA reporting. Additionally, control processes have not been documented for the FFR reports. Effect: The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA requirements was not achieved as the general public was unable to review accurate expenditure data associated with the State of Georgia’s MHBG and SABG programs. Furthermore, though it does not appear that inappropriate information was transmitted on the FFR reports, this could occur if appropriate controls are not documented and functioning properly. Recommendation: We recommend that the DBHDD: • Establish and document processes and procedures associated with the FFR and FFATA reporting requirements; • Incorporate additional oversight, training, and/or staff to aid in the identification of subawards to be reported and the reporting of appropriate data elements, as applicable, in a timely manner; and • Review, update, and maintain documentation of subaward agreements and the determination of whether each subaward should be entered into the FSRS in compliance with the FFATA reporting requirements. Views of Responsible Officials: DBHDD concurs with the audit finding.
2023-023 Improve Controls over Reporting Compliance Requirement: Reporting Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: None AL Numbers and Titles: 93.958 – Block Grants for Community Mental Health Services 93.958 – COVID-19 – Block Grants for Community Mental Health Services 93.959 – Block Grants for Prevention and Treatment of Substance Abuse 93.959 – COVID-19 – Block Grants for Prevention and Treatment of Substance Abuse Federal Award Numbers: B09SM083833 (Year: 2021), B09SM086001 (Year: 2022), B09SM087352 (Year: 2023), 1B09SM084001-01 (Year: 2021), 1B09SM085388-01 (Year: 2021), 1B09SM085916-01 (Year: 2021), 1B08TI083934-01 (Year: 2022), B08TI084623 (Year: 2022), 1B08TI083442-01 (Year: 2021), B08TI084637 (Year: 2022), B08TI085799 (Year: 2023), 1B08TI083530-01 (Year: 2021) Questioned Costs: None Identified Repeat of Prior Year Finding: 2022-025 Description: The Georgia Department of Behavioral Health and Developmental Disabilities should improve internal controls over required financial and Federal Funding Accountability and Transparency Act reporting to ensure that information is reported appropriately and timely. Background Information: The Block Grant for Community Mental Health Services (MHBG) was created to provide funds to states and territories to enable them to carry out their respective plans for providing comprehensive community-based mental health services for adults with serious mental illness and children with serious emotional disturbances. MHBG program funds are allocated to individual states based upon a formula. This funding may be distributed to cities, counties, or service providers within each state to carry out activities associated with the state plan. The objective of the Substance Abuse Prevention and Treatment Block Grant (SABG) program is to provide funds to states, territories, and one Indian tribe for the purpose of planning, carrying out, and evaluating activities to prevent and treat Substance Abuse (SA) and other related activities as authorized by the statute. The Georgia Department of Behavioral Health and Developmental Disabilities (DBHDD) was designated as the custodian of the MHBG and SABG funds for the State of Georgia. In that capacity, the DBHDD was required to report details associated with the expenditures to the Substance Abuse and Mental Health Services Administration (SAMHSA). This expenditure information should be reflected on the SF-425 Federal Financial Report (FFR) and is required to be submitted not later than ninety (90) days after the end of the award obligation and expenditure period (i.e., the project period). Funds associated with the MHBG and SABG programs are provided to the DBHDD for allocation to eligible entities, including local health agencies, community-based organizations, and other public or private entities, through competitive subgrants. Because DBHDD subgrants MHBG and SABG program funds to various entities, the DBHDD must comply with the Federal Funding Accountability and Transparency Act of 2006 (FFATA). The FFATA requirements were signed into law on September 26, 2006 in an effort to give the American public access to information on how their tax dollars are being spent. This information, including information associated with the use of MHBG and SABG program funds, is accessible via the USASpending.gov website. Criteria: As a recipient of federal awards, the DBHDD is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Under the FFATA (Public Law 109-282), as codified in Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, recipients of grants or cooperative agreements, including DBHDD, who make first-tier subawards of $30,000 or more are required to register in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Subaward data, such as the subaward date, subawardee Data Universal Numbering System number, amount of subaward, subaward obligation/action date, date of report submission, and subaward number, are submitted through the FSRS and accessible to the general public through the USASpending.gov website. Condition: Our audit of the MHBG and SABG programs revealed there was no evidence of review and approval over the FFR and FFATA reports. Additionally, upon performing testing over FFATA reporting, auditors noted the following deficiencies: • A sample of eight first-tier subawards of $30,000 or more associated with the MHBG program was randomly selected for testing using a non-statistical sampling method. Auditors examined documentation to determine if the subrecipient’s information was properly reported on the USASpending.gov website. Testing revealed that one subaward was not reported totaling $562,372.54, four subaward amounts were overstated by $3,639,860.00, and all eight subawards were missing key elements and were not reported timely. • A sample of twenty-two subawards of $30,000 or more associated with the SABG program was randomly selected for testing using a non-statistical sampling method. Auditors examined documentation to determine if the subrecipient’s information was properly reported on the USASpending.gov website. Testing revealed that nine subawards were not reported totaling $3,870,970.00, two subaward amounts were overstated by $321,000.00, and all 22 subawards were missing key elements and were not reported timely. Cause: Formal internal control processes have not been established for the FFATA reporting requirement due in part to a lack of sufficient staffing at the agency. As a result, noncompliance occurred with respect to FFATA reporting. Additionally, control processes have not been documented for the FFR reports. Effect: The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA requirements was not achieved as the general public was unable to review accurate expenditure data associated with the State of Georgia’s MHBG and SABG programs. Furthermore, though it does not appear that inappropriate information was transmitted on the FFR reports, this could occur if appropriate controls are not documented and functioning properly. Recommendation: We recommend that the DBHDD: • Establish and document processes and procedures associated with the FFR and FFATA reporting requirements; • Incorporate additional oversight, training, and/or staff to aid in the identification of subawards to be reported and the reporting of appropriate data elements, as applicable, in a timely manner; and • Review, update, and maintain documentation of subaward agreements and the determination of whether each subaward should be entered into the FSRS in compliance with the FFATA reporting requirements. Views of Responsible Officials: DBHDD concurs with the audit finding.
FINDING 2023-002 Subject: COVID-19 - Education Stabilization Fund - Reporting Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425D Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425D210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 20 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The School Corporation was required to submit annual data reports to the Indiana Department of Education (IDOE) via JotForm, a form/report builder. Data to be submitted included, but was not limited to, current period expenditures, prior period expenditures, and expenditures per activity. During the audit period, the School Corporation submitted two ESSER I reports and two ESSER II reports, for a total of four reports. The annual data reports were compiled, prepared, and submitted by the Deputy Treasurer and the Director of Business/Treasurer without an oversight or review process in place to prevent, or detect and correct, errors. In addition, the four annual data reports were not supported by the School Corporation's records. The documentation used to prepare the reports was not retained by the School Corporation and the ledger activity for the time period of each report did not agree to the data submitted. As such, we could not verify the information submitted to the IDOE was accurate or complete. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . ." 34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other responsibilities under the program." 34 CFR 76.731 states: "A State and a subgrantee shall keep records to show its compliance with program requirements." INDIANA STATE BOARD OF ACCOUNTS 21 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause A proper system of internal controls, which include segregation of key functions, was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, reports were not supported by the School Corporation's records. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure that documentation utilized in the preparation of the reports is maintained. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-002 Subject: COVID-19 - Education Stabilization Fund - Reporting Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425D Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425D210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 20 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The School Corporation was required to submit annual data reports to the Indiana Department of Education (IDOE) via JotForm, a form/report builder. Data to be submitted included, but was not limited to, current period expenditures, prior period expenditures, and expenditures per activity. During the audit period, the School Corporation submitted two ESSER I reports and two ESSER II reports, for a total of four reports. The annual data reports were compiled, prepared, and submitted by the Deputy Treasurer and the Director of Business/Treasurer without an oversight or review process in place to prevent, or detect and correct, errors. In addition, the four annual data reports were not supported by the School Corporation's records. The documentation used to prepare the reports was not retained by the School Corporation and the ledger activity for the time period of each report did not agree to the data submitted. As such, we could not verify the information submitted to the IDOE was accurate or complete. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . ." 34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other responsibilities under the program." 34 CFR 76.731 states: "A State and a subgrantee shall keep records to show its compliance with program requirements." INDIANA STATE BOARD OF ACCOUNTS 21 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause A proper system of internal controls, which include segregation of key functions, was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, reports were not supported by the School Corporation's records. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure that documentation utilized in the preparation of the reports is maintained. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-003 Subject: COVID-19 - Education Stabilization Fund - Special Tests and Provisions - Participation of Private School Children Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425C Federal Award Number and Year (or Other Identifying Number): S425C200018 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Special Tests and Provisions - Participation of Private School Children Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 22 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context In March 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which included the Education Stabilization Fund (ESF). One of the ESF programs included in the CARES Act was the Governor's Emergency Education Relief (GEER I) Fund. For programs under the GEER I, a local educational agency (LEA) that receives funds must provide equitable services in the same manner as provided under section 1117 of Title I, Part A of the Education and Secondary Education Act (ESEA) to students and teachers in private schools as determined in consultation with private school officials. Under the GEER I, the LEA in which a private school is located is responsible for providing equitable services to students and teachers in the school. The School Corporation chose to apply for a GEER I grant in partnership with other school corporations. One of the other school corporations was designated as the lead applicant. Each school corporation that was a part of the application was required to consult with the private schools within its boundaries. However, the School Corporation did not consult with the four private schools within its boundaries, due to a misunderstanding of which school corporation, the lead applicant or each individual applicant, would complete this requirement. As a result, the nonpublic schools within the School Corporation's boundaries did not have the opportunity to participate in the GEER I award. The lack of internal controls and noncompliance were isolated to the GEER I program award. Criteria 2 CFR 200.303 states in part: "The non-federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." The CARES Act P. CARES Act, Pub. L. No. 116-136 134 Stat. 281 (Mar. 27, 2020) Section 18005(a) states: "(a) IN GENERAL.—A local educational agency receiving funds under sections 18002 or 18003 of this title shall provide equitable services in the same manner as provided under section 1117 of the ESEA of 1965 to students and teachers in non-public schools, as determined in consultation with representatives of non-public schools. . . ." 20 USC 6320(a)(1) states: "To the extent consistent with the number of eligible children identified under section 6315(c) of this title in the school district served by a local educational agency who are enrolled in private elementary schools and secondary schools, a local educational agency shall— INDIANA STATE BOARD OF ACCOUNTS 23 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (A) after timely and meaningful consultation with appropriate private school officials, provide such children, on an equitable basis and individually or in combination, as requested by the officials to best meet the needs of such children, special educational services, instructional services (including evaluations to determine the progress being made in meeting such students' academic needs), counseling, mentoring, one-on-one tutoring, or other benefits under this part (such as dual or concurrent enrollment, educational radio and television, computer equipment and materials, other technology, and mobile educational services and equipment) that address their needs; and (B) ensure that teachers and families of the children participate, on an equitable basis, in services and activities developed pursuant to section 6318 of this title." 20 USC 6320(c)(1) states: "A local educational agency shall have the final authority, consistent with this section, to calculate the number of children, ages 5 through 17, who are from low-income families and attend private schools by- (A) using the same measure of low income used to count public school children; (B) using the results of a survey that, to the extent possible, protects the identity of families of private school students, and allowing such survey results to be extrapolated if complete actual data are unavailable; (C) applying the low-income percentage of each participating public school attendance area, determined pursuant to this section, to the number of private school children who reside in that school attendance area; or (D) using an equated measure of low income correlated with the measure of low income used to count public school children." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, the nonpublic schools were not consulted with to determine what, if any, equitable services needed to be provided. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. INDIANA STATE BOARD OF ACCOUNTS 24 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure nonpublic schools are consulted with and equitable services are offered to participating nonpublic schools. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-003 Subject: COVID-19 - Education Stabilization Fund - Special Tests and Provisions - Participation of Private School Children Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425C Federal Award Number and Year (or Other Identifying Number): S425C200018 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Special Tests and Provisions - Participation of Private School Children Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 22 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context In March 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which included the Education Stabilization Fund (ESF). One of the ESF programs included in the CARES Act was the Governor's Emergency Education Relief (GEER I) Fund. For programs under the GEER I, a local educational agency (LEA) that receives funds must provide equitable services in the same manner as provided under section 1117 of Title I, Part A of the Education and Secondary Education Act (ESEA) to students and teachers in private schools as determined in consultation with private school officials. Under the GEER I, the LEA in which a private school is located is responsible for providing equitable services to students and teachers in the school. The School Corporation chose to apply for a GEER I grant in partnership with other school corporations. One of the other school corporations was designated as the lead applicant. Each school corporation that was a part of the application was required to consult with the private schools within its boundaries. However, the School Corporation did not consult with the four private schools within its boundaries, due to a misunderstanding of which school corporation, the lead applicant or each individual applicant, would complete this requirement. As a result, the nonpublic schools within the School Corporation's boundaries did not have the opportunity to participate in the GEER I award. The lack of internal controls and noncompliance were isolated to the GEER I program award. Criteria 2 CFR 200.303 states in part: "The non-federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." The CARES Act P. CARES Act, Pub. L. No. 116-136 134 Stat. 281 (Mar. 27, 2020) Section 18005(a) states: "(a) IN GENERAL.—A local educational agency receiving funds under sections 18002 or 18003 of this title shall provide equitable services in the same manner as provided under section 1117 of the ESEA of 1965 to students and teachers in non-public schools, as determined in consultation with representatives of non-public schools. . . ." 20 USC 6320(a)(1) states: "To the extent consistent with the number of eligible children identified under section 6315(c) of this title in the school district served by a local educational agency who are enrolled in private elementary schools and secondary schools, a local educational agency shall— INDIANA STATE BOARD OF ACCOUNTS 23 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (A) after timely and meaningful consultation with appropriate private school officials, provide such children, on an equitable basis and individually or in combination, as requested by the officials to best meet the needs of such children, special educational services, instructional services (including evaluations to determine the progress being made in meeting such students' academic needs), counseling, mentoring, one-on-one tutoring, or other benefits under this part (such as dual or concurrent enrollment, educational radio and television, computer equipment and materials, other technology, and mobile educational services and equipment) that address their needs; and (B) ensure that teachers and families of the children participate, on an equitable basis, in services and activities developed pursuant to section 6318 of this title." 20 USC 6320(c)(1) states: "A local educational agency shall have the final authority, consistent with this section, to calculate the number of children, ages 5 through 17, who are from low-income families and attend private schools by- (A) using the same measure of low income used to count public school children; (B) using the results of a survey that, to the extent possible, protects the identity of families of private school students, and allowing such survey results to be extrapolated if complete actual data are unavailable; (C) applying the low-income percentage of each participating public school attendance area, determined pursuant to this section, to the number of private school children who reside in that school attendance area; or (D) using an equated measure of low income correlated with the measure of low income used to count public school children." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, the nonpublic schools were not consulted with to determine what, if any, equitable services needed to be provided. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. INDIANA STATE BOARD OF ACCOUNTS 24 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure nonpublic schools are consulted with and equitable services are offered to participating nonpublic schools. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-004 Subject: Child Nutrition Cluster - Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program Assistance Listings Numbers: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY 22, FY 23 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding for Allowable Costs/Cost Principles from the prior audit report. The prior audit finding number was 2021-002. Condition and Context Reimbursement for meals served is not based on costs; it is determined solely by applying the applicable meals times rates formula. A School Corporation can use its entire reimbursement payment for any combination of allowable operating and administrative costs. Therefore, expenditures charged to the food service program fund (fund 800) are to be for the benefit of the food service program and in conformance with applicable cost principles. Forty vendor claims were selected for testing to ensure the identified internal control of one employee prepares the claim and a second knowledgeable individual reviews the claim prior to payment was in place and operating effectively. For two of the forty vendor claims tested, one employee prepared and approved the claim without a review or oversight process by a second knowledgeable employee. In addition, one of the two claims was approved without supporting documentation. An additional forty claims were selected to ensure the expenditures were for the benefit of the food service program. For the forty claims tested, the following issues were noted: Seven claims, as detailed below, were for unallowable activities and unallowable costs. One claim was for the purchase of gift cards for staff gifts totaling $905. INDIANA STATE BOARD OF ACCOUNTS 25 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Two claims were refunds of prepaid lunch account balances totaling $1,790. Two claims were reimbursements to an employee for staff breakfasts totaling $110. One claim was for the purchase of medication totaling $8. One claim was for the purchase of uniforms totaling $50, which included no supporting documentation for the purchase. Eight claims included the payment of sales tax totaling $85. Due to the noncompliance identified above, an additional twenty-one claims paid to one employee were judgmentally selected for testing. For the additional twenty-one claims tested, the following errors were noted: One claim was for the purchase of a back brace shipped to an employee's house totaling $31. Twelve claims included the payment of sales tax totaling $195. In addition, all refunds not already selected for testing were reviewed. A total of sixty-seven additional refunds of prepaid lunch account balances were identified and determined to be incorrectly made from Fund 800. The total amount of the additional refunds was $6,476. The total amount of unallowed activities and unallowable costs charged to the School Lunch fund was $9,650. This amount was considered questioned costs. The lack of effective internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 7 CFR 220.7(e)(1) states in part: ". . . the School Food Authority shall, with respect to participating schools under its jurisdiction: . . . (ii) . . . use all revenues received by such food service only for the operation or improvement of that food service . . ." INDIANA STATE BOARD OF ACCOUNTS 26 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 7 CFR 210.14(a) states in part: ". . . Revenues received by the nonprofit school food service are to be used only for the operation or improvement of such food service, except that, such revenues shall not be used to purchase land or buildings, unless otherwise approved by FNS, or to construct buildings. . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." Cause A proper system of internal controls, which would include segregation of key functions, was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, costs that were not necessary and reasonable for the performance of the federal award were paid for with federal funds. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs Known questioned costs of $9,650 were identified as detailed in the Condition and Context. Recommendation We recommended the School Corporation's management establish a proper system of internal controls and develop policies and procedures to ensure costs are for the benefit of the food service program and are adequately documented. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-004 Subject: Child Nutrition Cluster - Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program Assistance Listings Numbers: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY 22, FY 23 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding for Allowable Costs/Cost Principles from the prior audit report. The prior audit finding number was 2021-002. Condition and Context Reimbursement for meals served is not based on costs; it is determined solely by applying the applicable meals times rates formula. A School Corporation can use its entire reimbursement payment for any combination of allowable operating and administrative costs. Therefore, expenditures charged to the food service program fund (fund 800) are to be for the benefit of the food service program and in conformance with applicable cost principles. Forty vendor claims were selected for testing to ensure the identified internal control of one employee prepares the claim and a second knowledgeable individual reviews the claim prior to payment was in place and operating effectively. For two of the forty vendor claims tested, one employee prepared and approved the claim without a review or oversight process by a second knowledgeable employee. In addition, one of the two claims was approved without supporting documentation. An additional forty claims were selected to ensure the expenditures were for the benefit of the food service program. For the forty claims tested, the following issues were noted: Seven claims, as detailed below, were for unallowable activities and unallowable costs. One claim was for the purchase of gift cards for staff gifts totaling $905. INDIANA STATE BOARD OF ACCOUNTS 25 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Two claims were refunds of prepaid lunch account balances totaling $1,790. Two claims were reimbursements to an employee for staff breakfasts totaling $110. One claim was for the purchase of medication totaling $8. One claim was for the purchase of uniforms totaling $50, which included no supporting documentation for the purchase. Eight claims included the payment of sales tax totaling $85. Due to the noncompliance identified above, an additional twenty-one claims paid to one employee were judgmentally selected for testing. For the additional twenty-one claims tested, the following errors were noted: One claim was for the purchase of a back brace shipped to an employee's house totaling $31. Twelve claims included the payment of sales tax totaling $195. In addition, all refunds not already selected for testing were reviewed. A total of sixty-seven additional refunds of prepaid lunch account balances were identified and determined to be incorrectly made from Fund 800. The total amount of the additional refunds was $6,476. The total amount of unallowed activities and unallowable costs charged to the School Lunch fund was $9,650. This amount was considered questioned costs. The lack of effective internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 7 CFR 220.7(e)(1) states in part: ". . . the School Food Authority shall, with respect to participating schools under its jurisdiction: . . . (ii) . . . use all revenues received by such food service only for the operation or improvement of that food service . . ." INDIANA STATE BOARD OF ACCOUNTS 26 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 7 CFR 210.14(a) states in part: ". . . Revenues received by the nonprofit school food service are to be used only for the operation or improvement of such food service, except that, such revenues shall not be used to purchase land or buildings, unless otherwise approved by FNS, or to construct buildings. . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." Cause A proper system of internal controls, which would include segregation of key functions, was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, costs that were not necessary and reasonable for the performance of the federal award were paid for with federal funds. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs Known questioned costs of $9,650 were identified as detailed in the Condition and Context. Recommendation We recommended the School Corporation's management establish a proper system of internal controls and develop policies and procedures to ensure costs are for the benefit of the food service program and are adequately documented. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-004 Subject: Child Nutrition Cluster - Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program Assistance Listings Numbers: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY 22, FY 23 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding for Allowable Costs/Cost Principles from the prior audit report. The prior audit finding number was 2021-002. Condition and Context Reimbursement for meals served is not based on costs; it is determined solely by applying the applicable meals times rates formula. A School Corporation can use its entire reimbursement payment for any combination of allowable operating and administrative costs. Therefore, expenditures charged to the food service program fund (fund 800) are to be for the benefit of the food service program and in conformance with applicable cost principles. Forty vendor claims were selected for testing to ensure the identified internal control of one employee prepares the claim and a second knowledgeable individual reviews the claim prior to payment was in place and operating effectively. For two of the forty vendor claims tested, one employee prepared and approved the claim without a review or oversight process by a second knowledgeable employee. In addition, one of the two claims was approved without supporting documentation. An additional forty claims were selected to ensure the expenditures were for the benefit of the food service program. For the forty claims tested, the following issues were noted: Seven claims, as detailed below, were for unallowable activities and unallowable costs. One claim was for the purchase of gift cards for staff gifts totaling $905. INDIANA STATE BOARD OF ACCOUNTS 25 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Two claims were refunds of prepaid lunch account balances totaling $1,790. Two claims were reimbursements to an employee for staff breakfasts totaling $110. One claim was for the purchase of medication totaling $8. One claim was for the purchase of uniforms totaling $50, which included no supporting documentation for the purchase. Eight claims included the payment of sales tax totaling $85. Due to the noncompliance identified above, an additional twenty-one claims paid to one employee were judgmentally selected for testing. For the additional twenty-one claims tested, the following errors were noted: One claim was for the purchase of a back brace shipped to an employee's house totaling $31. Twelve claims included the payment of sales tax totaling $195. In addition, all refunds not already selected for testing were reviewed. A total of sixty-seven additional refunds of prepaid lunch account balances were identified and determined to be incorrectly made from Fund 800. The total amount of the additional refunds was $6,476. The total amount of unallowed activities and unallowable costs charged to the School Lunch fund was $9,650. This amount was considered questioned costs. The lack of effective internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 7 CFR 220.7(e)(1) states in part: ". . . the School Food Authority shall, with respect to participating schools under its jurisdiction: . . . (ii) . . . use all revenues received by such food service only for the operation or improvement of that food service . . ." INDIANA STATE BOARD OF ACCOUNTS 26 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 7 CFR 210.14(a) states in part: ". . . Revenues received by the nonprofit school food service are to be used only for the operation or improvement of such food service, except that, such revenues shall not be used to purchase land or buildings, unless otherwise approved by FNS, or to construct buildings. . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." Cause A proper system of internal controls, which would include segregation of key functions, was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, costs that were not necessary and reasonable for the performance of the federal award were paid for with federal funds. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs Known questioned costs of $9,650 were identified as detailed in the Condition and Context. Recommendation We recommended the School Corporation's management establish a proper system of internal controls and develop policies and procedures to ensure costs are for the benefit of the food service program and are adequately documented. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-004 Subject: Child Nutrition Cluster - Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program Assistance Listings Numbers: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY 22, FY 23 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding for Allowable Costs/Cost Principles from the prior audit report. The prior audit finding number was 2021-002. Condition and Context Reimbursement for meals served is not based on costs; it is determined solely by applying the applicable meals times rates formula. A School Corporation can use its entire reimbursement payment for any combination of allowable operating and administrative costs. Therefore, expenditures charged to the food service program fund (fund 800) are to be for the benefit of the food service program and in conformance with applicable cost principles. Forty vendor claims were selected for testing to ensure the identified internal control of one employee prepares the claim and a second knowledgeable individual reviews the claim prior to payment was in place and operating effectively. For two of the forty vendor claims tested, one employee prepared and approved the claim without a review or oversight process by a second knowledgeable employee. In addition, one of the two claims was approved without supporting documentation. An additional forty claims were selected to ensure the expenditures were for the benefit of the food service program. For the forty claims tested, the following issues were noted: Seven claims, as detailed below, were for unallowable activities and unallowable costs. One claim was for the purchase of gift cards for staff gifts totaling $905. INDIANA STATE BOARD OF ACCOUNTS 25 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Two claims were refunds of prepaid lunch account balances totaling $1,790. Two claims were reimbursements to an employee for staff breakfasts totaling $110. One claim was for the purchase of medication totaling $8. One claim was for the purchase of uniforms totaling $50, which included no supporting documentation for the purchase. Eight claims included the payment of sales tax totaling $85. Due to the noncompliance identified above, an additional twenty-one claims paid to one employee were judgmentally selected for testing. For the additional twenty-one claims tested, the following errors were noted: One claim was for the purchase of a back brace shipped to an employee's house totaling $31. Twelve claims included the payment of sales tax totaling $195. In addition, all refunds not already selected for testing were reviewed. A total of sixty-seven additional refunds of prepaid lunch account balances were identified and determined to be incorrectly made from Fund 800. The total amount of the additional refunds was $6,476. The total amount of unallowed activities and unallowable costs charged to the School Lunch fund was $9,650. This amount was considered questioned costs. The lack of effective internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 7 CFR 220.7(e)(1) states in part: ". . . the School Food Authority shall, with respect to participating schools under its jurisdiction: . . . (ii) . . . use all revenues received by such food service only for the operation or improvement of that food service . . ." INDIANA STATE BOARD OF ACCOUNTS 26 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 7 CFR 210.14(a) states in part: ". . . Revenues received by the nonprofit school food service are to be used only for the operation or improvement of such food service, except that, such revenues shall not be used to purchase land or buildings, unless otherwise approved by FNS, or to construct buildings. . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." Cause A proper system of internal controls, which would include segregation of key functions, was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, costs that were not necessary and reasonable for the performance of the federal award were paid for with federal funds. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs Known questioned costs of $9,650 were identified as detailed in the Condition and Context. Recommendation We recommended the School Corporation's management establish a proper system of internal controls and develop policies and procedures to ensure costs are for the benefit of the food service program and are adequately documented. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-005 Subject: Child Nutrition Cluster - Eligibility Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program Assistance Listings Numbers: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY 23 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Eligibility Audit Finding: Material Weakness Condition and Context Any child enrolled in a participating school, who meets the applicable program's definition of "child," may receive meals under applicable programs. A child belonging to households meeting nationwide income eligibility requirements may receive meals at no charge or at a reduced price. Children that have been determined ineligible for free or reduced-price meals pay the full price for their meals. A child's eligibility for free and reduced-priced meals under a Child Nutrition Cluster program may be established by the submission of an annual application or statement which furnished such information as family income and family size. The School Corporation determines eligibility by comparing the data reported by the child's household to published income eligibility guidelines. Annual eligibility determinations may also be based on the child's household receiving benefits under SNAP, FDPIR, the Head Start Program, or, under most circumstances, the TANF program. A household may furnish documentation of its participation in one of those programs, or the School Corporation may obtain the information directly from the State or local agency that administers those programs. Certain foster, runaway, homeless, and migrant children are categorically eligible for free school lunches and breakfasts. Direct certified households do not need to complete an application. One employee uploaded the Direct Certification reports from the state into the software system without a documented oversight or review process in place to ensure direct certified students were properly processed. The lack of internal controls was isolated to fiscal year 2022-2023. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 28 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause A proper system of internal controls, which would include segregation of key functions, was not implemented by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper design or implementation of the components of a system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-005 Subject: Child Nutrition Cluster - Eligibility Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program Assistance Listings Numbers: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY 23 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Eligibility Audit Finding: Material Weakness Condition and Context Any child enrolled in a participating school, who meets the applicable program's definition of "child," may receive meals under applicable programs. A child belonging to households meeting nationwide income eligibility requirements may receive meals at no charge or at a reduced price. Children that have been determined ineligible for free or reduced-price meals pay the full price for their meals. A child's eligibility for free and reduced-priced meals under a Child Nutrition Cluster program may be established by the submission of an annual application or statement which furnished such information as family income and family size. The School Corporation determines eligibility by comparing the data reported by the child's household to published income eligibility guidelines. Annual eligibility determinations may also be based on the child's household receiving benefits under SNAP, FDPIR, the Head Start Program, or, under most circumstances, the TANF program. A household may furnish documentation of its participation in one of those programs, or the School Corporation may obtain the information directly from the State or local agency that administers those programs. Certain foster, runaway, homeless, and migrant children are categorically eligible for free school lunches and breakfasts. Direct certified households do not need to complete an application. One employee uploaded the Direct Certification reports from the state into the software system without a documented oversight or review process in place to ensure direct certified students were properly processed. The lack of internal controls was isolated to fiscal year 2022-2023. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 28 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause A proper system of internal controls, which would include segregation of key functions, was not implemented by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper design or implementation of the components of a system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-006 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program Assistance Listings Numbers: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY 22, FY 23 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the prior audit report. The prior audit finding numbers were 2021-003 and 2021-005. INDIANA STATE BOARD OF ACCOUNTS 29 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Procurement A School Nutrition Cooperative (Co-ops, Education Service Center, Group Purchasing Organization, etc.) that would like to be classified as a School Food Authority (SFA) Cooperative must complete a questionnaire and submit it to the Indiana Department of Education (IDOE). Once a questionnaire is received, the IDOE will review the answers to determine a Cooperative's classification. Only Cooperatives that submit the questionnaire and receive a SFA-only Cooperative classification from the IDOE in writing will be considered a SFA only Cooperative for the purposes of the procurement process and procurement reviews. When the value of goods or services exceeds the simplified acquisition threshold, the proper purchasing method would be the bidding process, unless the purchase meets certain other qualifications. Federal regulations allow for informal procurement methods when the value of the procurement for goods or services does not exceed the simplified acquisition threshold, which is customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds; micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. If it is determined a single source provider can be used for a small purchase, documentation must be retained supporting the determination. During fiscal year 2021-2022, the School Corporation purchased bread and commodities, through Region 8 Education Service Center (Region 8). During 2022-2023, the School Corporation purchased milk and commodities through Region 8. However, Region 8 had not received the SFA-only Cooperative classification from the IDOE for 2021–2022 and 2022-2023. As such, Region 8 is considered one bid for simplified acquisition or one quote for small purchases procedures. The School Corporation did not seek additional bids as required for the purchases of bread, milk, or commodities. As such these items were not properly procured. The total dollar amount spent with vendors through Region 8 was $3,056,485. In addition, during 2022-2023, the School Corporation had numerous transactions with five vendors, totaling $296,089, that were considered small purchases. Two of the five vendors were selected for testing. For the two vendors selected for testing, the School Corporation did not obtain a contract per Indiana Code which specifies that for procurements between $50,000 and $150,000 three quotes be obtained, and a contract be awarded. The total dollar amount spent with each vendor exceeded $50,000 individually, for a total of $162,751. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. INDIANA STATE BOARD OF ACCOUNTS 30 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The School Corporation did not verify that vendors with contracts over $25,000 were not excluded or disqualified from participation in federal award programs. All four of the contracts obtained through Region 8 did not comply. No issues were identified with the other three covered transactions, not associated with Region 8. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (1) Micro-purchases – . . . INDIANA STATE BOARD OF ACCOUNTS 31 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (ii) Micro-purchase awards. Micro-purchases may be awarded without soliciting competitive price or rate quotation if the non-Federal entity considers the price to be reasonable based on research, experience, purchase history or other information and documents it files accordingly. . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. (i) In order for sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; (B) Two or more responsible bidders are willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. (ii) If sealed bids are used, the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources, providing them sufficient response time prior to the date set for opening the bids, for local, and tribal governments, the invitation for bids must be publicly advertised; (B) The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond; INDIANA STATE BOARD OF ACCOUNTS 32 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (C) All bids will be opened at the time and place prescribed in the invitation for bids, and for local and tribal governments, the bids must be opened publicly; (D) A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and (E) Any or all bids may be rejected if there is a sound documented reason. (2) Proposals. A procurement method in which either a fixed price or costreimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. They are awarded in accordance with the following requirements: (i) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Proposals must be solicited from an adequate number of qualified offerors. Any response to publicized requests for proposals must be considered to the maximum extent practical; (ii) The non-Federal entity must have a written method for conducting technical evaluations of the proposals received and making selections; (iii) Contracts must be awarded to the responsible offeror whose proposal is most advantageous to the non-Federal entity, with price and other factors considered; and (iv) The non-Federal entity may use competitive proposal procedures for qualifications-based procurement of architectural/engineering (A/E) professional services whereby offeror's qualifications are evaluated, and the most qualified offeror is selected, subject to negotiation of fair and reasonable compensation. The method, where price is not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms that are a potential source to perform the proposed effort. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." INDIANA STATE BOARD OF ACCOUNTS 33 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, procurement procedures for goods and services were not adhered to and all vendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services and contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-006 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program Assistance Listings Numbers: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY 22, FY 23 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the prior audit report. The prior audit finding numbers were 2021-003 and 2021-005. INDIANA STATE BOARD OF ACCOUNTS 29 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Procurement A School Nutrition Cooperative (Co-ops, Education Service Center, Group Purchasing Organization, etc.) that would like to be classified as a School Food Authority (SFA) Cooperative must complete a questionnaire and submit it to the Indiana Department of Education (IDOE). Once a questionnaire is received, the IDOE will review the answers to determine a Cooperative's classification. Only Cooperatives that submit the questionnaire and receive a SFA-only Cooperative classification from the IDOE in writing will be considered a SFA only Cooperative for the purposes of the procurement process and procurement reviews. When the value of goods or services exceeds the simplified acquisition threshold, the proper purchasing method would be the bidding process, unless the purchase meets certain other qualifications. Federal regulations allow for informal procurement methods when the value of the procurement for goods or services does not exceed the simplified acquisition threshold, which is customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds; micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. If it is determined a single source provider can be used for a small purchase, documentation must be retained supporting the determination. During fiscal year 2021-2022, the School Corporation purchased bread and commodities, through Region 8 Education Service Center (Region 8). During 2022-2023, the School Corporation purchased milk and commodities through Region 8. However, Region 8 had not received the SFA-only Cooperative classification from the IDOE for 2021–2022 and 2022-2023. As such, Region 8 is considered one bid for simplified acquisition or one quote for small purchases procedures. The School Corporation did not seek additional bids as required for the purchases of bread, milk, or commodities. As such these items were not properly procured. The total dollar amount spent with vendors through Region 8 was $3,056,485. In addition, during 2022-2023, the School Corporation had numerous transactions with five vendors, totaling $296,089, that were considered small purchases. Two of the five vendors were selected for testing. For the two vendors selected for testing, the School Corporation did not obtain a contract per Indiana Code which specifies that for procurements between $50,000 and $150,000 three quotes be obtained, and a contract be awarded. The total dollar amount spent with each vendor exceeded $50,000 individually, for a total of $162,751. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. INDIANA STATE BOARD OF ACCOUNTS 30 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The School Corporation did not verify that vendors with contracts over $25,000 were not excluded or disqualified from participation in federal award programs. All four of the contracts obtained through Region 8 did not comply. No issues were identified with the other three covered transactions, not associated with Region 8. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (1) Micro-purchases – . . . INDIANA STATE BOARD OF ACCOUNTS 31 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (ii) Micro-purchase awards. Micro-purchases may be awarded without soliciting competitive price or rate quotation if the non-Federal entity considers the price to be reasonable based on research, experience, purchase history or other information and documents it files accordingly. . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. (i) In order for sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; (B) Two or more responsible bidders are willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. (ii) If sealed bids are used, the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources, providing them sufficient response time prior to the date set for opening the bids, for local, and tribal governments, the invitation for bids must be publicly advertised; (B) The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond; INDIANA STATE BOARD OF ACCOUNTS 32 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (C) All bids will be opened at the time and place prescribed in the invitation for bids, and for local and tribal governments, the bids must be opened publicly; (D) A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and (E) Any or all bids may be rejected if there is a sound documented reason. (2) Proposals. A procurement method in which either a fixed price or costreimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. They are awarded in accordance with the following requirements: (i) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Proposals must be solicited from an adequate number of qualified offerors. Any response to publicized requests for proposals must be considered to the maximum extent practical; (ii) The non-Federal entity must have a written method for conducting technical evaluations of the proposals received and making selections; (iii) Contracts must be awarded to the responsible offeror whose proposal is most advantageous to the non-Federal entity, with price and other factors considered; and (iv) The non-Federal entity may use competitive proposal procedures for qualifications-based procurement of architectural/engineering (A/E) professional services whereby offeror's qualifications are evaluated, and the most qualified offeror is selected, subject to negotiation of fair and reasonable compensation. The method, where price is not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms that are a potential source to perform the proposed effort. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." INDIANA STATE BOARD OF ACCOUNTS 33 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, procurement procedures for goods and services were not adhered to and all vendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services and contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-006 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program Assistance Listings Numbers: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY 22, FY 23 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the prior audit report. The prior audit finding numbers were 2021-003 and 2021-005. INDIANA STATE BOARD OF ACCOUNTS 29 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Procurement A School Nutrition Cooperative (Co-ops, Education Service Center, Group Purchasing Organization, etc.) that would like to be classified as a School Food Authority (SFA) Cooperative must complete a questionnaire and submit it to the Indiana Department of Education (IDOE). Once a questionnaire is received, the IDOE will review the answers to determine a Cooperative's classification. Only Cooperatives that submit the questionnaire and receive a SFA-only Cooperative classification from the IDOE in writing will be considered a SFA only Cooperative for the purposes of the procurement process and procurement reviews. When the value of goods or services exceeds the simplified acquisition threshold, the proper purchasing method would be the bidding process, unless the purchase meets certain other qualifications. Federal regulations allow for informal procurement methods when the value of the procurement for goods or services does not exceed the simplified acquisition threshold, which is customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds; micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. If it is determined a single source provider can be used for a small purchase, documentation must be retained supporting the determination. During fiscal year 2021-2022, the School Corporation purchased bread and commodities, through Region 8 Education Service Center (Region 8). During 2022-2023, the School Corporation purchased milk and commodities through Region 8. However, Region 8 had not received the SFA-only Cooperative classification from the IDOE for 2021–2022 and 2022-2023. As such, Region 8 is considered one bid for simplified acquisition or one quote for small purchases procedures. The School Corporation did not seek additional bids as required for the purchases of bread, milk, or commodities. As such these items were not properly procured. The total dollar amount spent with vendors through Region 8 was $3,056,485. In addition, during 2022-2023, the School Corporation had numerous transactions with five vendors, totaling $296,089, that were considered small purchases. Two of the five vendors were selected for testing. For the two vendors selected for testing, the School Corporation did not obtain a contract per Indiana Code which specifies that for procurements between $50,000 and $150,000 three quotes be obtained, and a contract be awarded. The total dollar amount spent with each vendor exceeded $50,000 individually, for a total of $162,751. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. INDIANA STATE BOARD OF ACCOUNTS 30 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The School Corporation did not verify that vendors with contracts over $25,000 were not excluded or disqualified from participation in federal award programs. All four of the contracts obtained through Region 8 did not comply. No issues were identified with the other three covered transactions, not associated with Region 8. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (1) Micro-purchases – . . . INDIANA STATE BOARD OF ACCOUNTS 31 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (ii) Micro-purchase awards. Micro-purchases may be awarded without soliciting competitive price or rate quotation if the non-Federal entity considers the price to be reasonable based on research, experience, purchase history or other information and documents it files accordingly. . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. (i) In order for sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; (B) Two or more responsible bidders are willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. (ii) If sealed bids are used, the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources, providing them sufficient response time prior to the date set for opening the bids, for local, and tribal governments, the invitation for bids must be publicly advertised; (B) The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond; INDIANA STATE BOARD OF ACCOUNTS 32 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (C) All bids will be opened at the time and place prescribed in the invitation for bids, and for local and tribal governments, the bids must be opened publicly; (D) A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and (E) Any or all bids may be rejected if there is a sound documented reason. (2) Proposals. A procurement method in which either a fixed price or costreimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. They are awarded in accordance with the following requirements: (i) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Proposals must be solicited from an adequate number of qualified offerors. Any response to publicized requests for proposals must be considered to the maximum extent practical; (ii) The non-Federal entity must have a written method for conducting technical evaluations of the proposals received and making selections; (iii) Contracts must be awarded to the responsible offeror whose proposal is most advantageous to the non-Federal entity, with price and other factors considered; and (iv) The non-Federal entity may use competitive proposal procedures for qualifications-based procurement of architectural/engineering (A/E) professional services whereby offeror's qualifications are evaluated, and the most qualified offeror is selected, subject to negotiation of fair and reasonable compensation. The method, where price is not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms that are a potential source to perform the proposed effort. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." INDIANA STATE BOARD OF ACCOUNTS 33 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, procurement procedures for goods and services were not adhered to and all vendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services and contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-006 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program Assistance Listings Numbers: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY 22, FY 23 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the prior audit report. The prior audit finding numbers were 2021-003 and 2021-005. INDIANA STATE BOARD OF ACCOUNTS 29 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Procurement A School Nutrition Cooperative (Co-ops, Education Service Center, Group Purchasing Organization, etc.) that would like to be classified as a School Food Authority (SFA) Cooperative must complete a questionnaire and submit it to the Indiana Department of Education (IDOE). Once a questionnaire is received, the IDOE will review the answers to determine a Cooperative's classification. Only Cooperatives that submit the questionnaire and receive a SFA-only Cooperative classification from the IDOE in writing will be considered a SFA only Cooperative for the purposes of the procurement process and procurement reviews. When the value of goods or services exceeds the simplified acquisition threshold, the proper purchasing method would be the bidding process, unless the purchase meets certain other qualifications. Federal regulations allow for informal procurement methods when the value of the procurement for goods or services does not exceed the simplified acquisition threshold, which is customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds; micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. If it is determined a single source provider can be used for a small purchase, documentation must be retained supporting the determination. During fiscal year 2021-2022, the School Corporation purchased bread and commodities, through Region 8 Education Service Center (Region 8). During 2022-2023, the School Corporation purchased milk and commodities through Region 8. However, Region 8 had not received the SFA-only Cooperative classification from the IDOE for 2021–2022 and 2022-2023. As such, Region 8 is considered one bid for simplified acquisition or one quote for small purchases procedures. The School Corporation did not seek additional bids as required for the purchases of bread, milk, or commodities. As such these items were not properly procured. The total dollar amount spent with vendors through Region 8 was $3,056,485. In addition, during 2022-2023, the School Corporation had numerous transactions with five vendors, totaling $296,089, that were considered small purchases. Two of the five vendors were selected for testing. For the two vendors selected for testing, the School Corporation did not obtain a contract per Indiana Code which specifies that for procurements between $50,000 and $150,000 three quotes be obtained, and a contract be awarded. The total dollar amount spent with each vendor exceeded $50,000 individually, for a total of $162,751. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. INDIANA STATE BOARD OF ACCOUNTS 30 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The School Corporation did not verify that vendors with contracts over $25,000 were not excluded or disqualified from participation in federal award programs. All four of the contracts obtained through Region 8 did not comply. No issues were identified with the other three covered transactions, not associated with Region 8. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (1) Micro-purchases – . . . INDIANA STATE BOARD OF ACCOUNTS 31 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (ii) Micro-purchase awards. Micro-purchases may be awarded without soliciting competitive price or rate quotation if the non-Federal entity considers the price to be reasonable based on research, experience, purchase history or other information and documents it files accordingly. . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. (i) In order for sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; (B) Two or more responsible bidders are willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. (ii) If sealed bids are used, the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources, providing them sufficient response time prior to the date set for opening the bids, for local, and tribal governments, the invitation for bids must be publicly advertised; (B) The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond; INDIANA STATE BOARD OF ACCOUNTS 32 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (C) All bids will be opened at the time and place prescribed in the invitation for bids, and for local and tribal governments, the bids must be opened publicly; (D) A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and (E) Any or all bids may be rejected if there is a sound documented reason. (2) Proposals. A procurement method in which either a fixed price or costreimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. They are awarded in accordance with the following requirements: (i) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Proposals must be solicited from an adequate number of qualified offerors. Any response to publicized requests for proposals must be considered to the maximum extent practical; (ii) The non-Federal entity must have a written method for conducting technical evaluations of the proposals received and making selections; (iii) Contracts must be awarded to the responsible offeror whose proposal is most advantageous to the non-Federal entity, with price and other factors considered; and (iv) The non-Federal entity may use competitive proposal procedures for qualifications-based procurement of architectural/engineering (A/E) professional services whereby offeror's qualifications are evaluated, and the most qualified offeror is selected, subject to negotiation of fair and reasonable compensation. The method, where price is not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms that are a potential source to perform the proposed effort. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." INDIANA STATE BOARD OF ACCOUNTS 33 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, procurement procedures for goods and services were not adhered to and all vendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services and contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-007 Subject: Special Education Cluster (IDEA) - Procurement Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.027X, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): H027A200084, H027A190084, H027X210084, H173X210104 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 34 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds: micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. The School Corporation was unable to provide a procurement policy which outlined procurement standards for all federal programs. The procurement policy provided for audit only addressed the Food Service requirements. The total amount of special education dollars spent on goods and services was $234,087. Of that amount $69,440, or 30 percent, were purchases between $10,000 and $150,000, which would require small purchases procedures. Five vendors were identified as being associated with the purchases requiring small purchases procedures. All five vendors were selected for testing. For the five vendors, the School Corporation could not provide the procurement history, which would include an adequate number of quotes, the rationale for the method of procurement used, selection of vendor, and basis for price. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." INDIANA STATE BOARD OF ACCOUNTS 35 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, procurement procedures for goods and services were not adhered to for procurements that fell within the small purchase threshold. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 36 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods for small purchases. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-007 Subject: Special Education Cluster (IDEA) - Procurement Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.027X, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): H027A200084, H027A190084, H027X210084, H173X210104 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 34 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds: micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. The School Corporation was unable to provide a procurement policy which outlined procurement standards for all federal programs. The procurement policy provided for audit only addressed the Food Service requirements. The total amount of special education dollars spent on goods and services was $234,087. Of that amount $69,440, or 30 percent, were purchases between $10,000 and $150,000, which would require small purchases procedures. Five vendors were identified as being associated with the purchases requiring small purchases procedures. All five vendors were selected for testing. For the five vendors, the School Corporation could not provide the procurement history, which would include an adequate number of quotes, the rationale for the method of procurement used, selection of vendor, and basis for price. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." INDIANA STATE BOARD OF ACCOUNTS 35 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, procurement procedures for goods and services were not adhered to for procurements that fell within the small purchase threshold. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 36 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods for small purchases. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-007 Subject: Special Education Cluster (IDEA) - Procurement Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.027X, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): H027A200084, H027A190084, H027X210084, H173X210104 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 34 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds: micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. The School Corporation was unable to provide a procurement policy which outlined procurement standards for all federal programs. The procurement policy provided for audit only addressed the Food Service requirements. The total amount of special education dollars spent on goods and services was $234,087. Of that amount $69,440, or 30 percent, were purchases between $10,000 and $150,000, which would require small purchases procedures. Five vendors were identified as being associated with the purchases requiring small purchases procedures. All five vendors were selected for testing. For the five vendors, the School Corporation could not provide the procurement history, which would include an adequate number of quotes, the rationale for the method of procurement used, selection of vendor, and basis for price. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." INDIANA STATE BOARD OF ACCOUNTS 35 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, procurement procedures for goods and services were not adhered to for procurements that fell within the small purchase threshold. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 36 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods for small purchases. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-007 Subject: Special Education Cluster (IDEA) - Procurement Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.027X, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): H027A200084, H027A190084, H027X210084, H173X210104 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 34 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds: micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. The School Corporation was unable to provide a procurement policy which outlined procurement standards for all federal programs. The procurement policy provided for audit only addressed the Food Service requirements. The total amount of special education dollars spent on goods and services was $234,087. Of that amount $69,440, or 30 percent, were purchases between $10,000 and $150,000, which would require small purchases procedures. Five vendors were identified as being associated with the purchases requiring small purchases procedures. All five vendors were selected for testing. For the five vendors, the School Corporation could not provide the procurement history, which would include an adequate number of quotes, the rationale for the method of procurement used, selection of vendor, and basis for price. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." INDIANA STATE BOARD OF ACCOUNTS 35 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, procurement procedures for goods and services were not adhered to for procurements that fell within the small purchase threshold. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 36 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods for small purchases. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-007 Subject: Special Education Cluster (IDEA) - Procurement Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.027X, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): H027A200084, H027A190084, H027X210084, H173X210104 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 34 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds: micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. The School Corporation was unable to provide a procurement policy which outlined procurement standards for all federal programs. The procurement policy provided for audit only addressed the Food Service requirements. The total amount of special education dollars spent on goods and services was $234,087. Of that amount $69,440, or 30 percent, were purchases between $10,000 and $150,000, which would require small purchases procedures. Five vendors were identified as being associated with the purchases requiring small purchases procedures. All five vendors were selected for testing. For the five vendors, the School Corporation could not provide the procurement history, which would include an adequate number of quotes, the rationale for the method of procurement used, selection of vendor, and basis for price. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." INDIANA STATE BOARD OF ACCOUNTS 35 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, procurement procedures for goods and services were not adhered to for procurements that fell within the small purchase threshold. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 36 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods for small purchases. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
2023-002 Excess Food Service Fund Balance (Material Weakness) Federal Agency: U.S. Department of Agriculture Pass-through Agency: New Hampshire Department of Education Cluster/Program: Child Nutrition Cluster Assistance Listing Numbers: 10.553 & 10.555 Passed-through Identification: N/A Compliance Requirement: Special Tests and Provisions Type of Finding: Internal Control over Compliance – Material Weakness Material Noncompliance Criteria or Specific Requirement: Federal regulations 2 CFR 200.303 states, the School District, as a recipient of Federal funds, must establish and maintain effective internal controls 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. In addition, under 7 CFR, 210.14(b), Net Cash Resources, “the school food authority shall limit its net cash resources to an amount that does not exceed 3 months average expenditures for its nonprofit school food service.” Condition: During review of the food service unassigned fund balance, it was noted that the balance exceeded three months’ average expenditures. The fund balance in the food service fund amounted to $76,935 whereas three months’ average expenditures is $40,267. This generates excess fund balance of $36,668. In addition, we noted that the district transferred funds from the general fund for a potential shortfall, however, this transfer contributed to the overall excess of fund balance at year-end. Effect: The District is not in compliance with CFR Title 7, 210.14(b) by maintaining fund balance more than three months average expenditures. Cause: Lack of administrative oversight and monthly reconciliations. Questioned Costs: $36,668. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the School District take immediate steps to reduce its net cash resources by having an acceptable, approved plan for using surplus fund balance. Since program funds must be used only for program purposes, excess fund balance must be reduced by improving the quality of food served or purchasing needed supplies, services, or equipment unless otherwise directed by the State of New Hampshire Department of Education. In addition, the School District should monitor and reconcile the food service fund on a more regular basis to ensure only funds needed to cover a deficit are transferred. Views of Responsible Officials: Management’s views and corrective action plan is included at the end of this report.
Significant Deficiency 2023-001. Procurement United States Department of Education, passed through New York State Department of Education Title I Grants to Local Educational Agencies ALN: 84.010 Special Education Cluster Special Education Grants to States: IDEA, Part B ALN: 84.027A Special Education Grants to States: IDEA 611 ARP Allocations ALN: 84.027X Special Education Preschool Grants: IDEA Preschool ALN: 84.173A Special Education Preschool Grants: IDEA 619 ARP Allocations ALN: 84.173X Education Stabilization Fund (ESF) COVID-19: Governor’s Emergency Education Relief Fund ALN: 84.425C COVID-19: Elementary and Secondary School Emergency Relief Fund ALN: 84.425D COVID-19: American Rescue Plan – Elementary and Secondary School Emergency Relief (ARP ESSER) Fund ALN: 84.425U United States Department of Agriculture, passed through New York State Department of Education Child Nutrition Cluster School Breakfast Program ALN: 10.553 National School Lunch Program ALN: 10.555 COVID-19: National School Lunch Program ALN: 10.555 COVID-19: Summer Food Service Program for Children ALN: 10.559 Condition: The District has not updated its existing policies and written procedures to conform to Uniform Guidance requirements. Criteria: 2 CFR §200.303 of the Uniform Guidance requires non-federal entities receiving federal awards to establish and maintain 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. Under the Uniform Guidance, federal awards recipients must maintain written documentation of internal control policies and procedures, such as procurement policies that adhere to state and local law, as well as federal regulations and statutes; procedures for documenting how costs are to be allocated to federal awards, documenting actual time and effort for payroll costs charged to federal awards; cash management procedures to minimize the time elapsed between the receipts and disbursements of federal funds; and, how to safeguard personally identifiable information. Cause: Staffing constraints have limited the District’s ability to perform a timely review of its existing policies and written procedures. Effect: Having insufficient or non-compliant written policies and procedures weaken internal controls over the federal awards received, increasing the risk of noncompliance with federal statutes and regulations. Questioned Costs: None reported. Identification of a Repeat Finding: This is a repeat finding from the previous audit referenced 2022-001. Recommendation: The District must review its existing written policies and procedures and update them as needed in order to comply with requirements of Uniform Guidance. Views of Responsible Officials of Auditee: The District’s Assistant Superintendent for Business will work on updating all policies and procedures relating to U.S. Office of Management and Budget Uniform Guidance to ensure policies are in compliance with these guidelines.
Significant Deficiency 2023-001. Procurement United States Department of Education, passed through New York State Department of Education Title I Grants to Local Educational Agencies ALN: 84.010 Special Education Cluster Special Education Grants to States: IDEA, Part B ALN: 84.027A Special Education Grants to States: IDEA 611 ARP Allocations ALN: 84.027X Special Education Preschool Grants: IDEA Preschool ALN: 84.173A Special Education Preschool Grants: IDEA 619 ARP Allocations ALN: 84.173X Education Stabilization Fund (ESF) COVID-19: Governor’s Emergency Education Relief Fund ALN: 84.425C COVID-19: Elementary and Secondary School Emergency Relief Fund ALN: 84.425D COVID-19: American Rescue Plan – Elementary and Secondary School Emergency Relief (ARP ESSER) Fund ALN: 84.425U United States Department of Agriculture, passed through New York State Department of Education Child Nutrition Cluster School Breakfast Program ALN: 10.553 National School Lunch Program ALN: 10.555 COVID-19: National School Lunch Program ALN: 10.555 COVID-19: Summer Food Service Program for Children ALN: 10.559 Condition: The District has not updated its existing policies and written procedures to conform to Uniform Guidance requirements. Criteria: 2 CFR §200.303 of the Uniform Guidance requires non-federal entities receiving federal awards to establish and maintain 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. Under the Uniform Guidance, federal awards recipients must maintain written documentation of internal control policies and procedures, such as procurement policies that adhere to state and local law, as well as federal regulations and statutes; procedures for documenting how costs are to be allocated to federal awards, documenting actual time and effort for payroll costs charged to federal awards; cash management procedures to minimize the time elapsed between the receipts and disbursements of federal funds; and, how to safeguard personally identifiable information. Cause: Staffing constraints have limited the District’s ability to perform a timely review of its existing policies and written procedures. Effect: Having insufficient or non-compliant written policies and procedures weaken internal controls over the federal awards received, increasing the risk of noncompliance with federal statutes and regulations. Questioned Costs: None reported. Identification of a Repeat Finding: This is a repeat finding from the previous audit referenced 2022-001. Recommendation: The District must review its existing written policies and procedures and update them as needed in order to comply with requirements of Uniform Guidance. Views of Responsible Officials of Auditee: The District’s Assistant Superintendent for Business will work on updating all policies and procedures relating to U.S. Office of Management and Budget Uniform Guidance to ensure policies are in compliance with these guidelines.
Significant Deficiency 2023-001. Procurement United States Department of Education, passed through New York State Department of Education Title I Grants to Local Educational Agencies ALN: 84.010 Special Education Cluster Special Education Grants to States: IDEA, Part B ALN: 84.027A Special Education Grants to States: IDEA 611 ARP Allocations ALN: 84.027X Special Education Preschool Grants: IDEA Preschool ALN: 84.173A Special Education Preschool Grants: IDEA 619 ARP Allocations ALN: 84.173X Education Stabilization Fund (ESF) COVID-19: Governor’s Emergency Education Relief Fund ALN: 84.425C COVID-19: Elementary and Secondary School Emergency Relief Fund ALN: 84.425D COVID-19: American Rescue Plan – Elementary and Secondary School Emergency Relief (ARP ESSER) Fund ALN: 84.425U United States Department of Agriculture, passed through New York State Department of Education Child Nutrition Cluster School Breakfast Program ALN: 10.553 National School Lunch Program ALN: 10.555 COVID-19: National School Lunch Program ALN: 10.555 COVID-19: Summer Food Service Program for Children ALN: 10.559 Condition: The District has not updated its existing policies and written procedures to conform to Uniform Guidance requirements. Criteria: 2 CFR §200.303 of the Uniform Guidance requires non-federal entities receiving federal awards to establish and maintain 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. Under the Uniform Guidance, federal awards recipients must maintain written documentation of internal control policies and procedures, such as procurement policies that adhere to state and local law, as well as federal regulations and statutes; procedures for documenting how costs are to be allocated to federal awards, documenting actual time and effort for payroll costs charged to federal awards; cash management procedures to minimize the time elapsed between the receipts and disbursements of federal funds; and, how to safeguard personally identifiable information. Cause: Staffing constraints have limited the District’s ability to perform a timely review of its existing policies and written procedures. Effect: Having insufficient or non-compliant written policies and procedures weaken internal controls over the federal awards received, increasing the risk of noncompliance with federal statutes and regulations. Questioned Costs: None reported. Identification of a Repeat Finding: This is a repeat finding from the previous audit referenced 2022-001. Recommendation: The District must review its existing written policies and procedures and update them as needed in order to comply with requirements of Uniform Guidance. Views of Responsible Officials of Auditee: The District’s Assistant Superintendent for Business will work on updating all policies and procedures relating to U.S. Office of Management and Budget Uniform Guidance to ensure policies are in compliance with these guidelines.
Significant Deficiency 2023-001. Procurement United States Department of Education, passed through New York State Department of Education Title I Grants to Local Educational Agencies ALN: 84.010 Special Education Cluster Special Education Grants to States: IDEA, Part B ALN: 84.027A Special Education Grants to States: IDEA 611 ARP Allocations ALN: 84.027X Special Education Preschool Grants: IDEA Preschool ALN: 84.173A Special Education Preschool Grants: IDEA 619 ARP Allocations ALN: 84.173X Education Stabilization Fund (ESF) COVID-19: Governor’s Emergency Education Relief Fund ALN: 84.425C COVID-19: Elementary and Secondary School Emergency Relief Fund ALN: 84.425D COVID-19: American Rescue Plan – Elementary and Secondary School Emergency Relief (ARP ESSER) Fund ALN: 84.425U United States Department of Agriculture, passed through New York State Department of Education Child Nutrition Cluster School Breakfast Program ALN: 10.553 National School Lunch Program ALN: 10.555 COVID-19: National School Lunch Program ALN: 10.555 COVID-19: Summer Food Service Program for Children ALN: 10.559 Condition: The District has not updated its existing policies and written procedures to conform to Uniform Guidance requirements. Criteria: 2 CFR §200.303 of the Uniform Guidance requires non-federal entities receiving federal awards to establish and maintain 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. Under the Uniform Guidance, federal awards recipients must maintain written documentation of internal control policies and procedures, such as procurement policies that adhere to state and local law, as well as federal regulations and statutes; procedures for documenting how costs are to be allocated to federal awards, documenting actual time and effort for payroll costs charged to federal awards; cash management procedures to minimize the time elapsed between the receipts and disbursements of federal funds; and, how to safeguard personally identifiable information. Cause: Staffing constraints have limited the District’s ability to perform a timely review of its existing policies and written procedures. Effect: Having insufficient or non-compliant written policies and procedures weaken internal controls over the federal awards received, increasing the risk of noncompliance with federal statutes and regulations. Questioned Costs: None reported. Identification of a Repeat Finding: This is a repeat finding from the previous audit referenced 2022-001. Recommendation: The District must review its existing written policies and procedures and update them as needed in order to comply with requirements of Uniform Guidance. Views of Responsible Officials of Auditee: The District’s Assistant Superintendent for Business will work on updating all policies and procedures relating to U.S. Office of Management and Budget Uniform Guidance to ensure policies are in compliance with these guidelines.
Significant Deficiency 2023-001. Procurement United States Department of Education, passed through New York State Department of Education Title I Grants to Local Educational Agencies ALN: 84.010 Special Education Cluster Special Education Grants to States: IDEA, Part B ALN: 84.027A Special Education Grants to States: IDEA 611 ARP Allocations ALN: 84.027X Special Education Preschool Grants: IDEA Preschool ALN: 84.173A Special Education Preschool Grants: IDEA 619 ARP Allocations ALN: 84.173X Education Stabilization Fund (ESF) COVID-19: Governor’s Emergency Education Relief Fund ALN: 84.425C COVID-19: Elementary and Secondary School Emergency Relief Fund ALN: 84.425D COVID-19: American Rescue Plan – Elementary and Secondary School Emergency Relief (ARP ESSER) Fund ALN: 84.425U United States Department of Agriculture, passed through New York State Department of Education Child Nutrition Cluster School Breakfast Program ALN: 10.553 National School Lunch Program ALN: 10.555 COVID-19: National School Lunch Program ALN: 10.555 COVID-19: Summer Food Service Program for Children ALN: 10.559 Condition: The District has not updated its existing policies and written procedures to conform to Uniform Guidance requirements. Criteria: 2 CFR §200.303 of the Uniform Guidance requires non-federal entities receiving federal awards to establish and maintain 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. Under the Uniform Guidance, federal awards recipients must maintain written documentation of internal control policies and procedures, such as procurement policies that adhere to state and local law, as well as federal regulations and statutes; procedures for documenting how costs are to be allocated to federal awards, documenting actual time and effort for payroll costs charged to federal awards; cash management procedures to minimize the time elapsed between the receipts and disbursements of federal funds; and, how to safeguard personally identifiable information. Cause: Staffing constraints have limited the District’s ability to perform a timely review of its existing policies and written procedures. Effect: Having insufficient or non-compliant written policies and procedures weaken internal controls over the federal awards received, increasing the risk of noncompliance with federal statutes and regulations. Questioned Costs: None reported. Identification of a Repeat Finding: This is a repeat finding from the previous audit referenced 2022-001. Recommendation: The District must review its existing written policies and procedures and update them as needed in order to comply with requirements of Uniform Guidance. Views of Responsible Officials of Auditee: The District’s Assistant Superintendent for Business will work on updating all policies and procedures relating to U.S. Office of Management and Budget Uniform Guidance to ensure policies are in compliance with these guidelines.
Significant Deficiency 2023-001. Procurement United States Department of Education, passed through New York State Department of Education Title I Grants to Local Educational Agencies ALN: 84.010 Special Education Cluster Special Education Grants to States: IDEA, Part B ALN: 84.027A Special Education Grants to States: IDEA 611 ARP Allocations ALN: 84.027X Special Education Preschool Grants: IDEA Preschool ALN: 84.173A Special Education Preschool Grants: IDEA 619 ARP Allocations ALN: 84.173X Education Stabilization Fund (ESF) COVID-19: Governor’s Emergency Education Relief Fund ALN: 84.425C COVID-19: Elementary and Secondary School Emergency Relief Fund ALN: 84.425D COVID-19: American Rescue Plan – Elementary and Secondary School Emergency Relief (ARP ESSER) Fund ALN: 84.425U United States Department of Agriculture, passed through New York State Department of Education Child Nutrition Cluster School Breakfast Program ALN: 10.553 National School Lunch Program ALN: 10.555 COVID-19: National School Lunch Program ALN: 10.555 COVID-19: Summer Food Service Program for Children ALN: 10.559 Condition: The District has not updated its existing policies and written procedures to conform to Uniform Guidance requirements. Criteria: 2 CFR §200.303 of the Uniform Guidance requires non-federal entities receiving federal awards to establish and maintain 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. Under the Uniform Guidance, federal awards recipients must maintain written documentation of internal control policies and procedures, such as procurement policies that adhere to state and local law, as well as federal regulations and statutes; procedures for documenting how costs are to be allocated to federal awards, documenting actual time and effort for payroll costs charged to federal awards; cash management procedures to minimize the time elapsed between the receipts and disbursements of federal funds; and, how to safeguard personally identifiable information. Cause: Staffing constraints have limited the District’s ability to perform a timely review of its existing policies and written procedures. Effect: Having insufficient or non-compliant written policies and procedures weaken internal controls over the federal awards received, increasing the risk of noncompliance with federal statutes and regulations. Questioned Costs: None reported. Identification of a Repeat Finding: This is a repeat finding from the previous audit referenced 2022-001. Recommendation: The District must review its existing written policies and procedures and update them as needed in order to comply with requirements of Uniform Guidance. Views of Responsible Officials of Auditee: The District’s Assistant Superintendent for Business will work on updating all policies and procedures relating to U.S. Office of Management and Budget Uniform Guidance to ensure policies are in compliance with these guidelines.
Significant Deficiency 2023-001. Procurement United States Department of Education, passed through New York State Department of Education Title I Grants to Local Educational Agencies ALN: 84.010 Special Education Cluster Special Education Grants to States: IDEA, Part B ALN: 84.027A Special Education Grants to States: IDEA 611 ARP Allocations ALN: 84.027X Special Education Preschool Grants: IDEA Preschool ALN: 84.173A Special Education Preschool Grants: IDEA 619 ARP Allocations ALN: 84.173X Education Stabilization Fund (ESF) COVID-19: Governor’s Emergency Education Relief Fund ALN: 84.425C COVID-19: Elementary and Secondary School Emergency Relief Fund ALN: 84.425D COVID-19: American Rescue Plan – Elementary and Secondary School Emergency Relief (ARP ESSER) Fund ALN: 84.425U United States Department of Agriculture, passed through New York State Department of Education Child Nutrition Cluster School Breakfast Program ALN: 10.553 National School Lunch Program ALN: 10.555 COVID-19: National School Lunch Program ALN: 10.555 COVID-19: Summer Food Service Program for Children ALN: 10.559 Condition: The District has not updated its existing policies and written procedures to conform to Uniform Guidance requirements. Criteria: 2 CFR §200.303 of the Uniform Guidance requires non-federal entities receiving federal awards to establish and maintain 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. Under the Uniform Guidance, federal awards recipients must maintain written documentation of internal control policies and procedures, such as procurement policies that adhere to state and local law, as well as federal regulations and statutes; procedures for documenting how costs are to be allocated to federal awards, documenting actual time and effort for payroll costs charged to federal awards; cash management procedures to minimize the time elapsed between the receipts and disbursements of federal funds; and, how to safeguard personally identifiable information. Cause: Staffing constraints have limited the District’s ability to perform a timely review of its existing policies and written procedures. Effect: Having insufficient or non-compliant written policies and procedures weaken internal controls over the federal awards received, increasing the risk of noncompliance with federal statutes and regulations. Questioned Costs: None reported. Identification of a Repeat Finding: This is a repeat finding from the previous audit referenced 2022-001. Recommendation: The District must review its existing written policies and procedures and update them as needed in order to comply with requirements of Uniform Guidance. Views of Responsible Officials of Auditee: The District’s Assistant Superintendent for Business will work on updating all policies and procedures relating to U.S. Office of Management and Budget Uniform Guidance to ensure policies are in compliance with these guidelines.
Significant Deficiency 2023-001. Procurement United States Department of Education, passed through New York State Department of Education Title I Grants to Local Educational Agencies ALN: 84.010 Special Education Cluster Special Education Grants to States: IDEA, Part B ALN: 84.027A Special Education Grants to States: IDEA 611 ARP Allocations ALN: 84.027X Special Education Preschool Grants: IDEA Preschool ALN: 84.173A Special Education Preschool Grants: IDEA 619 ARP Allocations ALN: 84.173X Education Stabilization Fund (ESF) COVID-19: Governor’s Emergency Education Relief Fund ALN: 84.425C COVID-19: Elementary and Secondary School Emergency Relief Fund ALN: 84.425D COVID-19: American Rescue Plan – Elementary and Secondary School Emergency Relief (ARP ESSER) Fund ALN: 84.425U United States Department of Agriculture, passed through New York State Department of Education Child Nutrition Cluster School Breakfast Program ALN: 10.553 National School Lunch Program ALN: 10.555 COVID-19: National School Lunch Program ALN: 10.555 COVID-19: Summer Food Service Program for Children ALN: 10.559 Condition: The District has not updated its existing policies and written procedures to conform to Uniform Guidance requirements. Criteria: 2 CFR §200.303 of the Uniform Guidance requires non-federal entities receiving federal awards to establish and maintain 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. Under the Uniform Guidance, federal awards recipients must maintain written documentation of internal control policies and procedures, such as procurement policies that adhere to state and local law, as well as federal regulations and statutes; procedures for documenting how costs are to be allocated to federal awards, documenting actual time and effort for payroll costs charged to federal awards; cash management procedures to minimize the time elapsed between the receipts and disbursements of federal funds; and, how to safeguard personally identifiable information. Cause: Staffing constraints have limited the District’s ability to perform a timely review of its existing policies and written procedures. Effect: Having insufficient or non-compliant written policies and procedures weaken internal controls over the federal awards received, increasing the risk of noncompliance with federal statutes and regulations. Questioned Costs: None reported. Identification of a Repeat Finding: This is a repeat finding from the previous audit referenced 2022-001. Recommendation: The District must review its existing written policies and procedures and update them as needed in order to comply with requirements of Uniform Guidance. Views of Responsible Officials of Auditee: The District’s Assistant Superintendent for Business will work on updating all policies and procedures relating to U.S. Office of Management and Budget Uniform Guidance to ensure policies are in compliance with these guidelines.
Significant Deficiency 2023-001. Procurement United States Department of Education, passed through New York State Department of Education Title I Grants to Local Educational Agencies ALN: 84.010 Special Education Cluster Special Education Grants to States: IDEA, Part B ALN: 84.027A Special Education Grants to States: IDEA 611 ARP Allocations ALN: 84.027X Special Education Preschool Grants: IDEA Preschool ALN: 84.173A Special Education Preschool Grants: IDEA 619 ARP Allocations ALN: 84.173X Education Stabilization Fund (ESF) COVID-19: Governor’s Emergency Education Relief Fund ALN: 84.425C COVID-19: Elementary and Secondary School Emergency Relief Fund ALN: 84.425D COVID-19: American Rescue Plan – Elementary and Secondary School Emergency Relief (ARP ESSER) Fund ALN: 84.425U United States Department of Agriculture, passed through New York State Department of Education Child Nutrition Cluster School Breakfast Program ALN: 10.553 National School Lunch Program ALN: 10.555 COVID-19: National School Lunch Program ALN: 10.555 COVID-19: Summer Food Service Program for Children ALN: 10.559 Condition: The District has not updated its existing policies and written procedures to conform to Uniform Guidance requirements. Criteria: 2 CFR §200.303 of the Uniform Guidance requires non-federal entities receiving federal awards to establish and maintain 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. Under the Uniform Guidance, federal awards recipients must maintain written documentation of internal control policies and procedures, such as procurement policies that adhere to state and local law, as well as federal regulations and statutes; procedures for documenting how costs are to be allocated to federal awards, documenting actual time and effort for payroll costs charged to federal awards; cash management procedures to minimize the time elapsed between the receipts and disbursements of federal funds; and, how to safeguard personally identifiable information. Cause: Staffing constraints have limited the District’s ability to perform a timely review of its existing policies and written procedures. Effect: Having insufficient or non-compliant written policies and procedures weaken internal controls over the federal awards received, increasing the risk of noncompliance with federal statutes and regulations. Questioned Costs: None reported. Identification of a Repeat Finding: This is a repeat finding from the previous audit referenced 2022-001. Recommendation: The District must review its existing written policies and procedures and update them as needed in order to comply with requirements of Uniform Guidance. Views of Responsible Officials of Auditee: The District’s Assistant Superintendent for Business will work on updating all policies and procedures relating to U.S. Office of Management and Budget Uniform Guidance to ensure policies are in compliance with these guidelines.
Significant Deficiency 2023-001. Procurement United States Department of Education, passed through New York State Department of Education Title I Grants to Local Educational Agencies ALN: 84.010 Special Education Cluster Special Education Grants to States: IDEA, Part B ALN: 84.027A Special Education Grants to States: IDEA 611 ARP Allocations ALN: 84.027X Special Education Preschool Grants: IDEA Preschool ALN: 84.173A Special Education Preschool Grants: IDEA 619 ARP Allocations ALN: 84.173X Education Stabilization Fund (ESF) COVID-19: Governor’s Emergency Education Relief Fund ALN: 84.425C COVID-19: Elementary and Secondary School Emergency Relief Fund ALN: 84.425D COVID-19: American Rescue Plan – Elementary and Secondary School Emergency Relief (ARP ESSER) Fund ALN: 84.425U United States Department of Agriculture, passed through New York State Department of Education Child Nutrition Cluster School Breakfast Program ALN: 10.553 National School Lunch Program ALN: 10.555 COVID-19: National School Lunch Program ALN: 10.555 COVID-19: Summer Food Service Program for Children ALN: 10.559 Condition: The District has not updated its existing policies and written procedures to conform to Uniform Guidance requirements. Criteria: 2 CFR §200.303 of the Uniform Guidance requires non-federal entities receiving federal awards to establish and maintain 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. Under the Uniform Guidance, federal awards recipients must maintain written documentation of internal control policies and procedures, such as procurement policies that adhere to state and local law, as well as federal regulations and statutes; procedures for documenting how costs are to be allocated to federal awards, documenting actual time and effort for payroll costs charged to federal awards; cash management procedures to minimize the time elapsed between the receipts and disbursements of federal funds; and, how to safeguard personally identifiable information. Cause: Staffing constraints have limited the District’s ability to perform a timely review of its existing policies and written procedures. Effect: Having insufficient or non-compliant written policies and procedures weaken internal controls over the federal awards received, increasing the risk of noncompliance with federal statutes and regulations. Questioned Costs: None reported. Identification of a Repeat Finding: This is a repeat finding from the previous audit referenced 2022-001. Recommendation: The District must review its existing written policies and procedures and update them as needed in order to comply with requirements of Uniform Guidance. Views of Responsible Officials of Auditee: The District’s Assistant Superintendent for Business will work on updating all policies and procedures relating to U.S. Office of Management and Budget Uniform Guidance to ensure policies are in compliance with these guidelines.
Significant Deficiency 2023-001. Procurement United States Department of Education, passed through New York State Department of Education Title I Grants to Local Educational Agencies ALN: 84.010 Special Education Cluster Special Education Grants to States: IDEA, Part B ALN: 84.027A Special Education Grants to States: IDEA 611 ARP Allocations ALN: 84.027X Special Education Preschool Grants: IDEA Preschool ALN: 84.173A Special Education Preschool Grants: IDEA 619 ARP Allocations ALN: 84.173X Education Stabilization Fund (ESF) COVID-19: Governor’s Emergency Education Relief Fund ALN: 84.425C COVID-19: Elementary and Secondary School Emergency Relief Fund ALN: 84.425D COVID-19: American Rescue Plan – Elementary and Secondary School Emergency Relief (ARP ESSER) Fund ALN: 84.425U United States Department of Agriculture, passed through New York State Department of Education Child Nutrition Cluster School Breakfast Program ALN: 10.553 National School Lunch Program ALN: 10.555 COVID-19: National School Lunch Program ALN: 10.555 COVID-19: Summer Food Service Program for Children ALN: 10.559 Condition: The District has not updated its existing policies and written procedures to conform to Uniform Guidance requirements. Criteria: 2 CFR §200.303 of the Uniform Guidance requires non-federal entities receiving federal awards to establish and maintain 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. Under the Uniform Guidance, federal awards recipients must maintain written documentation of internal control policies and procedures, such as procurement policies that adhere to state and local law, as well as federal regulations and statutes; procedures for documenting how costs are to be allocated to federal awards, documenting actual time and effort for payroll costs charged to federal awards; cash management procedures to minimize the time elapsed between the receipts and disbursements of federal funds; and, how to safeguard personally identifiable information. Cause: Staffing constraints have limited the District’s ability to perform a timely review of its existing policies and written procedures. Effect: Having insufficient or non-compliant written policies and procedures weaken internal controls over the federal awards received, increasing the risk of noncompliance with federal statutes and regulations. Questioned Costs: None reported. Identification of a Repeat Finding: This is a repeat finding from the previous audit referenced 2022-001. Recommendation: The District must review its existing written policies and procedures and update them as needed in order to comply with requirements of Uniform Guidance. Views of Responsible Officials of Auditee: The District’s Assistant Superintendent for Business will work on updating all policies and procedures relating to U.S. Office of Management and Budget Uniform Guidance to ensure policies are in compliance with these guidelines.