Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Department of Environmental Protection Finding 2022 ? 005: ALN 15.252 ? Abandoned Mine Land Reclamation A Material Weakness and Material Noncompliance Exist at the Department of Environmental Protection Related to Subrecipient Monitoring (A Similar Condition Was Noted in Prior Year Finding 2021-004) Federal Grant Number(s) and Year(s): S21AF10015 (01/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 09/30/2023), S20AF20006 (01/01/2020 ?? 12/31/2022), S19AF20006 (01/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2022), S18AF20004 (11/01/2017 ?10/31/2023) Type of Finding: Material Weakness, Material Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: The Department of Environmental Protection (DEP) administers the Abandoned Mine Land Reclamation (AMLR) program funded by the United States Department of the Interior (DOI). During the fiscal year ended June 30, 2022, DEP expended $49,400,302 within the AMLR program, of which $13,270,381 was paid to 18 subrecipients with whom DEP executed subrecipient agreements to provide abandoned mine land reclamation repairs and services throughout Pennsylvania. Our audit testing disclosed that DEP did not conduct risk assessments or program monitoring of these subrecipient expenditures during the fiscal year ended June 30, 2022, since DEP considered these entities to be contractors and not subrecipients. Based on a recent determination made by DEP, these entities should be categorized as subrecipients. As such, DEP began implementing procedures to ensure federal regulations are met regarding subrecipient agreements. However, these procedures were implemented subsequent to the fiscal year ended June 30, 2022. While Single Audits of the AMLR subrecipients may be conducted each year, this auditing activity does not compensate for the lack of during-the-award program monitoring, since the timing, focus, and scope of subrecipient auditing activities after year end are different than compliance monitoring to be performed by program officials during the year. Criteria: As part of administering the AMLR program, DEP must have policies, procedures, and controls in place to ensure compliance with federal requirements within contract requirements and regulations. 2 CFR Section 200.332, Requirements for pass through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the pass-through entity. (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for audit findings pertaining to the Federal award provided to the subrecipient from the pass-through entity as required by ? 200.521 [Management decision]. Finding 2022 ? 005: (continued) (e) Depending upon the pass-through entity's assessment of risk posed by the subrecipient (as described in paragraph (b) of this section), the following monitoring tools may be useful for the pass-through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals: (1) Providing subrecipients with training and technical assistance on program-related matters; and (2) Performing on-site reviews of the subrecipient's program operations; (3) Arranging for agreed-upon-procedures engagements as described in ?200.425 [Audit services]. The standard contract agreement between DEP and the local grantee states, in part: Audit/Compliance Review Requirements - The contractor must comply with all applicable federal and state grant requirements including the Single Audit Act Amendments of 1996; 2 CFR Part 200 as amended; and any other applicable law or regulation, and any amendment to such other applicable law or regulation that may be enacted or promulgated by the federal government. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: In previous years, DEP management considered these entities as contractors for whom subrecipient monitoring requirements were not applicable. However, based on recent determinations, DEP acknowledges these entities as subrecipients, not contractors, subject to federal subrecipient requirements. Effect: Without the completion of risk assessments and subrecipient monitoring, DEP cannot ensure compliance with federal statutes, regulations, and the terms and conditions of the subrecipient contracts, confirm that local subrecipients are performing satisfactory work, ensure the efficient use of program resources, and minimize the risk for fraud and abuse. Completing monitoring activities is essential for DEP to determine whether the local agencies are complying with federal regulations and spending grant funds appropriately. Recommendation: We recommend that DEP continue to develop and implement written policies and procedures for performing risk based during-the-award subrecipient monitoring and implement them immediately to ensure timely subrecipient compliance with federal regulations. On-site monitoring visits by state officials should be supported by documentation to show the monitoring performed, areas examined, conclusions reached, and that the monitoring was performed in compliance with applicable regulations. Agency Response: The Department of Environmental Protection agrees with the facts as presented in this finding. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 013: ALN 93.323 ? Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) State Agencies Did Not Identify the Federal Award Information and Applicable Requirements at the Time of the Subaward and Did Not Evaluate Each Subrecipient?s Risk of Noncompliance as Required by the Uniform Grant Guidance (A Similar Condition Was Noted in Prior Year Finding 2021-014) Federal Grant Number(s) and Year(s): NU50CK000527 (8/01/2019 ? 7/31/2024), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 1901PATANF (10/01/2018 ? 9/30/2019), 2101PAADPT (10/01/2020 ? 9/30/2021), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022) Type of Finding: Significant Deficiency, Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: The Uniform Guidance in 2 CFR Section 200 applies to the major programs listed above for the fiscal year ended June 30, 2022. Our testing disclosed that the Pennsylvania Department of Human Services (DHS) did not identify the federal award information and applicable requirements in subrecipient award documents. Additionally, the DHS and the Pennsylvania Department of Health (DOH) did not adequately evaluate each subrecipient?s risk of noncompliance for the purpose of determining the appropriate subrecipient monitoring related to the subaward. This represents an internal control weakness which could cause subrecipients to be improperly informed of federal award information and may result in inadequate monitoring by the state agencies. Also, it could cause the omission or improper identification of program expenditures on subrecipients? Schedules of Expenditures of Federal Awards (SEFAs). The following chart shows which federal award information required by 2 CFR Section 200 was omitted (as indicated by ?No?) from the subrecipient award documents at the time of the subaward and which major programs did not have a state agency evaluation of each subrecipient?s risk of noncompliance. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Finding 2022 ? 013: (continued) SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE (The cells with a hyphen in the table indicate that the federal award information was included in the subrecipient award documents or was not applicable for the respective major program.) (1) Although an evaluation of subrecipient risk was conducted, the only risk factor used in the evaluation was the error rate detected for the county subrecipients. The evaluation is deemed inadequate since there was no written evidence that the risk assessment considered other risk factors, such as the risk factors identified in 2 CFR Section 200.332. Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes: (1) Federal Award Identification. (iii) Federal Award Identification Number (FAIN); (iv) Federal Award Date (see the definition of Federal Award date in section 200.1) of award to the recipient by the Federal agency; (v) Subaward Period of Performance Start and End Date; (xi) Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the pass-through entity; (xii) Assistance Listings Number and Title; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of disbursement; (6) Appropriate terms and conditions concerning closeout of the subaward. (b) Evaluate each subrecipient?s risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring described in paragraphs (d) and (e) of this section, which may include consideration of such factors as: (1) The subrecipient?s prior experience with the same or similar subawards; (2) The results of previous audits including whether or not the subrecipient receives a Single Audit in accordance with Subpart F [Audit Requirements] of this part, and the extent to which the same or similar subaward has been audited as a major program; (3) Whether the subrecipient has new personnel or new or substantially changed systems; and (4) The extent and results of Federal awarding agency monitoring (e.g., if the subrecipient also receives Federal awards directly from a Federal awarding agency) Finding 2022 ? 013: (continued) Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should identify, analyze, and respond to risks related to achieving the defined objectives. Management should identify, analyze, and respond to significant changes that could impact the internal control system. Cause: In general, DHS?s process for subrecipient award monitoring did not identify the omission of required elements from the grant awards. In addition, the risk assessments performed by DHS and DOH were not properly documented. Effect: Excluding the federal grant award information at the time of the subaward may cause subrecipients and their auditors to be uninformed about specific program and other regulations that apply to the funds they receive. There is also the potential for subrecipients to have incomplete SEFAs in their Single Audit reports submitted to the Commonwealth, and federal funds may not be properly audited at the subrecipient level in accordance with the Single Audit Act and Uniform Guidance. Not evaluating each subrecipient?s risk of noncompliance for purposes of determining the appropriate subrecipient monitoring related to the subaward may result in subrecipients using the subaward for unauthorized purposes or in violation of the terms and conditions of the subaward, and state agency monitoring would not detect this noncompliance and ensure it is corrected in a timely manner. Recommendation: DHS should develop policies and reporting mechanisms to ensure all required federal award information is disseminated to all subrecipients at the time of the subaward to ensure subrecipient compliance with the Uniform Guidance in 2 CFR Section 200 and other applicable federal regulations. In addition, DHS should correspond with applicable subrecipients to ensure they are aware of the correct federal award information and review applicable subaward documents prior to issuance to ensure federal information is complete and accurate. DHS and DOH should implement procedures to adequately document their evaluation of each subrecipient?s risk of noncompliance as cited in 2 CFR Section 200.332 for purposes of determining the appropriate subrecipient monitoring related to the subaward. DHS Response: DHS agrees with this finding. DOH Response: DOH agrees with this finding. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 013: ALN 93.323 ? Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) State Agencies Did Not Identify the Federal Award Information and Applicable Requirements at the Time of the Subaward and Did Not Evaluate Each Subrecipient?s Risk of Noncompliance as Required by the Uniform Grant Guidance (A Similar Condition Was Noted in Prior Year Finding 2021-014) Federal Grant Number(s) and Year(s): NU50CK000527 (8/01/2019 ? 7/31/2024), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 1901PATANF (10/01/2018 ? 9/30/2019), 2101PAADPT (10/01/2020 ? 9/30/2021), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022) Type of Finding: Significant Deficiency, Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: The Uniform Guidance in 2 CFR Section 200 applies to the major programs listed above for the fiscal year ended June 30, 2022. Our testing disclosed that the Pennsylvania Department of Human Services (DHS) did not identify the federal award information and applicable requirements in subrecipient award documents. Additionally, the DHS and the Pennsylvania Department of Health (DOH) did not adequately evaluate each subrecipient?s risk of noncompliance for the purpose of determining the appropriate subrecipient monitoring related to the subaward. This represents an internal control weakness which could cause subrecipients to be improperly informed of federal award information and may result in inadequate monitoring by the state agencies. Also, it could cause the omission or improper identification of program expenditures on subrecipients? Schedules of Expenditures of Federal Awards (SEFAs). The following chart shows which federal award information required by 2 CFR Section 200 was omitted (as indicated by ?No?) from the subrecipient award documents at the time of the subaward and which major programs did not have a state agency evaluation of each subrecipient?s risk of noncompliance. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Finding 2022 ? 013: (continued) SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE (The cells with a hyphen in the table indicate that the federal award information was included in the subrecipient award documents or was not applicable for the respective major program.) (1) Although an evaluation of subrecipient risk was conducted, the only risk factor used in the evaluation was the error rate detected for the county subrecipients. The evaluation is deemed inadequate since there was no written evidence that the risk assessment considered other risk factors, such as the risk factors identified in 2 CFR Section 200.332. Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes: (1) Federal Award Identification. (iii) Federal Award Identification Number (FAIN); (iv) Federal Award Date (see the definition of Federal Award date in section 200.1) of award to the recipient by the Federal agency; (v) Subaward Period of Performance Start and End Date; (xi) Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the pass-through entity; (xii) Assistance Listings Number and Title; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of disbursement; (6) Appropriate terms and conditions concerning closeout of the subaward. (b) Evaluate each subrecipient?s risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring described in paragraphs (d) and (e) of this section, which may include consideration of such factors as: (1) The subrecipient?s prior experience with the same or similar subawards; (2) The results of previous audits including whether or not the subrecipient receives a Single Audit in accordance with Subpart F [Audit Requirements] of this part, and the extent to which the same or similar subaward has been audited as a major program; (3) Whether the subrecipient has new personnel or new or substantially changed systems; and (4) The extent and results of Federal awarding agency monitoring (e.g., if the subrecipient also receives Federal awards directly from a Federal awarding agency) Finding 2022 ? 013: (continued) Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should identify, analyze, and respond to risks related to achieving the defined objectives. Management should identify, analyze, and respond to significant changes that could impact the internal control system. Cause: In general, DHS?s process for subrecipient award monitoring did not identify the omission of required elements from the grant awards. In addition, the risk assessments performed by DHS and DOH were not properly documented. Effect: Excluding the federal grant award information at the time of the subaward may cause subrecipients and their auditors to be uninformed about specific program and other regulations that apply to the funds they receive. There is also the potential for subrecipients to have incomplete SEFAs in their Single Audit reports submitted to the Commonwealth, and federal funds may not be properly audited at the subrecipient level in accordance with the Single Audit Act and Uniform Guidance. Not evaluating each subrecipient?s risk of noncompliance for purposes of determining the appropriate subrecipient monitoring related to the subaward may result in subrecipients using the subaward for unauthorized purposes or in violation of the terms and conditions of the subaward, and state agency monitoring would not detect this noncompliance and ensure it is corrected in a timely manner. Recommendation: DHS should develop policies and reporting mechanisms to ensure all required federal award information is disseminated to all subrecipients at the time of the subaward to ensure subrecipient compliance with the Uniform Guidance in 2 CFR Section 200 and other applicable federal regulations. In addition, DHS should correspond with applicable subrecipients to ensure they are aware of the correct federal award information and review applicable subaward documents prior to issuance to ensure federal information is complete and accurate. DHS and DOH should implement procedures to adequately document their evaluation of each subrecipient?s risk of noncompliance as cited in 2 CFR Section 200.332 for purposes of determining the appropriate subrecipient monitoring related to the subaward. DHS Response: DHS agrees with this finding. DOH Response: DOH agrees with this finding. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Department of Human Services Finding 2022 ? 008: ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) Department of Human Services Did Not Validate Financial Information as Part of Its On-Site Monitoring of Temporary Assistance for Needy Families Subrecipients (A Similar Condition Was Noted in Prior Year Finding 2021-007) Federal Grant Number(s) and Year(s): 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 1801PATANF (10/01/2017 ? 9/30/2018), 1701PATANF (10/01/2016 ? 9/30/2017) Type of Finding: Significant Deficiency, Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: During the fiscal year ended June 30, 2022, the Department of Human Services (DHS) paid $79.5 million in Temporary Assistance for Needy Families (TANF) funding to subrecipients within the New Directions, Cash Grants, and Alternatives to Abortion appropriations (or 22.1 percent) out of total federal TANF expenditures of $360.2 million reported on the June 30, 2022 Schedule of Expenditures of Federal Awards. Our testing of DHS?s during-the-award monitoring of subrecipients for the fiscal year ended June 30, 2022 disclosed that DHS performed on-site monitoring for 20 out of 21 subrecipients selected for testing. The on-site monitoring that was performed consisted of reviews of program operations including design, data entry accuracy and timeliness, case management analysis, and program payment performance goals. The on-site monitoring also included a review of a sample of TANF recipient case files to ensure that the recipients? TANF activities were documented and accurately entered in the Commonwealth?s Workforce Development System. However, DHS?s monitoring procedures for the 20 subrecipients were not adequate as they did not include a review or monitoring of subrecipient financial records, which would provide an assessment of a subrecipient?s compliance with applicable federal regulations. Although DHS?s monitoring procedures include reviewing subrecipient completed questionnaires for selected subrecipients that had questions related to financial matters, DHS?s monitoring personnel did not review subrecipient financial records. For example, DHS did not perform procedures to ensure subrecipient invoices agreed to the books and records of the subrecipient and that the records were adequate to support the allowability of costs paid by DHS during the award period. In addition, DHS?s monitoring procedures did not include an evaluation of the operating effectiveness of DHS subrecipients? procedures to monitor Single Audits and any related findings. Our testing of the 21 subrecipients noted above included follow up on one subrecipient identified in the prior year finding as not being on-site monitored by DHS when the risk assessment warranted on-site monitoring. Our follow-up during the current audit period disclosed that DHS did not conduct on-site monitoring for this subrecipient during the fiscal year ended June 30, 2022. Since the on-site monitoring was not completed, internal control weaknesses, noncompliance, and questioned costs may have existed and remained undetected during the current audit period. This subrecipient received $980,923 of TANF funds during the fiscal year ended June 30, 2022. Criteria: 45 CFR Section 75.352, Requirements for pass-through entities, states: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the pass-through entity. Finding 2022 ? 008: (continued) (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and other means. (3) Issuing a management decision for audit findings pertaining to the Federal award provided to the subrecipient from the pass-through entity as required by ? 75.521 [Management decision]. 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (e) Depending upon the pass-through entity's assessment of risk posed by the subrecipient (as described in paragraph (b) of this section), the following monitoring tools may be useful for the pass-through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals: (1) Providing subrecipients with training and technical assistance on program-related matters; and (2) Performing on-site reviews of the subrecipient's program operations; (3) Arranging for agreed-upon-procedures engagements as described in ?200.425 [Audit services]. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: DHS planned to implement new during-the-award monitoring procedures to be used for the on-site monitoring of subrecipients, but these procedures were not in place for monitoring conducted during the fiscal year ended June 30, 2022. Therefore, DHS has not implemented adequate during-the-award monitoring procedures of subrecipients to include testing of the financial records and the subrecipients? monitoring of Single Audits sufficient to ensure compliance with federal regulations. Regarding the one subrecipient for which on-site monitoring was not completed, DHS personnel stated that they are working with the subrecipient to obtain the necessary documentation to complete the on-site monitoring. Effect: TANF subrecipients could be operating in noncompliance with federal regulations without timely detection and correction by DHS management. Recommendation: DHS should strengthen its controls to ensure during-the-award monitoring of TANF subrecipients includes procedures to ensure that subrecipients are in compliance with applicable federal regulations. This should include examining subrecipients? financial records and ensuring that all required Single Audits were obtained by DHS subrecipients. Agency Response: DHS agrees with this finding. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 013: ALN 93.323 ? Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) State Agencies Did Not Identify the Federal Award Information and Applicable Requirements at the Time of the Subaward and Did Not Evaluate Each Subrecipient?s Risk of Noncompliance as Required by the Uniform Grant Guidance (A Similar Condition Was Noted in Prior Year Finding 2021-014) Federal Grant Number(s) and Year(s): NU50CK000527 (8/01/2019 ? 7/31/2024), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 1901PATANF (10/01/2018 ? 9/30/2019), 2101PAADPT (10/01/2020 ? 9/30/2021), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022) Type of Finding: Significant Deficiency, Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: The Uniform Guidance in 2 CFR Section 200 applies to the major programs listed above for the fiscal year ended June 30, 2022. Our testing disclosed that the Pennsylvania Department of Human Services (DHS) did not identify the federal award information and applicable requirements in subrecipient award documents. Additionally, the DHS and the Pennsylvania Department of Health (DOH) did not adequately evaluate each subrecipient?s risk of noncompliance for the purpose of determining the appropriate subrecipient monitoring related to the subaward. This represents an internal control weakness which could cause subrecipients to be improperly informed of federal award information and may result in inadequate monitoring by the state agencies. Also, it could cause the omission or improper identification of program expenditures on subrecipients? Schedules of Expenditures of Federal Awards (SEFAs). The following chart shows which federal award information required by 2 CFR Section 200 was omitted (as indicated by ?No?) from the subrecipient award documents at the time of the subaward and which major programs did not have a state agency evaluation of each subrecipient?s risk of noncompliance. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Finding 2022 ? 013: (continued) SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE (The cells with a hyphen in the table indicate that the federal award information was included in the subrecipient award documents or was not applicable for the respective major program.) (1) Although an evaluation of subrecipient risk was conducted, the only risk factor used in the evaluation was the error rate detected for the county subrecipients. The evaluation is deemed inadequate since there was no written evidence that the risk assessment considered other risk factors, such as the risk factors identified in 2 CFR Section 200.332. Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes: (1) Federal Award Identification. (iii) Federal Award Identification Number (FAIN); (iv) Federal Award Date (see the definition of Federal Award date in section 200.1) of award to the recipient by the Federal agency; (v) Subaward Period of Performance Start and End Date; (xi) Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the pass-through entity; (xii) Assistance Listings Number and Title; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of disbursement; (6) Appropriate terms and conditions concerning closeout of the subaward. (b) Evaluate each subrecipient?s risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring described in paragraphs (d) and (e) of this section, which may include consideration of such factors as: (1) The subrecipient?s prior experience with the same or similar subawards; (2) The results of previous audits including whether or not the subrecipient receives a Single Audit in accordance with Subpart F [Audit Requirements] of this part, and the extent to which the same or similar subaward has been audited as a major program; (3) Whether the subrecipient has new personnel or new or substantially changed systems; and (4) The extent and results of Federal awarding agency monitoring (e.g., if the subrecipient also receives Federal awards directly from a Federal awarding agency) Finding 2022 ? 013: (continued) Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should identify, analyze, and respond to risks related to achieving the defined objectives. Management should identify, analyze, and respond to significant changes that could impact the internal control system. Cause: In general, DHS?s process for subrecipient award monitoring did not identify the omission of required elements from the grant awards. In addition, the risk assessments performed by DHS and DOH were not properly documented. Effect: Excluding the federal grant award information at the time of the subaward may cause subrecipients and their auditors to be uninformed about specific program and other regulations that apply to the funds they receive. There is also the potential for subrecipients to have incomplete SEFAs in their Single Audit reports submitted to the Commonwealth, and federal funds may not be properly audited at the subrecipient level in accordance with the Single Audit Act and Uniform Guidance. Not evaluating each subrecipient?s risk of noncompliance for purposes of determining the appropriate subrecipient monitoring related to the subaward may result in subrecipients using the subaward for unauthorized purposes or in violation of the terms and conditions of the subaward, and state agency monitoring would not detect this noncompliance and ensure it is corrected in a timely manner. Recommendation: DHS should develop policies and reporting mechanisms to ensure all required federal award information is disseminated to all subrecipients at the time of the subaward to ensure subrecipient compliance with the Uniform Guidance in 2 CFR Section 200 and other applicable federal regulations. In addition, DHS should correspond with applicable subrecipients to ensure they are aware of the correct federal award information and review applicable subaward documents prior to issuance to ensure federal information is complete and accurate. DHS and DOH should implement procedures to adequately document their evaluation of each subrecipient?s risk of noncompliance as cited in 2 CFR Section 200.332 for purposes of determining the appropriate subrecipient monitoring related to the subaward. DHS Response: DHS agrees with this finding. DOH Response: DOH agrees with this finding. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Department of Human Services Finding 2022 ? 008: ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) Department of Human Services Did Not Validate Financial Information as Part of Its On-Site Monitoring of Temporary Assistance for Needy Families Subrecipients (A Similar Condition Was Noted in Prior Year Finding 2021-007) Federal Grant Number(s) and Year(s): 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 1801PATANF (10/01/2017 ? 9/30/2018), 1701PATANF (10/01/2016 ? 9/30/2017) Type of Finding: Significant Deficiency, Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: During the fiscal year ended June 30, 2022, the Department of Human Services (DHS) paid $79.5 million in Temporary Assistance for Needy Families (TANF) funding to subrecipients within the New Directions, Cash Grants, and Alternatives to Abortion appropriations (or 22.1 percent) out of total federal TANF expenditures of $360.2 million reported on the June 30, 2022 Schedule of Expenditures of Federal Awards. Our testing of DHS?s during-the-award monitoring of subrecipients for the fiscal year ended June 30, 2022 disclosed that DHS performed on-site monitoring for 20 out of 21 subrecipients selected for testing. The on-site monitoring that was performed consisted of reviews of program operations including design, data entry accuracy and timeliness, case management analysis, and program payment performance goals. The on-site monitoring also included a review of a sample of TANF recipient case files to ensure that the recipients? TANF activities were documented and accurately entered in the Commonwealth?s Workforce Development System. However, DHS?s monitoring procedures for the 20 subrecipients were not adequate as they did not include a review or monitoring of subrecipient financial records, which would provide an assessment of a subrecipient?s compliance with applicable federal regulations. Although DHS?s monitoring procedures include reviewing subrecipient completed questionnaires for selected subrecipients that had questions related to financial matters, DHS?s monitoring personnel did not review subrecipient financial records. For example, DHS did not perform procedures to ensure subrecipient invoices agreed to the books and records of the subrecipient and that the records were adequate to support the allowability of costs paid by DHS during the award period. In addition, DHS?s monitoring procedures did not include an evaluation of the operating effectiveness of DHS subrecipients? procedures to monitor Single Audits and any related findings. Our testing of the 21 subrecipients noted above included follow up on one subrecipient identified in the prior year finding as not being on-site monitored by DHS when the risk assessment warranted on-site monitoring. Our follow-up during the current audit period disclosed that DHS did not conduct on-site monitoring for this subrecipient during the fiscal year ended June 30, 2022. Since the on-site monitoring was not completed, internal control weaknesses, noncompliance, and questioned costs may have existed and remained undetected during the current audit period. This subrecipient received $980,923 of TANF funds during the fiscal year ended June 30, 2022. Criteria: 45 CFR Section 75.352, Requirements for pass-through entities, states: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the pass-through entity. Finding 2022 ? 008: (continued) (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and other means. (3) Issuing a management decision for audit findings pertaining to the Federal award provided to the subrecipient from the pass-through entity as required by ? 75.521 [Management decision]. 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (e) Depending upon the pass-through entity's assessment of risk posed by the subrecipient (as described in paragraph (b) of this section), the following monitoring tools may be useful for the pass-through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals: (1) Providing subrecipients with training and technical assistance on program-related matters; and (2) Performing on-site reviews of the subrecipient's program operations; (3) Arranging for agreed-upon-procedures engagements as described in ?200.425 [Audit services]. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: DHS planned to implement new during-the-award monitoring procedures to be used for the on-site monitoring of subrecipients, but these procedures were not in place for monitoring conducted during the fiscal year ended June 30, 2022. Therefore, DHS has not implemented adequate during-the-award monitoring procedures of subrecipients to include testing of the financial records and the subrecipients? monitoring of Single Audits sufficient to ensure compliance with federal regulations. Regarding the one subrecipient for which on-site monitoring was not completed, DHS personnel stated that they are working with the subrecipient to obtain the necessary documentation to complete the on-site monitoring. Effect: TANF subrecipients could be operating in noncompliance with federal regulations without timely detection and correction by DHS management. Recommendation: DHS should strengthen its controls to ensure during-the-award monitoring of TANF subrecipients includes procedures to ensure that subrecipients are in compliance with applicable federal regulations. This should include examining subrecipients? financial records and ensuring that all required Single Audits were obtained by DHS subrecipients. Agency Response: DHS agrees with this finding. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 013: ALN 93.323 ? Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) State Agencies Did Not Identify the Federal Award Information and Applicable Requirements at the Time of the Subaward and Did Not Evaluate Each Subrecipient?s Risk of Noncompliance as Required by the Uniform Grant Guidance (A Similar Condition Was Noted in Prior Year Finding 2021-014) Federal Grant Number(s) and Year(s): NU50CK000527 (8/01/2019 ? 7/31/2024), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 1901PATANF (10/01/2018 ? 9/30/2019), 2101PAADPT (10/01/2020 ? 9/30/2021), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022) Type of Finding: Significant Deficiency, Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: The Uniform Guidance in 2 CFR Section 200 applies to the major programs listed above for the fiscal year ended June 30, 2022. Our testing disclosed that the Pennsylvania Department of Human Services (DHS) did not identify the federal award information and applicable requirements in subrecipient award documents. Additionally, the DHS and the Pennsylvania Department of Health (DOH) did not adequately evaluate each subrecipient?s risk of noncompliance for the purpose of determining the appropriate subrecipient monitoring related to the subaward. This represents an internal control weakness which could cause subrecipients to be improperly informed of federal award information and may result in inadequate monitoring by the state agencies. Also, it could cause the omission or improper identification of program expenditures on subrecipients? Schedules of Expenditures of Federal Awards (SEFAs). The following chart shows which federal award information required by 2 CFR Section 200 was omitted (as indicated by ?No?) from the subrecipient award documents at the time of the subaward and which major programs did not have a state agency evaluation of each subrecipient?s risk of noncompliance. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Finding 2022 ? 013: (continued) SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE (The cells with a hyphen in the table indicate that the federal award information was included in the subrecipient award documents or was not applicable for the respective major program.) (1) Although an evaluation of subrecipient risk was conducted, the only risk factor used in the evaluation was the error rate detected for the county subrecipients. The evaluation is deemed inadequate since there was no written evidence that the risk assessment considered other risk factors, such as the risk factors identified in 2 CFR Section 200.332. Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes: (1) Federal Award Identification. (iii) Federal Award Identification Number (FAIN); (iv) Federal Award Date (see the definition of Federal Award date in section 200.1) of award to the recipient by the Federal agency; (v) Subaward Period of Performance Start and End Date; (xi) Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the pass-through entity; (xii) Assistance Listings Number and Title; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of disbursement; (6) Appropriate terms and conditions concerning closeout of the subaward. (b) Evaluate each subrecipient?s risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring described in paragraphs (d) and (e) of this section, which may include consideration of such factors as: (1) The subrecipient?s prior experience with the same or similar subawards; (2) The results of previous audits including whether or not the subrecipient receives a Single Audit in accordance with Subpart F [Audit Requirements] of this part, and the extent to which the same or similar subaward has been audited as a major program; (3) Whether the subrecipient has new personnel or new or substantially changed systems; and (4) The extent and results of Federal awarding agency monitoring (e.g., if the subrecipient also receives Federal awards directly from a Federal awarding agency) Finding 2022 ? 013: (continued) Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should identify, analyze, and respond to risks related to achieving the defined objectives. Management should identify, analyze, and respond to significant changes that could impact the internal control system. Cause: In general, DHS?s process for subrecipient award monitoring did not identify the omission of required elements from the grant awards. In addition, the risk assessments performed by DHS and DOH were not properly documented. Effect: Excluding the federal grant award information at the time of the subaward may cause subrecipients and their auditors to be uninformed about specific program and other regulations that apply to the funds they receive. There is also the potential for subrecipients to have incomplete SEFAs in their Single Audit reports submitted to the Commonwealth, and federal funds may not be properly audited at the subrecipient level in accordance with the Single Audit Act and Uniform Guidance. Not evaluating each subrecipient?s risk of noncompliance for purposes of determining the appropriate subrecipient monitoring related to the subaward may result in subrecipients using the subaward for unauthorized purposes or in violation of the terms and conditions of the subaward, and state agency monitoring would not detect this noncompliance and ensure it is corrected in a timely manner. Recommendation: DHS should develop policies and reporting mechanisms to ensure all required federal award information is disseminated to all subrecipients at the time of the subaward to ensure subrecipient compliance with the Uniform Guidance in 2 CFR Section 200 and other applicable federal regulations. In addition, DHS should correspond with applicable subrecipients to ensure they are aware of the correct federal award information and review applicable subaward documents prior to issuance to ensure federal information is complete and accurate. DHS and DOH should implement procedures to adequately document their evaluation of each subrecipient?s risk of noncompliance as cited in 2 CFR Section 200.332 for purposes of determining the appropriate subrecipient monitoring related to the subaward. DHS Response: DHS agrees with this finding. DOH Response: DOH agrees with this finding. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 013: ALN 93.323 ? Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) State Agencies Did Not Identify the Federal Award Information and Applicable Requirements at the Time of the Subaward and Did Not Evaluate Each Subrecipient?s Risk of Noncompliance as Required by the Uniform Grant Guidance (A Similar Condition Was Noted in Prior Year Finding 2021-014) Federal Grant Number(s) and Year(s): NU50CK000527 (8/01/2019 ? 7/31/2024), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 1901PATANF (10/01/2018 ? 9/30/2019), 2101PAADPT (10/01/2020 ? 9/30/2021), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022) Type of Finding: Significant Deficiency, Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: The Uniform Guidance in 2 CFR Section 200 applies to the major programs listed above for the fiscal year ended June 30, 2022. Our testing disclosed that the Pennsylvania Department of Human Services (DHS) did not identify the federal award information and applicable requirements in subrecipient award documents. Additionally, the DHS and the Pennsylvania Department of Health (DOH) did not adequately evaluate each subrecipient?s risk of noncompliance for the purpose of determining the appropriate subrecipient monitoring related to the subaward. This represents an internal control weakness which could cause subrecipients to be improperly informed of federal award information and may result in inadequate monitoring by the state agencies. Also, it could cause the omission or improper identification of program expenditures on subrecipients? Schedules of Expenditures of Federal Awards (SEFAs). The following chart shows which federal award information required by 2 CFR Section 200 was omitted (as indicated by ?No?) from the subrecipient award documents at the time of the subaward and which major programs did not have a state agency evaluation of each subrecipient?s risk of noncompliance. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Finding 2022 ? 013: (continued) SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE (The cells with a hyphen in the table indicate that the federal award information was included in the subrecipient award documents or was not applicable for the respective major program.) (1) Although an evaluation of subrecipient risk was conducted, the only risk factor used in the evaluation was the error rate detected for the county subrecipients. The evaluation is deemed inadequate since there was no written evidence that the risk assessment considered other risk factors, such as the risk factors identified in 2 CFR Section 200.332. Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes: (1) Federal Award Identification. (iii) Federal Award Identification Number (FAIN); (iv) Federal Award Date (see the definition of Federal Award date in section 200.1) of award to the recipient by the Federal agency; (v) Subaward Period of Performance Start and End Date; (xi) Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the pass-through entity; (xii) Assistance Listings Number and Title; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of disbursement; (6) Appropriate terms and conditions concerning closeout of the subaward. (b) Evaluate each subrecipient?s risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring described in paragraphs (d) and (e) of this section, which may include consideration of such factors as: (1) The subrecipient?s prior experience with the same or similar subawards; (2) The results of previous audits including whether or not the subrecipient receives a Single Audit in accordance with Subpart F [Audit Requirements] of this part, and the extent to which the same or similar subaward has been audited as a major program; (3) Whether the subrecipient has new personnel or new or substantially changed systems; and (4) The extent and results of Federal awarding agency monitoring (e.g., if the subrecipient also receives Federal awards directly from a Federal awarding agency) Finding 2022 ? 013: (continued) Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should identify, analyze, and respond to risks related to achieving the defined objectives. Management should identify, analyze, and respond to significant changes that could impact the internal control system. Cause: In general, DHS?s process for subrecipient award monitoring did not identify the omission of required elements from the grant awards. In addition, the risk assessments performed by DHS and DOH were not properly documented. Effect: Excluding the federal grant award information at the time of the subaward may cause subrecipients and their auditors to be uninformed about specific program and other regulations that apply to the funds they receive. There is also the potential for subrecipients to have incomplete SEFAs in their Single Audit reports submitted to the Commonwealth, and federal funds may not be properly audited at the subrecipient level in accordance with the Single Audit Act and Uniform Guidance. Not evaluating each subrecipient?s risk of noncompliance for purposes of determining the appropriate subrecipient monitoring related to the subaward may result in subrecipients using the subaward for unauthorized purposes or in violation of the terms and conditions of the subaward, and state agency monitoring would not detect this noncompliance and ensure it is corrected in a timely manner. Recommendation: DHS should develop policies and reporting mechanisms to ensure all required federal award information is disseminated to all subrecipients at the time of the subaward to ensure subrecipient compliance with the Uniform Guidance in 2 CFR Section 200 and other applicable federal regulations. In addition, DHS should correspond with applicable subrecipients to ensure they are aware of the correct federal award information and review applicable subaward documents prior to issuance to ensure federal information is complete and accurate. DHS and DOH should implement procedures to adequately document their evaluation of each subrecipient?s risk of noncompliance as cited in 2 CFR Section 200.332 for purposes of determining the appropriate subrecipient monitoring related to the subaward. DHS Response: DHS agrees with this finding. DOH Response: DOH agrees with this finding. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 013: ALN 93.323 ? Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) State Agencies Did Not Identify the Federal Award Information and Applicable Requirements at the Time of the Subaward and Did Not Evaluate Each Subrecipient?s Risk of Noncompliance as Required by the Uniform Grant Guidance (A Similar Condition Was Noted in Prior Year Finding 2021-014) Federal Grant Number(s) and Year(s): NU50CK000527 (8/01/2019 ? 7/31/2024), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 1901PATANF (10/01/2018 ? 9/30/2019), 2101PAADPT (10/01/2020 ? 9/30/2021), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022) Type of Finding: Significant Deficiency, Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: The Uniform Guidance in 2 CFR Section 200 applies to the major programs listed above for the fiscal year ended June 30, 2022. Our testing disclosed that the Pennsylvania Department of Human Services (DHS) did not identify the federal award information and applicable requirements in subrecipient award documents. Additionally, the DHS and the Pennsylvania Department of Health (DOH) did not adequately evaluate each subrecipient?s risk of noncompliance for the purpose of determining the appropriate subrecipient monitoring related to the subaward. This represents an internal control weakness which could cause subrecipients to be improperly informed of federal award information and may result in inadequate monitoring by the state agencies. Also, it could cause the omission or improper identification of program expenditures on subrecipients? Schedules of Expenditures of Federal Awards (SEFAs). The following chart shows which federal award information required by 2 CFR Section 200 was omitted (as indicated by ?No?) from the subrecipient award documents at the time of the subaward and which major programs did not have a state agency evaluation of each subrecipient?s risk of noncompliance. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Finding 2022 ? 013: (continued) SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE (The cells with a hyphen in the table indicate that the federal award information was included in the subrecipient award documents or was not applicable for the respective major program.) (1) Although an evaluation of subrecipient risk was conducted, the only risk factor used in the evaluation was the error rate detected for the county subrecipients. The evaluation is deemed inadequate since there was no written evidence that the risk assessment considered other risk factors, such as the risk factors identified in 2 CFR Section 200.332. Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes: (1) Federal Award Identification. (iii) Federal Award Identification Number (FAIN); (iv) Federal Award Date (see the definition of Federal Award date in section 200.1) of award to the recipient by the Federal agency; (v) Subaward Period of Performance Start and End Date; (xi) Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the pass-through entity; (xii) Assistance Listings Number and Title; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of disbursement; (6) Appropriate terms and conditions concerning closeout of the subaward. (b) Evaluate each subrecipient?s risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring described in paragraphs (d) and (e) of this section, which may include consideration of such factors as: (1) The subrecipient?s prior experience with the same or similar subawards; (2) The results of previous audits including whether or not the subrecipient receives a Single Audit in accordance with Subpart F [Audit Requirements] of this part, and the extent to which the same or similar subaward has been audited as a major program; (3) Whether the subrecipient has new personnel or new or substantially changed systems; and (4) The extent and results of Federal awarding agency monitoring (e.g., if the subrecipient also receives Federal awards directly from a Federal awarding agency) Finding 2022 ? 013: (continued) Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should identify, analyze, and respond to risks related to achieving the defined objectives. Management should identify, analyze, and respond to significant changes that could impact the internal control system. Cause: In general, DHS?s process for subrecipient award monitoring did not identify the omission of required elements from the grant awards. In addition, the risk assessments performed by DHS and DOH were not properly documented. Effect: Excluding the federal grant award information at the time of the subaward may cause subrecipients and their auditors to be uninformed about specific program and other regulations that apply to the funds they receive. There is also the potential for subrecipients to have incomplete SEFAs in their Single Audit reports submitted to the Commonwealth, and federal funds may not be properly audited at the subrecipient level in accordance with the Single Audit Act and Uniform Guidance. Not evaluating each subrecipient?s risk of noncompliance for purposes of determining the appropriate subrecipient monitoring related to the subaward may result in subrecipients using the subaward for unauthorized purposes or in violation of the terms and conditions of the subaward, and state agency monitoring would not detect this noncompliance and ensure it is corrected in a timely manner. Recommendation: DHS should develop policies and reporting mechanisms to ensure all required federal award information is disseminated to all subrecipients at the time of the subaward to ensure subrecipient compliance with the Uniform Guidance in 2 CFR Section 200 and other applicable federal regulations. In addition, DHS should correspond with applicable subrecipients to ensure they are aware of the correct federal award information and review applicable subaward documents prior to issuance to ensure federal information is complete and accurate. DHS and DOH should implement procedures to adequately document their evaluation of each subrecipient?s risk of noncompliance as cited in 2 CFR Section 200.332 for purposes of determining the appropriate subrecipient monitoring related to the subaward. DHS Response: DHS agrees with this finding. DOH Response: DOH agrees with this finding. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 013: ALN 93.323 ? Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) State Agencies Did Not Identify the Federal Award Information and Applicable Requirements at the Time of the Subaward and Did Not Evaluate Each Subrecipient?s Risk of Noncompliance as Required by the Uniform Grant Guidance (A Similar Condition Was Noted in Prior Year Finding 2021-014) Federal Grant Number(s) and Year(s): NU50CK000527 (8/01/2019 ? 7/31/2024), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 1901PATANF (10/01/2018 ? 9/30/2019), 2101PAADPT (10/01/2020 ? 9/30/2021), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022) Type of Finding: Significant Deficiency, Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: The Uniform Guidance in 2 CFR Section 200 applies to the major programs listed above for the fiscal year ended June 30, 2022. Our testing disclosed that the Pennsylvania Department of Human Services (DHS) did not identify the federal award information and applicable requirements in subrecipient award documents. Additionally, the DHS and the Pennsylvania Department of Health (DOH) did not adequately evaluate each subrecipient?s risk of noncompliance for the purpose of determining the appropriate subrecipient monitoring related to the subaward. This represents an internal control weakness which could cause subrecipients to be improperly informed of federal award information and may result in inadequate monitoring by the state agencies. Also, it could cause the omission or improper identification of program expenditures on subrecipients? Schedules of Expenditures of Federal Awards (SEFAs). The following chart shows which federal award information required by 2 CFR Section 200 was omitted (as indicated by ?No?) from the subrecipient award documents at the time of the subaward and which major programs did not have a state agency evaluation of each subrecipient?s risk of noncompliance. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Finding 2022 ? 013: (continued) SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE (The cells with a hyphen in the table indicate that the federal award information was included in the subrecipient award documents or was not applicable for the respective major program.) (1) Although an evaluation of subrecipient risk was conducted, the only risk factor used in the evaluation was the error rate detected for the county subrecipients. The evaluation is deemed inadequate since there was no written evidence that the risk assessment considered other risk factors, such as the risk factors identified in 2 CFR Section 200.332. Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes: (1) Federal Award Identification. (iii) Federal Award Identification Number (FAIN); (iv) Federal Award Date (see the definition of Federal Award date in section 200.1) of award to the recipient by the Federal agency; (v) Subaward Period of Performance Start and End Date; (xi) Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the pass-through entity; (xii) Assistance Listings Number and Title; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of disbursement; (6) Appropriate terms and conditions concerning closeout of the subaward. (b) Evaluate each subrecipient?s risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring described in paragraphs (d) and (e) of this section, which may include consideration of such factors as: (1) The subrecipient?s prior experience with the same or similar subawards; (2) The results of previous audits including whether or not the subrecipient receives a Single Audit in accordance with Subpart F [Audit Requirements] of this part, and the extent to which the same or similar subaward has been audited as a major program; (3) Whether the subrecipient has new personnel or new or substantially changed systems; and (4) The extent and results of Federal awarding agency monitoring (e.g., if the subrecipient also receives Federal awards directly from a Federal awarding agency) Finding 2022 ? 013: (continued) Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should identify, analyze, and respond to risks related to achieving the defined objectives. Management should identify, analyze, and respond to significant changes that could impact the internal control system. Cause: In general, DHS?s process for subrecipient award monitoring did not identify the omission of required elements from the grant awards. In addition, the risk assessments performed by DHS and DOH were not properly documented. Effect: Excluding the federal grant award information at the time of the subaward may cause subrecipients and their auditors to be uninformed about specific program and other regulations that apply to the funds they receive. There is also the potential for subrecipients to have incomplete SEFAs in their Single Audit reports submitted to the Commonwealth, and federal funds may not be properly audited at the subrecipient level in accordance with the Single Audit Act and Uniform Guidance. Not evaluating each subrecipient?s risk of noncompliance for purposes of determining the appropriate subrecipient monitoring related to the subaward may result in subrecipients using the subaward for unauthorized purposes or in violation of the terms and conditions of the subaward, and state agency monitoring would not detect this noncompliance and ensure it is corrected in a timely manner. Recommendation: DHS should develop policies and reporting mechanisms to ensure all required federal award information is disseminated to all subrecipients at the time of the subaward to ensure subrecipient compliance with the Uniform Guidance in 2 CFR Section 200 and other applicable federal regulations. In addition, DHS should correspond with applicable subrecipients to ensure they are aware of the correct federal award information and review applicable subaward documents prior to issuance to ensure federal information is complete and accurate. DHS and DOH should implement procedures to adequately document their evaluation of each subrecipient?s risk of noncompliance as cited in 2 CFR Section 200.332 for purposes of determining the appropriate subrecipient monitoring related to the subaward. DHS Response: DHS agrees with this finding. DOH Response: DOH agrees with this finding. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 013: ALN 93.323 ? Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) State Agencies Did Not Identify the Federal Award Information and Applicable Requirements at the Time of the Subaward and Did Not Evaluate Each Subrecipient?s Risk of Noncompliance as Required by the Uniform Grant Guidance (A Similar Condition Was Noted in Prior Year Finding 2021-014) Federal Grant Number(s) and Year(s): NU50CK000527 (8/01/2019 ? 7/31/2024), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 1901PATANF (10/01/2018 ? 9/30/2019), 2101PAADPT (10/01/2020 ? 9/30/2021), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022) Type of Finding: Significant Deficiency, Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: The Uniform Guidance in 2 CFR Section 200 applies to the major programs listed above for the fiscal year ended June 30, 2022. Our testing disclosed that the Pennsylvania Department of Human Services (DHS) did not identify the federal award information and applicable requirements in subrecipient award documents. Additionally, the DHS and the Pennsylvania Department of Health (DOH) did not adequately evaluate each subrecipient?s risk of noncompliance for the purpose of determining the appropriate subrecipient monitoring related to the subaward. This represents an internal control weakness which could cause subrecipients to be improperly informed of federal award information and may result in inadequate monitoring by the state agencies. Also, it could cause the omission or improper identification of program expenditures on subrecipients? Schedules of Expenditures of Federal Awards (SEFAs). The following chart shows which federal award information required by 2 CFR Section 200 was omitted (as indicated by ?No?) from the subrecipient award documents at the time of the subaward and which major programs did not have a state agency evaluation of each subrecipient?s risk of noncompliance. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Finding 2022 ? 013: (continued) SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE (The cells with a hyphen in the table indicate that the federal award information was included in the subrecipient award documents or was not applicable for the respective major program.) (1) Although an evaluation of subrecipient risk was conducted, the only risk factor used in the evaluation was the error rate detected for the county subrecipients. The evaluation is deemed inadequate since there was no written evidence that the risk assessment considered other risk factors, such as the risk factors identified in 2 CFR Section 200.332. Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes: (1) Federal Award Identification. (iii) Federal Award Identification Number (FAIN); (iv) Federal Award Date (see the definition of Federal Award date in section 200.1) of award to the recipient by the Federal agency; (v) Subaward Period of Performance Start and End Date; (xi) Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the pass-through entity; (xii) Assistance Listings Number and Title; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of disbursement; (6) Appropriate terms and conditions concerning closeout of the subaward. (b) Evaluate each subrecipient?s risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring described in paragraphs (d) and (e) of this section, which may include consideration of such factors as: (1) The subrecipient?s prior experience with the same or similar subawards; (2) The results of previous audits including whether or not the subrecipient receives a Single Audit in accordance with Subpart F [Audit Requirements] of this part, and the extent to which the same or similar subaward has been audited as a major program; (3) Whether the subrecipient has new personnel or new or substantially changed systems; and (4) The extent and results of Federal awarding agency monitoring (e.g., if the subrecipient also receives Federal awards directly from a Federal awarding agency) Finding 2022 ? 013: (continued) Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should identify, analyze, and respond to risks related to achieving the defined objectives. Management should identify, analyze, and respond to significant changes that could impact the internal control system. Cause: In general, DHS?s process for subrecipient award monitoring did not identify the omission of required elements from the grant awards. In addition, the risk assessments performed by DHS and DOH were not properly documented. Effect: Excluding the federal grant award information at the time of the subaward may cause subrecipients and their auditors to be uninformed about specific program and other regulations that apply to the funds they receive. There is also the potential for subrecipients to have incomplete SEFAs in their Single Audit reports submitted to the Commonwealth, and federal funds may not be properly audited at the subrecipient level in accordance with the Single Audit Act and Uniform Guidance. Not evaluating each subrecipient?s risk of noncompliance for purposes of determining the appropriate subrecipient monitoring related to the subaward may result in subrecipients using the subaward for unauthorized purposes or in violation of the terms and conditions of the subaward, and state agency monitoring would not detect this noncompliance and ensure it is corrected in a timely manner. Recommendation: DHS should develop policies and reporting mechanisms to ensure all required federal award information is disseminated to all subrecipients at the time of the subaward to ensure subrecipient compliance with the Uniform Guidance in 2 CFR Section 200 and other applicable federal regulations. In addition, DHS should correspond with applicable subrecipients to ensure they are aware of the correct federal award information and review applicable subaward documents prior to issuance to ensure federal information is complete and accurate. DHS and DOH should implement procedures to adequately document their evaluation of each subrecipient?s risk of noncompliance as cited in 2 CFR Section 200.332 for purposes of determining the appropriate subrecipient monitoring related to the subaward. DHS Response: DHS agrees with this finding. DOH Response: DOH agrees with this finding. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
2022-003 ? Subrecipient Agreements Significant Deficiency Federal Program Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) Assistance Listing Number 21.027 Criteria The requirements of 2 CFR Part 200.332 state the various requirements of subrecipient agreements, which include the assistance listing number of the grant funding being passed through, and indication that the subrecipient would be subject to single audit requirements as set forth in 2 CFR Part 200, Subpart F (Uniform Guidance). Condition During the audit, we noted the agreement with subrecipients did not include the items noted in criteria above. Cause The City did not have controls in place to ensure required information was included in the subrecipient agreement. Effect The City could jeopardize future grant funding due to program noncompliance. Questioned Costs None. Recommendation We recommend the City review 2 CFR Part 200 to ensure information required in subrecipient agreements is properly included. Management?s Response See Corrective Action Plan.
2022-004 ? Subrecipient Agreements Noncompliance Federal Program Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) Assistance Listing Number 21.027 Criteria The requirements of 2 CFR Part 200.332 state the various requirements of subrecipient agreements, which include the assistance listing number of the grant funding being passed through, and indication that the subrecipient would be subject to single audit requirements as set forth in 2 CFR Part 200, Subpart F (Uniform Guidance). Condition During the audit, we noted the agreement with subrecipients did not include the items noted in criteria above. Cause The City did not have controls in place to ensure required information was included in the subrecipient agreement. Effect The City could jeopardize future grant funding due to program noncompliance. Questioned Costs None. Recommendation We recommend the City review 2 CFR Part 200 to ensure information required in subrecipient agreements is properly included. Management?s Response See Corrective Action Plan.
Federal Agency: Department of Agriculture Federal Program Title: Child and Adult Care Food Program Assistance Listing: 10.558 Federal Grant ID Numbers: 5SC300329 and 5SC308329 Pass-Through Entity: Not applicable Award Period: October 1, 2019, through September 30, 2022 Type of Finding: Significant deficiency in internal control over compliance, other matters Criteria: 2 CFR ? 200.332(d) requires that all pass-through entities monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Additionally, 7 CFR ? 226.6(m)(6) outlines the frequency and number of required institution reviews. Condition: The Department did not perform its subrecipient monitoring reviews in accordance with its policies and procedures and federal regulations. Questioned Costs: None Context: For fourteen of the sixty subrecipients tested, subrecipient monitoring reviews were not conducted within the three-year timeframe as set out in federal regulations. Cause: Due to staffing turnover, the Department did not comply with federal subrecipient monitoring requirements. Effect: The Department is not in compliance with federal requirements related to subrecipient monitoring requirements. Recommendation: We recommend that the Department follow its established policies and procedures for the program to ensure compliance with federal subrecipient monitoring requirements. Prior Year Single Audit Finding Number: Not applicable Views of Responsible Officials and Corrective Action Plan: Management agrees with the finding. See Corrective Action Plan at page 114.
Federal Agency: Department of Agriculture Federal Program Title: Child and Adult Care Food Program Assistance Listing: 10.558 Federal Grant ID Numbers: 5SC300329 and 5SC308329 Pass-Through Entity: Not applicable Award Period: October 1, 2019, through September 30, 2022 Type of Finding: Significant deficiency in internal control over compliance, other matters Criteria: 2 CFR ? 200.332(d) requires that all pass-through entities monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Additionally, 7 CFR ? 226.6(m)(6) outlines the frequency and number of required institution reviews. Condition: The Department did not perform its subrecipient monitoring reviews in accordance with its policies and procedures and federal regulations. Questioned Costs: None Context: For fourteen of the sixty subrecipients tested, subrecipient monitoring reviews were not conducted within the three-year timeframe as set out in federal regulations. Cause: Due to staffing turnover, the Department did not comply with federal subrecipient monitoring requirements. Effect: The Department is not in compliance with federal requirements related to subrecipient monitoring requirements. Recommendation: We recommend that the Department follow its established policies and procedures for the program to ensure compliance with federal subrecipient monitoring requirements. Prior Year Single Audit Finding Number: Not applicable Views of Responsible Officials and Corrective Action Plan: Management agrees with the finding. See Corrective Action Plan at page 114.
Finding 2022-001 Subject: Coronavirus Relief Fund ? Chicago Connected Subrecipient Monitoring Federal Agency: United States Department of the Treasury Federal Program: Chicago Connected ? Coronavirus Relief Fund Assistance Listing Number: 21.019 Pass-Through Entity: City of Chicago Compliance Requirements: Subrecipient Monitoring Audit Findings: Material Noncompliance, Material Weakness Criteria In accordance with 2 CFR section 200.332 related to requirements for pass-through entities, all passthrough entities must address the following relative to information provided to subrecipients: ? Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes detailed federal award identification information as described in 2 CFR section 200.332(a)(1) ? All requirements imposed by the pass-through entity on the subrecipient so that the Federal award is used in accordance with Federal statutes, regulations and the terms and conditions of the Federal award ? Any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the Federal awarding agency including identification of any required financial and performance reports ? A requirement that the subrecipient permit the pass-through entity and auditors to have access to the subrecipient's records and financial statements as necessary for the pass-through entity to meet the requirements of this part; and ? Appropriate terms and conditions concerning closeout of the subaward. Additionally, 2 CFR section 200.332 requires the following monitoring activities: ? Evaluate each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring ? Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include ? Verify that every subrecipient is audited as required by Subpart F of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ? 200.501. ? Consider whether the results of the subrecipient's audits, on-site reviews, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity's own records Condition CFF did not communicate the required information to subrecipients noted in the criteria including the communication of what funding represented federal funding and was subject to the related grant requirements. Additionally, while CFF in conjunction with program partners monitored the activities of the sub-grantees, the extent and results of this monitoring was not formally documented. Finally, CFF did not formally monitor audit results for the sub-grantees. Cause CFF has not historically received federal grant funding. As a result, management was not familiar with certain administrative requirements related to program oversight. Effect or potential effect Without information regarding the federal nature of certain pass-through funding, sub-grantees may broadly fail to comply with applicable federal requirements. Furthermore, this could impact CFF?s ability to properly oversee sub-grantees and take necessary corrective action, if applicable. Questioned cost None Context As part of testing this major program, requests were made to review agreements with sub-grantees and inquiries were made of CFF management relative to important requirements in 2 CFR section 200.332 and corresponding actions taken by CFF. These audit procedures identified that these key activities were not conducted. The entire amount of federal expenditures for the year ($915,830) were passed through to subrecipients. This finding is applicable for each subrecipient relationship. Identification as a repeat finding This is not a repeat finding. Recommendation We recommend that in the future CFF take the necessary steps to adhere to the requirements in 2 CFR section 200.332 relative to the monitoring of subrecipients. View of responsible officials The Chicago Connected initiative was supported by various external partners, including government and philanthropic funders. As the fiscal sponsor, the Children First Fund executed service agreements with each participating community-based organization (CBO), that noted the amount they were awarded. As deliverables were met, CFF made payments based on when the funds came in since they were not designated to a particular CBO by funder. As a result, CFF did not notify CBOs which payments came from federal vs philanthropic funding. Understanding that this is required when it comes to distributing federal funds to subrecipients, CFF will ensure that it's internal controls are updated to include this moving forward.
Reference Number: 2022-004 Prior Year Finding: No Federal Agency: U.S. Department of Agriculture State Agency: Department of Elementary and Secondary Education Federal Program: Child and Adult Care Food Program, COVID-19 ? Child and Adult Care Food Program Assistance Listing Number: 10.558 Award Number and Year: 202120N202044 (10/1/2020 ? 9/30/2021), 202120H170644 (12/27/2020 ? 9/30/2021), 202222N202044 (10/1/2021 ? 9/30/2022), 202222N115044 (10/1/2021 ? 9/30/2022), 202221N115044 (10/1/2021 ? 9/30/2023) Compliance Requirement: Eligibility and Subrecipient Monitoring Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Eligibility ? Per 7 CFR section 226.2, subrecipients must meet the definition of ?independent center? or ?sponsoring organization?. In addition, all institutions must also meet the eligibility requirements stated in 7 CFR section 226.15 and 42 USC 1766(a)(6) and (d)(l). Definitions include: (1) Independent center means a child care center, at-risk afterschool care center, emergency shelter, outside-school-hours care center or adult day care center which enters into an agreement with the state agency to assume final administrative and financial responsibility for program operations. (2) Sponsoring organization means a public or nonprofit private organization that is entirely responsible for the administration of the food program. (3) For-profit center means a child care center, outside-school-hours care center, or adult day care center providing nonresidential care to adults or children that does not qualify for tax-exempt status under the Internal Revenue Code of 1986. For-profit centers serving adults must meet the criteria described in paragraph (a) of this definition. For-profit centers serving children must meet the criteria described in paragraphs (b )(1) or (b )(2) of this definition, except that children who only participate in the at-risk afterschool snack and/or meal component of the program must not be considered in determining the percentages under paragraphs (b )( 1) or (b)(2) of this definition. Subrecipient Monitoring ? Per 2 CFR section 200.332(a), all pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes: i. Subrecipient name (which must match the name associated with its unique entity identifier); ii. Subrecipient's unique entity identifier; iii. Federal Award Identification Number (FAIN); iv. Federal Award Date (see the definition of Federal award date in ? 200.1 of this part) of award to the recipient by the Federal agency; v. Subaward Period of Performance Start and End Date; vi. Subaward Budget Period Start and End Date; vii. Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; viii. Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity including the current financial obligation; ix. Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; x. Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA); xi. Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity; xii. Assistance Listings number and Title; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of disbursement; xiii. Identification of whether the award is R&D; and xiv. Indirect cost rate for the Federal award (including if the de minimis rate is charged) per section 200.414. Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply 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). Condition: The Department of Elementary and Secondary Education (Department) was unable to provide documentation that it issued subawards in compliance with federal regulations. Context: Forty subawards were selected for testing and the following exceptions were noted: ? For forty of forty subawards selected for testing, the Federal Award Identification Number (FAIN) was not provided to the subrecipient. ? For one of forty subawards selected for testing, the Department could not provide documentation that it had obtained the subrecipient?s Unique Entity Identifier. ? The Department documents subrecipient eligibility in a permanent agreement with each subrecipient. For three of forty subrecipients selected for testing, the Department was unable to provide a copy of the approved permanent agreement, therefore, eligibility for these subrecipients could not be verified. Questioned costs: Undetermined. Cause: The Department?s procedures and controls were not sufficient to ensure that subawards were issued in compliance with federal regulations. Effect: Excluding the required federal grant award information at the time of the subaward may cause subrecipients and their auditors to be uninformed about specific program and other regulations that apply to the funds they receive. There is also the potential for subrecipients to have incomplete Schedules of Expenditures of Federal Awards (SEFA) in their Single Audit reports, and federal funds may not be properly audited at the subrecipient level in accordance with the Uniform Guidance. Failure to ensure subrecipients are eligible to receive program funding could result in unauthorized entities receiving program funding. Recommendation: The Department should review and enhance internal controls and procedures to ensure that all subrecipients are eligible to receive program funds, that required information is included in all subawards, that it retains copies of all subaward agreements, and that documentation is readily available for audit. Views of Responsible Officials: Management agrees with the finding.
Reference Number: 2022-004 Prior Year Finding: No Federal Agency: U.S. Department of Agriculture State Agency: Department of Elementary and Secondary Education Federal Program: Child and Adult Care Food Program, COVID-19 ? Child and Adult Care Food Program Assistance Listing Number: 10.558 Award Number and Year: 202120N202044 (10/1/2020 ? 9/30/2021), 202120H170644 (12/27/2020 ? 9/30/2021), 202222N202044 (10/1/2021 ? 9/30/2022), 202222N115044 (10/1/2021 ? 9/30/2022), 202221N115044 (10/1/2021 ? 9/30/2023) Compliance Requirement: Eligibility and Subrecipient Monitoring Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Eligibility ? Per 7 CFR section 226.2, subrecipients must meet the definition of ?independent center? or ?sponsoring organization?. In addition, all institutions must also meet the eligibility requirements stated in 7 CFR section 226.15 and 42 USC 1766(a)(6) and (d)(l). Definitions include: (1) Independent center means a child care center, at-risk afterschool care center, emergency shelter, outside-school-hours care center or adult day care center which enters into an agreement with the state agency to assume final administrative and financial responsibility for program operations. (2) Sponsoring organization means a public or nonprofit private organization that is entirely responsible for the administration of the food program. (3) For-profit center means a child care center, outside-school-hours care center, or adult day care center providing nonresidential care to adults or children that does not qualify for tax-exempt status under the Internal Revenue Code of 1986. For-profit centers serving adults must meet the criteria described in paragraph (a) of this definition. For-profit centers serving children must meet the criteria described in paragraphs (b )(1) or (b )(2) of this definition, except that children who only participate in the at-risk afterschool snack and/or meal component of the program must not be considered in determining the percentages under paragraphs (b )( 1) or (b)(2) of this definition. Subrecipient Monitoring ? Per 2 CFR section 200.332(a), all pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes: i. Subrecipient name (which must match the name associated with its unique entity identifier); ii. Subrecipient's unique entity identifier; iii. Federal Award Identification Number (FAIN); iv. Federal Award Date (see the definition of Federal award date in ? 200.1 of this part) of award to the recipient by the Federal agency; v. Subaward Period of Performance Start and End Date; vi. Subaward Budget Period Start and End Date; vii. Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; viii. Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity including the current financial obligation; ix. Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; x. Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA); xi. Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity; xii. Assistance Listings number and Title; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of disbursement; xiii. Identification of whether the award is R&D; and xiv. Indirect cost rate for the Federal award (including if the de minimis rate is charged) per section 200.414. Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply 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). Condition: The Department of Elementary and Secondary Education (Department) was unable to provide documentation that it issued subawards in compliance with federal regulations. Context: Forty subawards were selected for testing and the following exceptions were noted: ? For forty of forty subawards selected for testing, the Federal Award Identification Number (FAIN) was not provided to the subrecipient. ? For one of forty subawards selected for testing, the Department could not provide documentation that it had obtained the subrecipient?s Unique Entity Identifier. ? The Department documents subrecipient eligibility in a permanent agreement with each subrecipient. For three of forty subrecipients selected for testing, the Department was unable to provide a copy of the approved permanent agreement, therefore, eligibility for these subrecipients could not be verified. Questioned costs: Undetermined. Cause: The Department?s procedures and controls were not sufficient to ensure that subawards were issued in compliance with federal regulations. Effect: Excluding the required federal grant award information at the time of the subaward may cause subrecipients and their auditors to be uninformed about specific program and other regulations that apply to the funds they receive. There is also the potential for subrecipients to have incomplete Schedules of Expenditures of Federal Awards (SEFA) in their Single Audit reports, and federal funds may not be properly audited at the subrecipient level in accordance with the Uniform Guidance. Failure to ensure subrecipients are eligible to receive program funding could result in unauthorized entities receiving program funding. Recommendation: The Department should review and enhance internal controls and procedures to ensure that all subrecipients are eligible to receive program funds, that required information is included in all subawards, that it retains copies of all subaward agreements, and that documentation is readily available for audit. Views of Responsible Officials: Management agrees with the finding.