Matching Federal Agency: U.S. Department of Housing and Urban Development Program: Continuum of Care Program (ALN 14.267) Federal Assistance Identification Number or Pass-Through Numbers: MN0311L5K002007, MN0364L5K002005, MN0372L5K002105 Federal Award Years: Year ended December 31, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria: 2 CFR 200.303(a), requires that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 24 CFR 578.73(a) requires that the recipient must match all grant funds, except for leasing funds, with no less than 25 percent of funds or in-kind contributions from other sources. For grantees where there is more than one grant agreement, the 25 percent match must be provided on a grant-by-grant basis. Cash match must be used for the costs of activities that are eligible as program costs under 24 CFR 578 Subpart D. 2 CFR 200.306(b)(1) requires that any shared costs or matching funds must be verifiable from the non-Federal entity’s records. Condition: While we were able to test a manual compensating control over matching, we were not able to review and test the automated application controls and related ITGCs within the State’s MAXIS system. The State was not able to provide information regarding the design and implementation of MAXIS system controls, nor were we able to test those controls directly. Cause: The State was not able to provide information regarding the design and effectiveness of MAXIS system controls nor were we able to test those controls directly due to complexities of data privacy and resources within the State. Effect: There is an increased risk of noncompliance with the matching requirement. Context: Applies to the automated application controls over matching. Questioned Costs: None Repeat Finding?: Yes Recommendation: We suggest that the County encourage the State to provide an independent audit of the design and implementation of MAXIS system controls. View of responsible officials of the auditee: Hennepin County has reviewed and agrees with the finding and recommendation.
U.S. Department of State Professional & Cultural Exchange Programs Assistance Listing #19.415 Finding 2023-004 Material Weakness, Material Non-compliance – Matching Criteria: 2 CFR 200.306 requires cost sharing to be verifiable from a non-federal entity's records. Condition: Cost sharing amounts were not readily verifiable. Questioned Costs: Approximately $69,000 in adjustments were made in 2023 to recapture cost share amounts that occurred in a previous period(s). Context: Adjustments were made to capture cost share expenses for both current and prior periods, which were not previously tracked, which led to expense accounts in the current year with a credit balance, indicating cost share amounts could not be readily substantiated by underlying source documentation. Effect: By not maintaining adequate and consistent documentation for cost share amounts, the Organization may not be able to readily prevent, detect, and correct potential errors in matching. The Organization must maintain written records to support all allowable costs which are claimed as being its contribution. Such records are subject to audit. In the event the Organization does not provide the minimum amount of cost sharing as stipulated in the Organization’s approved budget, the Department of State’s contribution may be reduced in kind. Cause: Current processes do not include maintaining adequate documentation to track and record cost share amounts. Recommendation: The Organization should improve policies & procedures to document how cost share amounts are tracked in the accounting system to ensure amounts are verifiable. Management’s Response: Management considers this resolved as of August 2024. For 2023 and prior, there were no cost sharing amounts booked to the General Ledger. When applicable, cost share was calculated prior to a drawdown by reducing a drawdown request by any necessary cost share commitment. For 2023, Greenheart made several one-time adjustments to move costs to a new cost share account in the general ledger. This way, Greenheart can track total cost share. As previously stated, Greenheart did not previously allocate cost sharing items to a cost sharing account in the General Ledger. In 2024, a new template was created for grant expense submissions which identifies Cost Share coding from the time that a payment request is made. The grants team is responsible for completing this file and identifying how much of any expense incurred should be considered cost share. This approach allows for supporting documentation to be available for all cost share items and eliminates the need for adjusting journal entries to break out cost share.
U.S. Department of State Professional & Cultural Exchange Programs Assistance Listing #19.415 Finding 2023-004 Material Weakness, Material Non-compliance – Matching Criteria: 2 CFR 200.306 requires cost sharing to be verifiable from a non-federal entity's records. Condition: Cost sharing amounts were not readily verifiable. Questioned Costs: Approximately $69,000 in adjustments were made in 2023 to recapture cost share amounts that occurred in a previous period(s). Context: Adjustments were made to capture cost share expenses for both current and prior periods, which were not previously tracked, which led to expense accounts in the current year with a credit balance, indicating cost share amounts could not be readily substantiated by underlying source documentation. Effect: By not maintaining adequate and consistent documentation for cost share amounts, the Organization may not be able to readily prevent, detect, and correct potential errors in matching. The Organization must maintain written records to support all allowable costs which are claimed as being its contribution. Such records are subject to audit. In the event the Organization does not provide the minimum amount of cost sharing as stipulated in the Organization’s approved budget, the Department of State’s contribution may be reduced in kind. Cause: Current processes do not include maintaining adequate documentation to track and record cost share amounts. Recommendation: The Organization should improve policies & procedures to document how cost share amounts are tracked in the accounting system to ensure amounts are verifiable. Management’s Response: Management considers this resolved as of August 2024. For 2023 and prior, there were no cost sharing amounts booked to the General Ledger. When applicable, cost share was calculated prior to a drawdown by reducing a drawdown request by any necessary cost share commitment. For 2023, Greenheart made several one-time adjustments to move costs to a new cost share account in the general ledger. This way, Greenheart can track total cost share. As previously stated, Greenheart did not previously allocate cost sharing items to a cost sharing account in the General Ledger. In 2024, a new template was created for grant expense submissions which identifies Cost Share coding from the time that a payment request is made. The grants team is responsible for completing this file and identifying how much of any expense incurred should be considered cost share. This approach allows for supporting documentation to be available for all cost share items and eliminates the need for adjusting journal entries to break out cost share.
2 CFR § 2400.101 gives regulatory effect to the Department of Housing and Urban Development for 2 CFR § 200.303(a) which requires that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). 2 CFR § 2400.101 gives regulatory effect to the Department of Housing and Urban Development for 2 CFR § 200.403 which states except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. See also § 200.306(b). (g) Be adequately documented. See also §§ 200.300 through 200.309 of this part. (h) Cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to § 200.308(e)(3). State ex rel. McClure v. Hagerman, 155 Ohio St. 320 (1951) provides that expenditures made by a governmental unit should serve a public purpose. Typically, the determination of what constitutes a “proper public purpose” rests with the judgment of the governmental entity, unless such determination is arbitrary or unreasonable. Even if a purchase is reasonable, Ohio Attorney General Opinion 82-006 indicates that it must be memorialized by a duly enacted ordinance or resolution and may have a prospective effect only. Auditor of State Bulletin 2003-005 Expenditure of Public Funds/Proper “Public Purpose” states, in part, the Auditor of State’s Office will only question expenditures where the legislative determination of a public purpose is manifestly arbitrary and incorrect. The Lima-Allen County Regional Planning Commission, administrator of the Community Housing Impact and Preservation Program - CHIP (#B-C-21-1AB-1) for Allen County, incurred a charge of $4,386 for Admin January 2023 charges on invoice #106558 dated February 7, 2023 from the Great Lakes Community Action Partnership. On July 6, 2023, check number 7330652 was issued by Allen County which included payment of $4,386 on invoice number 106558. On August 3, 2023, check number 7332670 was issued by Allen County which included payment of $4,386 on invoice number 106558 which was approved by Tara Bales, Executive Director of the Lima-Allen County Regional Planning Commission. As a result, possibly due to the failure of an existing control or procedure, invoice number 106558 was paid twice resulting an overpayment of $4,386. On October 2, 2024, the Great Lakes Community Action Partnership refunded the overpayment with check number 20765 in the amount of $4,386. This refund was recorded in the Community Development Grant Fund (2414). The Lima-Allen County Regional Planning Commission should implement an additional control(s) and/or procedure(s) to prevent the duplicate payment of invoices.
Finding 2023-005 Cost Share Information on the Federal Programs: Assistance Listing Number #19.415 Criteria or Specific Requirement: Under 2 CFR 200.306 the following criteria apply for cost share funds: (1) Are verifiable in the recipient's or subrecipient's records; (2) Are not included as contributions for any other Federal award; (3) Are necessary and reasonable for achieving the objectives of the Federal award; (4) Are allowable under subpart E; (5) Are not paid by the Federal Government under another Federal award, except where the program's Federal authorizing statute specifically provides that Federal funds made available for the program can be applied to cost sharing requirements of other Federal programs; (6) Are provided for in the approved budget when required by the Federal agency; and (7) Conform to other applicable provisions of this part. Condition: Certain awards under the assistance listing number included cost share requirements, but ICFJ was unable to provide a schedule to identify the cost share requirements met during the year. Cause: ICFJ experienced transition during the fiscal year and certain documents and schedules were unable to be located during the audit process. Effect or Potential Effect: Lack of records related to cost share increase the chance of noncompliance and potential questioned costs. Questioned Costs: None. Context: We noted two out of the four awards within the assistance listing number included a cost share requirement. Neither of these awards ended during the current year. Identification as a Repeat Finding, if Applicable: Not applicable. Recommendation: We recommend that management of ICFJ implement procedures and control processes to track cost share requirements and the progress towards the requirements. Support for the cost share claimed should also be available upon request.
Finding 2023-001 Significant Deficiency – Matching Federal Assistance Listing No. 20.106 U.S. Department of Transportation Airport Improvement Program Criteria: All match funding must be provided in compliance with the requirements of 2 CFR Part 200.306. The Authority’s share of projects costs on an Airport Improvement Grant is defined in 49 USC 47109 and set forth in the grant agreement. The nonfederal share was 10 percent. Condition: Grant number 3-12-0053-040-2022 request for reimbursement number 4 included the nonfederal share for one invoice. Cause: The form used by the Authority contained a formula error that resulted in the Airport Improvement Program share to calculate at 100 percent instead of the required 90 percent. The error was not identified in the Authority’s review process of reimbursement number 4. It was subsequently identified by the Authority during the preparation of a subsequent grant draw. Effect: This condition resulted in an overpayment to the Authority of $62,469. If not corrected in future drawdowns, the grantor agency could deem the Authority to be non-compliant. Questioned Costs: Not applicable. Recommendation: We recommend that the Authority contact the grantor agency to correct the overpayment and also review its internal controls as it relates to complying with matching requirements.
FINDING 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
FINDING 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
FINDING 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
FINDING 2023-024 Fish and Wildlife Cluster, ALN 15.605, 15.611, and 15.626, Activities Allowed or Unallowed; Allowable Costs/Cost Principles; and Matching, Level of Effort, and Earmarking - Inappropriate Telecommunication Expenditures See Schedule of Findings and Questioned Costs for chart/table. Condition The Department of Natural Resources (DNR) did not ensure that telecommunication expenditures charged to the Fish and Wildlife Cluster were incurred for fish and wildlife activities. We reviewed 1 sampled telecommunication transaction related to 196 employees. We sampled 20 of those employees and noted 2 (10%) employees did not work on fish and wildlife activities. Criteria Federal regulation 2 CFR 200.303 requires the auditee to establish and maintain effective internal control over federal awards that provides reasonable assurance the auditee is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of federal awards. Also, Subpart E of federal regulation 2 CFR 200 requires costs charged to federal programs be necessary and reasonable for the administration of the federal award and be in accordance with the relative benefits received by the program. In addition, federal regulation 2 CFR 200.306 requires costs used for matching be allowable costs to the federal award. Cause DNR informed us because of an oversight error, it did not timely identify these employees to be removed from the monthly telecommunication bill. Effect DNR charged the Fish and Wildlife Cluster for telecommunication expenditures related to employees who worked on non-fish and wildlife activities. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs None. Recommendation We recommend DNR ensure that telecommunication expenditures charged to the Fish and Wildlife Cluster are incurred for fish and wildlife activities. Management Views DNR agrees with the finding.
FINDING 2023-024 Fish and Wildlife Cluster, ALN 15.605, 15.611, and 15.626, Activities Allowed or Unallowed; Allowable Costs/Cost Principles; and Matching, Level of Effort, and Earmarking - Inappropriate Telecommunication Expenditures See Schedule of Findings and Questioned Costs for chart/table. Condition The Department of Natural Resources (DNR) did not ensure that telecommunication expenditures charged to the Fish and Wildlife Cluster were incurred for fish and wildlife activities. We reviewed 1 sampled telecommunication transaction related to 196 employees. We sampled 20 of those employees and noted 2 (10%) employees did not work on fish and wildlife activities. Criteria Federal regulation 2 CFR 200.303 requires the auditee to establish and maintain effective internal control over federal awards that provides reasonable assurance the auditee is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of federal awards. Also, Subpart E of federal regulation 2 CFR 200 requires costs charged to federal programs be necessary and reasonable for the administration of the federal award and be in accordance with the relative benefits received by the program. In addition, federal regulation 2 CFR 200.306 requires costs used for matching be allowable costs to the federal award. Cause DNR informed us because of an oversight error, it did not timely identify these employees to be removed from the monthly telecommunication bill. Effect DNR charged the Fish and Wildlife Cluster for telecommunication expenditures related to employees who worked on non-fish and wildlife activities. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs None. Recommendation We recommend DNR ensure that telecommunication expenditures charged to the Fish and Wildlife Cluster are incurred for fish and wildlife activities. Management Views DNR agrees with the finding.
FINDING 2023-024 Fish and Wildlife Cluster, ALN 15.605, 15.611, and 15.626, Activities Allowed or Unallowed; Allowable Costs/Cost Principles; and Matching, Level of Effort, and Earmarking - Inappropriate Telecommunication Expenditures See Schedule of Findings and Questioned Costs for chart/table. Condition The Department of Natural Resources (DNR) did not ensure that telecommunication expenditures charged to the Fish and Wildlife Cluster were incurred for fish and wildlife activities. We reviewed 1 sampled telecommunication transaction related to 196 employees. We sampled 20 of those employees and noted 2 (10%) employees did not work on fish and wildlife activities. Criteria Federal regulation 2 CFR 200.303 requires the auditee to establish and maintain effective internal control over federal awards that provides reasonable assurance the auditee is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of federal awards. Also, Subpart E of federal regulation 2 CFR 200 requires costs charged to federal programs be necessary and reasonable for the administration of the federal award and be in accordance with the relative benefits received by the program. In addition, federal regulation 2 CFR 200.306 requires costs used for matching be allowable costs to the federal award. Cause DNR informed us because of an oversight error, it did not timely identify these employees to be removed from the monthly telecommunication bill. Effect DNR charged the Fish and Wildlife Cluster for telecommunication expenditures related to employees who worked on non-fish and wildlife activities. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs None. Recommendation We recommend DNR ensure that telecommunication expenditures charged to the Fish and Wildlife Cluster are incurred for fish and wildlife activities. Management Views DNR agrees with the finding.
FINDING 2023-024 Fish and Wildlife Cluster, ALN 15.605, 15.611, and 15.626, Activities Allowed or Unallowed; Allowable Costs/Cost Principles; and Matching, Level of Effort, and Earmarking - Inappropriate Telecommunication Expenditures See Schedule of Findings and Questioned Costs for chart/table. Condition The Department of Natural Resources (DNR) did not ensure that telecommunication expenditures charged to the Fish and Wildlife Cluster were incurred for fish and wildlife activities. We reviewed 1 sampled telecommunication transaction related to 196 employees. We sampled 20 of those employees and noted 2 (10%) employees did not work on fish and wildlife activities. Criteria Federal regulation 2 CFR 200.303 requires the auditee to establish and maintain effective internal control over federal awards that provides reasonable assurance the auditee is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of federal awards. Also, Subpart E of federal regulation 2 CFR 200 requires costs charged to federal programs be necessary and reasonable for the administration of the federal award and be in accordance with the relative benefits received by the program. In addition, federal regulation 2 CFR 200.306 requires costs used for matching be allowable costs to the federal award. Cause DNR informed us because of an oversight error, it did not timely identify these employees to be removed from the monthly telecommunication bill. Effect DNR charged the Fish and Wildlife Cluster for telecommunication expenditures related to employees who worked on non-fish and wildlife activities. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs None. Recommendation We recommend DNR ensure that telecommunication expenditures charged to the Fish and Wildlife Cluster are incurred for fish and wildlife activities. Management Views DNR agrees with the finding.
FINDING 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
FINDING 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
FINDING 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
FINDING 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
FINDING 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
FINDING 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
FINDING 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
FINDING 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
FINDING 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
FINDING 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
FINDING 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
FINDING 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
FINDING 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
FINDING 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
AL Numbers: 10.760, 93.575 Name of Federal Program or Cluster: Water and Waste Disposal Systems for Rural Communities, Xhild Care and Development Block Grant – CCDF Cluster and COVID-19 CCDF Cluster Award Number: Multiple, 21PANDCCDF,22PANDCCDD, 23PANDCCDD Award Year: 2021, 2022, 2023 Criteria – In accordance with the Tribe’s grant award requirements and the Uniform Guidance 2 CFR 200.306, the Tribe must have internal controls over and ensure compliance with any federal cost-sharing/matching and earmarking requirements. Additionally, for the CCDF Cluster program, Tribal lead agencies must spend at least 12% of the total CCDF program expenditures on quality improvement activities. Tribal lead agencies must spend 3% of the 12% on activities to increase the quality of care for infants and toddlers. Condition and context – We noted the following for each program: ALN 10.760 – The program was unable to provide us evidence of monitoring of or compliance with the Tribe’s cost-sharing contributions for the program’s operations. ALN 93.575 – The program did not meet the minimum threshold of 12% on quality improvement activities during the year ended September 30, 2023. Additionally, the program did not monitor expenditures against the 3% threshold on quality improvement activities to increase the quality of care for infants and toddlers. Cause – Inadequate internal controls over cost-sharing and earmarking requirements may have led to this finding. Questioned costs – There are no questioned costs to report related to this finding. Effect – The Tribe could be subject to repayment of funds for not meeting cost-sharing and earmarking requirements. Repeat finding – This is a repeat finding for the CCDF Cluster program and was reported in the prior year as finding 2022-004. Recommendation – The programs should establish and implement internal controls over cost-sharing and earmarking requirements and implement a supervisory review over these requirements. Views of responsible officials and planned corrective actions – ALN 10.760: The Program will work with the Finance Department to thoroughly review the grant award documentation for any cost-sharing contribution requirements. If identified, this requirement will be marked on the intake form and tracked by the Finance Department. ALN 93.575: The Program satisfied these matching requirements in fiscal year 2024. In future awards, the Program will ensure that the match requirements are met in the appropriate period of performance.
AL Numbers: 10.760, 93.575 Name of Federal Program or Cluster: Water and Waste Disposal Systems for Rural Communities, Xhild Care and Development Block Grant – CCDF Cluster and COVID-19 CCDF Cluster Award Number: Multiple, 21PANDCCDF,22PANDCCDD, 23PANDCCDD Award Year: 2021, 2022, 2023 Criteria – In accordance with the Tribe’s grant award requirements and the Uniform Guidance 2 CFR 200.306, the Tribe must have internal controls over and ensure compliance with any federal cost-sharing/matching and earmarking requirements. Additionally, for the CCDF Cluster program, Tribal lead agencies must spend at least 12% of the total CCDF program expenditures on quality improvement activities. Tribal lead agencies must spend 3% of the 12% on activities to increase the quality of care for infants and toddlers. Condition and context – We noted the following for each program: ALN 10.760 – The program was unable to provide us evidence of monitoring of or compliance with the Tribe’s cost-sharing contributions for the program’s operations. ALN 93.575 – The program did not meet the minimum threshold of 12% on quality improvement activities during the year ended September 30, 2023. Additionally, the program did not monitor expenditures against the 3% threshold on quality improvement activities to increase the quality of care for infants and toddlers. Cause – Inadequate internal controls over cost-sharing and earmarking requirements may have led to this finding. Questioned costs – There are no questioned costs to report related to this finding. Effect – The Tribe could be subject to repayment of funds for not meeting cost-sharing and earmarking requirements. Repeat finding – This is a repeat finding for the CCDF Cluster program and was reported in the prior year as finding 2022-004. Recommendation – The programs should establish and implement internal controls over cost-sharing and earmarking requirements and implement a supervisory review over these requirements. Views of responsible officials and planned corrective actions – ALN 10.760: The Program will work with the Finance Department to thoroughly review the grant award documentation for any cost-sharing contribution requirements. If identified, this requirement will be marked on the intake form and tracked by the Finance Department. ALN 93.575: The Program satisfied these matching requirements in fiscal year 2024. In future awards, the Program will ensure that the match requirements are met in the appropriate period of performance.
Finding 2023-001 Significant Deficiency – Matching Federal Assistance Listing No. 20.106 U.S. Department of Transportation Airport Improvement Program Criteria: All match funding must be provided in compliance with the requirements of 2 CFR Part 200.306. The Authority’s share of projects costs on an Airport Improvement Grant is defined in 49 USC 47109 and set forth in the grant agreement. The nonfederal share was 10 percent. Condition: Grant number 3-12-0053-040-2022 request for reimbursement number 4 included the nonfederal share for one invoice. Cause: The form used by the Authority contained a formula error that resulted in the Airport Improvement Program share to calculate at 100 percent instead of the required 90 percent. The error was not identified in the Authority’s review process of reimbursement number 4. It was subsequently identified by the Authority during the preparation of a subsequent grant draw. Effect: This condition resulted in an overpayment to the Authority of $62,469. If not corrected in future drawdowns, the grantor agency could deem the Authority to be non-compliant. Questioned Costs: Not applicable. Recommendation: We recommend that the Authority contact the grantor agency to correct the overpayment and also review its internal controls as it relates to complying with matching requirements.
FINDING 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
FINDING 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
FINDING 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
FINDING 2023-024 Fish and Wildlife Cluster, ALN 15.605, 15.611, and 15.626, Activities Allowed or Unallowed; Allowable Costs/Cost Principles; and Matching, Level of Effort, and Earmarking - Inappropriate Telecommunication Expenditures See Schedule of Findings and Questioned Costs for chart/table. Condition The Department of Natural Resources (DNR) did not ensure that telecommunication expenditures charged to the Fish and Wildlife Cluster were incurred for fish and wildlife activities. We reviewed 1 sampled telecommunication transaction related to 196 employees. We sampled 20 of those employees and noted 2 (10%) employees did not work on fish and wildlife activities. Criteria Federal regulation 2 CFR 200.303 requires the auditee to establish and maintain effective internal control over federal awards that provides reasonable assurance the auditee is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of federal awards. Also, Subpart E of federal regulation 2 CFR 200 requires costs charged to federal programs be necessary and reasonable for the administration of the federal award and be in accordance with the relative benefits received by the program. In addition, federal regulation 2 CFR 200.306 requires costs used for matching be allowable costs to the federal award. Cause DNR informed us because of an oversight error, it did not timely identify these employees to be removed from the monthly telecommunication bill. Effect DNR charged the Fish and Wildlife Cluster for telecommunication expenditures related to employees who worked on non-fish and wildlife activities. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs None. Recommendation We recommend DNR ensure that telecommunication expenditures charged to the Fish and Wildlife Cluster are incurred for fish and wildlife activities. Management Views DNR agrees with the finding.
FINDING 2023-024 Fish and Wildlife Cluster, ALN 15.605, 15.611, and 15.626, Activities Allowed or Unallowed; Allowable Costs/Cost Principles; and Matching, Level of Effort, and Earmarking - Inappropriate Telecommunication Expenditures See Schedule of Findings and Questioned Costs for chart/table. Condition The Department of Natural Resources (DNR) did not ensure that telecommunication expenditures charged to the Fish and Wildlife Cluster were incurred for fish and wildlife activities. We reviewed 1 sampled telecommunication transaction related to 196 employees. We sampled 20 of those employees and noted 2 (10%) employees did not work on fish and wildlife activities. Criteria Federal regulation 2 CFR 200.303 requires the auditee to establish and maintain effective internal control over federal awards that provides reasonable assurance the auditee is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of federal awards. Also, Subpart E of federal regulation 2 CFR 200 requires costs charged to federal programs be necessary and reasonable for the administration of the federal award and be in accordance with the relative benefits received by the program. In addition, federal regulation 2 CFR 200.306 requires costs used for matching be allowable costs to the federal award. Cause DNR informed us because of an oversight error, it did not timely identify these employees to be removed from the monthly telecommunication bill. Effect DNR charged the Fish and Wildlife Cluster for telecommunication expenditures related to employees who worked on non-fish and wildlife activities. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs None. Recommendation We recommend DNR ensure that telecommunication expenditures charged to the Fish and Wildlife Cluster are incurred for fish and wildlife activities. Management Views DNR agrees with the finding.
FINDING 2023-024 Fish and Wildlife Cluster, ALN 15.605, 15.611, and 15.626, Activities Allowed or Unallowed; Allowable Costs/Cost Principles; and Matching, Level of Effort, and Earmarking - Inappropriate Telecommunication Expenditures See Schedule of Findings and Questioned Costs for chart/table. Condition The Department of Natural Resources (DNR) did not ensure that telecommunication expenditures charged to the Fish and Wildlife Cluster were incurred for fish and wildlife activities. We reviewed 1 sampled telecommunication transaction related to 196 employees. We sampled 20 of those employees and noted 2 (10%) employees did not work on fish and wildlife activities. Criteria Federal regulation 2 CFR 200.303 requires the auditee to establish and maintain effective internal control over federal awards that provides reasonable assurance the auditee is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of federal awards. Also, Subpart E of federal regulation 2 CFR 200 requires costs charged to federal programs be necessary and reasonable for the administration of the federal award and be in accordance with the relative benefits received by the program. In addition, federal regulation 2 CFR 200.306 requires costs used for matching be allowable costs to the federal award. Cause DNR informed us because of an oversight error, it did not timely identify these employees to be removed from the monthly telecommunication bill. Effect DNR charged the Fish and Wildlife Cluster for telecommunication expenditures related to employees who worked on non-fish and wildlife activities. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs None. Recommendation We recommend DNR ensure that telecommunication expenditures charged to the Fish and Wildlife Cluster are incurred for fish and wildlife activities. Management Views DNR agrees with the finding.
FINDING 2023-024 Fish and Wildlife Cluster, ALN 15.605, 15.611, and 15.626, Activities Allowed or Unallowed; Allowable Costs/Cost Principles; and Matching, Level of Effort, and Earmarking - Inappropriate Telecommunication Expenditures See Schedule of Findings and Questioned Costs for chart/table. Condition The Department of Natural Resources (DNR) did not ensure that telecommunication expenditures charged to the Fish and Wildlife Cluster were incurred for fish and wildlife activities. We reviewed 1 sampled telecommunication transaction related to 196 employees. We sampled 20 of those employees and noted 2 (10%) employees did not work on fish and wildlife activities. Criteria Federal regulation 2 CFR 200.303 requires the auditee to establish and maintain effective internal control over federal awards that provides reasonable assurance the auditee is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of federal awards. Also, Subpart E of federal regulation 2 CFR 200 requires costs charged to federal programs be necessary and reasonable for the administration of the federal award and be in accordance with the relative benefits received by the program. In addition, federal regulation 2 CFR 200.306 requires costs used for matching be allowable costs to the federal award. Cause DNR informed us because of an oversight error, it did not timely identify these employees to be removed from the monthly telecommunication bill. Effect DNR charged the Fish and Wildlife Cluster for telecommunication expenditures related to employees who worked on non-fish and wildlife activities. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs None. Recommendation We recommend DNR ensure that telecommunication expenditures charged to the Fish and Wildlife Cluster are incurred for fish and wildlife activities. Management Views DNR agrees with the finding.
FINDING 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
FINDING 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
FINDING 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
FINDING 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
FINDING 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
FINDING 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
FINDING 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
FINDING 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
FINDING 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
FINDING 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
FINDING 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
FINDING 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
FINDING 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.