(2023-086) Title: Internal control over the Foster Care – Title IV-E eligibility and benefit determination process needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office of Child and Family Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Foster Care – Title IV-E (COVID-19) Assistance Listing Number: 93.658 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: $8,006 Likely Questioned Costs: $220,373; likely questioned costs were projected by dividing the identified known overpayment in our sample by total payments tested to establish an error rate, then applying that error rate to total payments made on behalf of Foster Care – Title IV-E clients in fiscal year 2023. Criteria: 2 CFR 200.303; 2 CFR 200.403; 45 CFR 1356.21 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. Funds may be expended for foster care maintenance payments on behalf of eligible children, in accordance with the Title IV-E agency’s foster care maintenance payment rate schedule, to individuals serving as foster family homes, to childcare institutions, or to public or private child-placement or child-care agencies. Condition: The Foster Care – Title IV-E program is designed to help states provide safe and stable out-of-home care for children under its jurisdiction until the children are returned home safely, placed with adoptive families, or placed in other planned arrangements for permanency. The Office of Child and Family Services (OCFS) administers the Foster Care – Title IV-E program for the State of Maine. A financial resources specialist (FRS) determines program eligibility and initiates benefits through completion of a determination checklist. The FRS reviews program eligibility factors, gathers required supporting documentation, and documents the certification decision on the checklist. The FRS enters the information into the child welfare information system for processing. Once the client is determined eligible in the child welfare information system, a level of benefits is assigned. OCFS relies on this information and the related system coding to ensure that benefits are accurately provided to eligible clients. The Office of the State Auditor (OSA) tested 60 clients and 60 benefit payments and found: • 10 determination checklists that did not include a certification decision; and • one benefit payment for an ineligible client. The client was erroneously paid a total of $8,006 for six months during fiscal year 2023. OSA selected non-statistical random samples. Context: In fiscal year 2023, the State provided approximately 900 Foster Care – Title IV-E clients with $5.3 million in Federal benefits. Cause: Lack of adequate policies and procedures and supervisory oversight over the child welfare information system. The system was implemented in fiscal year 2023 and policies and procedures were not designed to properly test system coding for all eligibility change circumstances that could occur. Effect: • Known questioned costs • Potential future questioned costs and disallowances • Noncompliance with Federal regulations Recommendation: We recommend that the Department enhance policies and procedures to ensure that eligibility determination checklists include certification decisions by a FRS and benefits are paid only to eligible clients. Corrective Action Plan: See F-35 Management’s Response: The Department agrees with this finding. The Financial Resources Specialist (FRS) role is to accurately determine Title IV-E Eligibility Foster care for the State of Maine DHHS OCFS. One of the items utilized in their determination of program eligibility is to document all of their findings in the “Title IV-E Initial Determination” document. This is included in every case file in front of the corresponding paperwork that confirms each element of that eligibility determination. Contact: Manisha Donahue, Title IV-E Program Manager, OCFS, DHHS, 207-592-1268 (State Number: 23-1109-01)
(2023-086) Title: Internal control over the Foster Care – Title IV-E eligibility and benefit determination process needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office of Child and Family Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Foster Care – Title IV-E (COVID-19) Assistance Listing Number: 93.658 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: $8,006 Likely Questioned Costs: $220,373; likely questioned costs were projected by dividing the identified known overpayment in our sample by total payments tested to establish an error rate, then applying that error rate to total payments made on behalf of Foster Care – Title IV-E clients in fiscal year 2023. Criteria: 2 CFR 200.303; 2 CFR 200.403; 45 CFR 1356.21 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. Funds may be expended for foster care maintenance payments on behalf of eligible children, in accordance with the Title IV-E agency’s foster care maintenance payment rate schedule, to individuals serving as foster family homes, to childcare institutions, or to public or private child-placement or child-care agencies. Condition: The Foster Care – Title IV-E program is designed to help states provide safe and stable out-of-home care for children under its jurisdiction until the children are returned home safely, placed with adoptive families, or placed in other planned arrangements for permanency. The Office of Child and Family Services (OCFS) administers the Foster Care – Title IV-E program for the State of Maine. A financial resources specialist (FRS) determines program eligibility and initiates benefits through completion of a determination checklist. The FRS reviews program eligibility factors, gathers required supporting documentation, and documents the certification decision on the checklist. The FRS enters the information into the child welfare information system for processing. Once the client is determined eligible in the child welfare information system, a level of benefits is assigned. OCFS relies on this information and the related system coding to ensure that benefits are accurately provided to eligible clients. The Office of the State Auditor (OSA) tested 60 clients and 60 benefit payments and found: • 10 determination checklists that did not include a certification decision; and • one benefit payment for an ineligible client. The client was erroneously paid a total of $8,006 for six months during fiscal year 2023. OSA selected non-statistical random samples. Context: In fiscal year 2023, the State provided approximately 900 Foster Care – Title IV-E clients with $5.3 million in Federal benefits. Cause: Lack of adequate policies and procedures and supervisory oversight over the child welfare information system. The system was implemented in fiscal year 2023 and policies and procedures were not designed to properly test system coding for all eligibility change circumstances that could occur. Effect: • Known questioned costs • Potential future questioned costs and disallowances • Noncompliance with Federal regulations Recommendation: We recommend that the Department enhance policies and procedures to ensure that eligibility determination checklists include certification decisions by a FRS and benefits are paid only to eligible clients. Corrective Action Plan: See F-35 Management’s Response: The Department agrees with this finding. The Financial Resources Specialist (FRS) role is to accurately determine Title IV-E Eligibility Foster care for the State of Maine DHHS OCFS. One of the items utilized in their determination of program eligibility is to document all of their findings in the “Title IV-E Initial Determination” document. This is included in every case file in front of the corresponding paperwork that confirms each element of that eligibility determination. Contact: Manisha Donahue, Title IV-E Program Manager, OCFS, DHHS, 207-592-1268 (State Number: 23-1109-01)
(2023-087) Title: Internal control over DHHS allocated costs needs improvement Prior Year Findings: None State Department: Administrative and Financial Services Health and Human Services State Bureau: Health and Human Services Service Center Office of Child and Family Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Title IV-E Prevention Program Foster Care – Title IV-E (COVID-19) Assistance Listing Number: 93.472; 93.658 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403; Department of Health and Human Services’ Cost Allocation Plan The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. Some accounts include costs that benefit multiple programs (cost pool accounts). A Random Moment Time Study (RMTS) allocation method is used to allocate certain Office of Child and Family Services cost pool accounts. RMTS is used to identify time spent on Title IV-E programs and time reimbursable for child welfare system operational costs. Condition: A Cost Allocation Plan (CAP) is used when a cost cannot be identified to a particular cost objective (direct expensed). The Department of Health and Human Services’ (DHHS) CAP is a written summary that documents how DHHS allocates cost pool accounts across multiple programs, including approved allocation methods by cost pool account, and is approved by the Federal government. The Office of the State Auditor (OSA) identified that the Foster Care – Title IV-E program’s allocated costs decreased by 31 percent in fiscal year 2023. In response to OSA’s inquiry, the Department acknowledged that the program was overcharged by $2.7 million due to incorrect RMTS statistic information that was provided beginning in October 2021 through April 2023. These costs should have been charged to ALN 93.472 Title IV-E Prevention Program. During the last quarter of fiscal year 2023, the Department initiated corrective action and appropriately transferred the unallowable costs that were incurred during fiscal year 2023 from the Foster Care – Title IV-E program to the Title IV-E Prevention Program. Context: Of the $80.2 million in costs allocated through the DHHS CAP, $11.9 million was correctly charged to the Foster Care – Title IV-E program and $4.9 million was correctly charged to the Title IV-E Prevention Program during fiscal year 2023. Cause: • Lack of adequate procedures to prevent, or detect and correct, errors timely • Lack of supervisory oversight Effect: • Potential questioned costs and disallowances if unallowable costs are charged to the wrong Federal program and not detected timely • Noncompliance with Federal requirements Recommendation: We recommend that the Department implement additional procedures to validate the accuracy of changes to the DHHS CAP before implementation and to enhance monitoring procedures over allocated costs. This will ensure that Federal programs are appropriately charged through the DHHS CAP in accordance with Federal regulations. Corrective Action Plan: See F-36 Management’s Response: The DHHS and DHHS Financial Service Center agree with this finding. The DHHS Financial Service Center and the Office of Child and Family Services will implement additional procedures to validate the accuracy of OCFS applicable changes to the DHHS CAP by December 31, 2024. Contact: Sarah Gove, Director, DHHS Service Center, DAFS, 207-458-6626 (State Number: 23-1103-01)
(2023-087) Title: Internal control over DHHS allocated costs needs improvement Prior Year Findings: None State Department: Administrative and Financial Services Health and Human Services State Bureau: Health and Human Services Service Center Office of Child and Family Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Title IV-E Prevention Program Foster Care – Title IV-E (COVID-19) Assistance Listing Number: 93.472; 93.658 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403; Department of Health and Human Services’ Cost Allocation Plan The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. Some accounts include costs that benefit multiple programs (cost pool accounts). A Random Moment Time Study (RMTS) allocation method is used to allocate certain Office of Child and Family Services cost pool accounts. RMTS is used to identify time spent on Title IV-E programs and time reimbursable for child welfare system operational costs. Condition: A Cost Allocation Plan (CAP) is used when a cost cannot be identified to a particular cost objective (direct expensed). The Department of Health and Human Services’ (DHHS) CAP is a written summary that documents how DHHS allocates cost pool accounts across multiple programs, including approved allocation methods by cost pool account, and is approved by the Federal government. The Office of the State Auditor (OSA) identified that the Foster Care – Title IV-E program’s allocated costs decreased by 31 percent in fiscal year 2023. In response to OSA’s inquiry, the Department acknowledged that the program was overcharged by $2.7 million due to incorrect RMTS statistic information that was provided beginning in October 2021 through April 2023. These costs should have been charged to ALN 93.472 Title IV-E Prevention Program. During the last quarter of fiscal year 2023, the Department initiated corrective action and appropriately transferred the unallowable costs that were incurred during fiscal year 2023 from the Foster Care – Title IV-E program to the Title IV-E Prevention Program. Context: Of the $80.2 million in costs allocated through the DHHS CAP, $11.9 million was correctly charged to the Foster Care – Title IV-E program and $4.9 million was correctly charged to the Title IV-E Prevention Program during fiscal year 2023. Cause: • Lack of adequate procedures to prevent, or detect and correct, errors timely • Lack of supervisory oversight Effect: • Potential questioned costs and disallowances if unallowable costs are charged to the wrong Federal program and not detected timely • Noncompliance with Federal requirements Recommendation: We recommend that the Department implement additional procedures to validate the accuracy of changes to the DHHS CAP before implementation and to enhance monitoring procedures over allocated costs. This will ensure that Federal programs are appropriately charged through the DHHS CAP in accordance with Federal regulations. Corrective Action Plan: See F-36 Management’s Response: The DHHS and DHHS Financial Service Center agree with this finding. The DHHS Financial Service Center and the Office of Child and Family Services will implement additional procedures to validate the accuracy of OCFS applicable changes to the DHHS CAP by December 31, 2024. Contact: Sarah Gove, Director, DHHS Service Center, DAFS, 207-458-6626 (State Number: 23-1103-01)
(2023-088) Title: Internal control over the Adoption Assistance – Title IV-E eligibility and benefit determination process needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office of Child and Family Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Adoption Assistance – Title IV-E (COVID-19) Assistance Listing Number: 93.659 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403; 45 CFR 1356.40 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. The State is allowed to pay a portion of the Federal Adoption Assistance maintenance payments and claim Federal financial participation for Title IV-E eligible clients. Condition: The Adoption Assistance – Title IV-E Program provides Federal funds to states to facilitate the timely placement of children, whose special needs or circumstances would otherwise make them difficult to place, with adoptive families. Funds are available for a one-time payment to assist with the costs of adopting a child as well as for subsidies to adoptive families to assist with the care of the eligible child on an ongoing basis. The Office of Child and Family Services (OCFS) administers the Adoption Assistance – Title IV-E program for the State. A financial resources specialist (FRS) determines program eligibility and initiates benefits through completion of an adoption assistance checklist. The FRS reviews program eligibility factors, gathers required supporting documentation, documents the certification decision on the checklist, and obtains supervisory approval. The FRS enters the information into the child welfare information system for processing. The Office of the State Auditor (OSA) tested 60 eligibility determinations and found: • one checklist did not have supervisory approval; • one checklist did not have a FRS signature or supervisory approval; • one checklist was not included in the case file; and • one checklist was signed by a FRS and included supervisory approval; however, information indicating that the required steps were taken to determine benefit eligibility was excluded. Once the client is determined eligible in the child welfare information system, a daily rate is negotiated by OCFS and the adoptive parents. OCFS relies on the information entered in the system and related system coding for the assignment of the appropriate revenue source to charge the assigned benefits. OSA tested 60 client benefit payments and identified that benefits for one client paid with State funds should have been charged to Federal funds. Through discussions with OCFS, OSA was informed that the error was caused by an issue with the newly implemented child welfare information system, which affected 421 clients. $1.6 million of State funds were utilized to pay benefits that should have been charged to Federal funds. OSA selected non-statistical random samples. Context: In fiscal year 2023, the State provided approximately 4,000 Adoption Assistance – Title IV-E clients with $24.6 million in Federal benefits. Cause: Lack of adequate policies and procedures and supervisory oversight over: • the documentation of eligibility determinations • the child welfare information system. The system was implemented in fiscal year 2023 and policies and procedures were not designed to properly test system coding to ensure that benefits were paid utilizing the appropriate funding source. Effect: • Individuals not eligible for services could be deemed eligible or eligible individuals could be deemed ineligible. • Potential questioned costs and disallowances • Noncompliance with Federal regulations Recommendation: We recommend that OCFS enhance policies and procedures to ensure that eligibility determination checklists include certification decisions and are documented consistently for all case files. We understand that OCFS is completing a retroactive review to correct the issue and charge the appropriate funding source for previously paid benefits. We recommend that OCFS continue this process and implement policies and procedures which require monitoring of the system to ensure benefits are accurately paid to eligible clients. Corrective Action Plan: See F-36 Management’s Response: The Department agrees with this finding. Completion of the Adoption Assistance Checklist has not been universally understood to be used as the internal control for documentation of certification decisions, but as a guide for staff to use in preparing and organizing the Application for Adoption Assistance Packets. We agree that this is an effective tool to ensure certification decisions regarding IVE, and consistent documentation in case files. OCFS staff will be trained in the importance of these internal control procedures. The Adoption Policy is currently in revision and the policy will be enhanced to reflect these changes. Contact: Karen Benson, Adoption Program Manager, DHHS, 207-561-4208 (State Number: 23-1110-01)
(2023-088) Title: Internal control over the Adoption Assistance – Title IV-E eligibility and benefit determination process needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office of Child and Family Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Adoption Assistance – Title IV-E (COVID-19) Assistance Listing Number: 93.659 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403; 45 CFR 1356.40 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. The State is allowed to pay a portion of the Federal Adoption Assistance maintenance payments and claim Federal financial participation for Title IV-E eligible clients. Condition: The Adoption Assistance – Title IV-E Program provides Federal funds to states to facilitate the timely placement of children, whose special needs or circumstances would otherwise make them difficult to place, with adoptive families. Funds are available for a one-time payment to assist with the costs of adopting a child as well as for subsidies to adoptive families to assist with the care of the eligible child on an ongoing basis. The Office of Child and Family Services (OCFS) administers the Adoption Assistance – Title IV-E program for the State. A financial resources specialist (FRS) determines program eligibility and initiates benefits through completion of an adoption assistance checklist. The FRS reviews program eligibility factors, gathers required supporting documentation, documents the certification decision on the checklist, and obtains supervisory approval. The FRS enters the information into the child welfare information system for processing. The Office of the State Auditor (OSA) tested 60 eligibility determinations and found: • one checklist did not have supervisory approval; • one checklist did not have a FRS signature or supervisory approval; • one checklist was not included in the case file; and • one checklist was signed by a FRS and included supervisory approval; however, information indicating that the required steps were taken to determine benefit eligibility was excluded. Once the client is determined eligible in the child welfare information system, a daily rate is negotiated by OCFS and the adoptive parents. OCFS relies on the information entered in the system and related system coding for the assignment of the appropriate revenue source to charge the assigned benefits. OSA tested 60 client benefit payments and identified that benefits for one client paid with State funds should have been charged to Federal funds. Through discussions with OCFS, OSA was informed that the error was caused by an issue with the newly implemented child welfare information system, which affected 421 clients. $1.6 million of State funds were utilized to pay benefits that should have been charged to Federal funds. OSA selected non-statistical random samples. Context: In fiscal year 2023, the State provided approximately 4,000 Adoption Assistance – Title IV-E clients with $24.6 million in Federal benefits. Cause: Lack of adequate policies and procedures and supervisory oversight over: • the documentation of eligibility determinations • the child welfare information system. The system was implemented in fiscal year 2023 and policies and procedures were not designed to properly test system coding to ensure that benefits were paid utilizing the appropriate funding source. Effect: • Individuals not eligible for services could be deemed eligible or eligible individuals could be deemed ineligible. • Potential questioned costs and disallowances • Noncompliance with Federal regulations Recommendation: We recommend that OCFS enhance policies and procedures to ensure that eligibility determination checklists include certification decisions and are documented consistently for all case files. We understand that OCFS is completing a retroactive review to correct the issue and charge the appropriate funding source for previously paid benefits. We recommend that OCFS continue this process and implement policies and procedures which require monitoring of the system to ensure benefits are accurately paid to eligible clients. Corrective Action Plan: See F-36 Management’s Response: The Department agrees with this finding. Completion of the Adoption Assistance Checklist has not been universally understood to be used as the internal control for documentation of certification decisions, but as a guide for staff to use in preparing and organizing the Application for Adoption Assistance Packets. We agree that this is an effective tool to ensure certification decisions regarding IVE, and consistent documentation in case files. OCFS staff will be trained in the importance of these internal control procedures. The Adoption Policy is currently in revision and the policy will be enhanced to reflect these changes. Contact: Karen Benson, Adoption Program Manager, DHHS, 207-561-4208 (State Number: 23-1110-01)
(2023-090) Title: Internal control over Adoption Assistance – Title IV-E level of effort needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office of Child and Family Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Adoption Assistance – Title IV-E (COVID-19) Assistance Listing Number: 93.659 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Matching, level of effort, earmarking Reporting Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 42 USC 673(a)(8)(B) and (D) The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must file an annual report containing accurate information on any savings (referred to as “adoption savings”) resulting from the application of differing program eligibility rules to all applicable children for a fiscal year. As part of the Adoption Assistance – Title IV-E program’s level of effort, referred to as maintenance of effort (MOE) requirements, the Department must use adoption savings to supplement and not supplant any Federal or non-Federal funds to provide any service under Title IV-B or IV-E. Condition: The Adoption Assistance – Title IV-E program has expanded eligibility provisions for any child who meets the criteria of an “applicable child.” The expanded eligibility provisions allow the State to receive additional Federal funding for adoption, thereby allowing them to reduce the level of non-Federal funds required for these services, referred to as “adoption savings.” The State must report the amount of adoption savings and how the adoption savings are spent on Form CB-496 Annual Adoption Savings Calculation and Accounting Report. The Office of the State Auditor (OSA) reviewed the Federal fiscal year 2022 adoption savings calculation reported in State fiscal year 2023 and found: • the average monthly number of applicable children was incorrectly calculated and reported as 1,171 instead of 1,052, resulting in an overstatement of approximately $962,000 reported on Form CB-496. The Department informed OSA that the error was due to inaccurate information obtained from the child welfare system vendor. • the Department could not provide documentation to support amounts reported on Form CB-496. While the Federal fiscal year 2022 adoption savings was incorrectly calculated and reported, OSA was able to verify that the Department met MOE requirements relating to the use of adoption savings to supplement not supplant any Federal or non-Federal funds. Context: The Department reported $9,461,754 in adoption savings on the Federal fiscal year 2022 Form CB-496; however, $8,500,226 should have been reported. Cause: • Lack of adequate procedures • Lack of supervisory oversight Effect: • The Department is required to meet specific MOE requirements that relate to adoption savings. An inaccurate adoption savings calculation could result in the Department not meeting these requirements. • Inaccurate information reported to the Federal government may be used for programmatic, policy or statistical purposes. • Noncompliance with Federal regulations Recommendation: We recommend that the Department enhance monitoring procedures to ensure the annual adoption savings information reported on Form CB-496 is accurate and complete prior to submission and retain documentation to support amounts reported. Corrective Action Plan: See F-37 Management’s Response: The Department agrees with this finding. Requirements will be added to the standard operating procedure and backup data will be stored in an OCFS shared drive for future needs. Contact: John Feeney, Chief Operating Officer, OCFS, DHHS, 207-626-8614 (State Number: 23-1110-02)
(2023-090) Title: Internal control over Adoption Assistance – Title IV-E level of effort needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office of Child and Family Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Adoption Assistance – Title IV-E (COVID-19) Assistance Listing Number: 93.659 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Matching, level of effort, earmarking Reporting Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 42 USC 673(a)(8)(B) and (D) The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must file an annual report containing accurate information on any savings (referred to as “adoption savings”) resulting from the application of differing program eligibility rules to all applicable children for a fiscal year. As part of the Adoption Assistance – Title IV-E program’s level of effort, referred to as maintenance of effort (MOE) requirements, the Department must use adoption savings to supplement and not supplant any Federal or non-Federal funds to provide any service under Title IV-B or IV-E. Condition: The Adoption Assistance – Title IV-E program has expanded eligibility provisions for any child who meets the criteria of an “applicable child.” The expanded eligibility provisions allow the State to receive additional Federal funding for adoption, thereby allowing them to reduce the level of non-Federal funds required for these services, referred to as “adoption savings.” The State must report the amount of adoption savings and how the adoption savings are spent on Form CB-496 Annual Adoption Savings Calculation and Accounting Report. The Office of the State Auditor (OSA) reviewed the Federal fiscal year 2022 adoption savings calculation reported in State fiscal year 2023 and found: • the average monthly number of applicable children was incorrectly calculated and reported as 1,171 instead of 1,052, resulting in an overstatement of approximately $962,000 reported on Form CB-496. The Department informed OSA that the error was due to inaccurate information obtained from the child welfare system vendor. • the Department could not provide documentation to support amounts reported on Form CB-496. While the Federal fiscal year 2022 adoption savings was incorrectly calculated and reported, OSA was able to verify that the Department met MOE requirements relating to the use of adoption savings to supplement not supplant any Federal or non-Federal funds. Context: The Department reported $9,461,754 in adoption savings on the Federal fiscal year 2022 Form CB-496; however, $8,500,226 should have been reported. Cause: • Lack of adequate procedures • Lack of supervisory oversight Effect: • The Department is required to meet specific MOE requirements that relate to adoption savings. An inaccurate adoption savings calculation could result in the Department not meeting these requirements. • Inaccurate information reported to the Federal government may be used for programmatic, policy or statistical purposes. • Noncompliance with Federal regulations Recommendation: We recommend that the Department enhance monitoring procedures to ensure the annual adoption savings information reported on Form CB-496 is accurate and complete prior to submission and retain documentation to support amounts reported. Corrective Action Plan: See F-37 Management’s Response: The Department agrees with this finding. Requirements will be added to the standard operating procedure and backup data will be stored in an OCFS shared drive for future needs. Contact: John Feeney, Chief Operating Officer, OCFS, DHHS, 207-626-8614 (State Number: 23-1110-02)
(2023-032) Title: Internal control over Medicaid and SNAP deceased client cases needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture U.S. Department of Health and Human Services Assistance Listing Title: SNAP Cluster (COVID-19) Medicaid Cluster (COVID-19) Assistance Listing Number: 10.551, 10.561; 93.775, 93.777, 93.778 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: $8,329 (ALN 10.551) Likely Questioned Costs: Undeterminable; the Office of the State Auditor (OSA) tested a sample of cases where Supplemental Nutrition Assistance Program (SNAP) benefits were issued after the client’s date of death (DOD). Issuance of benefits to a deceased client does not necessarily result in unallowable program costs, as the issued benefits may not be expended; therefore, an error rate cannot be applied to the population and a projection of questioned costs cannot be reasonably estimated. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 272.8 and .14 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. State agency action on information items about recipient households shall include review of information and comparison of it to case record information. State agencies must initiate and pursue actions on recipient households within 45 days of the receipt of the information items. States shall establish a system to verify and ensure that benefits are not issued to individuals who are deceased. States shall use the Social Security Administration’s (SSA) Death Master File, obtained through the State Verification and Exchange System. Condition: The Office for Family Independence (OFI) manages the Automated Client Eligibility System (ACES) that is used to determine eligibility for Federal assistance programs, including Medicaid and SNAP. Information maintained in ACES is relied upon by OFI for determining monthly SNAP benefits issued to client Electronic Benefit Transaction (EBT) cards, and by the Office of MaineCare Services for processing Medicaid claims. OFI relies on numerous data sources for identifying and providing client DOD information for input into ACES, including monthly data exchanges with the Maine Center for Disease Control & Prevention (MeCDC) Vital Records and weekly data reports from the SSA’s Death Master File. Federal program regulations require OFI to act on client cases within 45 days of receipt of DOD information. This includes review and comparison of DOD information to ACES case file information, and suspension of program participation and related benefits as warranted. OFI policies for SNAP require deactivation of the client’s EBT card as well as expungement of authorized benefits from the EBT card. If activity occurred on the client’s EBT card subsequent to the DOD, the case must be reported as potential fraud and referred for investigation. The Office of the State Auditor (OSA) obtained DOD information from MeCDC Vital Records and compared it to clients who received Medicaid and SNAP benefits during fiscal year 2023. OSA identified 95 Medicaid claims with service dates after DOD in fiscal year 2023 and reviewed 30 clients with the largest paid claim amounts. Because certain Medicaid claims with service dates after DOD are considered allowable, claims paid on behalf of the deceased clients noted below are not reported as questioned costs: • Two clients had a DOD recorded in ACES that did not agree to the DOD provided by MeCDC Vital Records. • Two clients did not have a DOD recorded in ACES but were reported as deceased by MeCDC Vital Records. Furthermore, four Medicaid clients with an incorrect DOD identified by OSA during the fiscal year 2022 audit were still not corrected in ACES. OSA identified 671 cases where SNAP benefits were issued more than 52 days following the client’s DOD; this benchmark was applied to denote the 45-day Federal program regulation related to weekly receipt of DOD information. OSA tested 60 of these SNAP cases and identified the following: • 18 single member household clients had EBT card purchase activity after DOD. Of these 18 clients: o 14 clients had transaction activity after DOD that occurred in fiscal year 2023, resulting in unallowable costs totaling $8,329, as follows: • For 13 of the 14 clients, unauthorized transaction activity totaling $7,297 occurred between the actual DOD and the Department’s receipt and processing of the DOD information in ACES. • One of the 14 clients did not have a DOD recorded in their ACES case file at the time of audit testing but was reported as deceased by MeCDC Vital Records; this resulted in $1,032 of unauthorized transaction activity. o Four clients’ DOD occurred in fiscal year 2023 and benefits continued to be authorized and issued; however, the unallowable purchase activity began subsequent to fiscal year 2023. o Four clients were not identified as potential fraud in the ACES case file. As a result, they were not referred for investigation as required by OFI policies. • Five clients had a DOD recorded in ACES that did not agree to the DOD provided by MeCDC Vital Records. This resulted from the Department’s practice of entering DODs as the last day of the month or an alternative date from public information sources in order to suspend benefits in cases where DOD information is not immediately available; however, the Department had MeCDC Vital Records information at the time of DOD input for all five clients and should have entered DODs based on those records. • One client did not have a DOD recorded in their ACES case file but was reported as deceased by MeCDC Vital Records; benefits were authorized during fiscal year 2023, but no unauthorized transaction activity occurred. • 10 clients’ benefits were not expunged upon receipt of DOD information as required by OFI policies; benefits were only expunged by the system-automated process based on inactivity after 274 days. For 2 of the 10 clients, the EBT card was never deactivated; therefore, benefits remained open and available for use 274 days after DOD. • One client’s case remained open two months after OFI was notified of the client’s DOD, resulting in two months of unauthorized SNAP benefit issuances. • Two clients’ ACES case file information partially matched DOD information from MeCDC Vital Records, including names and dates of birth; however, the client social security numbers did not match. The Department did not review the cases to determine appropriate follow-up action. OSA selected a non-statistical random sample. Context: In fiscal year 2023, the State provided approximately: • 575,000 Medicaid clients with $2.5 billion in Federal benefits. Of the 575,000 Medicaid clients, 9,826 had a DOD in fiscal year 2023. • 127,000 SNAP clients with $484.8 million in Federal benefits. Of the 127,000 SNAP clients, 2,021 had a DOD in fiscal year 2023. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Medicaid claims paid on behalf of deceased clients may go undetected. • SNAP benefits issued to deceased clients may result in unauthorized EBT card purchase activity. • Known questioned costs for SNAP • Potential future questioned costs and disallowances • Noncompliance with Federal regulations Recommendation: We recommend that the Department enhance policies and procedures to ensure that DOD information is received, reviewed, and updated in ACES on a more frequent basis to prevent unallowable Medicaid claim payments, and unauthorized SNAP benefit issuances and EBT card purchase activity. In addition, we recommend that the Department review all client cases noted in the Condition of this finding to ensure that: • ACES case file DOD information is accurate; • SNAP benefits are expunged and EBT cards are deactivated in accordance with existing policies; • cases are identified as potential fraud and referred for investigation as warranted; and • unallowable costs are identified and reported to Federal oversight agencies, and required recoupment activities are pursued. Corrective Action Plan: See F-19 Management’s Response: The Department agrees with this finding and will review the current SOP governing DOD procedures and will implement enhancements to ensure DOD is updated and that related required actions are taken within allowable timeframes. Contact: Ian Yaffe, Director, Office for Family Independence, DHHS, 207-592-1481 (State Number: 23-1108-04)
(2023-091) Title: Internal control over Medicaid Nursing Facility audits needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Division of Audit Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Special tests and provisions Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 42 CFR 447.253(g); MaineCare Benefits Manual, Chapter III, Section 67 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department is required to provide for the periodic audits of the financial and statistical records of participating providers. The MaineCare Benefits Manual (MCBM) Chapter III, Section 67 outlines the documentation and support required to be included in a provider’s annual cost report filing submission to the Division of Audit. The Division of Audit’s requirements for reviewing the cost reports and performing uniform desk reviews is also outlined. Section 67 states that the Division of Audit must perform a uniform desk review on each Nursing Facility (NF) cost report submission within 365 days of receipt of an acceptable cost report filing. Condition: For each participating Long Term Care Facility, the Department must provide for the filing of uniform cost reports in order to establish payment rates and must provide for the periodic audits of financial and statistical records. The specific audit requirements will be established by the State plan. The MCBM states uniform desk reviews shall be completed within 365 days after receipt of an acceptable cost report filing, including financial statements and other information requested from the provider except in unusual situations including, but not limited to, delays in obtaining necessary information from a provider. Unless the Division of Audit intends to schedule an on-site audit or an unusual situation referenced above exists, a written summary report of findings and adjustments shall be issued upon completion of the uniform desk review. The Division of Audit did not complete NF audits in accordance with Federal regulations. The population of NF uniform desk reviews due for completion in fiscal year 2023 was 96. Of those 96 uniform desk reviews, one was completed timely, one was completed 128 days late, and 94 had not been completed at the time of audit testing. Context: The Department: • provided $275.7 million in Federal Medicaid funding and $80.3 million in State Medicaid funding to NFs during fiscal year 2023. • completed 66 NF uniform desk reviews related to prior fiscal years in fiscal year 2023. Cause: Lack of resources Effect: • Noncompliance with Federal and State regulations • The determination of amounts owed to or from NFs is delayed. Recommendation: We recommend that the Department reallocate resources to address the backlog of NF uniform desk reviews. Timely audit issuance will minimize the impact on providers of potential payables and receivables. Corrective Action Plan: See F-37 Management’s Response: The Department agrees with this finding. This is a long-standing finding due, in part, to the complexity of audit-related work for Nursing Facility cost reports. Meeting the requirement has always been a challenge. Further complicating this topic, during State Fiscal year 2023, the Division of Audit experienced a vacancy rate of over 30%. In addition to being short of staffing, over 600 additional audit reviews were added to the audit workload as a result of COVID funding requirements. Staff are still assigned to completing the COVID audits. Once those are completed, the staff will be assigned to the Long Term Care audits. Additionally, the Division has worked with HR to increase our recruiting efforts. We will continue to work on recruiting and hiring qualified audit staff in order to improve the timeliness of audit assignments. Contact: Herb Downs, Director, Division of Audit, DHHS, 207-287-2778 (State Number: 23-1106-02)
(2023-092) Title: Internal control over Medicare Part B premium payments needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services Administrative and Financial Services State Bureau: Office for Family Independence Office of Information Technology Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 42 CFR 431.625 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. 42 CFR 431.625 outlines eligibility criteria which, if met, allows the State to pay a portion of the Federal Medicare Part B premium on behalf of the client and claim Federal financial participation in the payment. Clients may be deemed eligible by the Federal government as indicated by a Federal Buy-In code, or by the State as indicated by eligibility status in the Automated Client Eligibility System (ACES). Condition: The Department receives monthly invoices from the Centers for Medicare and Medicaid Services (CMS) for Medicare Part B premiums. CMS provides a separate detailed listing of Medicaid clients that supports the invoice to the Office of Information Technology (OIT). OIT produces a Monthly Reconciliation Report identifying potential discrepancies between the CMS detailed listing and the Department’s eligibility information recorded in ACES. Office for Family Independence personnel use this reconciliation report to identify clients for whom payment should not be made. Of the 12 Monthly Reconciliation Reports required in fiscal year 2023, the Department could not provide documentation that reports were reviewed or corrective action was taken for six reports. In the Office of the State Auditor’s (OSA) test of 60 premium payments: • one premium was paid by the Department on behalf of a client who was coded eligible on the CMS invoice but was coded not eligible in ACES. • one premium was paid by the Department on behalf of a client who was coded eligible in ACES but was not included on the CMS invoice. • four premiums were paid by the Department on behalf of clients who were coded eligible on the CMS invoice and in ACES; however, discrepancies existed between their Federal and State Buy-In eligibility codes. The Monthly Reconciliation Report did not identify these discrepancies. However, additional OSA procedures determined that the clients were eligible and the payments were allowable. OSA selected a non-statistical random sample. Context: In fiscal year 2023, approximately $129 million in Federal funds and $57 million in State funds were paid to CMS for Medicare Part B premiums. Cause: • Lack of resources • Lack of supervisory oversight • The Monthly Reconciliation Report is not adequately designed to identify all discrepancies. Effect: • Potential Medicare Part B premiums paid by the State for ineligible clients • Potential questioned costs and disallowances • Noncompliance with Federal regulations Recommendation: We recommend that the Department implement oversight procedures to ensure the review and follow up to Monthly Reconciliation Reports, and that the Department improve procedures for the documentation of those reports. We further recommend that the Department design the Monthly Reconciliation Report to identify all discrepancies. Corrective Action Plan: See F-38 Management’s Response: The Office for Family Independence agrees with this finding and recommendation. We have created a MaineCare Program Integrity team and have hired a Program Manager for this group effective February 5, 2024. The work of this team will include Medicare Part B reconciliations. Contact: Ian Yaffe, Director, Office for Family Independence, DHHS, 207-592-1481 (State Number: 23-1106-01)
(2023-093) Title: Internal control over Medicaid cost of care deductions needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office of MaineCare Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403; 42 CFR 435.725 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. The Department must reduce its payment to an institution for services provided to an individual by the amount that remains after deducting certain amounts from the member’s total income. This remaining amount is the member’s maximum share of the cost, known as cost of care (COC). Condition: A COC assessment represents the required contribution that a MaineCare recipient must pay toward care in a Long Term Care Facility (LTCF). The Office for Family Independence (OFI) is responsible for COC assessments for all Medicaid members in the State. COC assessments are either calculated by the Automated Client Eligibility System or calculated manually by eligibility specialists. System-generated COC assessments are not subject to secondary review. A COC deduction represents the amount of assessment that was deducted from a paid claim. Members may have an assessment calculated but may never have a claim with a deduction utilizing that assessment. The Office of MaineCare Services (OMS) is responsible for applying assessments to submitted claims prior to payment. The Office of the State Auditor (OSA) tested 60 COC assessments and related deductions from paid claims. OSA identified one COC deduction that was not updated after the claim was adjusted. As a result, the Department underpaid the provider by $263 for the month of September 2022. Seven additional claims that utilized this member’s COC were paid during fiscal year 2023 resulting in a total underpayment of $2,039. The monthly COC exception report generated by the system did not identify this error. OSA selected a non-statistical random sample. Context: In fiscal year 2023, approximately: • 26,000 COC assessments were calculated by OFI; • 9,400 members had COC assessments; and • $430 million was paid to nursing facilities and residential care facilities. Cause: Lack of adequate procedures to ensure system exception reports are complete and accurate Effect: • Potential questioned costs and disallowances • Inaccurate COC deductions and retroactive changes may result in overpayments or underpayments for members or the State. Recommendation: We recommend that OMS collaborate with OFI to ensure that system exception reports capture all COC-related claims which require adjustments. Corrective Action Plan: See F-38 Management’s Response: The Department agrees with this finding. OMS acknowledges a discrepancy in the report of identified claims for adjustments needed to claims as a result of changes to a member's cost of care. OFI generates the report for reporting COC changes from the ACES system, but the report provided only captures manual changes made to the member's cost of care. This report does not capture all cost of care changes. Example: NF COC, person has a level of care change and now needs APRC. They needed APRC starting in November and OFI doesn't know about it until January. They cannot have the system “run” that change because it is a change in the assistance group type that occurred in the past. OFI has to manually make that adjustment. It will populate as a change on the manually adjusted COC report. The report used by the OMS Adjustment Unit is generated by our vendor and sent by the second Wednesday of the month, capturing changes made to cost of care for an identified period of time. The cost of care adjustments are intended to be completed within the same month. Based on the discrepancy in the claims identified for adjustment, OMS is in agreement that collaboration between OFI and OMS should occur to assure accurate claims data is reviewed for those member's having changes to their cost of care within that month. Contact: Michelle Probert, Director, Office of MaineCare Services, DHHS, 207-287-2093 (State Number: 23-1106-04)
(2023-094) Title: Internal control over Medicaid drug rebates needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office of MaineCare Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; Section 1927 of the Social Security Act (42 USC 1396r-8) The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Section 1927 of the Social Security Act requires manufacturers that wish to have their outpatient drugs covered by Medicaid to enter into an agreement with the Centers for Medicare & Medicaid Services (CMS) under which the manufacturers agree to pay rebates for drugs dispensed and paid for by the State Medicaid agencies under the State plan. Drug rebates are shared between the State and Federal government. Condition: Drug manufacturers are required to submit a list of all covered outpatient drugs, along with each drug’s average manufacturer price and “best price” to CMS. Utilizing this information, CMS calculates a unit rebate amount (URA) for each covered outpatient drug and provides the amounts to the State on a quarterly basis. The Department is required to maintain drug utilization data that identifies, by National Drug Code, the number of units of each covered outpatient drug for which the Department has paid pharmacy providers. The utilization data is provided to CMS and the manufacturers. The number of dispensed units is applied to the URA to determine the rebate amount due from each manufacturer. The State contracts with a vendor to calculate the drug rebate amounts and invoice manufacturers for drug rebates. During audit testing, the Office of the State Auditor identified that the Department does not have procedures in place to ensure the accuracy and completeness of the drug rebate amounts invoiced by the vendor. The Department does not compare drug utilization data to the number of dispensed units utilized to ensure that the vendor has calculated the rebate correctly. Context: In fiscal year 2023, the State invoiced approximately $315 million for rebatable drugs and received approximately $220 million in rebates. Of the $220 million in rebates, approximately $159 million was returned to the Federal government. Due to the amount of time rebate negotiations may take, discrepancies will exist between the invoiced total and the total amount of rebates received. Cause: • Lack of adequate procedures • Lack of supervisory oversight Effect: • Inaccurate or incomplete invoicing of drug rebates would result in overpayments or underpayments to the State and Federal government. • Noncompliance with Federal regulations Recommendation: We recommend that the Department implement procedures to confirm the drug rebate amounts calculated and invoiced by the vendor are accurate and complete by utilizing drug utilization data. This will ensure that correct drug rebate amounts are returned to the State and Federal government. Corrective Action Plan: See F-38 Management’s Response: The Department agrees with this finding. The control described is built into the computer systems that facilitate selecting claims for submission to the Pharmacy Rebate Invoice Management System (PRIMS). An additional check on the collection of claims is not needed for the following reasons: In response to the concern of completeness of the rebate eligible claim capture, the criteria for selecting outpatient drug claims from our claims system was defined, implemented, tested, and validated when PRIMS was first installed. This claim selection coding is what ensures that all outpatient drug claims are submitted to PRIMS for invoicing. In response to the concern of accuracy, pre-invoicing variance checks are completed within PRIMS and the manufacturers scrutinize the invoices once received which would detect any incorrect calculations. We have both a preventative control with the variance checks and independent detection with the drug manufacturers with respect to accuracy. However, we will take additional steps to ensure accuracy. Contact: Michelle Probert, Director, Office of MaineCare Services, DHHS, 207-287-2093 Auditor’s Concluding Remarks: Though the Department agrees with this finding, the Department asserts that controls exist over the control deficiency identified in the Condition and an “additional check on the collection of claims is not needed.” However, as a result of not comparing drug utilization data to the number of dispensed units utilized, the Department is relying on the drug manufacturer to submit the correct drug rebate information to the Department and to notify the Department of any discrepancies. The drug manufacturer is not an independent source to ensure accuracy of the drug rebate amount. An “additional check” would ensure that the drug rebate amount received is accurate and complete. The finding remains as stated. (State Number: 23-1106-08)
(2023-095) Title: Internal control over conflict of interest requirements needs improvement Prior Year Findings: None State Department: Administrative and Financial Services State Bureau: Division of Procurement Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Procurement and suspension and debarment Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.318 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award or administration of contracts. No employee, officer, or agent may participate in the selection, award or administration of a contract supported by a Federal award if he or she has a real or apparent conflict of interest. Condition: The Division of Procurement Services (DPS) oversees the creation, development, approval, and implementation of contracts for the State. DPS publishes contract templates and a Procurement Justification Form (PJF) template to be used by State agencies during the procurement process. The templates are reviewed by DPS to ensure all pertinent Federal requirements are included. The Office of the State Auditor reviewed the contract and PJF templates and found that the following templates did not include required conflict of interest language: • Service contract template, which only addressed a prohibition of employment between a State employee and the party to the contract • PJF template, which is utilized for contracts procured through the non-competitive bidding (sole source) process Context: $825.3 million in Federal expenditures was paid to contractors, subcontractors, or vendors through contracts in fiscal year 2023. Cause: Lack of supervisory oversight Effect: • All conflicts of interest may not be disclosed and thus, may not be considered by the State when entering into contracts with contractors, subcontractors or vendors. Conflict of interest disclosures are required to ensure transparency, accountability, and remove potential bias. • Noncompliance with Federal regulations Recommendation: We recommend that DPS enhance oversight procedures to ensure conflict of interest requirements and disclosures are included in all contract and PJF templates. This will ensure transparency, accountability, and remove potential bias. Corrective Action Plan: See F-38 Management’s Response: The Department agrees with this finding. The service contract did not include updated conflict of interest verbiage. Upon review and consultation, Procurement Services has updated the contract to appropriately reference the applicable statute and verbiage. These new contracts will be distributed to agencies for future use. Historically, the NOI-PJF has not included the conflict of interest reference. This was the case at the time of this audit review, a revised PJF form has been created with a department attestation referencing the statute at the time of the document signature. This new PJF will be distributed for use. Contact: David Morris, Acting Chief Procurement Officer, DAFS, 207-624-7335 (State Number: 23-1010-01)
(2023-032) Title: Internal control over Medicaid and SNAP deceased client cases needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture U.S. Department of Health and Human Services Assistance Listing Title: SNAP Cluster (COVID-19) Medicaid Cluster (COVID-19) Assistance Listing Number: 10.551, 10.561; 93.775, 93.777, 93.778 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: $8,329 (ALN 10.551) Likely Questioned Costs: Undeterminable; the Office of the State Auditor (OSA) tested a sample of cases where Supplemental Nutrition Assistance Program (SNAP) benefits were issued after the client’s date of death (DOD). Issuance of benefits to a deceased client does not necessarily result in unallowable program costs, as the issued benefits may not be expended; therefore, an error rate cannot be applied to the population and a projection of questioned costs cannot be reasonably estimated. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 272.8 and .14 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. State agency action on information items about recipient households shall include review of information and comparison of it to case record information. State agencies must initiate and pursue actions on recipient households within 45 days of the receipt of the information items. States shall establish a system to verify and ensure that benefits are not issued to individuals who are deceased. States shall use the Social Security Administration’s (SSA) Death Master File, obtained through the State Verification and Exchange System. Condition: The Office for Family Independence (OFI) manages the Automated Client Eligibility System (ACES) that is used to determine eligibility for Federal assistance programs, including Medicaid and SNAP. Information maintained in ACES is relied upon by OFI for determining monthly SNAP benefits issued to client Electronic Benefit Transaction (EBT) cards, and by the Office of MaineCare Services for processing Medicaid claims. OFI relies on numerous data sources for identifying and providing client DOD information for input into ACES, including monthly data exchanges with the Maine Center for Disease Control & Prevention (MeCDC) Vital Records and weekly data reports from the SSA’s Death Master File. Federal program regulations require OFI to act on client cases within 45 days of receipt of DOD information. This includes review and comparison of DOD information to ACES case file information, and suspension of program participation and related benefits as warranted. OFI policies for SNAP require deactivation of the client’s EBT card as well as expungement of authorized benefits from the EBT card. If activity occurred on the client’s EBT card subsequent to the DOD, the case must be reported as potential fraud and referred for investigation. The Office of the State Auditor (OSA) obtained DOD information from MeCDC Vital Records and compared it to clients who received Medicaid and SNAP benefits during fiscal year 2023. OSA identified 95 Medicaid claims with service dates after DOD in fiscal year 2023 and reviewed 30 clients with the largest paid claim amounts. Because certain Medicaid claims with service dates after DOD are considered allowable, claims paid on behalf of the deceased clients noted below are not reported as questioned costs: • Two clients had a DOD recorded in ACES that did not agree to the DOD provided by MeCDC Vital Records. • Two clients did not have a DOD recorded in ACES but were reported as deceased by MeCDC Vital Records. Furthermore, four Medicaid clients with an incorrect DOD identified by OSA during the fiscal year 2022 audit were still not corrected in ACES. OSA identified 671 cases where SNAP benefits were issued more than 52 days following the client’s DOD; this benchmark was applied to denote the 45-day Federal program regulation related to weekly receipt of DOD information. OSA tested 60 of these SNAP cases and identified the following: • 18 single member household clients had EBT card purchase activity after DOD. Of these 18 clients: o 14 clients had transaction activity after DOD that occurred in fiscal year 2023, resulting in unallowable costs totaling $8,329, as follows: • For 13 of the 14 clients, unauthorized transaction activity totaling $7,297 occurred between the actual DOD and the Department’s receipt and processing of the DOD information in ACES. • One of the 14 clients did not have a DOD recorded in their ACES case file at the time of audit testing but was reported as deceased by MeCDC Vital Records; this resulted in $1,032 of unauthorized transaction activity. o Four clients’ DOD occurred in fiscal year 2023 and benefits continued to be authorized and issued; however, the unallowable purchase activity began subsequent to fiscal year 2023. o Four clients were not identified as potential fraud in the ACES case file. As a result, they were not referred for investigation as required by OFI policies. • Five clients had a DOD recorded in ACES that did not agree to the DOD provided by MeCDC Vital Records. This resulted from the Department’s practice of entering DODs as the last day of the month or an alternative date from public information sources in order to suspend benefits in cases where DOD information is not immediately available; however, the Department had MeCDC Vital Records information at the time of DOD input for all five clients and should have entered DODs based on those records. • One client did not have a DOD recorded in their ACES case file but was reported as deceased by MeCDC Vital Records; benefits were authorized during fiscal year 2023, but no unauthorized transaction activity occurred. • 10 clients’ benefits were not expunged upon receipt of DOD information as required by OFI policies; benefits were only expunged by the system-automated process based on inactivity after 274 days. For 2 of the 10 clients, the EBT card was never deactivated; therefore, benefits remained open and available for use 274 days after DOD. • One client’s case remained open two months after OFI was notified of the client’s DOD, resulting in two months of unauthorized SNAP benefit issuances. • Two clients’ ACES case file information partially matched DOD information from MeCDC Vital Records, including names and dates of birth; however, the client social security numbers did not match. The Department did not review the cases to determine appropriate follow-up action. OSA selected a non-statistical random sample. Context: In fiscal year 2023, the State provided approximately: • 575,000 Medicaid clients with $2.5 billion in Federal benefits. Of the 575,000 Medicaid clients, 9,826 had a DOD in fiscal year 2023. • 127,000 SNAP clients with $484.8 million in Federal benefits. Of the 127,000 SNAP clients, 2,021 had a DOD in fiscal year 2023. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Medicaid claims paid on behalf of deceased clients may go undetected. • SNAP benefits issued to deceased clients may result in unauthorized EBT card purchase activity. • Known questioned costs for SNAP • Potential future questioned costs and disallowances • Noncompliance with Federal regulations Recommendation: We recommend that the Department enhance policies and procedures to ensure that DOD information is received, reviewed, and updated in ACES on a more frequent basis to prevent unallowable Medicaid claim payments, and unauthorized SNAP benefit issuances and EBT card purchase activity. In addition, we recommend that the Department review all client cases noted in the Condition of this finding to ensure that: • ACES case file DOD information is accurate; • SNAP benefits are expunged and EBT cards are deactivated in accordance with existing policies; • cases are identified as potential fraud and referred for investigation as warranted; and • unallowable costs are identified and reported to Federal oversight agencies, and required recoupment activities are pursued. Corrective Action Plan: See F-19 Management’s Response: The Department agrees with this finding and will review the current SOP governing DOD procedures and will implement enhancements to ensure DOD is updated and that related required actions are taken within allowable timeframes. Contact: Ian Yaffe, Director, Office for Family Independence, DHHS, 207-592-1481 (State Number: 23-1108-04)
(2023-091) Title: Internal control over Medicaid Nursing Facility audits needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Division of Audit Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Special tests and provisions Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 42 CFR 447.253(g); MaineCare Benefits Manual, Chapter III, Section 67 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department is required to provide for the periodic audits of the financial and statistical records of participating providers. The MaineCare Benefits Manual (MCBM) Chapter III, Section 67 outlines the documentation and support required to be included in a provider’s annual cost report filing submission to the Division of Audit. The Division of Audit’s requirements for reviewing the cost reports and performing uniform desk reviews is also outlined. Section 67 states that the Division of Audit must perform a uniform desk review on each Nursing Facility (NF) cost report submission within 365 days of receipt of an acceptable cost report filing. Condition: For each participating Long Term Care Facility, the Department must provide for the filing of uniform cost reports in order to establish payment rates and must provide for the periodic audits of financial and statistical records. The specific audit requirements will be established by the State plan. The MCBM states uniform desk reviews shall be completed within 365 days after receipt of an acceptable cost report filing, including financial statements and other information requested from the provider except in unusual situations including, but not limited to, delays in obtaining necessary information from a provider. Unless the Division of Audit intends to schedule an on-site audit or an unusual situation referenced above exists, a written summary report of findings and adjustments shall be issued upon completion of the uniform desk review. The Division of Audit did not complete NF audits in accordance with Federal regulations. The population of NF uniform desk reviews due for completion in fiscal year 2023 was 96. Of those 96 uniform desk reviews, one was completed timely, one was completed 128 days late, and 94 had not been completed at the time of audit testing. Context: The Department: • provided $275.7 million in Federal Medicaid funding and $80.3 million in State Medicaid funding to NFs during fiscal year 2023. • completed 66 NF uniform desk reviews related to prior fiscal years in fiscal year 2023. Cause: Lack of resources Effect: • Noncompliance with Federal and State regulations • The determination of amounts owed to or from NFs is delayed. Recommendation: We recommend that the Department reallocate resources to address the backlog of NF uniform desk reviews. Timely audit issuance will minimize the impact on providers of potential payables and receivables. Corrective Action Plan: See F-37 Management’s Response: The Department agrees with this finding. This is a long-standing finding due, in part, to the complexity of audit-related work for Nursing Facility cost reports. Meeting the requirement has always been a challenge. Further complicating this topic, during State Fiscal year 2023, the Division of Audit experienced a vacancy rate of over 30%. In addition to being short of staffing, over 600 additional audit reviews were added to the audit workload as a result of COVID funding requirements. Staff are still assigned to completing the COVID audits. Once those are completed, the staff will be assigned to the Long Term Care audits. Additionally, the Division has worked with HR to increase our recruiting efforts. We will continue to work on recruiting and hiring qualified audit staff in order to improve the timeliness of audit assignments. Contact: Herb Downs, Director, Division of Audit, DHHS, 207-287-2778 (State Number: 23-1106-02)
(2023-092) Title: Internal control over Medicare Part B premium payments needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services Administrative and Financial Services State Bureau: Office for Family Independence Office of Information Technology Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 42 CFR 431.625 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. 42 CFR 431.625 outlines eligibility criteria which, if met, allows the State to pay a portion of the Federal Medicare Part B premium on behalf of the client and claim Federal financial participation in the payment. Clients may be deemed eligible by the Federal government as indicated by a Federal Buy-In code, or by the State as indicated by eligibility status in the Automated Client Eligibility System (ACES). Condition: The Department receives monthly invoices from the Centers for Medicare and Medicaid Services (CMS) for Medicare Part B premiums. CMS provides a separate detailed listing of Medicaid clients that supports the invoice to the Office of Information Technology (OIT). OIT produces a Monthly Reconciliation Report identifying potential discrepancies between the CMS detailed listing and the Department’s eligibility information recorded in ACES. Office for Family Independence personnel use this reconciliation report to identify clients for whom payment should not be made. Of the 12 Monthly Reconciliation Reports required in fiscal year 2023, the Department could not provide documentation that reports were reviewed or corrective action was taken for six reports. In the Office of the State Auditor’s (OSA) test of 60 premium payments: • one premium was paid by the Department on behalf of a client who was coded eligible on the CMS invoice but was coded not eligible in ACES. • one premium was paid by the Department on behalf of a client who was coded eligible in ACES but was not included on the CMS invoice. • four premiums were paid by the Department on behalf of clients who were coded eligible on the CMS invoice and in ACES; however, discrepancies existed between their Federal and State Buy-In eligibility codes. The Monthly Reconciliation Report did not identify these discrepancies. However, additional OSA procedures determined that the clients were eligible and the payments were allowable. OSA selected a non-statistical random sample. Context: In fiscal year 2023, approximately $129 million in Federal funds and $57 million in State funds were paid to CMS for Medicare Part B premiums. Cause: • Lack of resources • Lack of supervisory oversight • The Monthly Reconciliation Report is not adequately designed to identify all discrepancies. Effect: • Potential Medicare Part B premiums paid by the State for ineligible clients • Potential questioned costs and disallowances • Noncompliance with Federal regulations Recommendation: We recommend that the Department implement oversight procedures to ensure the review and follow up to Monthly Reconciliation Reports, and that the Department improve procedures for the documentation of those reports. We further recommend that the Department design the Monthly Reconciliation Report to identify all discrepancies. Corrective Action Plan: See F-38 Management’s Response: The Office for Family Independence agrees with this finding and recommendation. We have created a MaineCare Program Integrity team and have hired a Program Manager for this group effective February 5, 2024. The work of this team will include Medicare Part B reconciliations. Contact: Ian Yaffe, Director, Office for Family Independence, DHHS, 207-592-1481 (State Number: 23-1106-01)
(2023-093) Title: Internal control over Medicaid cost of care deductions needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office of MaineCare Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403; 42 CFR 435.725 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. The Department must reduce its payment to an institution for services provided to an individual by the amount that remains after deducting certain amounts from the member’s total income. This remaining amount is the member’s maximum share of the cost, known as cost of care (COC). Condition: A COC assessment represents the required contribution that a MaineCare recipient must pay toward care in a Long Term Care Facility (LTCF). The Office for Family Independence (OFI) is responsible for COC assessments for all Medicaid members in the State. COC assessments are either calculated by the Automated Client Eligibility System or calculated manually by eligibility specialists. System-generated COC assessments are not subject to secondary review. A COC deduction represents the amount of assessment that was deducted from a paid claim. Members may have an assessment calculated but may never have a claim with a deduction utilizing that assessment. The Office of MaineCare Services (OMS) is responsible for applying assessments to submitted claims prior to payment. The Office of the State Auditor (OSA) tested 60 COC assessments and related deductions from paid claims. OSA identified one COC deduction that was not updated after the claim was adjusted. As a result, the Department underpaid the provider by $263 for the month of September 2022. Seven additional claims that utilized this member’s COC were paid during fiscal year 2023 resulting in a total underpayment of $2,039. The monthly COC exception report generated by the system did not identify this error. OSA selected a non-statistical random sample. Context: In fiscal year 2023, approximately: • 26,000 COC assessments were calculated by OFI; • 9,400 members had COC assessments; and • $430 million was paid to nursing facilities and residential care facilities. Cause: Lack of adequate procedures to ensure system exception reports are complete and accurate Effect: • Potential questioned costs and disallowances • Inaccurate COC deductions and retroactive changes may result in overpayments or underpayments for members or the State. Recommendation: We recommend that OMS collaborate with OFI to ensure that system exception reports capture all COC-related claims which require adjustments. Corrective Action Plan: See F-38 Management’s Response: The Department agrees with this finding. OMS acknowledges a discrepancy in the report of identified claims for adjustments needed to claims as a result of changes to a member's cost of care. OFI generates the report for reporting COC changes from the ACES system, but the report provided only captures manual changes made to the member's cost of care. This report does not capture all cost of care changes. Example: NF COC, person has a level of care change and now needs APRC. They needed APRC starting in November and OFI doesn't know about it until January. They cannot have the system “run” that change because it is a change in the assistance group type that occurred in the past. OFI has to manually make that adjustment. It will populate as a change on the manually adjusted COC report. The report used by the OMS Adjustment Unit is generated by our vendor and sent by the second Wednesday of the month, capturing changes made to cost of care for an identified period of time. The cost of care adjustments are intended to be completed within the same month. Based on the discrepancy in the claims identified for adjustment, OMS is in agreement that collaboration between OFI and OMS should occur to assure accurate claims data is reviewed for those member's having changes to their cost of care within that month. Contact: Michelle Probert, Director, Office of MaineCare Services, DHHS, 207-287-2093 (State Number: 23-1106-04)
(2023-094) Title: Internal control over Medicaid drug rebates needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office of MaineCare Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; Section 1927 of the Social Security Act (42 USC 1396r-8) The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Section 1927 of the Social Security Act requires manufacturers that wish to have their outpatient drugs covered by Medicaid to enter into an agreement with the Centers for Medicare & Medicaid Services (CMS) under which the manufacturers agree to pay rebates for drugs dispensed and paid for by the State Medicaid agencies under the State plan. Drug rebates are shared between the State and Federal government. Condition: Drug manufacturers are required to submit a list of all covered outpatient drugs, along with each drug’s average manufacturer price and “best price” to CMS. Utilizing this information, CMS calculates a unit rebate amount (URA) for each covered outpatient drug and provides the amounts to the State on a quarterly basis. The Department is required to maintain drug utilization data that identifies, by National Drug Code, the number of units of each covered outpatient drug for which the Department has paid pharmacy providers. The utilization data is provided to CMS and the manufacturers. The number of dispensed units is applied to the URA to determine the rebate amount due from each manufacturer. The State contracts with a vendor to calculate the drug rebate amounts and invoice manufacturers for drug rebates. During audit testing, the Office of the State Auditor identified that the Department does not have procedures in place to ensure the accuracy and completeness of the drug rebate amounts invoiced by the vendor. The Department does not compare drug utilization data to the number of dispensed units utilized to ensure that the vendor has calculated the rebate correctly. Context: In fiscal year 2023, the State invoiced approximately $315 million for rebatable drugs and received approximately $220 million in rebates. Of the $220 million in rebates, approximately $159 million was returned to the Federal government. Due to the amount of time rebate negotiations may take, discrepancies will exist between the invoiced total and the total amount of rebates received. Cause: • Lack of adequate procedures • Lack of supervisory oversight Effect: • Inaccurate or incomplete invoicing of drug rebates would result in overpayments or underpayments to the State and Federal government. • Noncompliance with Federal regulations Recommendation: We recommend that the Department implement procedures to confirm the drug rebate amounts calculated and invoiced by the vendor are accurate and complete by utilizing drug utilization data. This will ensure that correct drug rebate amounts are returned to the State and Federal government. Corrective Action Plan: See F-38 Management’s Response: The Department agrees with this finding. The control described is built into the computer systems that facilitate selecting claims for submission to the Pharmacy Rebate Invoice Management System (PRIMS). An additional check on the collection of claims is not needed for the following reasons: In response to the concern of completeness of the rebate eligible claim capture, the criteria for selecting outpatient drug claims from our claims system was defined, implemented, tested, and validated when PRIMS was first installed. This claim selection coding is what ensures that all outpatient drug claims are submitted to PRIMS for invoicing. In response to the concern of accuracy, pre-invoicing variance checks are completed within PRIMS and the manufacturers scrutinize the invoices once received which would detect any incorrect calculations. We have both a preventative control with the variance checks and independent detection with the drug manufacturers with respect to accuracy. However, we will take additional steps to ensure accuracy. Contact: Michelle Probert, Director, Office of MaineCare Services, DHHS, 207-287-2093 Auditor’s Concluding Remarks: Though the Department agrees with this finding, the Department asserts that controls exist over the control deficiency identified in the Condition and an “additional check on the collection of claims is not needed.” However, as a result of not comparing drug utilization data to the number of dispensed units utilized, the Department is relying on the drug manufacturer to submit the correct drug rebate information to the Department and to notify the Department of any discrepancies. The drug manufacturer is not an independent source to ensure accuracy of the drug rebate amount. An “additional check” would ensure that the drug rebate amount received is accurate and complete. The finding remains as stated. (State Number: 23-1106-08)
(2023-095) Title: Internal control over conflict of interest requirements needs improvement Prior Year Findings: None State Department: Administrative and Financial Services State Bureau: Division of Procurement Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Procurement and suspension and debarment Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.318 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award or administration of contracts. No employee, officer, or agent may participate in the selection, award or administration of a contract supported by a Federal award if he or she has a real or apparent conflict of interest. Condition: The Division of Procurement Services (DPS) oversees the creation, development, approval, and implementation of contracts for the State. DPS publishes contract templates and a Procurement Justification Form (PJF) template to be used by State agencies during the procurement process. The templates are reviewed by DPS to ensure all pertinent Federal requirements are included. The Office of the State Auditor reviewed the contract and PJF templates and found that the following templates did not include required conflict of interest language: • Service contract template, which only addressed a prohibition of employment between a State employee and the party to the contract • PJF template, which is utilized for contracts procured through the non-competitive bidding (sole source) process Context: $825.3 million in Federal expenditures was paid to contractors, subcontractors, or vendors through contracts in fiscal year 2023. Cause: Lack of supervisory oversight Effect: • All conflicts of interest may not be disclosed and thus, may not be considered by the State when entering into contracts with contractors, subcontractors or vendors. Conflict of interest disclosures are required to ensure transparency, accountability, and remove potential bias. • Noncompliance with Federal regulations Recommendation: We recommend that DPS enhance oversight procedures to ensure conflict of interest requirements and disclosures are included in all contract and PJF templates. This will ensure transparency, accountability, and remove potential bias. Corrective Action Plan: See F-38 Management’s Response: The Department agrees with this finding. The service contract did not include updated conflict of interest verbiage. Upon review and consultation, Procurement Services has updated the contract to appropriately reference the applicable statute and verbiage. These new contracts will be distributed to agencies for future use. Historically, the NOI-PJF has not included the conflict of interest reference. This was the case at the time of this audit review, a revised PJF form has been created with a department attestation referencing the statute at the time of the document signature. This new PJF will be distributed for use. Contact: David Morris, Acting Chief Procurement Officer, DAFS, 207-624-7335 (State Number: 23-1010-01)
(2023-032) Title: Internal control over Medicaid and SNAP deceased client cases needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture U.S. Department of Health and Human Services Assistance Listing Title: SNAP Cluster (COVID-19) Medicaid Cluster (COVID-19) Assistance Listing Number: 10.551, 10.561; 93.775, 93.777, 93.778 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: $8,329 (ALN 10.551) Likely Questioned Costs: Undeterminable; the Office of the State Auditor (OSA) tested a sample of cases where Supplemental Nutrition Assistance Program (SNAP) benefits were issued after the client’s date of death (DOD). Issuance of benefits to a deceased client does not necessarily result in unallowable program costs, as the issued benefits may not be expended; therefore, an error rate cannot be applied to the population and a projection of questioned costs cannot be reasonably estimated. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 272.8 and .14 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. State agency action on information items about recipient households shall include review of information and comparison of it to case record information. State agencies must initiate and pursue actions on recipient households within 45 days of the receipt of the information items. States shall establish a system to verify and ensure that benefits are not issued to individuals who are deceased. States shall use the Social Security Administration’s (SSA) Death Master File, obtained through the State Verification and Exchange System. Condition: The Office for Family Independence (OFI) manages the Automated Client Eligibility System (ACES) that is used to determine eligibility for Federal assistance programs, including Medicaid and SNAP. Information maintained in ACES is relied upon by OFI for determining monthly SNAP benefits issued to client Electronic Benefit Transaction (EBT) cards, and by the Office of MaineCare Services for processing Medicaid claims. OFI relies on numerous data sources for identifying and providing client DOD information for input into ACES, including monthly data exchanges with the Maine Center for Disease Control & Prevention (MeCDC) Vital Records and weekly data reports from the SSA’s Death Master File. Federal program regulations require OFI to act on client cases within 45 days of receipt of DOD information. This includes review and comparison of DOD information to ACES case file information, and suspension of program participation and related benefits as warranted. OFI policies for SNAP require deactivation of the client’s EBT card as well as expungement of authorized benefits from the EBT card. If activity occurred on the client’s EBT card subsequent to the DOD, the case must be reported as potential fraud and referred for investigation. The Office of the State Auditor (OSA) obtained DOD information from MeCDC Vital Records and compared it to clients who received Medicaid and SNAP benefits during fiscal year 2023. OSA identified 95 Medicaid claims with service dates after DOD in fiscal year 2023 and reviewed 30 clients with the largest paid claim amounts. Because certain Medicaid claims with service dates after DOD are considered allowable, claims paid on behalf of the deceased clients noted below are not reported as questioned costs: • Two clients had a DOD recorded in ACES that did not agree to the DOD provided by MeCDC Vital Records. • Two clients did not have a DOD recorded in ACES but were reported as deceased by MeCDC Vital Records. Furthermore, four Medicaid clients with an incorrect DOD identified by OSA during the fiscal year 2022 audit were still not corrected in ACES. OSA identified 671 cases where SNAP benefits were issued more than 52 days following the client’s DOD; this benchmark was applied to denote the 45-day Federal program regulation related to weekly receipt of DOD information. OSA tested 60 of these SNAP cases and identified the following: • 18 single member household clients had EBT card purchase activity after DOD. Of these 18 clients: o 14 clients had transaction activity after DOD that occurred in fiscal year 2023, resulting in unallowable costs totaling $8,329, as follows: • For 13 of the 14 clients, unauthorized transaction activity totaling $7,297 occurred between the actual DOD and the Department’s receipt and processing of the DOD information in ACES. • One of the 14 clients did not have a DOD recorded in their ACES case file at the time of audit testing but was reported as deceased by MeCDC Vital Records; this resulted in $1,032 of unauthorized transaction activity. o Four clients’ DOD occurred in fiscal year 2023 and benefits continued to be authorized and issued; however, the unallowable purchase activity began subsequent to fiscal year 2023. o Four clients were not identified as potential fraud in the ACES case file. As a result, they were not referred for investigation as required by OFI policies. • Five clients had a DOD recorded in ACES that did not agree to the DOD provided by MeCDC Vital Records. This resulted from the Department’s practice of entering DODs as the last day of the month or an alternative date from public information sources in order to suspend benefits in cases where DOD information is not immediately available; however, the Department had MeCDC Vital Records information at the time of DOD input for all five clients and should have entered DODs based on those records. • One client did not have a DOD recorded in their ACES case file but was reported as deceased by MeCDC Vital Records; benefits were authorized during fiscal year 2023, but no unauthorized transaction activity occurred. • 10 clients’ benefits were not expunged upon receipt of DOD information as required by OFI policies; benefits were only expunged by the system-automated process based on inactivity after 274 days. For 2 of the 10 clients, the EBT card was never deactivated; therefore, benefits remained open and available for use 274 days after DOD. • One client’s case remained open two months after OFI was notified of the client’s DOD, resulting in two months of unauthorized SNAP benefit issuances. • Two clients’ ACES case file information partially matched DOD information from MeCDC Vital Records, including names and dates of birth; however, the client social security numbers did not match. The Department did not review the cases to determine appropriate follow-up action. OSA selected a non-statistical random sample. Context: In fiscal year 2023, the State provided approximately: • 575,000 Medicaid clients with $2.5 billion in Federal benefits. Of the 575,000 Medicaid clients, 9,826 had a DOD in fiscal year 2023. • 127,000 SNAP clients with $484.8 million in Federal benefits. Of the 127,000 SNAP clients, 2,021 had a DOD in fiscal year 2023. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Medicaid claims paid on behalf of deceased clients may go undetected. • SNAP benefits issued to deceased clients may result in unauthorized EBT card purchase activity. • Known questioned costs for SNAP • Potential future questioned costs and disallowances • Noncompliance with Federal regulations Recommendation: We recommend that the Department enhance policies and procedures to ensure that DOD information is received, reviewed, and updated in ACES on a more frequent basis to prevent unallowable Medicaid claim payments, and unauthorized SNAP benefit issuances and EBT card purchase activity. In addition, we recommend that the Department review all client cases noted in the Condition of this finding to ensure that: • ACES case file DOD information is accurate; • SNAP benefits are expunged and EBT cards are deactivated in accordance with existing policies; • cases are identified as potential fraud and referred for investigation as warranted; and • unallowable costs are identified and reported to Federal oversight agencies, and required recoupment activities are pursued. Corrective Action Plan: See F-19 Management’s Response: The Department agrees with this finding and will review the current SOP governing DOD procedures and will implement enhancements to ensure DOD is updated and that related required actions are taken within allowable timeframes. Contact: Ian Yaffe, Director, Office for Family Independence, DHHS, 207-592-1481 (State Number: 23-1108-04)
(2023-032) Title: Internal control over Medicaid and SNAP deceased client cases needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture U.S. Department of Health and Human Services Assistance Listing Title: SNAP Cluster (COVID-19) Medicaid Cluster (COVID-19) Assistance Listing Number: 10.551, 10.561; 93.775, 93.777, 93.778 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: $8,329 (ALN 10.551) Likely Questioned Costs: Undeterminable; the Office of the State Auditor (OSA) tested a sample of cases where Supplemental Nutrition Assistance Program (SNAP) benefits were issued after the client’s date of death (DOD). Issuance of benefits to a deceased client does not necessarily result in unallowable program costs, as the issued benefits may not be expended; therefore, an error rate cannot be applied to the population and a projection of questioned costs cannot be reasonably estimated. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 272.8 and .14 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. State agency action on information items about recipient households shall include review of information and comparison of it to case record information. State agencies must initiate and pursue actions on recipient households within 45 days of the receipt of the information items. States shall establish a system to verify and ensure that benefits are not issued to individuals who are deceased. States shall use the Social Security Administration’s (SSA) Death Master File, obtained through the State Verification and Exchange System. Condition: The Office for Family Independence (OFI) manages the Automated Client Eligibility System (ACES) that is used to determine eligibility for Federal assistance programs, including Medicaid and SNAP. Information maintained in ACES is relied upon by OFI for determining monthly SNAP benefits issued to client Electronic Benefit Transaction (EBT) cards, and by the Office of MaineCare Services for processing Medicaid claims. OFI relies on numerous data sources for identifying and providing client DOD information for input into ACES, including monthly data exchanges with the Maine Center for Disease Control & Prevention (MeCDC) Vital Records and weekly data reports from the SSA’s Death Master File. Federal program regulations require OFI to act on client cases within 45 days of receipt of DOD information. This includes review and comparison of DOD information to ACES case file information, and suspension of program participation and related benefits as warranted. OFI policies for SNAP require deactivation of the client’s EBT card as well as expungement of authorized benefits from the EBT card. If activity occurred on the client’s EBT card subsequent to the DOD, the case must be reported as potential fraud and referred for investigation. The Office of the State Auditor (OSA) obtained DOD information from MeCDC Vital Records and compared it to clients who received Medicaid and SNAP benefits during fiscal year 2023. OSA identified 95 Medicaid claims with service dates after DOD in fiscal year 2023 and reviewed 30 clients with the largest paid claim amounts. Because certain Medicaid claims with service dates after DOD are considered allowable, claims paid on behalf of the deceased clients noted below are not reported as questioned costs: • Two clients had a DOD recorded in ACES that did not agree to the DOD provided by MeCDC Vital Records. • Two clients did not have a DOD recorded in ACES but were reported as deceased by MeCDC Vital Records. Furthermore, four Medicaid clients with an incorrect DOD identified by OSA during the fiscal year 2022 audit were still not corrected in ACES. OSA identified 671 cases where SNAP benefits were issued more than 52 days following the client’s DOD; this benchmark was applied to denote the 45-day Federal program regulation related to weekly receipt of DOD information. OSA tested 60 of these SNAP cases and identified the following: • 18 single member household clients had EBT card purchase activity after DOD. Of these 18 clients: o 14 clients had transaction activity after DOD that occurred in fiscal year 2023, resulting in unallowable costs totaling $8,329, as follows: • For 13 of the 14 clients, unauthorized transaction activity totaling $7,297 occurred between the actual DOD and the Department’s receipt and processing of the DOD information in ACES. • One of the 14 clients did not have a DOD recorded in their ACES case file at the time of audit testing but was reported as deceased by MeCDC Vital Records; this resulted in $1,032 of unauthorized transaction activity. o Four clients’ DOD occurred in fiscal year 2023 and benefits continued to be authorized and issued; however, the unallowable purchase activity began subsequent to fiscal year 2023. o Four clients were not identified as potential fraud in the ACES case file. As a result, they were not referred for investigation as required by OFI policies. • Five clients had a DOD recorded in ACES that did not agree to the DOD provided by MeCDC Vital Records. This resulted from the Department’s practice of entering DODs as the last day of the month or an alternative date from public information sources in order to suspend benefits in cases where DOD information is not immediately available; however, the Department had MeCDC Vital Records information at the time of DOD input for all five clients and should have entered DODs based on those records. • One client did not have a DOD recorded in their ACES case file but was reported as deceased by MeCDC Vital Records; benefits were authorized during fiscal year 2023, but no unauthorized transaction activity occurred. • 10 clients’ benefits were not expunged upon receipt of DOD information as required by OFI policies; benefits were only expunged by the system-automated process based on inactivity after 274 days. For 2 of the 10 clients, the EBT card was never deactivated; therefore, benefits remained open and available for use 274 days after DOD. • One client’s case remained open two months after OFI was notified of the client’s DOD, resulting in two months of unauthorized SNAP benefit issuances. • Two clients’ ACES case file information partially matched DOD information from MeCDC Vital Records, including names and dates of birth; however, the client social security numbers did not match. The Department did not review the cases to determine appropriate follow-up action. OSA selected a non-statistical random sample. Context: In fiscal year 2023, the State provided approximately: • 575,000 Medicaid clients with $2.5 billion in Federal benefits. Of the 575,000 Medicaid clients, 9,826 had a DOD in fiscal year 2023. • 127,000 SNAP clients with $484.8 million in Federal benefits. Of the 127,000 SNAP clients, 2,021 had a DOD in fiscal year 2023. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Medicaid claims paid on behalf of deceased clients may go undetected. • SNAP benefits issued to deceased clients may result in unauthorized EBT card purchase activity. • Known questioned costs for SNAP • Potential future questioned costs and disallowances • Noncompliance with Federal regulations Recommendation: We recommend that the Department enhance policies and procedures to ensure that DOD information is received, reviewed, and updated in ACES on a more frequent basis to prevent unallowable Medicaid claim payments, and unauthorized SNAP benefit issuances and EBT card purchase activity. In addition, we recommend that the Department review all client cases noted in the Condition of this finding to ensure that: • ACES case file DOD information is accurate; • SNAP benefits are expunged and EBT cards are deactivated in accordance with existing policies; • cases are identified as potential fraud and referred for investigation as warranted; and • unallowable costs are identified and reported to Federal oversight agencies, and required recoupment activities are pursued. Corrective Action Plan: See F-19 Management’s Response: The Department agrees with this finding and will review the current SOP governing DOD procedures and will implement enhancements to ensure DOD is updated and that related required actions are taken within allowable timeframes. Contact: Ian Yaffe, Director, Office for Family Independence, DHHS, 207-592-1481 (State Number: 23-1108-04)
(2023-091) Title: Internal control over Medicaid Nursing Facility audits needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Division of Audit Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Special tests and provisions Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 42 CFR 447.253(g); MaineCare Benefits Manual, Chapter III, Section 67 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department is required to provide for the periodic audits of the financial and statistical records of participating providers. The MaineCare Benefits Manual (MCBM) Chapter III, Section 67 outlines the documentation and support required to be included in a provider’s annual cost report filing submission to the Division of Audit. The Division of Audit’s requirements for reviewing the cost reports and performing uniform desk reviews is also outlined. Section 67 states that the Division of Audit must perform a uniform desk review on each Nursing Facility (NF) cost report submission within 365 days of receipt of an acceptable cost report filing. Condition: For each participating Long Term Care Facility, the Department must provide for the filing of uniform cost reports in order to establish payment rates and must provide for the periodic audits of financial and statistical records. The specific audit requirements will be established by the State plan. The MCBM states uniform desk reviews shall be completed within 365 days after receipt of an acceptable cost report filing, including financial statements and other information requested from the provider except in unusual situations including, but not limited to, delays in obtaining necessary information from a provider. Unless the Division of Audit intends to schedule an on-site audit or an unusual situation referenced above exists, a written summary report of findings and adjustments shall be issued upon completion of the uniform desk review. The Division of Audit did not complete NF audits in accordance with Federal regulations. The population of NF uniform desk reviews due for completion in fiscal year 2023 was 96. Of those 96 uniform desk reviews, one was completed timely, one was completed 128 days late, and 94 had not been completed at the time of audit testing. Context: The Department: • provided $275.7 million in Federal Medicaid funding and $80.3 million in State Medicaid funding to NFs during fiscal year 2023. • completed 66 NF uniform desk reviews related to prior fiscal years in fiscal year 2023. Cause: Lack of resources Effect: • Noncompliance with Federal and State regulations • The determination of amounts owed to or from NFs is delayed. Recommendation: We recommend that the Department reallocate resources to address the backlog of NF uniform desk reviews. Timely audit issuance will minimize the impact on providers of potential payables and receivables. Corrective Action Plan: See F-37 Management’s Response: The Department agrees with this finding. This is a long-standing finding due, in part, to the complexity of audit-related work for Nursing Facility cost reports. Meeting the requirement has always been a challenge. Further complicating this topic, during State Fiscal year 2023, the Division of Audit experienced a vacancy rate of over 30%. In addition to being short of staffing, over 600 additional audit reviews were added to the audit workload as a result of COVID funding requirements. Staff are still assigned to completing the COVID audits. Once those are completed, the staff will be assigned to the Long Term Care audits. Additionally, the Division has worked with HR to increase our recruiting efforts. We will continue to work on recruiting and hiring qualified audit staff in order to improve the timeliness of audit assignments. Contact: Herb Downs, Director, Division of Audit, DHHS, 207-287-2778 (State Number: 23-1106-02)
(2023-091) Title: Internal control over Medicaid Nursing Facility audits needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Division of Audit Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Special tests and provisions Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 42 CFR 447.253(g); MaineCare Benefits Manual, Chapter III, Section 67 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department is required to provide for the periodic audits of the financial and statistical records of participating providers. The MaineCare Benefits Manual (MCBM) Chapter III, Section 67 outlines the documentation and support required to be included in a provider’s annual cost report filing submission to the Division of Audit. The Division of Audit’s requirements for reviewing the cost reports and performing uniform desk reviews is also outlined. Section 67 states that the Division of Audit must perform a uniform desk review on each Nursing Facility (NF) cost report submission within 365 days of receipt of an acceptable cost report filing. Condition: For each participating Long Term Care Facility, the Department must provide for the filing of uniform cost reports in order to establish payment rates and must provide for the periodic audits of financial and statistical records. The specific audit requirements will be established by the State plan. The MCBM states uniform desk reviews shall be completed within 365 days after receipt of an acceptable cost report filing, including financial statements and other information requested from the provider except in unusual situations including, but not limited to, delays in obtaining necessary information from a provider. Unless the Division of Audit intends to schedule an on-site audit or an unusual situation referenced above exists, a written summary report of findings and adjustments shall be issued upon completion of the uniform desk review. The Division of Audit did not complete NF audits in accordance with Federal regulations. The population of NF uniform desk reviews due for completion in fiscal year 2023 was 96. Of those 96 uniform desk reviews, one was completed timely, one was completed 128 days late, and 94 had not been completed at the time of audit testing. Context: The Department: • provided $275.7 million in Federal Medicaid funding and $80.3 million in State Medicaid funding to NFs during fiscal year 2023. • completed 66 NF uniform desk reviews related to prior fiscal years in fiscal year 2023. Cause: Lack of resources Effect: • Noncompliance with Federal and State regulations • The determination of amounts owed to or from NFs is delayed. Recommendation: We recommend that the Department reallocate resources to address the backlog of NF uniform desk reviews. Timely audit issuance will minimize the impact on providers of potential payables and receivables. Corrective Action Plan: See F-37 Management’s Response: The Department agrees with this finding. This is a long-standing finding due, in part, to the complexity of audit-related work for Nursing Facility cost reports. Meeting the requirement has always been a challenge. Further complicating this topic, during State Fiscal year 2023, the Division of Audit experienced a vacancy rate of over 30%. In addition to being short of staffing, over 600 additional audit reviews were added to the audit workload as a result of COVID funding requirements. Staff are still assigned to completing the COVID audits. Once those are completed, the staff will be assigned to the Long Term Care audits. Additionally, the Division has worked with HR to increase our recruiting efforts. We will continue to work on recruiting and hiring qualified audit staff in order to improve the timeliness of audit assignments. Contact: Herb Downs, Director, Division of Audit, DHHS, 207-287-2778 (State Number: 23-1106-02)
(2023-092) Title: Internal control over Medicare Part B premium payments needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services Administrative and Financial Services State Bureau: Office for Family Independence Office of Information Technology Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 42 CFR 431.625 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. 42 CFR 431.625 outlines eligibility criteria which, if met, allows the State to pay a portion of the Federal Medicare Part B premium on behalf of the client and claim Federal financial participation in the payment. Clients may be deemed eligible by the Federal government as indicated by a Federal Buy-In code, or by the State as indicated by eligibility status in the Automated Client Eligibility System (ACES). Condition: The Department receives monthly invoices from the Centers for Medicare and Medicaid Services (CMS) for Medicare Part B premiums. CMS provides a separate detailed listing of Medicaid clients that supports the invoice to the Office of Information Technology (OIT). OIT produces a Monthly Reconciliation Report identifying potential discrepancies between the CMS detailed listing and the Department’s eligibility information recorded in ACES. Office for Family Independence personnel use this reconciliation report to identify clients for whom payment should not be made. Of the 12 Monthly Reconciliation Reports required in fiscal year 2023, the Department could not provide documentation that reports were reviewed or corrective action was taken for six reports. In the Office of the State Auditor’s (OSA) test of 60 premium payments: • one premium was paid by the Department on behalf of a client who was coded eligible on the CMS invoice but was coded not eligible in ACES. • one premium was paid by the Department on behalf of a client who was coded eligible in ACES but was not included on the CMS invoice. • four premiums were paid by the Department on behalf of clients who were coded eligible on the CMS invoice and in ACES; however, discrepancies existed between their Federal and State Buy-In eligibility codes. The Monthly Reconciliation Report did not identify these discrepancies. However, additional OSA procedures determined that the clients were eligible and the payments were allowable. OSA selected a non-statistical random sample. Context: In fiscal year 2023, approximately $129 million in Federal funds and $57 million in State funds were paid to CMS for Medicare Part B premiums. Cause: • Lack of resources • Lack of supervisory oversight • The Monthly Reconciliation Report is not adequately designed to identify all discrepancies. Effect: • Potential Medicare Part B premiums paid by the State for ineligible clients • Potential questioned costs and disallowances • Noncompliance with Federal regulations Recommendation: We recommend that the Department implement oversight procedures to ensure the review and follow up to Monthly Reconciliation Reports, and that the Department improve procedures for the documentation of those reports. We further recommend that the Department design the Monthly Reconciliation Report to identify all discrepancies. Corrective Action Plan: See F-38 Management’s Response: The Office for Family Independence agrees with this finding and recommendation. We have created a MaineCare Program Integrity team and have hired a Program Manager for this group effective February 5, 2024. The work of this team will include Medicare Part B reconciliations. Contact: Ian Yaffe, Director, Office for Family Independence, DHHS, 207-592-1481 (State Number: 23-1106-01)
(2023-092) Title: Internal control over Medicare Part B premium payments needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services Administrative and Financial Services State Bureau: Office for Family Independence Office of Information Technology Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 42 CFR 431.625 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. 42 CFR 431.625 outlines eligibility criteria which, if met, allows the State to pay a portion of the Federal Medicare Part B premium on behalf of the client and claim Federal financial participation in the payment. Clients may be deemed eligible by the Federal government as indicated by a Federal Buy-In code, or by the State as indicated by eligibility status in the Automated Client Eligibility System (ACES). Condition: The Department receives monthly invoices from the Centers for Medicare and Medicaid Services (CMS) for Medicare Part B premiums. CMS provides a separate detailed listing of Medicaid clients that supports the invoice to the Office of Information Technology (OIT). OIT produces a Monthly Reconciliation Report identifying potential discrepancies between the CMS detailed listing and the Department’s eligibility information recorded in ACES. Office for Family Independence personnel use this reconciliation report to identify clients for whom payment should not be made. Of the 12 Monthly Reconciliation Reports required in fiscal year 2023, the Department could not provide documentation that reports were reviewed or corrective action was taken for six reports. In the Office of the State Auditor’s (OSA) test of 60 premium payments: • one premium was paid by the Department on behalf of a client who was coded eligible on the CMS invoice but was coded not eligible in ACES. • one premium was paid by the Department on behalf of a client who was coded eligible in ACES but was not included on the CMS invoice. • four premiums were paid by the Department on behalf of clients who were coded eligible on the CMS invoice and in ACES; however, discrepancies existed between their Federal and State Buy-In eligibility codes. The Monthly Reconciliation Report did not identify these discrepancies. However, additional OSA procedures determined that the clients were eligible and the payments were allowable. OSA selected a non-statistical random sample. Context: In fiscal year 2023, approximately $129 million in Federal funds and $57 million in State funds were paid to CMS for Medicare Part B premiums. Cause: • Lack of resources • Lack of supervisory oversight • The Monthly Reconciliation Report is not adequately designed to identify all discrepancies. Effect: • Potential Medicare Part B premiums paid by the State for ineligible clients • Potential questioned costs and disallowances • Noncompliance with Federal regulations Recommendation: We recommend that the Department implement oversight procedures to ensure the review and follow up to Monthly Reconciliation Reports, and that the Department improve procedures for the documentation of those reports. We further recommend that the Department design the Monthly Reconciliation Report to identify all discrepancies. Corrective Action Plan: See F-38 Management’s Response: The Office for Family Independence agrees with this finding and recommendation. We have created a MaineCare Program Integrity team and have hired a Program Manager for this group effective February 5, 2024. The work of this team will include Medicare Part B reconciliations. Contact: Ian Yaffe, Director, Office for Family Independence, DHHS, 207-592-1481 (State Number: 23-1106-01)
(2023-093) Title: Internal control over Medicaid cost of care deductions needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office of MaineCare Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403; 42 CFR 435.725 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. The Department must reduce its payment to an institution for services provided to an individual by the amount that remains after deducting certain amounts from the member’s total income. This remaining amount is the member’s maximum share of the cost, known as cost of care (COC). Condition: A COC assessment represents the required contribution that a MaineCare recipient must pay toward care in a Long Term Care Facility (LTCF). The Office for Family Independence (OFI) is responsible for COC assessments for all Medicaid members in the State. COC assessments are either calculated by the Automated Client Eligibility System or calculated manually by eligibility specialists. System-generated COC assessments are not subject to secondary review. A COC deduction represents the amount of assessment that was deducted from a paid claim. Members may have an assessment calculated but may never have a claim with a deduction utilizing that assessment. The Office of MaineCare Services (OMS) is responsible for applying assessments to submitted claims prior to payment. The Office of the State Auditor (OSA) tested 60 COC assessments and related deductions from paid claims. OSA identified one COC deduction that was not updated after the claim was adjusted. As a result, the Department underpaid the provider by $263 for the month of September 2022. Seven additional claims that utilized this member’s COC were paid during fiscal year 2023 resulting in a total underpayment of $2,039. The monthly COC exception report generated by the system did not identify this error. OSA selected a non-statistical random sample. Context: In fiscal year 2023, approximately: • 26,000 COC assessments were calculated by OFI; • 9,400 members had COC assessments; and • $430 million was paid to nursing facilities and residential care facilities. Cause: Lack of adequate procedures to ensure system exception reports are complete and accurate Effect: • Potential questioned costs and disallowances • Inaccurate COC deductions and retroactive changes may result in overpayments or underpayments for members or the State. Recommendation: We recommend that OMS collaborate with OFI to ensure that system exception reports capture all COC-related claims which require adjustments. Corrective Action Plan: See F-38 Management’s Response: The Department agrees with this finding. OMS acknowledges a discrepancy in the report of identified claims for adjustments needed to claims as a result of changes to a member's cost of care. OFI generates the report for reporting COC changes from the ACES system, but the report provided only captures manual changes made to the member's cost of care. This report does not capture all cost of care changes. Example: NF COC, person has a level of care change and now needs APRC. They needed APRC starting in November and OFI doesn't know about it until January. They cannot have the system “run” that change because it is a change in the assistance group type that occurred in the past. OFI has to manually make that adjustment. It will populate as a change on the manually adjusted COC report. The report used by the OMS Adjustment Unit is generated by our vendor and sent by the second Wednesday of the month, capturing changes made to cost of care for an identified period of time. The cost of care adjustments are intended to be completed within the same month. Based on the discrepancy in the claims identified for adjustment, OMS is in agreement that collaboration between OFI and OMS should occur to assure accurate claims data is reviewed for those member's having changes to their cost of care within that month. Contact: Michelle Probert, Director, Office of MaineCare Services, DHHS, 207-287-2093 (State Number: 23-1106-04)
(2023-093) Title: Internal control over Medicaid cost of care deductions needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office of MaineCare Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403; 42 CFR 435.725 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. The Department must reduce its payment to an institution for services provided to an individual by the amount that remains after deducting certain amounts from the member’s total income. This remaining amount is the member’s maximum share of the cost, known as cost of care (COC). Condition: A COC assessment represents the required contribution that a MaineCare recipient must pay toward care in a Long Term Care Facility (LTCF). The Office for Family Independence (OFI) is responsible for COC assessments for all Medicaid members in the State. COC assessments are either calculated by the Automated Client Eligibility System or calculated manually by eligibility specialists. System-generated COC assessments are not subject to secondary review. A COC deduction represents the amount of assessment that was deducted from a paid claim. Members may have an assessment calculated but may never have a claim with a deduction utilizing that assessment. The Office of MaineCare Services (OMS) is responsible for applying assessments to submitted claims prior to payment. The Office of the State Auditor (OSA) tested 60 COC assessments and related deductions from paid claims. OSA identified one COC deduction that was not updated after the claim was adjusted. As a result, the Department underpaid the provider by $263 for the month of September 2022. Seven additional claims that utilized this member’s COC were paid during fiscal year 2023 resulting in a total underpayment of $2,039. The monthly COC exception report generated by the system did not identify this error. OSA selected a non-statistical random sample. Context: In fiscal year 2023, approximately: • 26,000 COC assessments were calculated by OFI; • 9,400 members had COC assessments; and • $430 million was paid to nursing facilities and residential care facilities. Cause: Lack of adequate procedures to ensure system exception reports are complete and accurate Effect: • Potential questioned costs and disallowances • Inaccurate COC deductions and retroactive changes may result in overpayments or underpayments for members or the State. Recommendation: We recommend that OMS collaborate with OFI to ensure that system exception reports capture all COC-related claims which require adjustments. Corrective Action Plan: See F-38 Management’s Response: The Department agrees with this finding. OMS acknowledges a discrepancy in the report of identified claims for adjustments needed to claims as a result of changes to a member's cost of care. OFI generates the report for reporting COC changes from the ACES system, but the report provided only captures manual changes made to the member's cost of care. This report does not capture all cost of care changes. Example: NF COC, person has a level of care change and now needs APRC. They needed APRC starting in November and OFI doesn't know about it until January. They cannot have the system “run” that change because it is a change in the assistance group type that occurred in the past. OFI has to manually make that adjustment. It will populate as a change on the manually adjusted COC report. The report used by the OMS Adjustment Unit is generated by our vendor and sent by the second Wednesday of the month, capturing changes made to cost of care for an identified period of time. The cost of care adjustments are intended to be completed within the same month. Based on the discrepancy in the claims identified for adjustment, OMS is in agreement that collaboration between OFI and OMS should occur to assure accurate claims data is reviewed for those member's having changes to their cost of care within that month. Contact: Michelle Probert, Director, Office of MaineCare Services, DHHS, 207-287-2093 (State Number: 23-1106-04)
(2023-094) Title: Internal control over Medicaid drug rebates needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office of MaineCare Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; Section 1927 of the Social Security Act (42 USC 1396r-8) The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Section 1927 of the Social Security Act requires manufacturers that wish to have their outpatient drugs covered by Medicaid to enter into an agreement with the Centers for Medicare & Medicaid Services (CMS) under which the manufacturers agree to pay rebates for drugs dispensed and paid for by the State Medicaid agencies under the State plan. Drug rebates are shared between the State and Federal government. Condition: Drug manufacturers are required to submit a list of all covered outpatient drugs, along with each drug’s average manufacturer price and “best price” to CMS. Utilizing this information, CMS calculates a unit rebate amount (URA) for each covered outpatient drug and provides the amounts to the State on a quarterly basis. The Department is required to maintain drug utilization data that identifies, by National Drug Code, the number of units of each covered outpatient drug for which the Department has paid pharmacy providers. The utilization data is provided to CMS and the manufacturers. The number of dispensed units is applied to the URA to determine the rebate amount due from each manufacturer. The State contracts with a vendor to calculate the drug rebate amounts and invoice manufacturers for drug rebates. During audit testing, the Office of the State Auditor identified that the Department does not have procedures in place to ensure the accuracy and completeness of the drug rebate amounts invoiced by the vendor. The Department does not compare drug utilization data to the number of dispensed units utilized to ensure that the vendor has calculated the rebate correctly. Context: In fiscal year 2023, the State invoiced approximately $315 million for rebatable drugs and received approximately $220 million in rebates. Of the $220 million in rebates, approximately $159 million was returned to the Federal government. Due to the amount of time rebate negotiations may take, discrepancies will exist between the invoiced total and the total amount of rebates received. Cause: • Lack of adequate procedures • Lack of supervisory oversight Effect: • Inaccurate or incomplete invoicing of drug rebates would result in overpayments or underpayments to the State and Federal government. • Noncompliance with Federal regulations Recommendation: We recommend that the Department implement procedures to confirm the drug rebate amounts calculated and invoiced by the vendor are accurate and complete by utilizing drug utilization data. This will ensure that correct drug rebate amounts are returned to the State and Federal government. Corrective Action Plan: See F-38 Management’s Response: The Department agrees with this finding. The control described is built into the computer systems that facilitate selecting claims for submission to the Pharmacy Rebate Invoice Management System (PRIMS). An additional check on the collection of claims is not needed for the following reasons: In response to the concern of completeness of the rebate eligible claim capture, the criteria for selecting outpatient drug claims from our claims system was defined, implemented, tested, and validated when PRIMS was first installed. This claim selection coding is what ensures that all outpatient drug claims are submitted to PRIMS for invoicing. In response to the concern of accuracy, pre-invoicing variance checks are completed within PRIMS and the manufacturers scrutinize the invoices once received which would detect any incorrect calculations. We have both a preventative control with the variance checks and independent detection with the drug manufacturers with respect to accuracy. However, we will take additional steps to ensure accuracy. Contact: Michelle Probert, Director, Office of MaineCare Services, DHHS, 207-287-2093 Auditor’s Concluding Remarks: Though the Department agrees with this finding, the Department asserts that controls exist over the control deficiency identified in the Condition and an “additional check on the collection of claims is not needed.” However, as a result of not comparing drug utilization data to the number of dispensed units utilized, the Department is relying on the drug manufacturer to submit the correct drug rebate information to the Department and to notify the Department of any discrepancies. The drug manufacturer is not an independent source to ensure accuracy of the drug rebate amount. An “additional check” would ensure that the drug rebate amount received is accurate and complete. The finding remains as stated. (State Number: 23-1106-08)
(2023-094) Title: Internal control over Medicaid drug rebates needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office of MaineCare Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; Section 1927 of the Social Security Act (42 USC 1396r-8) The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Section 1927 of the Social Security Act requires manufacturers that wish to have their outpatient drugs covered by Medicaid to enter into an agreement with the Centers for Medicare & Medicaid Services (CMS) under which the manufacturers agree to pay rebates for drugs dispensed and paid for by the State Medicaid agencies under the State plan. Drug rebates are shared between the State and Federal government. Condition: Drug manufacturers are required to submit a list of all covered outpatient drugs, along with each drug’s average manufacturer price and “best price” to CMS. Utilizing this information, CMS calculates a unit rebate amount (URA) for each covered outpatient drug and provides the amounts to the State on a quarterly basis. The Department is required to maintain drug utilization data that identifies, by National Drug Code, the number of units of each covered outpatient drug for which the Department has paid pharmacy providers. The utilization data is provided to CMS and the manufacturers. The number of dispensed units is applied to the URA to determine the rebate amount due from each manufacturer. The State contracts with a vendor to calculate the drug rebate amounts and invoice manufacturers for drug rebates. During audit testing, the Office of the State Auditor identified that the Department does not have procedures in place to ensure the accuracy and completeness of the drug rebate amounts invoiced by the vendor. The Department does not compare drug utilization data to the number of dispensed units utilized to ensure that the vendor has calculated the rebate correctly. Context: In fiscal year 2023, the State invoiced approximately $315 million for rebatable drugs and received approximately $220 million in rebates. Of the $220 million in rebates, approximately $159 million was returned to the Federal government. Due to the amount of time rebate negotiations may take, discrepancies will exist between the invoiced total and the total amount of rebates received. Cause: • Lack of adequate procedures • Lack of supervisory oversight Effect: • Inaccurate or incomplete invoicing of drug rebates would result in overpayments or underpayments to the State and Federal government. • Noncompliance with Federal regulations Recommendation: We recommend that the Department implement procedures to confirm the drug rebate amounts calculated and invoiced by the vendor are accurate and complete by utilizing drug utilization data. This will ensure that correct drug rebate amounts are returned to the State and Federal government. Corrective Action Plan: See F-38 Management’s Response: The Department agrees with this finding. The control described is built into the computer systems that facilitate selecting claims for submission to the Pharmacy Rebate Invoice Management System (PRIMS). An additional check on the collection of claims is not needed for the following reasons: In response to the concern of completeness of the rebate eligible claim capture, the criteria for selecting outpatient drug claims from our claims system was defined, implemented, tested, and validated when PRIMS was first installed. This claim selection coding is what ensures that all outpatient drug claims are submitted to PRIMS for invoicing. In response to the concern of accuracy, pre-invoicing variance checks are completed within PRIMS and the manufacturers scrutinize the invoices once received which would detect any incorrect calculations. We have both a preventative control with the variance checks and independent detection with the drug manufacturers with respect to accuracy. However, we will take additional steps to ensure accuracy. Contact: Michelle Probert, Director, Office of MaineCare Services, DHHS, 207-287-2093 Auditor’s Concluding Remarks: Though the Department agrees with this finding, the Department asserts that controls exist over the control deficiency identified in the Condition and an “additional check on the collection of claims is not needed.” However, as a result of not comparing drug utilization data to the number of dispensed units utilized, the Department is relying on the drug manufacturer to submit the correct drug rebate information to the Department and to notify the Department of any discrepancies. The drug manufacturer is not an independent source to ensure accuracy of the drug rebate amount. An “additional check” would ensure that the drug rebate amount received is accurate and complete. The finding remains as stated. (State Number: 23-1106-08)
(2023-095) Title: Internal control over conflict of interest requirements needs improvement Prior Year Findings: None State Department: Administrative and Financial Services State Bureau: Division of Procurement Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Procurement and suspension and debarment Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.318 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award or administration of contracts. No employee, officer, or agent may participate in the selection, award or administration of a contract supported by a Federal award if he or she has a real or apparent conflict of interest. Condition: The Division of Procurement Services (DPS) oversees the creation, development, approval, and implementation of contracts for the State. DPS publishes contract templates and a Procurement Justification Form (PJF) template to be used by State agencies during the procurement process. The templates are reviewed by DPS to ensure all pertinent Federal requirements are included. The Office of the State Auditor reviewed the contract and PJF templates and found that the following templates did not include required conflict of interest language: • Service contract template, which only addressed a prohibition of employment between a State employee and the party to the contract • PJF template, which is utilized for contracts procured through the non-competitive bidding (sole source) process Context: $825.3 million in Federal expenditures was paid to contractors, subcontractors, or vendors through contracts in fiscal year 2023. Cause: Lack of supervisory oversight Effect: • All conflicts of interest may not be disclosed and thus, may not be considered by the State when entering into contracts with contractors, subcontractors or vendors. Conflict of interest disclosures are required to ensure transparency, accountability, and remove potential bias. • Noncompliance with Federal regulations Recommendation: We recommend that DPS enhance oversight procedures to ensure conflict of interest requirements and disclosures are included in all contract and PJF templates. This will ensure transparency, accountability, and remove potential bias. Corrective Action Plan: See F-38 Management’s Response: The Department agrees with this finding. The service contract did not include updated conflict of interest verbiage. Upon review and consultation, Procurement Services has updated the contract to appropriately reference the applicable statute and verbiage. These new contracts will be distributed to agencies for future use. Historically, the NOI-PJF has not included the conflict of interest reference. This was the case at the time of this audit review, a revised PJF form has been created with a department attestation referencing the statute at the time of the document signature. This new PJF will be distributed for use. Contact: David Morris, Acting Chief Procurement Officer, DAFS, 207-624-7335 (State Number: 23-1010-01)
(2023-095) Title: Internal control over conflict of interest requirements needs improvement Prior Year Findings: None State Department: Administrative and Financial Services State Bureau: Division of Procurement Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Procurement and suspension and debarment Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.318 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award or administration of contracts. No employee, officer, or agent may participate in the selection, award or administration of a contract supported by a Federal award if he or she has a real or apparent conflict of interest. Condition: The Division of Procurement Services (DPS) oversees the creation, development, approval, and implementation of contracts for the State. DPS publishes contract templates and a Procurement Justification Form (PJF) template to be used by State agencies during the procurement process. The templates are reviewed by DPS to ensure all pertinent Federal requirements are included. The Office of the State Auditor reviewed the contract and PJF templates and found that the following templates did not include required conflict of interest language: • Service contract template, which only addressed a prohibition of employment between a State employee and the party to the contract • PJF template, which is utilized for contracts procured through the non-competitive bidding (sole source) process Context: $825.3 million in Federal expenditures was paid to contractors, subcontractors, or vendors through contracts in fiscal year 2023. Cause: Lack of supervisory oversight Effect: • All conflicts of interest may not be disclosed and thus, may not be considered by the State when entering into contracts with contractors, subcontractors or vendors. Conflict of interest disclosures are required to ensure transparency, accountability, and remove potential bias. • Noncompliance with Federal regulations Recommendation: We recommend that DPS enhance oversight procedures to ensure conflict of interest requirements and disclosures are included in all contract and PJF templates. This will ensure transparency, accountability, and remove potential bias. Corrective Action Plan: See F-38 Management’s Response: The Department agrees with this finding. The service contract did not include updated conflict of interest verbiage. Upon review and consultation, Procurement Services has updated the contract to appropriately reference the applicable statute and verbiage. These new contracts will be distributed to agencies for future use. Historically, the NOI-PJF has not included the conflict of interest reference. This was the case at the time of this audit review, a revised PJF form has been created with a department attestation referencing the statute at the time of the document signature. This new PJF will be distributed for use. Contact: David Morris, Acting Chief Procurement Officer, DAFS, 207-624-7335 (State Number: 23-1010-01)
(2023-096) Title: Internal control over DG – PA program special reporting needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Defense, Veterans and Emergency Management State Bureau: Maine Emergency Management Agency Federal Agency: U.S. Department of Homeland Security Assistance Listing Title: Disaster Grants – Public Assistance (Presidentially Declared Disasters) (COVID-19) Assistance Listing Number: 97.036 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 170 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Agencies must report each subaward that equals or exceeds the first-tier subaward threshold of $30,000 in Federal funds in the public-facing Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System (FSRS). Condition: When an amount exceeding the first-tier subaward threshold is awarded to a subrecipient, Maine Emergency Management Agency (MEMA) must collect and enter data into FSRS. MEMA did not report any of its first-tier subawards under the DG – PA program in FSRS for fiscal year 2022 or 2021. As a result, a backlog existed during fiscal year 2023. MEMA entered approximately 100 first-tier subawards into FSRS during fiscal year 2023; however, many of these awards were attributable to prior fiscal years. Additionally, upon subsequent review, MEMA identified completeness and accuracy issues related to the awards entered into FSRS in fiscal year 2023. The Office of the State Auditor and MEMA agreed that it was not beneficial to select a sample of subawards for audit testing. For this reason, the auditee did not provide a listing of awards input into FSRS or a listing of awards subject to FFATA reporting. Context: First-tier subawards totaled $116.4 million under the DG – PA program in fiscal year 2023. First-tier subawards account for 83 percent of program expenditures. Cause: • Lack of adequate policies and procedures • Competing priorities related to an increase in aid requests as a result of COVID-19 • Lack of resources Effect: • Noncompliance with Federal regulations • Accurate first-tier subaward information for the DG – PA program was not reported to the Federal government. This information may be used for programmatic, policy, or statistical purposes. Recommendation: We recommend that MEMA evaluate FFATA reporting policies and procedures and allocate necessary resources to ensure that subrecipient awards are properly reported in FSRS as required by Federal program regulations. Corrective Action Plan: See F-39 Management’s Response: The Department agrees with this finding. MEMA will update internal controls to ensure that FFATA reporting is timely and accurate. Contact: James Belanger, Business Office Director MEMA, 207-707-2912 (State Number: 23-1502-02)
(2023-096) Title: Internal control over DG – PA program special reporting needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Defense, Veterans and Emergency Management State Bureau: Maine Emergency Management Agency Federal Agency: U.S. Department of Homeland Security Assistance Listing Title: Disaster Grants – Public Assistance (Presidentially Declared Disasters) (COVID-19) Assistance Listing Number: 97.036 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 170 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Agencies must report each subaward that equals or exceeds the first-tier subaward threshold of $30,000 in Federal funds in the public-facing Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System (FSRS). Condition: When an amount exceeding the first-tier subaward threshold is awarded to a subrecipient, Maine Emergency Management Agency (MEMA) must collect and enter data into FSRS. MEMA did not report any of its first-tier subawards under the DG – PA program in FSRS for fiscal year 2022 or 2021. As a result, a backlog existed during fiscal year 2023. MEMA entered approximately 100 first-tier subawards into FSRS during fiscal year 2023; however, many of these awards were attributable to prior fiscal years. Additionally, upon subsequent review, MEMA identified completeness and accuracy issues related to the awards entered into FSRS in fiscal year 2023. The Office of the State Auditor and MEMA agreed that it was not beneficial to select a sample of subawards for audit testing. For this reason, the auditee did not provide a listing of awards input into FSRS or a listing of awards subject to FFATA reporting. Context: First-tier subawards totaled $116.4 million under the DG – PA program in fiscal year 2023. First-tier subawards account for 83 percent of program expenditures. Cause: • Lack of adequate policies and procedures • Competing priorities related to an increase in aid requests as a result of COVID-19 • Lack of resources Effect: • Noncompliance with Federal regulations • Accurate first-tier subaward information for the DG – PA program was not reported to the Federal government. This information may be used for programmatic, policy, or statistical purposes. Recommendation: We recommend that MEMA evaluate FFATA reporting policies and procedures and allocate necessary resources to ensure that subrecipient awards are properly reported in FSRS as required by Federal program regulations. Corrective Action Plan: See F-39 Management’s Response: The Department agrees with this finding. MEMA will update internal controls to ensure that FFATA reporting is timely and accurate. Contact: James Belanger, Business Office Director MEMA, 207-707-2912 (State Number: 23-1502-02)
(2023-097) Title: Internal control over DG – PA program cash management needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Defense, Veterans and Emergency Management Administrative and Financial Services State Bureau: Maine Emergency Management Agency Security and Employment Service Center Federal Agency: U.S. Department of Homeland Security Assistance Listing Title: Disaster Grants – Public Assistance (Presidentially Declared Disasters) (COVID-19) Assistance Listing Number: 97.036 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Cash management Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 31 CFR 205(A); 2023 Treasury-State Agreement (Maine) The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. A Treasury-State Agreement (TSA) documents the accepted funding techniques and methods for calculating interest agreed upon by the U.S. Department of Treasury and the State. The funding technique agreed upon in the State’s TSA for the Disaster Grants – Public Assistance (DG – PA) program is the “weekly drawdown – actual and estimate” method. This method specifies that the State shall make weekly drawdown requests such that funds are deposited in the State account on the median business day of the week, based on actual and estimated expenditures for that week. Condition: The Maine Emergency Management Agency (MEMA) administers the DG – PA program for the State. The Department of Administrative and Financial Services’ Security and Employment Service Center (SESC) is responsible for requesting drawdowns of Federal funds in order to pay DG – PA program expenditures on behalf of MEMA. MEMA reviews, authorizes, and submits approved invoices to SESC for payment. SESC then requests Federal funds based on the approved invoice and processes the authorized payment once Federal funds are received. This process is a cash advance funding technique and is not in compliance with the TSA which requires utilization of the “weekly drawdown – actual and estimate” funding technique. Context: In fiscal year 2023, DG – PA expenditures totaled $139.6 million. Cause: The program has not been included in the TSA in previous years; as a result, policies and procedures to ensure compliance with TSA regulations have not been established. Effect: • Noncompliance with Federal regulations • The Federal government may impose more stringent program-specific cash management requirements based on noncompliance. Recommendation: We recommend that the Department implement policies and procedures to ensure compliance with the funding techniques specified in the TSA when requesting Federal funds. Corrective Action Plan: See F-39 Management’s Response: The Department agrees with this finding. MEMA will update and implement policies and procedures to ensure compliance with the Treasury State Agreement. MEMA has altered the timing and frequency of drawdown requests to conform with the funding technique specified in the Treasury State Agreement. Contact: James Belanger, Business Office Director, MEMA, 207-707-2912 (State Number: 23-1502-01)
(2023-097) Title: Internal control over DG – PA program cash management needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Defense, Veterans and Emergency Management Administrative and Financial Services State Bureau: Maine Emergency Management Agency Security and Employment Service Center Federal Agency: U.S. Department of Homeland Security Assistance Listing Title: Disaster Grants – Public Assistance (Presidentially Declared Disasters) (COVID-19) Assistance Listing Number: 97.036 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Cash management Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 31 CFR 205(A); 2023 Treasury-State Agreement (Maine) The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. A Treasury-State Agreement (TSA) documents the accepted funding techniques and methods for calculating interest agreed upon by the U.S. Department of Treasury and the State. The funding technique agreed upon in the State’s TSA for the Disaster Grants – Public Assistance (DG – PA) program is the “weekly drawdown – actual and estimate” method. This method specifies that the State shall make weekly drawdown requests such that funds are deposited in the State account on the median business day of the week, based on actual and estimated expenditures for that week. Condition: The Maine Emergency Management Agency (MEMA) administers the DG – PA program for the State. The Department of Administrative and Financial Services’ Security and Employment Service Center (SESC) is responsible for requesting drawdowns of Federal funds in order to pay DG – PA program expenditures on behalf of MEMA. MEMA reviews, authorizes, and submits approved invoices to SESC for payment. SESC then requests Federal funds based on the approved invoice and processes the authorized payment once Federal funds are received. This process is a cash advance funding technique and is not in compliance with the TSA which requires utilization of the “weekly drawdown – actual and estimate” funding technique. Context: In fiscal year 2023, DG – PA expenditures totaled $139.6 million. Cause: The program has not been included in the TSA in previous years; as a result, policies and procedures to ensure compliance with TSA regulations have not been established. Effect: • Noncompliance with Federal regulations • The Federal government may impose more stringent program-specific cash management requirements based on noncompliance. Recommendation: We recommend that the Department implement policies and procedures to ensure compliance with the funding techniques specified in the TSA when requesting Federal funds. Corrective Action Plan: See F-39 Management’s Response: The Department agrees with this finding. MEMA will update and implement policies and procedures to ensure compliance with the Treasury State Agreement. MEMA has altered the timing and frequency of drawdown requests to conform with the funding technique specified in the Treasury State Agreement. Contact: James Belanger, Business Office Director, MEMA, 207-707-2912 (State Number: 23-1502-01)
Federal Agency: US Department of Homeland Security (DHS) and US Department of Education (ED) Program Names: Cooperating Technical Partners; Governor’s Emergency Education Relief Fund; Elementary and Second School Emergency Relief Fund; and Higher Education Emergency Relief Fund ALN #s: 97.045; 84.425C; 84.425D; and 84.425F Award Numbers: DHS EMC-2019-CA-00009; DHS EMC-2018-CA-00010; IBHE GEERF 601-GEE-2200-UIC; 826 DOE ISBE Loyola Partnership; and 831 DE UIS HEERF Institution; Federal Award Year 2022 - 2023 Questioned Costs: None 2023-004. Finding: Reporting The University of Illinois’ controls in place did not ensure certain reporting requirements were submitted timely, and in some cases, were not properly reviewed for accuracy. Out of the seven Cooperating Technical Partners quarterly performance reports tested, the University of Illinois Urbana-Champaign did not submit two reports (29%) within the required timeframe. Two reports for the quarter ended December 31, 2022 were due by January 30, 2023, however, were submitted February 3, 2023. The sample was not intended to be, and was not, a statistically valid sample. The Cooperating Technical Partners grant program requires submission of quarterly performance reports 30 days after the end of each quarter. Out of the four Governor’s Emergency Education Relief Fund quarterly reports submitted by the University of Illinois Chicago under the Education Stabilization Fund, one report (25%) was not submitted within the required timeframe. The report for the quarter ended March 31, 2023 was due by May 1, 2023, however was submitted May 8, 2023. The Governor’s Emergency Education Relief Fund, Elementary and Second Emergency Relief Fund and Higher Education Emergency Relief Fund require submission of quarterly financial reports 30 days after the end of each quarter. Out of the four Elementary and Second School Emergency Relief Fund quarterly reports required to be submitted by the University of Illinois Springfield, four reports (100%) have not been submitted. Out of the four Higher Education Emergency Relief Fund quarterly reports required to be submitted by the University of Illinois Springfield, one report (25%) did not contain sufficient evidence the report was reviewed prior to submission. The University of Illinois Springfield did not accurately report their methodology for conducting direct outreach to financial aid applicants for the Higher Education Emergency Relief Fund required within the 2022 annual report which was submitted timely on March 24, 2023. 2023-004. Finding: Reporting (Continued) The Higher Education Emergency Relief Fund requires the reporting of the methodology for conducting direct outreach to financial aid applicants in the annual report. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure reports are submitted timely. University of Illinois Urbana-Champaign officials stated reporting was late due to other project priorities and a change in the report template. University of Illinois Chicago officials stated due to miscommunication within the department the progress report was submitted after the deadline. University of Illinois Springfield officials stated the Elementary and Second School Emergency Relief Fund quarterly reports were not submitted due to miscommunication with the sponsor regarding reporting requirements. Additionally, University officials stated for the Higher Education Emergency Relief Fund, an oversight led to the insufficient review prior to submission and a misunderstanding of the requirement led to not disclosing the methodology of direct outreach to financial aid recipients in the report. Without proper program reporting processes and procedures, the submission of late reports or inaccurate reporting is noncompliance with Federal regulation and could result in the loss of future funding. (Finding Code No. 2023-004; 2022-007) Recommendation: We recommend the University of Illinois Urbana-Champaign, the University of Illinois Chicago, and the University of Illinois Springfield review current processes and procedures to ensure reporting requirements are completed timely. University Response: Accepted. The University will take steps identified to address the recommendation in this finding.
Federal Agency: US Department of Homeland Security (DHS) and US Department of Education (ED) Program Names: Cooperating Technical Partners; Governor’s Emergency Education Relief Fund; Elementary and Second School Emergency Relief Fund; and Higher Education Emergency Relief Fund ALN #s: 97.045; 84.425C; 84.425D; and 84.425F Award Numbers: DHS EMC-2019-CA-00009; DHS EMC-2018-CA-00010; IBHE GEERF 601-GEE-2200-UIC; 826 DOE ISBE Loyola Partnership; and 831 DE UIS HEERF Institution; Federal Award Year 2022 - 2023 Questioned Costs: None 2023-004. Finding: Reporting The University of Illinois’ controls in place did not ensure certain reporting requirements were submitted timely, and in some cases, were not properly reviewed for accuracy. Out of the seven Cooperating Technical Partners quarterly performance reports tested, the University of Illinois Urbana-Champaign did not submit two reports (29%) within the required timeframe. Two reports for the quarter ended December 31, 2022 were due by January 30, 2023, however, were submitted February 3, 2023. The sample was not intended to be, and was not, a statistically valid sample. The Cooperating Technical Partners grant program requires submission of quarterly performance reports 30 days after the end of each quarter. Out of the four Governor’s Emergency Education Relief Fund quarterly reports submitted by the University of Illinois Chicago under the Education Stabilization Fund, one report (25%) was not submitted within the required timeframe. The report for the quarter ended March 31, 2023 was due by May 1, 2023, however was submitted May 8, 2023. The Governor’s Emergency Education Relief Fund, Elementary and Second Emergency Relief Fund and Higher Education Emergency Relief Fund require submission of quarterly financial reports 30 days after the end of each quarter. Out of the four Elementary and Second School Emergency Relief Fund quarterly reports required to be submitted by the University of Illinois Springfield, four reports (100%) have not been submitted. Out of the four Higher Education Emergency Relief Fund quarterly reports required to be submitted by the University of Illinois Springfield, one report (25%) did not contain sufficient evidence the report was reviewed prior to submission. The University of Illinois Springfield did not accurately report their methodology for conducting direct outreach to financial aid applicants for the Higher Education Emergency Relief Fund required within the 2022 annual report which was submitted timely on March 24, 2023. 2023-004. Finding: Reporting (Continued) The Higher Education Emergency Relief Fund requires the reporting of the methodology for conducting direct outreach to financial aid applicants in the annual report. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure reports are submitted timely. University of Illinois Urbana-Champaign officials stated reporting was late due to other project priorities and a change in the report template. University of Illinois Chicago officials stated due to miscommunication within the department the progress report was submitted after the deadline. University of Illinois Springfield officials stated the Elementary and Second School Emergency Relief Fund quarterly reports were not submitted due to miscommunication with the sponsor regarding reporting requirements. Additionally, University officials stated for the Higher Education Emergency Relief Fund, an oversight led to the insufficient review prior to submission and a misunderstanding of the requirement led to not disclosing the methodology of direct outreach to financial aid recipients in the report. Without proper program reporting processes and procedures, the submission of late reports or inaccurate reporting is noncompliance with Federal regulation and could result in the loss of future funding. (Finding Code No. 2023-004; 2022-007) Recommendation: We recommend the University of Illinois Urbana-Champaign, the University of Illinois Chicago, and the University of Illinois Springfield review current processes and procedures to ensure reporting requirements are completed timely. University Response: Accepted. The University will take steps identified to address the recommendation in this finding.
Federal Agency: US Department of Homeland Security (DHS) and US Department of Education (ED) Program Names: Cooperating Technical Partners; Governor’s Emergency Education Relief Fund; Elementary and Second School Emergency Relief Fund; and Higher Education Emergency Relief Fund ALN #s: 97.045; 84.425C; 84.425D; and 84.425F Award Numbers: DHS EMC-2019-CA-00009; DHS EMC-2018-CA-00010; IBHE GEERF 601-GEE-2200-UIC; 826 DOE ISBE Loyola Partnership; and 831 DE UIS HEERF Institution; Federal Award Year 2022 - 2023 Questioned Costs: None 2023-004. Finding: Reporting The University of Illinois’ controls in place did not ensure certain reporting requirements were submitted timely, and in some cases, were not properly reviewed for accuracy. Out of the seven Cooperating Technical Partners quarterly performance reports tested, the University of Illinois Urbana-Champaign did not submit two reports (29%) within the required timeframe. Two reports for the quarter ended December 31, 2022 were due by January 30, 2023, however, were submitted February 3, 2023. The sample was not intended to be, and was not, a statistically valid sample. The Cooperating Technical Partners grant program requires submission of quarterly performance reports 30 days after the end of each quarter. Out of the four Governor’s Emergency Education Relief Fund quarterly reports submitted by the University of Illinois Chicago under the Education Stabilization Fund, one report (25%) was not submitted within the required timeframe. The report for the quarter ended March 31, 2023 was due by May 1, 2023, however was submitted May 8, 2023. The Governor’s Emergency Education Relief Fund, Elementary and Second Emergency Relief Fund and Higher Education Emergency Relief Fund require submission of quarterly financial reports 30 days after the end of each quarter. Out of the four Elementary and Second School Emergency Relief Fund quarterly reports required to be submitted by the University of Illinois Springfield, four reports (100%) have not been submitted. Out of the four Higher Education Emergency Relief Fund quarterly reports required to be submitted by the University of Illinois Springfield, one report (25%) did not contain sufficient evidence the report was reviewed prior to submission. The University of Illinois Springfield did not accurately report their methodology for conducting direct outreach to financial aid applicants for the Higher Education Emergency Relief Fund required within the 2022 annual report which was submitted timely on March 24, 2023. 2023-004. Finding: Reporting (Continued) The Higher Education Emergency Relief Fund requires the reporting of the methodology for conducting direct outreach to financial aid applicants in the annual report. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure reports are submitted timely. University of Illinois Urbana-Champaign officials stated reporting was late due to other project priorities and a change in the report template. University of Illinois Chicago officials stated due to miscommunication within the department the progress report was submitted after the deadline. University of Illinois Springfield officials stated the Elementary and Second School Emergency Relief Fund quarterly reports were not submitted due to miscommunication with the sponsor regarding reporting requirements. Additionally, University officials stated for the Higher Education Emergency Relief Fund, an oversight led to the insufficient review prior to submission and a misunderstanding of the requirement led to not disclosing the methodology of direct outreach to financial aid recipients in the report. Without proper program reporting processes and procedures, the submission of late reports or inaccurate reporting is noncompliance with Federal regulation and could result in the loss of future funding. (Finding Code No. 2023-004; 2022-007) Recommendation: We recommend the University of Illinois Urbana-Champaign, the University of Illinois Chicago, and the University of Illinois Springfield review current processes and procedures to ensure reporting requirements are completed timely. University Response: Accepted. The University will take steps identified to address the recommendation in this finding.
Federal Agency: US Department of Homeland Security (DHS) and US Department of Education (ED) Program Names: Cooperating Technical Partners; Governor’s Emergency Education Relief Fund; Elementary and Second School Emergency Relief Fund; and Higher Education Emergency Relief Fund ALN #s: 97.045; 84.425C; 84.425D; and 84.425F Award Numbers: DHS EMC-2019-CA-00009; DHS EMC-2018-CA-00010; IBHE GEERF 601-GEE-2200-UIC; 826 DOE ISBE Loyola Partnership; and 831 DE UIS HEERF Institution; Federal Award Year 2022 - 2023 Questioned Costs: None 2023-004. Finding: Reporting The University of Illinois’ controls in place did not ensure certain reporting requirements were submitted timely, and in some cases, were not properly reviewed for accuracy. Out of the seven Cooperating Technical Partners quarterly performance reports tested, the University of Illinois Urbana-Champaign did not submit two reports (29%) within the required timeframe. Two reports for the quarter ended December 31, 2022 were due by January 30, 2023, however, were submitted February 3, 2023. The sample was not intended to be, and was not, a statistically valid sample. The Cooperating Technical Partners grant program requires submission of quarterly performance reports 30 days after the end of each quarter. Out of the four Governor’s Emergency Education Relief Fund quarterly reports submitted by the University of Illinois Chicago under the Education Stabilization Fund, one report (25%) was not submitted within the required timeframe. The report for the quarter ended March 31, 2023 was due by May 1, 2023, however was submitted May 8, 2023. The Governor’s Emergency Education Relief Fund, Elementary and Second Emergency Relief Fund and Higher Education Emergency Relief Fund require submission of quarterly financial reports 30 days after the end of each quarter. Out of the four Elementary and Second School Emergency Relief Fund quarterly reports required to be submitted by the University of Illinois Springfield, four reports (100%) have not been submitted. Out of the four Higher Education Emergency Relief Fund quarterly reports required to be submitted by the University of Illinois Springfield, one report (25%) did not contain sufficient evidence the report was reviewed prior to submission. The University of Illinois Springfield did not accurately report their methodology for conducting direct outreach to financial aid applicants for the Higher Education Emergency Relief Fund required within the 2022 annual report which was submitted timely on March 24, 2023. 2023-004. Finding: Reporting (Continued) The Higher Education Emergency Relief Fund requires the reporting of the methodology for conducting direct outreach to financial aid applicants in the annual report. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure reports are submitted timely. University of Illinois Urbana-Champaign officials stated reporting was late due to other project priorities and a change in the report template. University of Illinois Chicago officials stated due to miscommunication within the department the progress report was submitted after the deadline. University of Illinois Springfield officials stated the Elementary and Second School Emergency Relief Fund quarterly reports were not submitted due to miscommunication with the sponsor regarding reporting requirements. Additionally, University officials stated for the Higher Education Emergency Relief Fund, an oversight led to the insufficient review prior to submission and a misunderstanding of the requirement led to not disclosing the methodology of direct outreach to financial aid recipients in the report. Without proper program reporting processes and procedures, the submission of late reports or inaccurate reporting is noncompliance with Federal regulation and could result in the loss of future funding. (Finding Code No. 2023-004; 2022-007) Recommendation: We recommend the University of Illinois Urbana-Champaign, the University of Illinois Chicago, and the University of Illinois Springfield review current processes and procedures to ensure reporting requirements are completed timely. University Response: Accepted. The University will take steps identified to address the recommendation in this finding.
Federal Agency: US Department of Homeland Security (DHS) and US Department of Education (ED) Program Names: Cooperating Technical Partners; Governor’s Emergency Education Relief Fund; Elementary and Second School Emergency Relief Fund; and Higher Education Emergency Relief Fund ALN #s: 97.045; 84.425C; 84.425D; and 84.425F Award Numbers: DHS EMC-2019-CA-00009; DHS EMC-2018-CA-00010; IBHE GEERF 601-GEE-2200-UIC; 826 DOE ISBE Loyola Partnership; and 831 DE UIS HEERF Institution; Federal Award Year 2022 - 2023 Questioned Costs: None 2023-004. Finding: Reporting The University of Illinois’ controls in place did not ensure certain reporting requirements were submitted timely, and in some cases, were not properly reviewed for accuracy. Out of the seven Cooperating Technical Partners quarterly performance reports tested, the University of Illinois Urbana-Champaign did not submit two reports (29%) within the required timeframe. Two reports for the quarter ended December 31, 2022 were due by January 30, 2023, however, were submitted February 3, 2023. The sample was not intended to be, and was not, a statistically valid sample. The Cooperating Technical Partners grant program requires submission of quarterly performance reports 30 days after the end of each quarter. Out of the four Governor’s Emergency Education Relief Fund quarterly reports submitted by the University of Illinois Chicago under the Education Stabilization Fund, one report (25%) was not submitted within the required timeframe. The report for the quarter ended March 31, 2023 was due by May 1, 2023, however was submitted May 8, 2023. The Governor’s Emergency Education Relief Fund, Elementary and Second Emergency Relief Fund and Higher Education Emergency Relief Fund require submission of quarterly financial reports 30 days after the end of each quarter. Out of the four Elementary and Second School Emergency Relief Fund quarterly reports required to be submitted by the University of Illinois Springfield, four reports (100%) have not been submitted. Out of the four Higher Education Emergency Relief Fund quarterly reports required to be submitted by the University of Illinois Springfield, one report (25%) did not contain sufficient evidence the report was reviewed prior to submission. The University of Illinois Springfield did not accurately report their methodology for conducting direct outreach to financial aid applicants for the Higher Education Emergency Relief Fund required within the 2022 annual report which was submitted timely on March 24, 2023. 2023-004. Finding: Reporting (Continued) The Higher Education Emergency Relief Fund requires the reporting of the methodology for conducting direct outreach to financial aid applicants in the annual report. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure reports are submitted timely. University of Illinois Urbana-Champaign officials stated reporting was late due to other project priorities and a change in the report template. University of Illinois Chicago officials stated due to miscommunication within the department the progress report was submitted after the deadline. University of Illinois Springfield officials stated the Elementary and Second School Emergency Relief Fund quarterly reports were not submitted due to miscommunication with the sponsor regarding reporting requirements. Additionally, University officials stated for the Higher Education Emergency Relief Fund, an oversight led to the insufficient review prior to submission and a misunderstanding of the requirement led to not disclosing the methodology of direct outreach to financial aid recipients in the report. Without proper program reporting processes and procedures, the submission of late reports or inaccurate reporting is noncompliance with Federal regulation and could result in the loss of future funding. (Finding Code No. 2023-004; 2022-007) Recommendation: We recommend the University of Illinois Urbana-Champaign, the University of Illinois Chicago, and the University of Illinois Springfield review current processes and procedures to ensure reporting requirements are completed timely. University Response: Accepted. The University will take steps identified to address the recommendation in this finding.
Federal Agency: US Department of Homeland Security (DHS) and US Department of Education (ED) Program Names: Cooperating Technical Partners; Governor’s Emergency Education Relief Fund; Elementary and Second School Emergency Relief Fund; and Higher Education Emergency Relief Fund ALN #s: 97.045; 84.425C; 84.425D; and 84.425F Award Numbers: DHS EMC-2019-CA-00009; DHS EMC-2018-CA-00010; IBHE GEERF 601-GEE-2200-UIC; 826 DOE ISBE Loyola Partnership; and 831 DE UIS HEERF Institution; Federal Award Year 2022 - 2023 Questioned Costs: None 2023-004. Finding: Reporting The University of Illinois’ controls in place did not ensure certain reporting requirements were submitted timely, and in some cases, were not properly reviewed for accuracy. Out of the seven Cooperating Technical Partners quarterly performance reports tested, the University of Illinois Urbana-Champaign did not submit two reports (29%) within the required timeframe. Two reports for the quarter ended December 31, 2022 were due by January 30, 2023, however, were submitted February 3, 2023. The sample was not intended to be, and was not, a statistically valid sample. The Cooperating Technical Partners grant program requires submission of quarterly performance reports 30 days after the end of each quarter. Out of the four Governor’s Emergency Education Relief Fund quarterly reports submitted by the University of Illinois Chicago under the Education Stabilization Fund, one report (25%) was not submitted within the required timeframe. The report for the quarter ended March 31, 2023 was due by May 1, 2023, however was submitted May 8, 2023. The Governor’s Emergency Education Relief Fund, Elementary and Second Emergency Relief Fund and Higher Education Emergency Relief Fund require submission of quarterly financial reports 30 days after the end of each quarter. Out of the four Elementary and Second School Emergency Relief Fund quarterly reports required to be submitted by the University of Illinois Springfield, four reports (100%) have not been submitted. Out of the four Higher Education Emergency Relief Fund quarterly reports required to be submitted by the University of Illinois Springfield, one report (25%) did not contain sufficient evidence the report was reviewed prior to submission. The University of Illinois Springfield did not accurately report their methodology for conducting direct outreach to financial aid applicants for the Higher Education Emergency Relief Fund required within the 2022 annual report which was submitted timely on March 24, 2023. 2023-004. Finding: Reporting (Continued) The Higher Education Emergency Relief Fund requires the reporting of the methodology for conducting direct outreach to financial aid applicants in the annual report. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure reports are submitted timely. University of Illinois Urbana-Champaign officials stated reporting was late due to other project priorities and a change in the report template. University of Illinois Chicago officials stated due to miscommunication within the department the progress report was submitted after the deadline. University of Illinois Springfield officials stated the Elementary and Second School Emergency Relief Fund quarterly reports were not submitted due to miscommunication with the sponsor regarding reporting requirements. Additionally, University officials stated for the Higher Education Emergency Relief Fund, an oversight led to the insufficient review prior to submission and a misunderstanding of the requirement led to not disclosing the methodology of direct outreach to financial aid recipients in the report. Without proper program reporting processes and procedures, the submission of late reports or inaccurate reporting is noncompliance with Federal regulation and could result in the loss of future funding. (Finding Code No. 2023-004; 2022-007) Recommendation: We recommend the University of Illinois Urbana-Champaign, the University of Illinois Chicago, and the University of Illinois Springfield review current processes and procedures to ensure reporting requirements are completed timely. University Response: Accepted. The University will take steps identified to address the recommendation in this finding.
Federal Agency: US Department of Homeland Security (DHS) and US Department of Education (ED) Program Names: Cooperating Technical Partners; Governor’s Emergency Education Relief Fund; Elementary and Second School Emergency Relief Fund; and Higher Education Emergency Relief Fund ALN #s: 97.045; 84.425C; 84.425D; and 84.425F Award Numbers: DHS EMC-2019-CA-00009; DHS EMC-2018-CA-00010; IBHE GEERF 601-GEE-2200-UIC; 826 DOE ISBE Loyola Partnership; and 831 DE UIS HEERF Institution; Federal Award Year 2022 - 2023 Questioned Costs: None 2023-004. Finding: Reporting The University of Illinois’ controls in place did not ensure certain reporting requirements were submitted timely, and in some cases, were not properly reviewed for accuracy. Out of the seven Cooperating Technical Partners quarterly performance reports tested, the University of Illinois Urbana-Champaign did not submit two reports (29%) within the required timeframe. Two reports for the quarter ended December 31, 2022 were due by January 30, 2023, however, were submitted February 3, 2023. The sample was not intended to be, and was not, a statistically valid sample. The Cooperating Technical Partners grant program requires submission of quarterly performance reports 30 days after the end of each quarter. Out of the four Governor’s Emergency Education Relief Fund quarterly reports submitted by the University of Illinois Chicago under the Education Stabilization Fund, one report (25%) was not submitted within the required timeframe. The report for the quarter ended March 31, 2023 was due by May 1, 2023, however was submitted May 8, 2023. The Governor’s Emergency Education Relief Fund, Elementary and Second Emergency Relief Fund and Higher Education Emergency Relief Fund require submission of quarterly financial reports 30 days after the end of each quarter. Out of the four Elementary and Second School Emergency Relief Fund quarterly reports required to be submitted by the University of Illinois Springfield, four reports (100%) have not been submitted. Out of the four Higher Education Emergency Relief Fund quarterly reports required to be submitted by the University of Illinois Springfield, one report (25%) did not contain sufficient evidence the report was reviewed prior to submission. The University of Illinois Springfield did not accurately report their methodology for conducting direct outreach to financial aid applicants for the Higher Education Emergency Relief Fund required within the 2022 annual report which was submitted timely on March 24, 2023. 2023-004. Finding: Reporting (Continued) The Higher Education Emergency Relief Fund requires the reporting of the methodology for conducting direct outreach to financial aid applicants in the annual report. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure reports are submitted timely. University of Illinois Urbana-Champaign officials stated reporting was late due to other project priorities and a change in the report template. University of Illinois Chicago officials stated due to miscommunication within the department the progress report was submitted after the deadline. University of Illinois Springfield officials stated the Elementary and Second School Emergency Relief Fund quarterly reports were not submitted due to miscommunication with the sponsor regarding reporting requirements. Additionally, University officials stated for the Higher Education Emergency Relief Fund, an oversight led to the insufficient review prior to submission and a misunderstanding of the requirement led to not disclosing the methodology of direct outreach to financial aid recipients in the report. Without proper program reporting processes and procedures, the submission of late reports or inaccurate reporting is noncompliance with Federal regulation and could result in the loss of future funding. (Finding Code No. 2023-004; 2022-007) Recommendation: We recommend the University of Illinois Urbana-Champaign, the University of Illinois Chicago, and the University of Illinois Springfield review current processes and procedures to ensure reporting requirements are completed timely. University Response: Accepted. The University will take steps identified to address the recommendation in this finding.
Federal Agency: US Department of Homeland Security (DHS) and US Department of Education (ED) Program Names: Cooperating Technical Partners; Governor’s Emergency Education Relief Fund; Elementary and Second School Emergency Relief Fund; and Higher Education Emergency Relief Fund ALN #s: 97.045; 84.425C; 84.425D; and 84.425F Award Numbers: DHS EMC-2019-CA-00009; DHS EMC-2018-CA-00010; IBHE GEERF 601-GEE-2200-UIC; 826 DOE ISBE Loyola Partnership; and 831 DE UIS HEERF Institution; Federal Award Year 2022 - 2023 Questioned Costs: None 2023-004. Finding: Reporting The University of Illinois’ controls in place did not ensure certain reporting requirements were submitted timely, and in some cases, were not properly reviewed for accuracy. Out of the seven Cooperating Technical Partners quarterly performance reports tested, the University of Illinois Urbana-Champaign did not submit two reports (29%) within the required timeframe. Two reports for the quarter ended December 31, 2022 were due by January 30, 2023, however, were submitted February 3, 2023. The sample was not intended to be, and was not, a statistically valid sample. The Cooperating Technical Partners grant program requires submission of quarterly performance reports 30 days after the end of each quarter. Out of the four Governor’s Emergency Education Relief Fund quarterly reports submitted by the University of Illinois Chicago under the Education Stabilization Fund, one report (25%) was not submitted within the required timeframe. The report for the quarter ended March 31, 2023 was due by May 1, 2023, however was submitted May 8, 2023. The Governor’s Emergency Education Relief Fund, Elementary and Second Emergency Relief Fund and Higher Education Emergency Relief Fund require submission of quarterly financial reports 30 days after the end of each quarter. Out of the four Elementary and Second School Emergency Relief Fund quarterly reports required to be submitted by the University of Illinois Springfield, four reports (100%) have not been submitted. Out of the four Higher Education Emergency Relief Fund quarterly reports required to be submitted by the University of Illinois Springfield, one report (25%) did not contain sufficient evidence the report was reviewed prior to submission. The University of Illinois Springfield did not accurately report their methodology for conducting direct outreach to financial aid applicants for the Higher Education Emergency Relief Fund required within the 2022 annual report which was submitted timely on March 24, 2023. 2023-004. Finding: Reporting (Continued) The Higher Education Emergency Relief Fund requires the reporting of the methodology for conducting direct outreach to financial aid applicants in the annual report. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure reports are submitted timely. University of Illinois Urbana-Champaign officials stated reporting was late due to other project priorities and a change in the report template. University of Illinois Chicago officials stated due to miscommunication within the department the progress report was submitted after the deadline. University of Illinois Springfield officials stated the Elementary and Second School Emergency Relief Fund quarterly reports were not submitted due to miscommunication with the sponsor regarding reporting requirements. Additionally, University officials stated for the Higher Education Emergency Relief Fund, an oversight led to the insufficient review prior to submission and a misunderstanding of the requirement led to not disclosing the methodology of direct outreach to financial aid recipients in the report. Without proper program reporting processes and procedures, the submission of late reports or inaccurate reporting is noncompliance with Federal regulation and could result in the loss of future funding. (Finding Code No. 2023-004; 2022-007) Recommendation: We recommend the University of Illinois Urbana-Champaign, the University of Illinois Chicago, and the University of Illinois Springfield review current processes and procedures to ensure reporting requirements are completed timely. University Response: Accepted. The University will take steps identified to address the recommendation in this finding.
Federal Agency: US Department of Homeland Security (DHS) and US Department of Education (ED) Program Names: Cooperating Technical Partners; Governor’s Emergency Education Relief Fund; Elementary and Second School Emergency Relief Fund; and Higher Education Emergency Relief Fund ALN #s: 97.045; 84.425C; 84.425D; and 84.425F Award Numbers: DHS EMC-2019-CA-00009; DHS EMC-2018-CA-00010; IBHE GEERF 601-GEE-2200-UIC; 826 DOE ISBE Loyola Partnership; and 831 DE UIS HEERF Institution; Federal Award Year 2022 - 2023 Questioned Costs: None 2023-004. Finding: Reporting The University of Illinois’ controls in place did not ensure certain reporting requirements were submitted timely, and in some cases, were not properly reviewed for accuracy. Out of the seven Cooperating Technical Partners quarterly performance reports tested, the University of Illinois Urbana-Champaign did not submit two reports (29%) within the required timeframe. Two reports for the quarter ended December 31, 2022 were due by January 30, 2023, however, were submitted February 3, 2023. The sample was not intended to be, and was not, a statistically valid sample. The Cooperating Technical Partners grant program requires submission of quarterly performance reports 30 days after the end of each quarter. Out of the four Governor’s Emergency Education Relief Fund quarterly reports submitted by the University of Illinois Chicago under the Education Stabilization Fund, one report (25%) was not submitted within the required timeframe. The report for the quarter ended March 31, 2023 was due by May 1, 2023, however was submitted May 8, 2023. The Governor’s Emergency Education Relief Fund, Elementary and Second Emergency Relief Fund and Higher Education Emergency Relief Fund require submission of quarterly financial reports 30 days after the end of each quarter. Out of the four Elementary and Second School Emergency Relief Fund quarterly reports required to be submitted by the University of Illinois Springfield, four reports (100%) have not been submitted. Out of the four Higher Education Emergency Relief Fund quarterly reports required to be submitted by the University of Illinois Springfield, one report (25%) did not contain sufficient evidence the report was reviewed prior to submission. The University of Illinois Springfield did not accurately report their methodology for conducting direct outreach to financial aid applicants for the Higher Education Emergency Relief Fund required within the 2022 annual report which was submitted timely on March 24, 2023. 2023-004. Finding: Reporting (Continued) The Higher Education Emergency Relief Fund requires the reporting of the methodology for conducting direct outreach to financial aid applicants in the annual report. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure reports are submitted timely. University of Illinois Urbana-Champaign officials stated reporting was late due to other project priorities and a change in the report template. University of Illinois Chicago officials stated due to miscommunication within the department the progress report was submitted after the deadline. University of Illinois Springfield officials stated the Elementary and Second School Emergency Relief Fund quarterly reports were not submitted due to miscommunication with the sponsor regarding reporting requirements. Additionally, University officials stated for the Higher Education Emergency Relief Fund, an oversight led to the insufficient review prior to submission and a misunderstanding of the requirement led to not disclosing the methodology of direct outreach to financial aid recipients in the report. Without proper program reporting processes and procedures, the submission of late reports or inaccurate reporting is noncompliance with Federal regulation and could result in the loss of future funding. (Finding Code No. 2023-004; 2022-007) Recommendation: We recommend the University of Illinois Urbana-Champaign, the University of Illinois Chicago, and the University of Illinois Springfield review current processes and procedures to ensure reporting requirements are completed timely. University Response: Accepted. The University will take steps identified to address the recommendation in this finding.
Federal Agency: US Department of Homeland Security (DHS) and US Department of Education (ED) Program Names: Cooperating Technical Partners; Governor’s Emergency Education Relief Fund; Elementary and Second School Emergency Relief Fund; and Higher Education Emergency Relief Fund ALN #s: 97.045; 84.425C; 84.425D; and 84.425F Award Numbers: DHS EMC-2019-CA-00009; DHS EMC-2018-CA-00010; IBHE GEERF 601-GEE-2200-UIC; 826 DOE ISBE Loyola Partnership; and 831 DE UIS HEERF Institution; Federal Award Year 2022 - 2023 Questioned Costs: None 2023-004. Finding: Reporting The University of Illinois’ controls in place did not ensure certain reporting requirements were submitted timely, and in some cases, were not properly reviewed for accuracy. Out of the seven Cooperating Technical Partners quarterly performance reports tested, the University of Illinois Urbana-Champaign did not submit two reports (29%) within the required timeframe. Two reports for the quarter ended December 31, 2022 were due by January 30, 2023, however, were submitted February 3, 2023. The sample was not intended to be, and was not, a statistically valid sample. The Cooperating Technical Partners grant program requires submission of quarterly performance reports 30 days after the end of each quarter. Out of the four Governor’s Emergency Education Relief Fund quarterly reports submitted by the University of Illinois Chicago under the Education Stabilization Fund, one report (25%) was not submitted within the required timeframe. The report for the quarter ended March 31, 2023 was due by May 1, 2023, however was submitted May 8, 2023. The Governor’s Emergency Education Relief Fund, Elementary and Second Emergency Relief Fund and Higher Education Emergency Relief Fund require submission of quarterly financial reports 30 days after the end of each quarter. Out of the four Elementary and Second School Emergency Relief Fund quarterly reports required to be submitted by the University of Illinois Springfield, four reports (100%) have not been submitted. Out of the four Higher Education Emergency Relief Fund quarterly reports required to be submitted by the University of Illinois Springfield, one report (25%) did not contain sufficient evidence the report was reviewed prior to submission. The University of Illinois Springfield did not accurately report their methodology for conducting direct outreach to financial aid applicants for the Higher Education Emergency Relief Fund required within the 2022 annual report which was submitted timely on March 24, 2023. 2023-004. Finding: Reporting (Continued) The Higher Education Emergency Relief Fund requires the reporting of the methodology for conducting direct outreach to financial aid applicants in the annual report. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure reports are submitted timely. University of Illinois Urbana-Champaign officials stated reporting was late due to other project priorities and a change in the report template. University of Illinois Chicago officials stated due to miscommunication within the department the progress report was submitted after the deadline. University of Illinois Springfield officials stated the Elementary and Second School Emergency Relief Fund quarterly reports were not submitted due to miscommunication with the sponsor regarding reporting requirements. Additionally, University officials stated for the Higher Education Emergency Relief Fund, an oversight led to the insufficient review prior to submission and a misunderstanding of the requirement led to not disclosing the methodology of direct outreach to financial aid recipients in the report. Without proper program reporting processes and procedures, the submission of late reports or inaccurate reporting is noncompliance with Federal regulation and could result in the loss of future funding. (Finding Code No. 2023-004; 2022-007) Recommendation: We recommend the University of Illinois Urbana-Champaign, the University of Illinois Chicago, and the University of Illinois Springfield review current processes and procedures to ensure reporting requirements are completed timely. University Response: Accepted. The University will take steps identified to address the recommendation in this finding.
Federal Agency: US Department of Homeland Security (DHS) and US Department of Education (ED) Program Names: Cooperating Technical Partners; Governor’s Emergency Education Relief Fund; Elementary and Second School Emergency Relief Fund; and Higher Education Emergency Relief Fund ALN #s: 97.045; 84.425C; 84.425D; and 84.425F Award Numbers: DHS EMC-2019-CA-00009; DHS EMC-2018-CA-00010; IBHE GEERF 601-GEE-2200-UIC; 826 DOE ISBE Loyola Partnership; and 831 DE UIS HEERF Institution; Federal Award Year 2022 - 2023 Questioned Costs: None 2023-004. Finding: Reporting The University of Illinois’ controls in place did not ensure certain reporting requirements were submitted timely, and in some cases, were not properly reviewed for accuracy. Out of the seven Cooperating Technical Partners quarterly performance reports tested, the University of Illinois Urbana-Champaign did not submit two reports (29%) within the required timeframe. Two reports for the quarter ended December 31, 2022 were due by January 30, 2023, however, were submitted February 3, 2023. The sample was not intended to be, and was not, a statistically valid sample. The Cooperating Technical Partners grant program requires submission of quarterly performance reports 30 days after the end of each quarter. Out of the four Governor’s Emergency Education Relief Fund quarterly reports submitted by the University of Illinois Chicago under the Education Stabilization Fund, one report (25%) was not submitted within the required timeframe. The report for the quarter ended March 31, 2023 was due by May 1, 2023, however was submitted May 8, 2023. The Governor’s Emergency Education Relief Fund, Elementary and Second Emergency Relief Fund and Higher Education Emergency Relief Fund require submission of quarterly financial reports 30 days after the end of each quarter. Out of the four Elementary and Second School Emergency Relief Fund quarterly reports required to be submitted by the University of Illinois Springfield, four reports (100%) have not been submitted. Out of the four Higher Education Emergency Relief Fund quarterly reports required to be submitted by the University of Illinois Springfield, one report (25%) did not contain sufficient evidence the report was reviewed prior to submission. The University of Illinois Springfield did not accurately report their methodology for conducting direct outreach to financial aid applicants for the Higher Education Emergency Relief Fund required within the 2022 annual report which was submitted timely on March 24, 2023. 2023-004. Finding: Reporting (Continued) The Higher Education Emergency Relief Fund requires the reporting of the methodology for conducting direct outreach to financial aid applicants in the annual report. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure reports are submitted timely. University of Illinois Urbana-Champaign officials stated reporting was late due to other project priorities and a change in the report template. University of Illinois Chicago officials stated due to miscommunication within the department the progress report was submitted after the deadline. University of Illinois Springfield officials stated the Elementary and Second School Emergency Relief Fund quarterly reports were not submitted due to miscommunication with the sponsor regarding reporting requirements. Additionally, University officials stated for the Higher Education Emergency Relief Fund, an oversight led to the insufficient review prior to submission and a misunderstanding of the requirement led to not disclosing the methodology of direct outreach to financial aid recipients in the report. Without proper program reporting processes and procedures, the submission of late reports or inaccurate reporting is noncompliance with Federal regulation and could result in the loss of future funding. (Finding Code No. 2023-004; 2022-007) Recommendation: We recommend the University of Illinois Urbana-Champaign, the University of Illinois Chicago, and the University of Illinois Springfield review current processes and procedures to ensure reporting requirements are completed timely. University Response: Accepted. The University will take steps identified to address the recommendation in this finding.
Federal Agency: US Health & Human Services (HHS) Program Name: Health Center Program ALN #: 93.224 Award Number: HRSA 5 U1OHA29293-08; Federal Award Year 2022 - 2023 Questioned Costs: None 2023-005. Finding: Federal Funding Accountability and Transparency Act Reporting University of Illinois Chicago did not timely report subaward data to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS) under the Health Center Program and the controls in place did not identify the error. One out of eight subaward obligations/modifications tested was not reported in FSRS within the last day of the month following the month in which the subaward/subaward amendment obligation was made. The subaward was reported 168 days late. Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 8 0 1 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $ 1,834,937 $ 0 $ 205,557 $ 0 $ 0 Under the requirements of the Federal Funding Accountability and Transparency Act (Pub. L. No. 109-282), as amended by section 6202 of Public Law 110-252, hereafter referred as the “Transparency Act” which are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the FSRS. The non-federal entity is required to report each obligating action to FSRS. The action must be reported in FSRS no later than the last day of the month following the month in which the subaward/subaward amendment is made. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure reports are submitted timely. University officials stated the dollar amount obligated with this subaward modification was not recorded in the internal system due to human error. Since the funding was not recorded, a Federal Funding Accountability and Transparency Act reporting was not triggered. Without proper program reporting policies and procedures, the submission of late reports is noncompliance with Federal regulation and could result in the loss of future funding. (Finding Code No. 2023-005; 2022-009) Recommendation: We recommend the University of Illinois Chicago review current processes and procedures to ensure Federal Funding Accountability and Transparency Act reporting requirements are completed timely. University Response: Accepted. The human error was caught and rectified during a subsequent amendment on the next subaward. The University will take steps to address the recommendation in this finding.
Federal Agencies: US Department of Energy (DOE); and US Health and Human Services (HHS Program Names: Research & Development Cluster: Office of Science and Financial Assistance Program; Health Center Program Cluster; and HIV-Related Training and Technical Assistance Program ALN #s: 81.049; 93.224; and 93.145 Award Numbers: DOE DE-SC0018420; and 675 HRSA 5U1OHA29293-07; Federal Award Year 2022 - 2023 Questioned Costs: None 2023-006. Finding: Cash Management – Timeliness of Subrecipient Payments The University of Illinois Urbana-Champaign and the University of Illinois Chicago did not make certain subrecipient payments timely and did not have controls in place to prevent late payments. Out of twelve subrecipient payments tested which were made by the University of Illinois at Urbana-Champaign under the Research & Development Cluster, seven payments (58%) were not submitted within 30 days after receipt of the billing from the subrecipient. The payments ranged from 34-197 days after receipt of the billing from the subrecipients. The sample was not intended to be, and was not, a statistically valid sample. Out of fourteen subrecipient payments tested which were made by the University of Illinois Chicago under the Health Center Program Cluster and HIV-Related Training and Technical Assistance Program, three payments (21%) were not submitted within 30 days after receipt of the billing from the subrecipient. The payments ranged from 37-51 days after the receipt of billing from the subrecipients. The sample was not intended to be, and was not, a statistically valid sample. Under Uniform Guidance (2 CFR 200.305(b)(3)), when the reimbursement method is used, the Federal awarding agency or pass-through entity must make payment within 30 calendar days after receipt of the billing, unless the Federal awarding agency or pass-through entity reasonably believes the request to be improper. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure subrecipient payments are made timely. University of Illinois Urbana-Champaign officials stated continued staffing issues and the multi-layered review and approval process contributed to untimely subrecipient payments. University of Illinois Chicago officials stated the administering unit was delayed in submitting invoices due to competing priorities. Additionally, the central approving offices contributed to the delay in one payment due to fiscal year-end close responsibilities. Without proper program cash management processes and procedures, late subrecipient payments could result in the loss of future funding. (Finding Code No. 2023-006; 2022-008) 2023-006. Finding: Cash Management – Timeliness of Subrecipient Payments (Continued) Recommendation: We recommend the University of Illinois Urbana-Champaign and the University of Illinois Chicago review current processes, policies and procedures to minimize the time elapsing between the transfer of federal funds to the subrecipient. University Response: Accepted. The University will take steps to address the recommendation in this finding.
Federal Agencies: US Department of Energy (DOE); and US Health and Human Services (HHS Program Names: Research & Development Cluster: Office of Science and Financial Assistance Program; Health Center Program Cluster; and HIV-Related Training and Technical Assistance Program ALN #s: 81.049; 93.224; and 93.145 Award Numbers: DOE DE-SC0018420; and 675 HRSA 5U1OHA29293-07; Federal Award Year 2022 - 2023 Questioned Costs: None 2023-006. Finding: Cash Management – Timeliness of Subrecipient Payments The University of Illinois Urbana-Champaign and the University of Illinois Chicago did not make certain subrecipient payments timely and did not have controls in place to prevent late payments. Out of twelve subrecipient payments tested which were made by the University of Illinois at Urbana-Champaign under the Research & Development Cluster, seven payments (58%) were not submitted within 30 days after receipt of the billing from the subrecipient. The payments ranged from 34-197 days after receipt of the billing from the subrecipients. The sample was not intended to be, and was not, a statistically valid sample. Out of fourteen subrecipient payments tested which were made by the University of Illinois Chicago under the Health Center Program Cluster and HIV-Related Training and Technical Assistance Program, three payments (21%) were not submitted within 30 days after receipt of the billing from the subrecipient. The payments ranged from 37-51 days after the receipt of billing from the subrecipients. The sample was not intended to be, and was not, a statistically valid sample. Under Uniform Guidance (2 CFR 200.305(b)(3)), when the reimbursement method is used, the Federal awarding agency or pass-through entity must make payment within 30 calendar days after receipt of the billing, unless the Federal awarding agency or pass-through entity reasonably believes the request to be improper. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure subrecipient payments are made timely. University of Illinois Urbana-Champaign officials stated continued staffing issues and the multi-layered review and approval process contributed to untimely subrecipient payments. University of Illinois Chicago officials stated the administering unit was delayed in submitting invoices due to competing priorities. Additionally, the central approving offices contributed to the delay in one payment due to fiscal year-end close responsibilities. Without proper program cash management processes and procedures, late subrecipient payments could result in the loss of future funding. (Finding Code No. 2023-006; 2022-008) 2023-006. Finding: Cash Management – Timeliness of Subrecipient Payments (Continued) Recommendation: We recommend the University of Illinois Urbana-Champaign and the University of Illinois Chicago review current processes, policies and procedures to minimize the time elapsing between the transfer of federal funds to the subrecipient. University Response: Accepted. The University will take steps to address the recommendation in this finding.