FINDING REFERENCE NUMBER 2023-040 (See Finding Reference Number 2023-012) FEDERAL PROGRAMS (ALN – 93.568) LOW-INCOME HOME ENERGY ASSISTANCE (ALN – 93.568) COVID-19 – LOW-INCOME HOME ENERGY ASSISTANCE U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES AWARD NUMBERS 2101PRLIEA; 2201PRLIEA; 2301PRLIEA; 2001PRLIEA; 2001PRE5C3 (Federal Award Years: 2020 through 2023) ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM) COMPLIANCE REQUIREMENT ELIGIBILITY // REPORTING TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS CRITERIA Uniform Guidance at 2 CFR 200.334, Record retention requirements, establishes that: the recipient and subrecipient must retain all Federal award records for three years from the date of submission of their final financial report. For awards that are renewed quarterly or annually, the recipient and subrecipient must retain records for three years from the date of submission of their quarterly or annual financial report, respectively. Records to be retained include but are not limited to financial records, supporting documentation, and statistical records. Further, in §200.337, Access to records, requires in (a) Records of recipients and subrecipients. The Federal agency or pass-through entity, Inspectors General, the Comptroller General of the United States, or any of their authorized representatives must have the right of access to any records of the recipient or subrecipient pertinent to the Federal award to perform audits, execute site visits, or for any other official use. This right also includes timely and reasonable access to the recipient's or subrecipient's personnel for the purpose of interviewing and discussion related to such documents or the Federal award in general. STATEMENT OF CONDITION As part of our audit procedures for eligibility requirements, we selected forty (40) participants from a population of 27,038 who were eligible for the crisis subsidy program. Of the sample of participants, only eight (8) files were submitted to us for evaluation. This represents a scope limitation. In relation to the requirement of Performance Reporting and Special reporting, we requested the applicable reports submitted during the fiscal year 2022-2023, the reports submitted for our review were applicable for the fiscal year 2023-2024. This represents a scope limitation. QUESTIONED COSTS No questioned costs identified. PERSPECTIVE INFORMATION This is a systemic deficiency. ADSEF was unable to demonstrate compliance with these compliance requirements. STATEMENT OF CAUSE ADSEF does not have an adequate process to identify participants' files within a reasonable timeframe for auditing. In addition, ADSEF does not have adequate controls and safeguards over the reports submitted to the Federal government. POSSIBLE ASSERTED EFFECT We were unable to obtain evidence of compliance with the eligibility and reporting requirements because the information in the files and applicable reports was not available for review. IDENTIFICATION OF REPEAT FINDING No reported as prior audit finding. RECOMMENDATIONS We recommend that management establish an appropriate mechanism to identify participants' files within a reasonable time. In addition, improve its system for filing reports submitted to the Federal government.
FINDING REFERENCE NUMBER 2023-049 (See Finding Reference Number 2023-020) FEDERAL PROGRAM (ALN – 10.566) NUTRITION ASSISTANCE FOR PUERTO RICO U.S. DEPARTMENT OF AGRICULTURE AWARD NUMBERS 221PR426S7003/4; 231PR426S7003/4 (Federal Award Years: 2021 through 2023) 211PR476V1003/4 – ARPA (Federal Award Years: March 11, 2021 through September 30, 2025) ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM) COMPLIANCE REQUIREMENT REPORTING TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS CRITERIA Uniform Guidance at 2 CFR § 200.302, Financial Management, establishes that (a) each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. See § 200.450. In section (b), the recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337): … (6) written procedures to implement the requirements of § 200.305 and (7) written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award. The 2 CFR §200.303 (a) establishes that the recipient and subrecipient must: establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the 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). STATEMENT OF CONDITION As part of our audit procedures over internal controls and compliance for reporting requirements, we selected two reports that closed during our fiscal year audit. With respect with the Grant Award 221PR426S7003 and 221PR426S7004 we noted the following deficiency: • The auditee was unable to provide supporting documentation for the administrative expenditures that reconcile the figures reported with the PRIFAS accounting system. • In addition, for all the Federal awards mentioned above, based on internal control interviews, we found that there is no designated individual responsible for independently reviewing the reports prior to submission to ensure accuracy and consistency with source data. QUESTIONED COSTS No questioned costs identified. PERSPECTIVE INFORMATION This deficiency is a systemic problem. Procedures and internal controls manuals should provide for and ensure the segregation of duties, and the reconciliation of financial information reported to Federal agencies against the accounting records used to prepare financial statement and SEFA. ADSEF failure to support reported amounts with verifiable documentation and the absence of independent review increases the risk of inaccurate or misstated financial data being reported to the Federal awarding agency. STATEMENT OF CAUSE During our interviews and understanding of the internal controls over financial reporting, we noted that only one person prepares, submits and certifies the required reports. No proper segregation of duties exists, that allows for validation of all accounting data before submitting the reports. In addition, the procedures manual for preparing reports does not establish a clear process for obtaining information, validating it, recording it, preparing it, and reporting it, as well as the responsibilities and segregation of duties to ensure that the reported information is consistent with ADSEF's accounting records. Furthermore, they lack a written procedures manual detailing the processes to follow in obtaining accounting data and reporting it to the Federal government, ensuring that the responsibility does not fall on a single individual. POSSIBLE ASSERTED EFFECT ADSEF does not ensure that the reports are accurate and traceable to the accounting database used to prepare their financial reports to the Federal Agencies and their financial statement. IDENTIFICATION OF REPEAT FINDING No reported as prior audit finding. RECOMMENDATIONS We recommend ADSEF establish written internal controls and specific procedures to ensure that all reported amounts are fully supported and reconciled with the PRIFAS accounting system and to assign responsibility to a designated official to review and approve all reports prior to submission to the Federal agency. Implement internal controls to maintain adequate documentation supporting all financial data reported.
FINDING REFERENCE NUMBER 2023-051 (See Finding Reference Number 2023-021) FEDERAL PROGRAM (ALN – 93.568) LOW-INCOME HOME ENERGY ASSISTANCE U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES AWARD NUMBERS 2101PRLIEA (Federal Award Years: 2021 through 2023) ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM) COMPLIANCE REQUIREMENT REPORTING TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS CRITERIA Uniform Guidance at 2 CFR § 200.302, Financial Management, establishes that: (a) Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. (See § 200.450.) (b) The recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337): (1) Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity. (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand. (3) Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. (4) Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes. See § 200.303. … (6) Written procedures to implement the requirements of § 200.305 and (7) Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award. STATEMENT OF CONDITION As part of our audit procedures over the reporting requirement for LIHEAP program, we selected two reports submitted during our fiscal year. We noted that the administrative expenditures do not reconcile with the accounting information from PRIFAS. In addition, for the amount of encumbrances of $11,032,784.51, the amount of $9,943,769.52 was not supported by a detail. QUESTIONED COSTS No questioned costs identified. PERSPECTIVE INFORMATION This is a systematic deficiency. Procedures and internal controls manuals should provide for and ensure the segregation of duties, and the reconciliation of financial information reported to federal agencies against the accounting records used to prepare financial statements and SEFA. ADSEF failure to support reported amounts with verifiable documentation and the absence of independent review increases the risk of inaccurate or misstated financial data being reported to the Federal awarding agency. STATEMENT OF CAUSE During our interviews and understanding of the internal controls over financial reporting, we noted that only one person prepares, submits and certifies the SF– 425 reports. No proper segregation of duties exists, that allows for validation of all accounting data before submitting the reports. In addition, the procedures manual for preparing reports does not establish a clear process for obtaining information, validating it, recording it, preparing it, and reporting it, as well as the responsibilities and segregation of duties to ensure that the reported information is consistent with ADSEF's accounting records. ADSEF lacks internal controls that allow for the timely validation and reconciliation of financial information. Furthermore, they lack a written procedures manual detailing the processes to follow in obtaining accounting data and reporting it to the Federal government, ensuring that the responsibility does not fall on a single individual. POSSIBLE ASSERTED EFFECT ADSEF does not ensure that the reports are accurate and traceable to the accounting database used to prepare their financial reports to the Federal Agencies and their financial statement. IDENTIFICATION OF REPEAT FINDING No reported as prior audit finding. RECOMMENDATIONS We recommend ADSEF to establish written procedures and internal controls manuals to provide and document the segregation of duties related to the reporting compliance requirement.
FINDING REFERENCE NUMBER 2023-052 FEDERAL PROGRAM (ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF) U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES AWARD NUMBERS 2021G996117; 2022G996117; 2023996117 (Federal Award Years: 2021 through 2023) ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM) COMPLIANCE REQUIREMENT REPORTING – PERFORMANCE TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS CRITERIA In accordance with 45 CFR, Subtitle B, Chapter II, Part 265.7, states that: (a) Each State's quarterly reports [the TANF Data Report, the TANF Financial Report (or Territorial Financial Report), the SSP-MOE Data Report, and the Work Outcomes of TANF Exciters Report] must be complete and accurate and filed by the due date. (b) For a disaggregated data report, “a complete and accurate report” means that: (1) The reported data accurately reflects information available to the State in case records, financial records, and automated data systems, and includes correction of the quarterly data by the end of the fiscal year reporting period; (2) The data are free from computational errors and are internally consistent (e.g., items that should add to totals do so); (3) The State reports data for all required elements (i.e., no data is missing); (4) (i) The State provides data on all families; or (ii) If the State opts to use sampling, the State reports data on all families selected in a sample that meets the specification and procedures in the TANF Sampling Manual (except for families listed in error); and (5) Where estimates are necessary (e.g., some types of assistance may require cost estimates), the State uses reasonable methods to develop these estimates. (c) For an aggregated data report, “a complete and accurate report” means that: (1) The reported data accurately reflects information available to the State in case records, financial records, and automated data systems; (2) The data are free from computational errors and are internally consistent (e.g., items that should add to totals do so); (3) The State reports data on all applicable elements; and (4) Monthly totals are unduplicated counts for all families (e.g., the number of families and the number of out-of-wedlock births are unduplicated counts). In addition, 2 CFR § 200.302 (a) establishes that each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. See § 200.450. In section (b) the recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337): (6) written procedures to implement the requirements of § 200.305 and (7) written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award. STATEMENT OF CONDITION As part of our procedures for understanding internal controls for the preparation of ACF-199 reports, we request a procedures manual on how these reports are processed and the personnel responsible for each process. ADSEF did not provide us with a manual describing the data collection process, how the information provided by the regions is validated, and the individuals responsible for submitting the reports. To evaluate compliance with the reported data, the quarter ending June 2023 was selected. From this period, forty (40) participants were selected. ADSEF was required to provide us with the corresponding participant worksheet appendix and the physical file to corroborate the information included in the report. ADSEF provided us with evidence of the hand-completed forms; however, we were not provided with the physical files to validate the information included in each document. This represents a scope limitation. QUESTIONED COSTS No questioned costs identified. PERSPECTIVE INFORMATION This is a systemic deficiency. After sample selection, ADSEF did not demonstrate a control structure that would allow the files to be located within a reasonable period of time. STATEMENT OF CAUSE ADSEF does not maintain an internal control structure for participant files that allows each file to be located within a reasonable period of time. Additionally, they do not have internal control procedure manuals that allow for the validation of the process they carry out and the individuals responsible for compiling, validating, and submitting this report. POSSIBLE ASSERTED EFFECT ADSEF may be including data in this report that has not been corroborated with the participants' physical records. The lack of a uniform process for archiving participant records prevented them from providing us with evidence of the requested records. IDENTIFICATION OF REPEAT FINDING No reported as prior audit finding. RECOMMENDATIONS We recommend that management establish internal control procedures manuals that clearly outline the processes to be followed for data collection, recording, and reporting. Additionally, standardize the way documents related to participant files are filed.
FINDING REFERENCE NUMBER 2023-054 (See Finding Reference Number 2023-023) FEDERAL PROGRAMS (ALN – 93.556) MARYLEE ALLEN PROMOTING SAFE AND STABLE FAMILIES (ALN – 93.667) SOCIAL SERVICES BLOCK GRANT U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES AWARD NUMBERS 2101PRFPSS (Federal Award Years: 2021 through 2022) 2211PRSOSR (Federal Award Years: 2021 through 2022) ADMINISTRATION ADMINISTRATION FOR FAMILIES AND CHILDREN (ADFAN, BY ITS SPANISH ACRONYM) COMPLIANCE REQUIREMENT REPORTING TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS CRITERIA Uniform Guidance at 2 CFR § 200.302 (a) establishes that each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. See § 200.450. In addition, the SF-425 Federal Financial Report requires the reporting of financial activities related to Federal awards. The accounting basis used for reporting expenditures (whether cash or accrual) must align with the accounting system employed by the recipient organization. The 2 CFR § 200.302 (b), establish that the recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337): (6) written procedures to implement the requirements of § 200.305 and (7) written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award. The 2 CFR section 200.328(c) establishes that the recipient or subrecipient must submit financial reports as required by the Federal award. Reports submitted annually by the recipient or subrecipient must be due no later than 90 calendar days after the reporting period. Reports submitted quarterly or semiannually must be due no later than 30 calendar days after the reporting period. The 2 CFR §200.303 (a) establishes that the recipient and subrecipient must: establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the 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). STATEMENT OF CONDITION As part of our audit procedures over internal controls and compliance for reporting requirements, we selected the Grants Awards 2101PRFPSS and 2111PRSOSR, which closes in the audit period from July 2022 to June 2023, to validate the recorded amounts. Upon evaluating the report for the Grant Award 2101PRFPSS, we found the following deficiencies: (1) The total Federal expenditure reported on line (e) does not match the database provided by the PRDF. (2) The matching expenditure on line (j) does not match the database provided by the PRDF, and (3) The report was not submitted within the established deadline, and an extension was granted to settle and report the funds until March 31, 2023, and they submitted on August 10, 2023. For both Grants Awards we found the following deficiencies: (4) The accounting basis should be Cash Basis instead of Accrual Basis, according to the accounting system used. Additionally, they provided a Procedures Manual for the Finance and Budget Divisions, approved in 2009 and delivered in Word format, which states that the accounting basis is “accrual”, even though their current system operates on a cash basis. (5) During the internal control’s interviews, we found that there is no designated person responsible for reviewing the information entered by the preparer. QUESTIONED COSTS No questioned costs identified. PERSPECTIVE INFORMATION This deficiency is a systemic problem. Procedures and internal controls manuals should provide for and ensure the segregation of duties, training, and the reconciliation of financial information reported to Federal agencies against the accounting records used to prepare financial statement and SEFA. STATEMENT OF CAUSE ADFAN does not have internal controls to effectively review the process and comply with the reporting requirements. The absence of effective internal controls at ADFAN to review processes and ensure compliance with reporting requirements can be attributed to inadequate organizational structure and insufficiently defined roles and responsibilities. There is no designated individual or team responsible for overseeing the accuracy and completeness of financial data entered reports. As mentioned above in the statement of condition, this responsibility falls under one person and does not have segregation of duties. This gap in accountability stems from a lack of internal review and insufficient oversight mechanisms, which restrains the organization's ability to ensure that reports are fully aligned with the required compliance standards. Additionally, there is a lack of training or resources dedicated to maintaining and monitoring compliance which contributes to the failure in reporting requirements. POSSIBLE ASSERTED EFFECT ADFAN does not ensure that the reports are accurate and traceable to the accounting database used to prepare their financial reports for the Federal Agencies and their financial statement. IDENTIFICATION OF REPEAT FINDING No reported as prior audit finding. RECOMMENDATIONS We recommend that ADFAN ensures the SF– 425 is completed using the appropriate accounting basis consistent with the organization’s financial system. Additionally, ADFAN should establish and implement internal control procedures that include formal review process to verify the accuracy and completeness of the reported information and designate responsible personnel for the review and approval of reports prior to submission to ensure compliance with Federal reporting requirements.
FINDING REFERENCE NUMBER 2023-054 (See Finding Reference Number 2023-023) FEDERAL PROGRAMS (ALN – 93.556) MARYLEE ALLEN PROMOTING SAFE AND STABLE FAMILIES (ALN – 93.667) SOCIAL SERVICES BLOCK GRANT U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES AWARD NUMBERS 2101PRFPSS (Federal Award Years: 2021 through 2022) 2211PRSOSR (Federal Award Years: 2021 through 2022) ADMINISTRATION ADMINISTRATION FOR FAMILIES AND CHILDREN (ADFAN, BY ITS SPANISH ACRONYM) COMPLIANCE REQUIREMENT REPORTING TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS CRITERIA Uniform Guidance at 2 CFR § 200.302 (a) establishes that each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. See § 200.450. In addition, the SF-425 Federal Financial Report requires the reporting of financial activities related to Federal awards. The accounting basis used for reporting expenditures (whether cash or accrual) must align with the accounting system employed by the recipient organization. The 2 CFR § 200.302 (b), establish that the recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337): (6) written procedures to implement the requirements of § 200.305 and (7) written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award. The 2 CFR section 200.328(c) establishes that the recipient or subrecipient must submit financial reports as required by the Federal award. Reports submitted annually by the recipient or subrecipient must be due no later than 90 calendar days after the reporting period. Reports submitted quarterly or semiannually must be due no later than 30 calendar days after the reporting period. The 2 CFR §200.303 (a) establishes that the recipient and subrecipient must: establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the 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). STATEMENT OF CONDITION As part of our audit procedures over internal controls and compliance for reporting requirements, we selected the Grants Awards 2101PRFPSS and 2111PRSOSR, which closes in the audit period from July 2022 to June 2023, to validate the recorded amounts. Upon evaluating the report for the Grant Award 2101PRFPSS, we found the following deficiencies: (1) The total Federal expenditure reported on line (e) does not match the database provided by the PRDF. (2) The matching expenditure on line (j) does not match the database provided by the PRDF, and (3) The report was not submitted within the established deadline, and an extension was granted to settle and report the funds until March 31, 2023, and they submitted on August 10, 2023. For both Grants Awards we found the following deficiencies: (4) The accounting basis should be Cash Basis instead of Accrual Basis, according to the accounting system used. Additionally, they provided a Procedures Manual for the Finance and Budget Divisions, approved in 2009 and delivered in Word format, which states that the accounting basis is “accrual”, even though their current system operates on a cash basis. (5) During the internal control’s interviews, we found that there is no designated person responsible for reviewing the information entered by the preparer. QUESTIONED COSTS No questioned costs identified. PERSPECTIVE INFORMATION This deficiency is a systemic problem. Procedures and internal controls manuals should provide for and ensure the segregation of duties, training, and the reconciliation of financial information reported to Federal agencies against the accounting records used to prepare financial statement and SEFA. STATEMENT OF CAUSE ADFAN does not have internal controls to effectively review the process and comply with the reporting requirements. The absence of effective internal controls at ADFAN to review processes and ensure compliance with reporting requirements can be attributed to inadequate organizational structure and insufficiently defined roles and responsibilities. There is no designated individual or team responsible for overseeing the accuracy and completeness of financial data entered reports. As mentioned above in the statement of condition, this responsibility falls under one person and does not have segregation of duties. This gap in accountability stems from a lack of internal review and insufficient oversight mechanisms, which restrains the organization's ability to ensure that reports are fully aligned with the required compliance standards. Additionally, there is a lack of training or resources dedicated to maintaining and monitoring compliance which contributes to the failure in reporting requirements. POSSIBLE ASSERTED EFFECT ADFAN does not ensure that the reports are accurate and traceable to the accounting database used to prepare their financial reports for the Federal Agencies and their financial statement. IDENTIFICATION OF REPEAT FINDING No reported as prior audit finding. RECOMMENDATIONS We recommend that ADFAN ensures the SF– 425 is completed using the appropriate accounting basis consistent with the organization’s financial system. Additionally, ADFAN should establish and implement internal control procedures that include formal review process to verify the accuracy and completeness of the reported information and designate responsible personnel for the review and approval of reports prior to submission to ensure compliance with Federal reporting requirements.
FINDING REFERENCE NUMBER 2023-056 (See Finding Reference Number 2023-025) FEDERAL PROGRAMS (ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF) (ALN – 93.560) PAYMENT TO TERRITORIES – ADULT U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES AWARD NUMBERS 2021G996117; 2022G996117; 2023996117 (Federal Award Years: 2021 through 2023) 2022G9922PT; 2301PRTABD (Federal Award Years: 2022 through 2023) ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM) COMPLIANCE REQUIREMENT REPORTING – FINANCIAL TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS CRITERIA The 2 CFR 200 §200.302, Financial Management, establishes that: “(a) Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. See § 200.450. (b) The recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337): (1) Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity. (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand. (3) Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. (4) Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes. See § 200.303. … (6) Written procedures to implement the requirements of § 200.305 and (7) Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award. STATEMENT OF CONDITION As part of our audit procedures over the reporting requirement for TANF and Payment to Territories – Adult programs, we selected two reports submitted during our fiscal year. We found the following deficiencies: i. Administrative expenditures related to both programs are recorded under the same accounting account number, and the assistance listing number of TANF. That is, in PRIFAS, the administrative expenditures of both programs are not segregated by grant award and assistance listing number. ii. The ACF-196TR reports report expenditures under both programs that are not reconciled with the PRIFAS accounting system, specifically in administrative expenditures. We requested evidence of the expenditures incurred or details that were used to prepare the reports; this information was not available, and it was generated upon our request. iii. In both reports evaluated, the amounts reported on lines 2 and 3, related to the amounts that the TANF program transfers to two other federal programs, are recorded inconsistently. During the quarters from October to June, these lines report the amount of the budget that is allowed to be transferred, without validating whether the Federal programs incurred any expenditures. In the quarterly report of September, the expenditure for these lines is reported based on the amount of drawdowns incurred. This practice is inconsistent and does not reflect the actual expenditure incurred. iv. In the quarterly report of June 2023, an expenditure of $3,733,668 was reported on line 5(a). According to PRIFAS, the reported expenditure was $1,988,000. QUESTIONED COSTS Undetermined. PERSPECTIVE INFORMATION This is a systematic deficiency. Procedures and internal controls manuals should provide for and ensure the segregation of duties, and the reconciliation of financial information reported to federal agencies against the accounting records used to prepare financial statements and SEFA. In addition, the financial management system should provide to account separately the administrative expenditures incurred among all Federal programs administered. ADSEF failure to support reported amounts with verifiable documentation and the absence of independent review increases the risk of inaccurate or misstated financial data being reported to the federal awarding agency. STATEMENT OF CAUSE During our interviews and understanding of the internal controls over financial reporting, we noted that only one person prepares, submits and certifies the ACF-196TR reports. No proper segregation of duties exists, that allows for validation of all accounting data before submitting the reports. In addition, the procedures manual for preparing reports does not establish a clear process for obtaining information, validating it, recording it, preparing it, and reporting it, as well as the responsibilities and segregation of duties to ensure that the reported information is consistent with ADSEF's accounting records. PRIFAS accounting data base as configured, does not provide for the administrative expenditures incurred from the TANF and Payment to Territories – Adult program to be segregated. ADSEF lacks internal controls that allow for the timely validation and reconciliation of financial information. Furthermore, they lack a written procedures manual detailing the processes to follow in obtaining accounting data and reporting it to the federal government, ensuring that the responsibility does not fall on a single individual. POSSIBLE ASSERTED EFFECT ADSEF does not ensure that the reports are accurate and traceable to the accounting database used to prepare their financial reports to the Federal Agencies and their financial statement. IDENTIFICATION OF REPEAT FINDING No reported as prior audit finding. RECOMMENDATIONS We recommend ADSEF to establish written procedures and internal controls manuals to provide and document the segregation of duties related to the reporting compliance requirement. Additionally, work with the Puerto Rico Department of the Treasury to provide accounting records to segregate the administrative expenditures of both programs.
FINDING REFERENCE NUMBER 2023-056 (See Finding Reference Number 2023-025) FEDERAL PROGRAMS (ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF) (ALN – 93.560) PAYMENT TO TERRITORIES – ADULT U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES AWARD NUMBERS 2021G996117; 2022G996117; 2023996117 (Federal Award Years: 2021 through 2023) 2022G9922PT; 2301PRTABD (Federal Award Years: 2022 through 2023) ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM) COMPLIANCE REQUIREMENT REPORTING – FINANCIAL TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS CRITERIA The 2 CFR 200 §200.302, Financial Management, establishes that: “(a) Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. See § 200.450. (b) The recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337): (1) Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity. (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand. (3) Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. (4) Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes. See § 200.303. … (6) Written procedures to implement the requirements of § 200.305 and (7) Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award. STATEMENT OF CONDITION As part of our audit procedures over the reporting requirement for TANF and Payment to Territories – Adult programs, we selected two reports submitted during our fiscal year. We found the following deficiencies: i. Administrative expenditures related to both programs are recorded under the same accounting account number, and the assistance listing number of TANF. That is, in PRIFAS, the administrative expenditures of both programs are not segregated by grant award and assistance listing number. ii. The ACF-196TR reports report expenditures under both programs that are not reconciled with the PRIFAS accounting system, specifically in administrative expenditures. We requested evidence of the expenditures incurred or details that were used to prepare the reports; this information was not available, and it was generated upon our request. iii. In both reports evaluated, the amounts reported on lines 2 and 3, related to the amounts that the TANF program transfers to two other federal programs, are recorded inconsistently. During the quarters from October to June, these lines report the amount of the budget that is allowed to be transferred, without validating whether the Federal programs incurred any expenditures. In the quarterly report of September, the expenditure for these lines is reported based on the amount of drawdowns incurred. This practice is inconsistent and does not reflect the actual expenditure incurred. iv. In the quarterly report of June 2023, an expenditure of $3,733,668 was reported on line 5(a). According to PRIFAS, the reported expenditure was $1,988,000. QUESTIONED COSTS Undetermined. PERSPECTIVE INFORMATION This is a systematic deficiency. Procedures and internal controls manuals should provide for and ensure the segregation of duties, and the reconciliation of financial information reported to federal agencies against the accounting records used to prepare financial statements and SEFA. In addition, the financial management system should provide to account separately the administrative expenditures incurred among all Federal programs administered. ADSEF failure to support reported amounts with verifiable documentation and the absence of independent review increases the risk of inaccurate or misstated financial data being reported to the federal awarding agency. STATEMENT OF CAUSE During our interviews and understanding of the internal controls over financial reporting, we noted that only one person prepares, submits and certifies the ACF-196TR reports. No proper segregation of duties exists, that allows for validation of all accounting data before submitting the reports. In addition, the procedures manual for preparing reports does not establish a clear process for obtaining information, validating it, recording it, preparing it, and reporting it, as well as the responsibilities and segregation of duties to ensure that the reported information is consistent with ADSEF's accounting records. PRIFAS accounting data base as configured, does not provide for the administrative expenditures incurred from the TANF and Payment to Territories – Adult program to be segregated. ADSEF lacks internal controls that allow for the timely validation and reconciliation of financial information. Furthermore, they lack a written procedures manual detailing the processes to follow in obtaining accounting data and reporting it to the federal government, ensuring that the responsibility does not fall on a single individual. POSSIBLE ASSERTED EFFECT ADSEF does not ensure that the reports are accurate and traceable to the accounting database used to prepare their financial reports to the Federal Agencies and their financial statement. IDENTIFICATION OF REPEAT FINDING No reported as prior audit finding. RECOMMENDATIONS We recommend ADSEF to establish written procedures and internal controls manuals to provide and document the segregation of duties related to the reporting compliance requirement. Additionally, work with the Puerto Rico Department of the Treasury to provide accounting records to segregate the administrative expenditures of both programs.
FINDING REFERENCE NUMBER 2023-060 FEDERAL PROGRAMS (ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF) U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES AWARD NUMBERS 2021G996117; 2022G996117; 2023996117 (Federal Award Years: 2021 through 2023) ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM) COMPLIANCE REQUIREMENT SPECIAL TESTS & PROVISIONS – PENALTY FOR REFUSAL TO WORK / LACK OF CHILD CARE FOR SINGLE CUSTODIAL PARENT OF CHILD UNDER AGE SIX / PENALTY FOR FAILURE TO COMPLY WITH WORK VERIFICATION PLAN TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS CRITERIA 2 CFR 200.334, Record retention requirements, establishes that: the recipient and subrecipient must retain all Federal award records for three years from the date of submission of their final financial report. For awards that are renewed quarterly or annually, the recipient and subrecipient must retain records for three years from the date of submission of their quarterly or annual financial report, respectively. Records to be retained include but are not limited to financial records, supporting documentation, and statistical records. Further, in §200.337, Access to records, requires in (a) Records of recipients and subrecipients. The Federal agency or pass-through entity, Inspectors General, the Comptroller General of the United States, or any of their authorized representatives must have the right of access to any records of the recipient or subrecipient pertinent to the Federal award to perform audits, execute site visits, or for any other official use. This right also includes timely and reasonable access to the recipient's or subrecipient's personnel for the purpose of interviewing and discussion related to such documents or the Federal award in general. STATEMENT OF CONDITION As part of our audit procedures for special tests and provisions, we selected twenty-five (25) participants from a population of 475 who had been penalized for failing to meet the work requirement or complying with the work verification plan. Of the sample of participants, only ten (10) files were submitted to us for evaluation. Related to the Lack of Child Care requirement for single Custodial Parent of Child Under Age Six, from a population of seven (7) participants identified with this requirement, we requested three (3) files for evaluation, however, we were only given one (1) file. This is a scope limitation. QUESTIONED COSTS No questioned costs identified. PERSPECTIVE INFORMATION This is a systemic deficiency. ADSEF was unable to demonstrate compliance with this compliance requirement. STATEMENT OF CAUSE ADSEF does not have an adequate process to identify participants' files within a reasonable timeframe for auditing. POSSIBLE ASSERTED EFFECT We were unable to obtain evidence of compliance with these Special Tests and Provisions because the information in the files was not available for review. IDENTIFICATION OF REPEAT FINDING No reported as prior audit finding. RECOMMENDATIONS We recommend that management establish an appropriate mechanism to identify participants' files within a reasonable time.
FINDING NO: 2023-031 STATE AGENCY: Oklahoma Employment Security Commission FEDERAL AGENCY: U.S. Department of Labor ALN: 17.225 FEDERAL PROGRAM NAME: Unemployment Insurance FEDERAL AWARD NUMBER: UI340792055A40, UI356692155A40, UI372442255A40, UI393432355A40 FEDERAL AWARD YEAR: 2020, 2021, 2022, 2023 CONTROL CATEGORY: Reporting QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.303(a) – Internal Controls states in part, “The non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” 2 CFR § 200.303(c) – Internal Controls states in part, “Evaluate and monitor the non-Federal entity’s compliance with statutes, regulations, and the terms and conditions of Federal awards.” 2 CFR §200.334 Retention requirements for records states in part, “Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient… .” The UI Report Handbook No. 401, 5th Ed., Introduction and General Reporting Instructions – Reporting Policy provides reporting requirements that, in accordance with section 303(a)(6) of the Social Security Act, stipulate the reporting of unemployment insurance data in a consistent, comparable manner. The UI Report Handbook No. 401, 5th Ed., Introduction and General Reporting Instructions – Record Retention states in part, “Unless otherwise noted in specific instructions, source data supporting counts should be retained for at least three years.” Condition and Context: The U.S. Department of Labor (DOL) requires monthly submission of the ETA 9050 Time Lapse of All First Payments, ETA 9052 Nonmonetary Determinations, and ETA 9055 Appeals Case Aging reports. Oklahoma Employment Security Commission’s mainframe generates summary level reports of data that are then input into the DOL’s Sun System to create the final ETA 9050, 9052, and 9055 reports. Of the 12 final ETA 9052 reports submitted for State Fiscal Year 2023, we selected a sample of three (3) reports. For 33.33% (1/3) of the final ETA 9052 Reports tested, Section C did not tie to the summary level mainframe report and the error was not detected during review. The summary level mainframe report identified one claimant in Section C; however, the final ETA 9052 submitted to DOL reported none. Further, we obtained the detail for one month’s ETA 9050 Report and one month’s ETA 9052 Report to tie to the summary level mainframe report. Each set of detail had discrepancies from the summary level mainframe reports; therefore, we were unable to verify the accuracy of the information in the summary level mainframe reports. We were unable to obtain one month’s detail for the ETA 9055 report. Cause: The data used to create the summary level mainframe reports is time sensitive and cannot be reproduced to achieve the exact results. Oklahoma Employment Security Commission did not save the underlying detail when the summary level mainframe reports were created; therefore, discrepancies existed when the detail was obtained retroactively. For the ETA 9055 Report, constraints on available resources in the Oklahoma Employment Security Commission IT department caused focus to shift to higher priority requests from Department of Labor. Effect: Since the data was time sensitive and could not be reproduced, we were unable to determine whether the data was accurately reported on the ETA 9050, ETA 9052, and ETA 9055 reports. For the ETA 9055, we were also unable to determine whether the system accurately calculated the number of days from the date an appeal was filed through the end of the month covered by the report. In addition, Oklahoma Employment Security Commission is not in compliance with federal record retention requirements. Recommendation: We recommend Oklahoma Employment Security Commission save the detail behind the summary level reports each month when the summary level reports are produced and retain the data for a period compliant with requirements. Views of Responsible Official(s) Contact Person: Michelle Britten, Chief Administrative Officer Anticipated Completion Date: Programming completed in June 2023 to retain backup data; data validation for regulatory reports is ongoing as part of OESC technology modernization efforts Corrective Action Planned: OESC concurs with the audit finding and agrees with the recommendation. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-035 (Repeat #2022-077) STATE AGENCY: Oklahoma Employment Security Commission FEDERAL AGENCY: U.S. Department of Labor ALN: 17.225 FEDERAL PROGRAM NAME: Unemployment Insurance Program FEDERAL AWARD NUMBER: UI359652160A40, UI380002260A40, 23A60UR000033 FEDERAL AWARD YEAR: 2022-2023 CONTROL CATEGORY: Special Tests and Provisions – Reemployment Services and Eligibility Assessments (RESEA) QUESTIONED COSTS: $0 Criteria: 42 USC § 506(b) – Grants to States for reemployment services and eligibility assessments states in part, “The purposes of this section are to accomplish the following goals: (1) To improve employment outcomes of individuals that receive unemployment compensation and to reduce the average duration of receipt of such compensation through employment. (2) To strengthen program integrity and reduce improper payments of unemployment compensation by States through the detection and prevention of such payments to individuals who are not eligible for such compensation. (3) To promote alignment with the broader vision of the Workforce Innovation and Opportunity Act (29 U.S.C. 3101 et seq.) of increased program integration and service delivery for job seekers, including claimants for unemployment compensation. (4) To establish reemployment services and eligibility assessments as an entry point for individuals receiving unemployment compensation into other workforce system partner programs.” U.S. Department of Labor, Unemployment Insurance Program Letter No. 10-22, Number 4. Program Operations, d. states in part, “i. UI staff must be engaged in the administration of the RESEA program. This includes, but is not limited to: • Participating in the planning, administration, and oversight of the RESEA program; • Providing all appropriate staff training on UC eligibility requirements; • Ensuring accurate data are provided in the RESEA-required reports; and • Conducting eligibility determinations and redeterminations resulting from issues identified through RESEA participation.” 2 CFR §421 – Failure to Participate in Reemployment Services through Profiling states in part, “The Oklahoma Employment Security Commission shall establish and utilize a system of Re-employment Services and Eligibility Assessment selection for all ex-military service claimants and for unemployment benefit claimants who will be likely to exhaust unemployment benefits and who will need job-search assistance services to make a successful transition to new employment. Any claimant who has been referred to re-employment services pursuant to the selection system and who fails to participate in the re-employment services made available to the claimant, shall be disqualified to receive benefits for each week in which the failure occurs, unless the Commission determines that:1. The claimant has previously completed the re-employment services within the benefit year; or 2. There is good cause for the claimant's failure to participate in re-employment services.” The RESEA Instructions and Procedures, 07/17/2017 revision and 06/06/2023 revision, Summary of Documentation states in part, “the RESEA process will be documented by the following - Required services: 1. Reemployment Services & Eligibility Assessment – RESEA (placeholder service) 2. Reemployment Needs Inventory & Eligibility Review 3. Resume Assistance 4. Referral to WIOA Services 5. OKJM Registration 6. Job Search Planning 7. Individual Reemployment Plan 8. Custom Labor Market Information 9. RESEA – Follow-up • Completing the Individual Reemployment Plan according to procedures. • Uploading 3 required forms to OKJM: 1. Reemployment Needs Inventory & Eligibility Review, OES 802 2. RESEA Follow-Up, OES 251(Must be completed and uploaded during the initial appointment.) 3. Unemployment Eligibility Review Questionnaire for follow-up appointment, OES 173” The RESEA Instructions and Procedures, 07/17/2017 revision, Notifying UI and the Adjudication Process states in part, “Adjudication Process. Once all notifications have been sent to the OKC Claims Adjudication Unit, the adjudication process follows these general steps: Local office staff report the claimant as a NO SHOW by emailing the OES 842E to PRF/JSW/POE@oesc.state.ok.us. A 2-421 code will be placed on the claim.” The RESEA Instructions and Procedures, 06/06/2023 revision, Notifying UI and the Adjudication Process states in part, “Adjudication Process. Once all notifications have been sent to the OKC Claims Adjudication Unit, the adjudication process follows these general steps: 1. Local office staff report the claimant as a NO SHOW by emailing the OES-842E to PRF/JSW/POE@oesc.ok.gov. A 2-421 code will be placed on the claim and benefits will be denied until attend and no back weeks will be paid. 2.If the claimant reschedules and attends the same week they were a no show the, local office staff email the OES-842E to PRF/JSW/POE@oesc.ok.gov and: The 2-421 is deleted; and the claimants will receive their weekly benefits. 3. If the Claimant reschedules and attends any time after the same week, they were a no show the Local office staff will report the claimant as attended after denial by emailing the OES-842E to PRF/JSW/POE@oesc.ok.gov. The 2-421 issue will be released that week and no back benefits will be paid. 4. If the claimant calls to say he will not be able to attend the RESEA appointment because he has returned to fulltime work, local office staff will enter the start date, employer name, salary, and employment status full time or part time in OKJM and the CRC. Then email PRF/JSW/POE@oesc.ok.gov advising of the date so it can be added to the claim. If a determination has been issued for 2-421, let it stand.” 2 CFR §200.1 “Internal controls” states in part, “Internal controls for non-Federal entities means: (1) Processes designed and implemented by non-Federal entities to provide reasonable assurance regarding the achievement of objectives in the following categories: (iv) Effectiveness and efficiency of operations; (v) Reliability of reporting for internal and external use; and (vi) Compliance with applicable laws and regulations.” The Government Accountability Office (GAO) Standards for Internal Control in the Federal Government 14.03 states, “Management communicates quality information down and across reporting lines to enable personnel to perform key roles in achieving objectives, addressing risks, and supporting the internal control system. In these communications, management assigns the internal control responsibilities for key roles.” 2 CFR §200.334 Retention requirements for records states in part, “Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient….” Condition and Context: The Reemployment Services and Eligibility Assessment (RESEA) provides reemployment services to unemployment claimants who are unlikely to return to their previous industry or occupation and who are considered likely to use up benefits. The Department of Labor’s Employment and Training Administration (ETA) 9128 report provides quarterly information on the RESEA activities of claimants selected to participate in the RESEA program. The data on this report allows for evaluation and monitoring of the RESEA program. We tested 60 Unemployment Insurance claimants that were profiled for the RESEA program during State Fiscal Year (SFY) 2023 and noted the following exceptions: • 10 (16.7%) had no RESEA Notification Letters in DocuShare. • 12 (20.0%) were missing an OES 842E Adjudication Form in OKJobMatch when the claimant did not report for follow-up. • 7 (11.7%) were missing documentation for at least one of the nine required RESEA steps. Cause: During SFY 2023, the Oklahoma Employment Security Commission did not have adequate controls, along with timely and/or effective communication of RESEA procedures, including instructions on how to properly retain documentation. Further, RESEA Quality Control reviews were suspended throughout SFY 2023 due to system malfunctions. Effect: RESEA program evaluation and monitoring may not have been based on correct information and the ETA 9128 performance report may be incomplete and unreliable. RESEA participants may not have received notice regarding their required participation in the RESEA program and may have received benefits for a longer period than necessary. Recommendation: The Oklahoma Employment Security Commission revised the RESEA procedures in the last month of SFY 2023. We recommend the Oklahoma Employment Security Commission continue implementing the new procedures to ensure all documents are properly completed and retained. Additionally, when the Quality Control program resumes, we recommend follow-up on all Quality Control findings and training to ensure employees are aware of and understand proper procedures for completing appropriate forms and retaining records to prevent future errors. Views of Responsible Official(s) Contact Person: Tammy Wood, RESEA/TAA Program Manager Anticipated Completion Date: Ongoing until modernization of RESEA tools is complete Corrective Action Planned: The agency concurs with the findings and agrees with the recommendation. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-031 STATE AGENCY: Oklahoma Employment Security Commission FEDERAL AGENCY: U.S. Department of Labor ALN: 17.225 FEDERAL PROGRAM NAME: Unemployment Insurance FEDERAL AWARD NUMBER: UI340792055A40, UI356692155A40, UI372442255A40, UI393432355A40 FEDERAL AWARD YEAR: 2020, 2021, 2022, 2023 CONTROL CATEGORY: Reporting QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.303(a) – Internal Controls states in part, “The non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” 2 CFR § 200.303(c) – Internal Controls states in part, “Evaluate and monitor the non-Federal entity’s compliance with statutes, regulations, and the terms and conditions of Federal awards.” 2 CFR §200.334 Retention requirements for records states in part, “Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient… .” The UI Report Handbook No. 401, 5th Ed., Introduction and General Reporting Instructions – Reporting Policy provides reporting requirements that, in accordance with section 303(a)(6) of the Social Security Act, stipulate the reporting of unemployment insurance data in a consistent, comparable manner. The UI Report Handbook No. 401, 5th Ed., Introduction and General Reporting Instructions – Record Retention states in part, “Unless otherwise noted in specific instructions, source data supporting counts should be retained for at least three years.” Condition and Context: The U.S. Department of Labor (DOL) requires monthly submission of the ETA 9050 Time Lapse of All First Payments, ETA 9052 Nonmonetary Determinations, and ETA 9055 Appeals Case Aging reports. Oklahoma Employment Security Commission’s mainframe generates summary level reports of data that are then input into the DOL’s Sun System to create the final ETA 9050, 9052, and 9055 reports. Of the 12 final ETA 9052 reports submitted for State Fiscal Year 2023, we selected a sample of three (3) reports. For 33.33% (1/3) of the final ETA 9052 Reports tested, Section C did not tie to the summary level mainframe report and the error was not detected during review. The summary level mainframe report identified one claimant in Section C; however, the final ETA 9052 submitted to DOL reported none. Further, we obtained the detail for one month’s ETA 9050 Report and one month’s ETA 9052 Report to tie to the summary level mainframe report. Each set of detail had discrepancies from the summary level mainframe reports; therefore, we were unable to verify the accuracy of the information in the summary level mainframe reports. We were unable to obtain one month’s detail for the ETA 9055 report. Cause: The data used to create the summary level mainframe reports is time sensitive and cannot be reproduced to achieve the exact results. Oklahoma Employment Security Commission did not save the underlying detail when the summary level mainframe reports were created; therefore, discrepancies existed when the detail was obtained retroactively. For the ETA 9055 Report, constraints on available resources in the Oklahoma Employment Security Commission IT department caused focus to shift to higher priority requests from Department of Labor. Effect: Since the data was time sensitive and could not be reproduced, we were unable to determine whether the data was accurately reported on the ETA 9050, ETA 9052, and ETA 9055 reports. For the ETA 9055, we were also unable to determine whether the system accurately calculated the number of days from the date an appeal was filed through the end of the month covered by the report. In addition, Oklahoma Employment Security Commission is not in compliance with federal record retention requirements. Recommendation: We recommend Oklahoma Employment Security Commission save the detail behind the summary level reports each month when the summary level reports are produced and retain the data for a period compliant with requirements. Views of Responsible Official(s) Contact Person: Michelle Britten, Chief Administrative Officer Anticipated Completion Date: Programming completed in June 2023 to retain backup data; data validation for regulatory reports is ongoing as part of OESC technology modernization efforts Corrective Action Planned: OESC concurs with the audit finding and agrees with the recommendation. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-035 (Repeat #2022-077) STATE AGENCY: Oklahoma Employment Security Commission FEDERAL AGENCY: U.S. Department of Labor ALN: 17.225 FEDERAL PROGRAM NAME: Unemployment Insurance Program FEDERAL AWARD NUMBER: UI359652160A40, UI380002260A40, 23A60UR000033 FEDERAL AWARD YEAR: 2022-2023 CONTROL CATEGORY: Special Tests and Provisions – Reemployment Services and Eligibility Assessments (RESEA) QUESTIONED COSTS: $0 Criteria: 42 USC § 506(b) – Grants to States for reemployment services and eligibility assessments states in part, “The purposes of this section are to accomplish the following goals: (1) To improve employment outcomes of individuals that receive unemployment compensation and to reduce the average duration of receipt of such compensation through employment. (2) To strengthen program integrity and reduce improper payments of unemployment compensation by States through the detection and prevention of such payments to individuals who are not eligible for such compensation. (3) To promote alignment with the broader vision of the Workforce Innovation and Opportunity Act (29 U.S.C. 3101 et seq.) of increased program integration and service delivery for job seekers, including claimants for unemployment compensation. (4) To establish reemployment services and eligibility assessments as an entry point for individuals receiving unemployment compensation into other workforce system partner programs.” U.S. Department of Labor, Unemployment Insurance Program Letter No. 10-22, Number 4. Program Operations, d. states in part, “i. UI staff must be engaged in the administration of the RESEA program. This includes, but is not limited to: • Participating in the planning, administration, and oversight of the RESEA program; • Providing all appropriate staff training on UC eligibility requirements; • Ensuring accurate data are provided in the RESEA-required reports; and • Conducting eligibility determinations and redeterminations resulting from issues identified through RESEA participation.” 2 CFR §421 – Failure to Participate in Reemployment Services through Profiling states in part, “The Oklahoma Employment Security Commission shall establish and utilize a system of Re-employment Services and Eligibility Assessment selection for all ex-military service claimants and for unemployment benefit claimants who will be likely to exhaust unemployment benefits and who will need job-search assistance services to make a successful transition to new employment. Any claimant who has been referred to re-employment services pursuant to the selection system and who fails to participate in the re-employment services made available to the claimant, shall be disqualified to receive benefits for each week in which the failure occurs, unless the Commission determines that:1. The claimant has previously completed the re-employment services within the benefit year; or 2. There is good cause for the claimant's failure to participate in re-employment services.” The RESEA Instructions and Procedures, 07/17/2017 revision and 06/06/2023 revision, Summary of Documentation states in part, “the RESEA process will be documented by the following - Required services: 1. Reemployment Services & Eligibility Assessment – RESEA (placeholder service) 2. Reemployment Needs Inventory & Eligibility Review 3. Resume Assistance 4. Referral to WIOA Services 5. OKJM Registration 6. Job Search Planning 7. Individual Reemployment Plan 8. Custom Labor Market Information 9. RESEA – Follow-up • Completing the Individual Reemployment Plan according to procedures. • Uploading 3 required forms to OKJM: 1. Reemployment Needs Inventory & Eligibility Review, OES 802 2. RESEA Follow-Up, OES 251(Must be completed and uploaded during the initial appointment.) 3. Unemployment Eligibility Review Questionnaire for follow-up appointment, OES 173” The RESEA Instructions and Procedures, 07/17/2017 revision, Notifying UI and the Adjudication Process states in part, “Adjudication Process. Once all notifications have been sent to the OKC Claims Adjudication Unit, the adjudication process follows these general steps: Local office staff report the claimant as a NO SHOW by emailing the OES 842E to PRF/JSW/POE@oesc.state.ok.us. A 2-421 code will be placed on the claim.” The RESEA Instructions and Procedures, 06/06/2023 revision, Notifying UI and the Adjudication Process states in part, “Adjudication Process. Once all notifications have been sent to the OKC Claims Adjudication Unit, the adjudication process follows these general steps: 1. Local office staff report the claimant as a NO SHOW by emailing the OES-842E to PRF/JSW/POE@oesc.ok.gov. A 2-421 code will be placed on the claim and benefits will be denied until attend and no back weeks will be paid. 2.If the claimant reschedules and attends the same week they were a no show the, local office staff email the OES-842E to PRF/JSW/POE@oesc.ok.gov and: The 2-421 is deleted; and the claimants will receive their weekly benefits. 3. If the Claimant reschedules and attends any time after the same week, they were a no show the Local office staff will report the claimant as attended after denial by emailing the OES-842E to PRF/JSW/POE@oesc.ok.gov. The 2-421 issue will be released that week and no back benefits will be paid. 4. If the claimant calls to say he will not be able to attend the RESEA appointment because he has returned to fulltime work, local office staff will enter the start date, employer name, salary, and employment status full time or part time in OKJM and the CRC. Then email PRF/JSW/POE@oesc.ok.gov advising of the date so it can be added to the claim. If a determination has been issued for 2-421, let it stand.” 2 CFR §200.1 “Internal controls” states in part, “Internal controls for non-Federal entities means: (1) Processes designed and implemented by non-Federal entities to provide reasonable assurance regarding the achievement of objectives in the following categories: (iv) Effectiveness and efficiency of operations; (v) Reliability of reporting for internal and external use; and (vi) Compliance with applicable laws and regulations.” The Government Accountability Office (GAO) Standards for Internal Control in the Federal Government 14.03 states, “Management communicates quality information down and across reporting lines to enable personnel to perform key roles in achieving objectives, addressing risks, and supporting the internal control system. In these communications, management assigns the internal control responsibilities for key roles.” 2 CFR §200.334 Retention requirements for records states in part, “Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient….” Condition and Context: The Reemployment Services and Eligibility Assessment (RESEA) provides reemployment services to unemployment claimants who are unlikely to return to their previous industry or occupation and who are considered likely to use up benefits. The Department of Labor’s Employment and Training Administration (ETA) 9128 report provides quarterly information on the RESEA activities of claimants selected to participate in the RESEA program. The data on this report allows for evaluation and monitoring of the RESEA program. We tested 60 Unemployment Insurance claimants that were profiled for the RESEA program during State Fiscal Year (SFY) 2023 and noted the following exceptions: • 10 (16.7%) had no RESEA Notification Letters in DocuShare. • 12 (20.0%) were missing an OES 842E Adjudication Form in OKJobMatch when the claimant did not report for follow-up. • 7 (11.7%) were missing documentation for at least one of the nine required RESEA steps. Cause: During SFY 2023, the Oklahoma Employment Security Commission did not have adequate controls, along with timely and/or effective communication of RESEA procedures, including instructions on how to properly retain documentation. Further, RESEA Quality Control reviews were suspended throughout SFY 2023 due to system malfunctions. Effect: RESEA program evaluation and monitoring may not have been based on correct information and the ETA 9128 performance report may be incomplete and unreliable. RESEA participants may not have received notice regarding their required participation in the RESEA program and may have received benefits for a longer period than necessary. Recommendation: The Oklahoma Employment Security Commission revised the RESEA procedures in the last month of SFY 2023. We recommend the Oklahoma Employment Security Commission continue implementing the new procedures to ensure all documents are properly completed and retained. Additionally, when the Quality Control program resumes, we recommend follow-up on all Quality Control findings and training to ensure employees are aware of and understand proper procedures for completing appropriate forms and retaining records to prevent future errors. Views of Responsible Official(s) Contact Person: Tammy Wood, RESEA/TAA Program Manager Anticipated Completion Date: Ongoing until modernization of RESEA tools is complete Corrective Action Planned: The agency concurs with the findings and agrees with the recommendation. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-062 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.019 FEDERAL PROGRAM NAME: Coronavirus Relief Fund (CRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Reporting QUESTIONED COSTS: $0 Criteria: 2 CFR §200.303 - Internal controls states in part, “The Non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” 2 CFR §200.334 – Record retention Requirements states in part, “The recipient and subrecipient must retain all Federal award records for three years from the date of submission of their final financial report. For awards that are renewed quarterly or annually, the recipient and subrecipient must retain records for three years from the date of submission of their quarterly or annual financial report, respectively. Records to be retained include but are not limited to, financial records, supporting documentation, and statistical records.” 2 CFR §200.336 – Methods for collection, transmission, and storage of information states, “When practicable, the Federal agency or pass-through entity and the recipient or subrecipient must collect, transmit, and store Federal award information in open and machine-readable formats. A machine-readable format is a format in a standard computer language (not English text) that can be read automatically by a computer system. Upon request, the Federal agency or pass-through entity must always provide or accept paper versions of Federal award information to and from the recipient or subrecipient. The Federal agency or pass-through entity must not require additional copies of Federal award information submitted in paper versions. The recipient or subrecipient does not need to create and retain paper copies when original records are electronic and cannot be altered. In addition, the recipient or subrecipient may substitute electronic versions of original paper records through duplication or other forms of electronic conversion, provided that the procedures are subject to periodic quality control reviews. Quality control reviews must ensure that electronic conversion procedures provide safeguards against the alteration of records and assurance that records remain in a format that is readable by a computer system.” Condition and Context: The CARES FORWARD team for State of Oklahoma was unable to provide the full quarterly Financial Progress Report (FPR) for 7/1/2022 to 9/30/2022 (cycle 10) before the reporting portal was closed. However, for the summary page that was provided, we noted that the current quarter expenditures were reported as $28,415,019.58. We reconciled the Financial Progress Report to the Schedule of Expenditures of Federal Awards (SEFA) for AL #21.019, by removing the interest revenue from our SEFA calculation, since interest is not required to be reported on the Financial Progress Report. The net result was SEFA expenditures totaled $29,220,392 ($30,422,641-$1,202,249) for SFY 2023, based on this being the last quarter of the CRF grant. Cause: The CARES FORWARD team reported obligations and expenditures based on the funds being transferred from the Oklahoma State Treasurer to the Executive Office of the State of Oklahoma, and not when the funds were obligated or expended by an entity other than the State of Oklahoma. In addition, human error occurred when recording some expenditures to certain cost categories. Lastly, the CARES FORWARD team failed to retain a copy of the entire cycle 10 Financial Progress Report. Effect: Expenditures for the cycle 10 Financial Progress Report were understated by $805,372.42. Further, the State of Oklahoma did not comply with 2 CFR §200.334. Recommendation: We recommend the State of Oklahoma continue to work to strengthen the controls over financial reporting of federal grant awards to ensure the amounts are accurately reported. Also, we recommend the State of Oklahoma ensure they retain all quarterly Financial Progress Reports for a period of three years from the date of submission. Views of Responsible Official(s) Contact Person: Brandy Manek Anticipated Completion Date: September 2022 Corrective Action Planned: The State of Oklahoma/Office of Management and Enterprise Services agrees with this finding. See corrective action plan located in the corrective action plan section of the report.
FINDING NO: 2023-062 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.019 FEDERAL PROGRAM NAME: Coronavirus Relief Fund (CRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Reporting QUESTIONED COSTS: $0 Criteria: 2 CFR §200.303 - Internal controls states in part, “The Non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” 2 CFR §200.334 – Record retention Requirements states in part, “The recipient and subrecipient must retain all Federal award records for three years from the date of submission of their final financial report. For awards that are renewed quarterly or annually, the recipient and subrecipient must retain records for three years from the date of submission of their quarterly or annual financial report, respectively. Records to be retained include but are not limited to, financial records, supporting documentation, and statistical records.” 2 CFR §200.336 – Methods for collection, transmission, and storage of information states, “When practicable, the Federal agency or pass-through entity and the recipient or subrecipient must collect, transmit, and store Federal award information in open and machine-readable formats. A machine-readable format is a format in a standard computer language (not English text) that can be read automatically by a computer system. Upon request, the Federal agency or pass-through entity must always provide or accept paper versions of Federal award information to and from the recipient or subrecipient. The Federal agency or pass-through entity must not require additional copies of Federal award information submitted in paper versions. The recipient or subrecipient does not need to create and retain paper copies when original records are electronic and cannot be altered. In addition, the recipient or subrecipient may substitute electronic versions of original paper records through duplication or other forms of electronic conversion, provided that the procedures are subject to periodic quality control reviews. Quality control reviews must ensure that electronic conversion procedures provide safeguards against the alteration of records and assurance that records remain in a format that is readable by a computer system.” Condition and Context: The CARES FORWARD team for State of Oklahoma was unable to provide the full quarterly Financial Progress Report (FPR) for 7/1/2022 to 9/30/2022 (cycle 10) before the reporting portal was closed. However, for the summary page that was provided, we noted that the current quarter expenditures were reported as $28,415,019.58. We reconciled the Financial Progress Report to the Schedule of Expenditures of Federal Awards (SEFA) for AL #21.019, by removing the interest revenue from our SEFA calculation, since interest is not required to be reported on the Financial Progress Report. The net result was SEFA expenditures totaled $29,220,392 ($30,422,641-$1,202,249) for SFY 2023, based on this being the last quarter of the CRF grant. Cause: The CARES FORWARD team reported obligations and expenditures based on the funds being transferred from the Oklahoma State Treasurer to the Executive Office of the State of Oklahoma, and not when the funds were obligated or expended by an entity other than the State of Oklahoma. In addition, human error occurred when recording some expenditures to certain cost categories. Lastly, the CARES FORWARD team failed to retain a copy of the entire cycle 10 Financial Progress Report. Effect: Expenditures for the cycle 10 Financial Progress Report were understated by $805,372.42. Further, the State of Oklahoma did not comply with 2 CFR §200.334. Recommendation: We recommend the State of Oklahoma continue to work to strengthen the controls over financial reporting of federal grant awards to ensure the amounts are accurately reported. Also, we recommend the State of Oklahoma ensure they retain all quarterly Financial Progress Reports for a period of three years from the date of submission. Views of Responsible Official(s) Contact Person: Brandy Manek Anticipated Completion Date: September 2022 Corrective Action Planned: The State of Oklahoma/Office of Management and Enterprise Services agrees with this finding. See corrective action plan located in the corrective action plan section of the report.
FINDING NO: 2023-062 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.019 FEDERAL PROGRAM NAME: Coronavirus Relief Fund (CRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Reporting QUESTIONED COSTS: $0 Criteria: 2 CFR §200.303 - Internal controls states in part, “The Non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” 2 CFR §200.334 – Record retention Requirements states in part, “The recipient and subrecipient must retain all Federal award records for three years from the date of submission of their final financial report. For awards that are renewed quarterly or annually, the recipient and subrecipient must retain records for three years from the date of submission of their quarterly or annual financial report, respectively. Records to be retained include but are not limited to, financial records, supporting documentation, and statistical records.” 2 CFR §200.336 – Methods for collection, transmission, and storage of information states, “When practicable, the Federal agency or pass-through entity and the recipient or subrecipient must collect, transmit, and store Federal award information in open and machine-readable formats. A machine-readable format is a format in a standard computer language (not English text) that can be read automatically by a computer system. Upon request, the Federal agency or pass-through entity must always provide or accept paper versions of Federal award information to and from the recipient or subrecipient. The Federal agency or pass-through entity must not require additional copies of Federal award information submitted in paper versions. The recipient or subrecipient does not need to create and retain paper copies when original records are electronic and cannot be altered. In addition, the recipient or subrecipient may substitute electronic versions of original paper records through duplication or other forms of electronic conversion, provided that the procedures are subject to periodic quality control reviews. Quality control reviews must ensure that electronic conversion procedures provide safeguards against the alteration of records and assurance that records remain in a format that is readable by a computer system.” Condition and Context: The CARES FORWARD team for State of Oklahoma was unable to provide the full quarterly Financial Progress Report (FPR) for 7/1/2022 to 9/30/2022 (cycle 10) before the reporting portal was closed. However, for the summary page that was provided, we noted that the current quarter expenditures were reported as $28,415,019.58. We reconciled the Financial Progress Report to the Schedule of Expenditures of Federal Awards (SEFA) for AL #21.019, by removing the interest revenue from our SEFA calculation, since interest is not required to be reported on the Financial Progress Report. The net result was SEFA expenditures totaled $29,220,392 ($30,422,641-$1,202,249) for SFY 2023, based on this being the last quarter of the CRF grant. Cause: The CARES FORWARD team reported obligations and expenditures based on the funds being transferred from the Oklahoma State Treasurer to the Executive Office of the State of Oklahoma, and not when the funds were obligated or expended by an entity other than the State of Oklahoma. In addition, human error occurred when recording some expenditures to certain cost categories. Lastly, the CARES FORWARD team failed to retain a copy of the entire cycle 10 Financial Progress Report. Effect: Expenditures for the cycle 10 Financial Progress Report were understated by $805,372.42. Further, the State of Oklahoma did not comply with 2 CFR §200.334. Recommendation: We recommend the State of Oklahoma continue to work to strengthen the controls over financial reporting of federal grant awards to ensure the amounts are accurately reported. Also, we recommend the State of Oklahoma ensure they retain all quarterly Financial Progress Reports for a period of three years from the date of submission. Views of Responsible Official(s) Contact Person: Brandy Manek Anticipated Completion Date: September 2022 Corrective Action Planned: The State of Oklahoma/Office of Management and Enterprise Services agrees with this finding. See corrective action plan located in the corrective action plan section of the report.
FINDING NO: 2023-062 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.019 FEDERAL PROGRAM NAME: Coronavirus Relief Fund (CRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Reporting QUESTIONED COSTS: $0 Criteria: 2 CFR §200.303 - Internal controls states in part, “The Non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” 2 CFR §200.334 – Record retention Requirements states in part, “The recipient and subrecipient must retain all Federal award records for three years from the date of submission of their final financial report. For awards that are renewed quarterly or annually, the recipient and subrecipient must retain records for three years from the date of submission of their quarterly or annual financial report, respectively. Records to be retained include but are not limited to, financial records, supporting documentation, and statistical records.” 2 CFR §200.336 – Methods for collection, transmission, and storage of information states, “When practicable, the Federal agency or pass-through entity and the recipient or subrecipient must collect, transmit, and store Federal award information in open and machine-readable formats. A machine-readable format is a format in a standard computer language (not English text) that can be read automatically by a computer system. Upon request, the Federal agency or pass-through entity must always provide or accept paper versions of Federal award information to and from the recipient or subrecipient. The Federal agency or pass-through entity must not require additional copies of Federal award information submitted in paper versions. The recipient or subrecipient does not need to create and retain paper copies when original records are electronic and cannot be altered. In addition, the recipient or subrecipient may substitute electronic versions of original paper records through duplication or other forms of electronic conversion, provided that the procedures are subject to periodic quality control reviews. Quality control reviews must ensure that electronic conversion procedures provide safeguards against the alteration of records and assurance that records remain in a format that is readable by a computer system.” Condition and Context: The CARES FORWARD team for State of Oklahoma was unable to provide the full quarterly Financial Progress Report (FPR) for 7/1/2022 to 9/30/2022 (cycle 10) before the reporting portal was closed. However, for the summary page that was provided, we noted that the current quarter expenditures were reported as $28,415,019.58. We reconciled the Financial Progress Report to the Schedule of Expenditures of Federal Awards (SEFA) for AL #21.019, by removing the interest revenue from our SEFA calculation, since interest is not required to be reported on the Financial Progress Report. The net result was SEFA expenditures totaled $29,220,392 ($30,422,641-$1,202,249) for SFY 2023, based on this being the last quarter of the CRF grant. Cause: The CARES FORWARD team reported obligations and expenditures based on the funds being transferred from the Oklahoma State Treasurer to the Executive Office of the State of Oklahoma, and not when the funds were obligated or expended by an entity other than the State of Oklahoma. In addition, human error occurred when recording some expenditures to certain cost categories. Lastly, the CARES FORWARD team failed to retain a copy of the entire cycle 10 Financial Progress Report. Effect: Expenditures for the cycle 10 Financial Progress Report were understated by $805,372.42. Further, the State of Oklahoma did not comply with 2 CFR §200.334. Recommendation: We recommend the State of Oklahoma continue to work to strengthen the controls over financial reporting of federal grant awards to ensure the amounts are accurately reported. Also, we recommend the State of Oklahoma ensure they retain all quarterly Financial Progress Reports for a period of three years from the date of submission. Views of Responsible Official(s) Contact Person: Brandy Manek Anticipated Completion Date: September 2022 Corrective Action Planned: The State of Oklahoma/Office of Management and Enterprise Services agrees with this finding. See corrective action plan located in the corrective action plan section of the report.
FINDING NO: 2023-026 (Repeat 2022-032, 2022-033, 2022-034) STATE AGENCY: State of Oklahoma, Office of Management and Enterprise Services (OMES) FEDERAL AGENCY: US Department of Treasury ALN: 21.023 FEDERAL PROGRAM NAME: Emergency Rental Assistance (ERA 1 and ERA 2) FEDERAL AWARD NUMBER: ERA028 and ERAE0259 FEDERAL AWARD YEAR: 2022 and 2023 CONTROL CATEGORY: Subrecipient Monitoring QUESTIONED COSTS: $0 Criteria: U.S Department of the Treasury Emergency Rental Assistance Grantee Award Form (8) (a-b) Compliance with Applicable Law and Regulations, states in part, “ a. Recipient agrees to comply with the requirements of Section 501 and Treasury interpretive guidance regarding such requirements. Recipient also agrees to comply with all other applicable federal statutes, regulations, and executive orders, and Recipient shall provide for such compliance in any agreements it enters into with other parties relating to this award. b. Federal regulations applicable to this award include, without limitation, the following: i. Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, 2 C.F.R. Part 200, other than such provisions as Treasury may determine are inapplicable to this Award and subject to such exceptions as may be otherwise provided by Treasury. Subpart F -Audit Requirements of the Uniform Guidance, implementing the Single Audit Act, shall apply to this award… iii. Reporting Subaward and Executive Compensation Information, 2 C.F.R. Part 170, pursuant to which the award term set forth in Appendix A to 2 C.F.R. Part 170 is hereby incorporated by reference. 2 CFR § 200.303(a) – Internal Controls states in part, “The Non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” 2 CFR § 200.332 Requirements for pass-through entities states in part, “All pass-through entities must: … (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, 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). … (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. … (f) 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.” 2 CFR § 200.334 – Retention requirements for records states in part, “Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient.” 2 CFR § 200.337 Access to records states in part, “(a) Records of non-Federal entities. The Federal awarding agency, Inspectors General, the Comptroller General of the United States, and the pass-through entity, or any of their authorized representatives, must have the right of access to any documents, papers, or other records of the non-Federal entity which are pertinent to the Federal award, in order to make audits, examinations, excerpts, and transcripts. The right also includes timely and reasonable access to the non-Federal entity's personnel for the purpose of interview and discussion related to such documents.” Condition and Context: The State of Oklahoma entered into agreements with two non-profit entities, Restore Hope Ministries and Communities Foundation of Oklahoma (RHM and CFO), to administer the ERA program for the State of Oklahoma. SAI reviewed the agreements for these two entities and determined that both agreements constituted a subrecipient relationship that would be subject to Part M Subrecipient Monitoring requirements. The Office of Management Enterprise Services (OMES) did not perform any subrecipient monitoring procedures during State Fiscal Year (SFY) 2023. In addition, the agreements with both subrecipients to administer the ERA 1 program ended on March 31, 2022, and stated funds were “to be used for necessary expenditures/obligations that were or will be incurred through March 31, 2022.” The State did not obtain a new agreement to cover fiscal year 2023 when they advanced ERA 1 payments totaling $25,878,270.13, of which the subrecipients expended $9,459,407.08. OMES provided these subrecipients advance payments based on expected program rental and utility expenditures for the month and administrative costs on a set percentage, 9.3% for RHM for ERA 1; and 10 % and 15% for CFO for ERA 1 and ERA 2 respectively. The subrecipients did not submit, and OMES did not review, any supporting documentation for program expenditures incurred by the subrecipients. While OMES did obtain summary information related to rental and utility payments and housing stability payments made for reporting purposes, OMES did not obtain or review any support for administrative costs to ensure that the costs were attributable to providing financial assistance and housing stability services to eligible households. OMES did not have a process in place to review potential fraud identified by the subrecipients and ensure that the agency’s response was adequate. OMES also did not have a process in place to ensure subrecipients were adequately evaluating for the types of fraud that may occur or identifying fraud risk factors applicable to the ERA program. OMES was unable to provide documentation to support that a risk assessment was performed in which each subrecipient would have been verified to have maintained an active status in the SAM.gov system, and that subrecipients were not suspended or disbarred. Cause: OMES did not 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. Adequate subrecipient monitoring policies and procedures were not established by the State prior to entering into agreements with subrecipients. OMES personnel responsible for oversight of the ERA grant do not normally oversee Federal grant programs, and do not have an adequate understanding or experience with administering Federal grant funds and understanding the types of activities that may be supported by the ERA grant. Effect: Failure to ensure subrecipient agreements are appropriately updated to cover the Federal grant period could result in inappropriate use of federal funds past the expiration date of the agreement. The OMES did not comply with 2 CFR § 200.332. In addition, without proper monitoring the subrecipients may not comply with the award terms and there is an increased risk of mismanagement and fraud by the subrecipients. Recommendation: We recommend that OMES develop and implement internal controls to ensure: • Each subrecipient’s risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward is appropriately evaluated for monitoring purposes. • Current and future ERA grant funds are administered in accordance with applicable Federal laws and grant requirements, including ensuring that grant subrecipients are provided the proper award documentation. • Adequate supporting documentation for actual program and administrative expenditures incurred is obtained, reviewed, and maintained by the State in order to ensure subrecipients are only expending ERA funds for allowable costs. • Fraud identified by subrecipients is appropriately reviewed and response is adequate. • Subrecipients adequately evaluate types of fraud that may occur and identify fraud risk factors applicable to ERA program. • Subrecipients are reimbursed for administrative costs based on supporting documentation for actual costs incurred rather than making advanced payments for a set percentage of program funds advanced. • Subrecipient records are available for inspection for monitoring and other audit purposes as required by OMES. • Subrecipient agreements are reviewed and updated regularly so the subrecipient is not operating under an expired agreement. Views of Responsible Official(s) Contact Person: Brandy Manek Anticipated Completion Date: Ongoing throughout the life of the grant Corrective Action Planned: The Office of Management and Enterprise Services agrees with the finding. See corrective action plan located in the corrective action plan section of this report. Auditor Response: The attached risk assessments were completed in 2020 by another agency, and SAI would have no way of knowing if they were used by OMES. In addition, a risk assessment needs to be performed annually by OMES.
FINDING NO: 2023-027 (Repeat 2022-032 and 2022-036) STATE AGENCY: State of Oklahoma, Office of Management and Enterprise Services FEDERAL AGENCY: US Department of Treasury ALN: 21.023 FEDERAL PROGRAM NAME: Emergency Rental Assistance (ERA 1 and ERA 2) FEDERAL AWARD NUMBER: ERA028 and ERAE0259 FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Eligibility QUESTIONED COSTS: $2,686,050 Criteria: U.S Department of the Treasury Emergency Rental Assistance Grantee Award Form (8) (a-b) Compliance with Applicable Law and Regulations, states in part, “a. Recipient agrees to comply with the requirements of Section 501 and Treasury interpretive guidance regarding such requirements. Recipient also agrees to comply with all other applicable federal statutes, regulations, and executive orders, and Recipient shall provide for such compliance in any agreements it enters into with other parties relating to this award. b. Federal regulations applicable to this award include, without limitation, the following: i. Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, 2 C.F.R. Part 200, other than such provisions as Treasury may determine are inapplicable to this Award and subject to such exceptions as may be otherwise provided by Treasury.” Per the U.S. Department of the Treasury Emergency Rental Assistance Frequently Asked Questions document revised August 25, 2021, “The Department of the Treasury (Treasury) is providing these frequently asked questions (FAQs) as guidance regarding the requirements of the Emergency Rental Assistance program (ERA1) established by section 501 of Division N of the Consolidated Appropriations Act, 2021, Pub. L. No. 116-260 (Dec. 27, 2020) and the Emergency Rental Assistance program (ERA2) established by section 3201 of the American Rescue Plan Act of 2021, Pub. L. No. 117-2 (March 11, 2021). Grantees must establish policies and procedures to govern the implementation of their ERA programs consistent with the statutes and these FAQs. To the extent that these FAQs do not provide specific guidance on a particular issue, a grantee should establish its own policy or procedure that is consistent with the statutes and follow it consistently.” The US Department of Treasury Emergency Rental Assistance (ERA) FAQ #1 states in part “A grantee may only use the funds provided in the ERA to provide financial assistance and housing stability services to eligible households. To be eligible, a household must be obligated to pay rent on a residential dwelling [emphasis added] and the grantee must determine that: i. for ERA1: a. one or more individuals within the household has qualified for unemployment benefits or experienced a reduction in household income, incurred significant costs, or experienced other financial hardship due, directly or indirectly, to the COVID-19 outbreak. b. one or more individuals within the household can demonstrate a risk of experiencing homelessness or housing instability; and c. the household has a household income at or below 80 percent of area median income. ii. for ERA2: a. one or more individuals within the household has qualified for unemployment benefits or experienced a reduction in household income, incurred significant costs, or experienced other financial hardship during or due, directly or indirectly, to the coronavirus pandemic. b. one or more individuals within the household can demonstrate a risk of experiencing homelessness or housing instability; and c. the household is a low-income family (as such term is defined in section 3(b) of the United States Housing Act of 1937 (42 U.S.C. 1437a(b))).2.” The US Department of Treasury Emergency Rental Assistance (ERA) FAQ #4 states in part “If a written attestation without further verification is relied on to document the majority of the applicant’s income, the grantee must reassess the household’s income every three months by obtaining appropriate documentation or a new self-attestation.” The US Department of Treasury Emergency Rental Assistance (ERA) FAQ #5 states in part “Grantees must obtain, if available, a current lease, signed by the applicant and the landlord or sublessor, that identifies the unit where the applicant resides and establishes the rental payment amount.” The US Department of Treasury Emergency Rental Assistance (ERA) FAQ #6 states in part “All payments for utilities and home energy costs should be supported by a bill, invoice, or evidence of payment to the provider of the utility or home energy service.” The US Department of Treasury Emergency Rental Assistance (ERA) FAQ #10 states in part, “In ERA1, an eligible household may receive up to twelve (12) months of assistance (plus an additional three (3) months if necessary to ensure housing stability for the household, subject to the availability of funds). The aggregate amount of financial assistance an eligible household may receive under ERA2, when combined with financial assistance under ERA1, must not exceed 18 months.” 2 CFR § 200.303(a) – Internal Controls states in part, “The Non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” 2 CFR § 200.334 – Retention requirements for records state in part, “Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient.” 2 CFR § 200.337 Access to records states in part, “(a) Records of non-Federal entities. The Federal awarding agency, Inspectors General, the Comptroller General of the United States, and the pass-through entity, or any of their authorized representatives, must have the right of access to any documents, papers, or other records of the non-Federal entity which are pertinent to the Federal award, in order to make audits, examinations, excerpts, and transcripts. The right also includes timely and reasonable access to the non-Federal entity's personnel for the purpose of interview and discussion related to such documents.” Per Community Cares Partners (CCP) Emergency Rental Assistance Policies and Procedures “Steps to Quality for Assistance, Section B, Qualifications - to be approved to receive assistance, a. Live in Oklahoma b. Rent [Refers to a household being obligated to pay rent on a dwelling in order to be eligible] c. Qualified for unemployment OR one of the three below due, directly or indirectly, to COVID-19 i. Reduction in household income ii. Incurred significant costs iii. Other financial hardship d. Risk of housing instability or homelessness e. 80% AMI” The CCP application contains the following regarding “rent”: *Qualification Checklist Instructions: Use this form to verify eligibility for each applicant. USE THE CHECKBOXES BELOW TO CONFIRM THE APPLICANT QUALIFIES FOR CCP ASSISTANCE. Check 2 • Verify Applicant is a Renter Reason(s) for Denial • Applicant owns home. Condition and Context: While documenting controls over activities allowed or unallowed and allowable costs/cost principles, we noted that one subrecipient’s system which tracks the number of months approved for arrears and prospective rent and utilities for each applicant does not distinguish between months paid for rent, utilities, or deposits. In addition, if an applicant originally applied through their prior system and then reapplied in the current system, the subrecipient would have to manually check both systems for each applicant to determine the number of months of assistance provided. We noted that an accurate tracking sheet was not maintained to ensure each applicant was in compliance with program assistance limits. In addition, while testing 89 of 18,553 rent and utilities program expenditures, totaling $1,161,976, we noted the following: Activities Allowed or Unallowed and Allowable Costs/Cost Principles and Eligibility exceptions: • For 22 of 89, or 24.72%, of items tested, the applicant was an Afghanistan refugee and not a renter who lived in Oklahoma at the time of applying for assistance; therefore, they were not eligible and the payment was unallowable. The subrecipient, Communities Foundation of Oklahoma, paid for the applicant to be in a hotel and then subsequently paid for their rent and utilities. Since the applicants were not eligible all payments were unallowable; therefore, we did not determine if the payment was calculated correctly or if the assistance exceeded 15 months for ERA 1 or 18 months for ERA 2. However, of these unallowable costs, we noted several payments were made to the applicants after the initial payment without receiving an additional application or additional funds request (AFR) form (See FAQ #10). • For 1 of 89, or 1.12% of items tested, the subrecipient approved two separate pledges days apart and paid the tenant and the landlord the same amount to cover the same months. A pledge is confirmation from the utility company or ledger to confirm how much was owed by the tenants and the pledge served as a promise to pay and not disconnect services. Per the landlord, the tenant did not submit the funds for rent and appears to have kept the funds for other uses. CCP noted it was a duplicate payment and requested the tenant return the money but to date have not recovered the funds. • For 5 of 89, or 5.62% of items tested, the subrecipient paid for utilities but they were unable to provide support from the utility company showing how much the applicant owed and for which months. Therefore, we were unable to determine which months were paid or the number of months paid to ensure they were not prior to March 13, 2020 and did not exceed 15 months for ERA 1 or 18 months for ERA 2. • For 5 of 89 home rental payments, or 5.62% of items tested, the applicant was an Afghanistan refugee and not a renter who lived in Oklahoma at the time of applying for assistance; therefore, they were not eligible and the payment was unallowable. The application was submitted prior to the applicant having a lease. • For 1 of 89, or 1.12% of items tested, the applicant received assistance from both subrecipients administering the State of Oklahoma ERA program and duplicate months were paid. Community Cares Partners (CCP) provided a list of payments to Restore Hope Ministries (RHM) weekly so RHM would not make a duplicate payment to an applicant who already received assistance from CCP. However, this process did not identify payments made by RHM prior to CCP and allowed for a duplicate payment. • For 1 of 89, or 1.12% of items tested, the subrecipient paid a month that was paid by the tenant per the ledger; therefore, the amount paid did not agree to the amount owed per the ledger. Upon SAI's inquiry of the payment the subrecipient stated they would send a new pledge, moving the month in question to be prospective rent covering a different month. However, the subrecipient had already pledged 3 months prospective rent on the original pledge and therefore, would be paying 4 months prospective which is unallowable (See FAQ #10). • For 2 of 89, or 2.25% of items tested, the subrecipient determined the applicant was ineligible after making the payment but to date has not recovered the funds. • For 1 of 89, or 1.12% of items tested, the subrecipient obtained a ledger in August 2022 and made a payment that agreed to the ledger on 9/13/2022. However, the landlord returned the payment on 11/7/2022 and CCP paid the returned funds directly to the tenant on 12/13/2022. The landlord returning the funds indicates the funds were no longer needed and CCP did not obtain an updated ledger prior to making payment to the tenant; therefore, we are unable to determine if the amount paid agreed to the amount owed at the time of payment. • For 2 of 89, or 2.25% of items tested, the applicant stated they had received prior ERA assistance but the subrecipient did not inquire about the prior assistance. Therefore, the subrecipient did not determine the number of months of assistance the applicant had previously received to ensure they did not exceed 15 months for ERA 1 or 18 months for ERA 2. • One of the applicants received prior assistance from CCP during FY22 and CCP should have looked up the prior payment information in their system to ensure assistance did not exceed the number of months allowed. • One of the applicants does not appear in the FY21 or FY22 CCP State expenditure data; however, they could have received funds from City, County, or Tribal sources and CCP made no attempt to investigate the prior payments to ensure assistance did not exceed the number of months allowed. • For 1 of 89, or 1.12% of items tested, the subrecipient paid for 19 months of assistance, which is one month more than allowed for the ERA 2 program. • For 4 of 89, or 4.49% of items tested, the assistance payment was not calculated correctly per the lease/ledger and the subrecipient paid more than the amount owed. • For 1 of 89, or 1.12% of items tested, the subrecipient paid for 2 months of rent after the lease agreement expired and the lease did not have a month-to-month renewal clause. Therefore, the applicant was not properly screened for eligibility. • For 1 of 89, or 1.12% of items tested, the subrecipient made several payments to the applicant without receiving additional applications or additional funds requests (AFR). Per CCP, this was because the applicant was part of the ORR (Office of Refugee Resettlement) program. The subrecipient did not properly screen for eligibility and obtain all required documents for all FY23 payments (FAQ #10). • For 1 of 89, or 1.12% of items tested, the address on the lease, driver’s license, and utility bill do not agree to the address on the application, ledger, or pledge to pay and the discrepancy was not noted or investigated by the subrecipient. Therefore, it does not appear proper eligibility screening or determinations were done. • Questioned costs related to the previous bullets for Rent/Utilities totaled $958,362. Further, while summarizing the data on ‘applicant’, we noted one line item was made up of 498 individual payments made to hotels on behalf of the Afghanistan refugees, which consisted of 186 applicants. We identified 185 of these applicants had payments for Afghanistan refugees to live in hotels prior to applying to the ERA program. Since, at the time of the application, they were not obligated to pay rent on a residential dwelling per Department of Treasury FAQ 1 and established CCP ERA policy, the cost is unallowable. This resulted in $1,727,687.64 in questioned costs (these costs do not include payments previously questioned in the first bullet). Lastly, while testing 72 of 6,576 application denials we noted the following: • For 1 of 72, or 1.39%, of items tested, the applicant was eligible and the subrecipient was unable to provide a reason for the denial other than it was when the team first formed, denoting an inadequate review. • For 6 of 72, or 8.33%, of items tested, the secondary review was not conducted by someone separate from the original case worker, denoting an inadequate review. Cause: OMES personnel responsible for oversight of the ERA 1 and ERA 2 grants do not normally oversee Federal grant programs, do not understand the types of activities that may be supported by the ERA 1 and ERA 2 grant funds, and do not have adequate experience with administering Federal grant funds. OMES did not establish and maintain effective internal control over the Federal award that provides reasonable assurance that OMES is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. OMES did not monitor subrecipients to ensure they established and maintained effective internal control over the Federal award to provide reasonable assurance that the non-Federal entity was managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. The Communities Foundation of Oklahoma (CFO) did not maintain effective internal control over payments to applicants for rent and utility expenses to ensure compliance with allowability requirements and did not obtain all supporting documentation. Effect: Unallowable costs, totaling $2,686,050 were charged to the ERA program. In addition, at least 1,700 Oklahomans were denied assistance due to lack of funding. In addition, CCP, and therefore the State of Oklahoma, did not follow their established ERA policies and procedures for determining eligibility. Recommendation: We recommend that OMES develop and implement internal controls to ensure it administers current and future ERA grants in accordance with applicable Federal laws and grant requirements, including ensuring that grant subrecipients are properly informed of Federal requirements related to allowable costs and eligibility. Further, we recommend OMES ensure subrecipients have established effective internal control over the Federal award to provide reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. We recommend that OMES ensure the personnel responsible for oversight of the ERA grant obtain the necessary training and knowledge to ensure compliance with Federal grant requirements. Views of Responsible Official(s) Contact Person: Brandy Manek Anticipated Completion Date: Ongoing throughout the life of the grant Corrective Action Planned: The Office of Management and Enterprise Services partially agrees with the finding. See corrective action plan located in the corrective action plan section of this report. Auditor Response: While U.S. Department of Treasury guidance does not require U.S. citizenship or legal residency to be eligible, FAQ #1 states the household must be obligated to pay rent on a residential dwelling. Further CCP’s application in page 3 lists eligibility requirements which include “Live in the State of Oklahoma and rent their home or primary residence”. SAI is not concerned with the immigration status of the applicants but rather their eligibility status at the time of applying for the program. Staying in a hotel can establish the applicant was living in the State of Oklahoma and renting their residence; however, there was no documentation supporting the Afghan refugees were renting hotels and had established a residential dwelling prior to CCP’s assistance and therefore they did not meet the rental requirement for eligibility prior to applying to the program. Further, we noted 48 of the hotel payments tested CCP paid for the hotel stay prior to an ERA application being completed, indicating they were not properly screening for eligibility. While FAQ #26 allows for the cost of a hotel or motel room occupied by an eligible household, it also states “grantees should consider the cost effectiveness of offering assistance for this purpose as compared to other uses. If a household is eligible for an existing program with narrower eligibility criteria that can provide similar assistance for hotel or motel stays, such as the HUD Emergency Solutions Grant program or FEMA Public Assistance, grantees should utilize such programs prior to providing similar assistance under the ERA program.” Other sources of assistance were available to refugees. According to the Administration for Children and Families (ACF) Office of Refugee Resettlement (ORR) some Afghanistan humanitarian parolees are eligible to apply for federal mainstream benefits in their state, such as cash assistance through Supplemental Security Income (SSI) or Temporary Assistance for Needy Families (TANF), health insurance through Medicaid, and food assistance through Supplemental Nutrition Assistance Program (SNAP). The ORR also contracted with nine organizations nationally and were eligible to use CRF funds. Therefore, SAI determined this was not an appropriate use of ERA funds that could have helped Oklahoma renters whose only available assistance was ERA. While CCP’s policies and procedures no longer required additional funds requests (AFR), additional applications were still required by FAQ #10. Further, per FAQ #1 “Treasury strongly encourages grantees to avoid establishing documentation requirements that are likely to be barriers to participation for eligible households, including those with irregular incomes such as those operating small businesses or gig workers whose income is reported on Internal Revenue Service Form 1099. However, grantees must require all applications for assistance to include an attestation from the applicant that all information included is correct and complete.”. Applications to determine eligibility are required by Treasury guidance and therefore, are not considered an administrative barrier that could be removed, regardless of CCP’s policies and procedures.
FINDING NO: 2023-028 (Repeat 2022-087) STATE AGENCY: State of Oklahoma, Office of Management and Enterprise Services FEDERAL AGENCY: US Department of Treasury ALN: 21.023 FEDERAL PROGRAM NAME: Emergency Rental Assistance (ERA 1 and ERA 2) FEDERAL AWARD NUMBER: ERA0028 and ERAE0259 FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed and Allowable Costs/Cost Principles QUESTIONED COSTS: $5,585,127 Criteria: U.S Department of the Treasury Emergency Rental Assistance Grantee Award Form (8) (a-b) Compliance with Applicable Law and Regulations, states in part, “a. Recipient agrees to comply with the requirements of Section 501 and Treasury interpretive guidance regarding such requirements. Recipient also agrees to comply with all other applicable federal statutes, regulations, and executive orders, and Recipient shall provide for such compliance in any agreements it enters into with other parties relating to this award. b. Federal regulations applicable to this award include, without limitation, the following: i. Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, 2 C.F.R. Part 200, other than such provisions as Treasury may determine are inapplicable to this Award and subject to such exceptions as may be otherwise provided by Treasury.” 2 CFR § 200.303(a) – Internal Controls states in part, “The Non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” The Consolidated Appropriations Act § Section 501 (c)(5) Use of Funds - Administrative Costs states in part, “A. IN GENERAL.- Not more than 10 percent of the amount paid to an eligible grantee under this section may be used for administrative costs attributable to providing financial assistance and housing stability services under paragraphs (2) and (3), respectively, including for data collection and reporting requirements related to such funds. B. No OTHER ADMINISTRATIVE COSTS.- Amounts paid under this section shall not be used for any administrative costs other than to the extent allowed under subparagraph (A)” The American Rescue Plan Act of 2021 § Section 3201 (d)(1)(C) Use of Funds – Administrative Costs states in part, “Not more than 15 percent of the total amount paid to an eligible grantee under this section may be used for administrative costs attributable to providing financial assistance, housing stability services, and other affordable rental housing and eviction prevention activities, including for data collection and reporting requirements related to such funds.” 2 CFR § 200.334 – Retention requirements for records states in part, “Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient.” 2 CFR § 200.337 Access to records states in part, “(a) Records of non-Federal entities. The Federal awarding agency, Inspectors General, the Comptroller General of the United States, and the pass-through entity, or any of their authorized representatives, must have the right of access to any documents, papers, or other records of the non-Federal entity which are pertinent to the Federal award, in order to make audits, examinations, excerpts, and transcripts. The right also includes timely and reasonable access to the non-Federal entity's personnel for the purpose of interview and discussion related to such documents.” The US Department of Treasury Emergency Rental Assistance (ERA) FAQ #29 states in part “A grantee may permit a subrecipient to incur more than 10 or 15 percent, as applicable, of the amount of the subaward issued to that subrecipient as long as the total of all administrative costs incurred by the grantee and all subrecipients, whether as direct or indirect costs, does not exceed 10 or 15 percent, as applicable, of the total amount of the award provided to the grantee from Treasury.” Condition and Context: While documenting controls over subrecipient program and administrative expenditures for the ERA 1 and ERA 2 grants, we noted that OMES did not require the subrecipients to submit supporting documentation for expenditures charged to the programs. Further, we determined one subrecipient, Communities Foundation of Oklahoma (CFO) did not have sufficient internal controls over program or administrative expenditures to ensure they were for allowable costs and activities. While reviewing all administrative management fees, we noted one of the subrecipients charged the ERA 1 and ERA 2 grants $5,585,126.89 in unallowable administrative costs (management fees) that were retained by the subrecipient and were not attributable to providing financial assistance and housing stability services. The management fees the subrecipient charged to the grant do not represent actual admin expenditures, but rather an arbitrary amount retained by CFO (Questioned costs - $5,585,126.89). See management fees referenced in finding 2023-091. In addition, during our testwork for the ERA 1 program administrative limit, we noted that administrative costs charged to the program exceeded the 10% allowable limit by 5.81%, or $1,259,429. Cause: OMES personnel responsible for oversight of the ERA 1 and ERA 2 grants do not normally oversee Federal grant programs, and do not have adequate experience with administering Federal grant funds and understanding the types of activities that may be supported by the ERA 1 and ERA 2 grants. OMES did not ensure the personnel responsible for oversight of the ERA 1 And ERA 2 grants received the proper training to understand and did not ensure they used available resources to help them understand, the grant requirements. OMES did not ensure the subrecipients established and maintained effective internal control over the Federal award to provide reasonable assurance that the non-Federal entity was managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. OMES advanced to one subrecipient a set rate of 10% (ERA 1) and 15% (ERA 2) and to another subrecipient 9.3% (ERA 1) of program funds for administrative costs instead of reimbursing administrative costs actually incurred by the subrecipient that were attributable to providing financial assistance and housing stability services under the ERA 1 and ERA 2 programs. OMES did not obtain, review, approve, or maintain adequate supporting documentation for administrative costs. Effect: Unallowable costs, totaling $5,585,126.89, were charged to the ERA program by one subrecipient as administrative costs. Recommendation: We recommend that OMES develop and implement internal controls to ensure it has the knowledge and experience to administer current and future ERA grants in accordance with applicable Federal laws and grant requirements, including ensuring that grant subrecipients are properly informed of Federal requirements related to allowable costs. In addition, we recommend that OMES ensure subrecipients have established effective internal controls over the Federal award to provide reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Further, we recommend that OMES ensure adequate supporting documentation for administrative costs charged to the program is obtained, reviewed, approved, and maintained by OMES to ensure subrecipients are only paid or reimbursed for allowable activities and costs based on that supporting documentation. Views of Responsible Official(s) Contact Person: Brandy Manek Anticipated Completion Date: Brandy Manek Corrective Action Planned: The Office of Management and Enterprise Services partially agrees with the finding. See corrective action plan located in the corrective action plan section of this report. Auditor Response: CFO: Condition and Context 1 Response - SAI requested CFO’s ERA accounting data on 9/27/2024. On 1/15/2025 CFO provided spreadsheets of CFO ERA expenditures for FFY21-FFY23. SAI noted the CFO expenditures only accounted for 28.05% of all management fees paid to CFO and therefore, the management fees “expended” by CCP to pay CFO were retained without representing actual admin expenditures. CFO: Condition and Context 2 Response - The ERA 1 program’s period of performance ended within the SFY23 audit period; therefore, SAI performed testwork to determine whether the 10% administrative limit was exceeded using data for the entirety of the ERA 1 program (FFY21-FFY23). We noted the 10% limit was exceeded by 5.81% or $1,259,429.
FINDING NO: 2023-088 (Repeat 2022-085) STATE AGENCY: State of Oklahoma, Office of Management and Enterprise Services FEDERAL AGENCY: US Department of Treasury ALN: 21.023 FEDERAL PROGRAM NAME: Emergency Rental Assistance (ERA 1 and ERA 2) FEDERAL AWARD NUMBER: ERA028 and ERAE0259 FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; and Allowable Costs/Cost Principles QUESTIONED COSTS: $2,410,251 Criteria: U.S. Department of the Treasury Emergency Rental Assistance Grantee Award Form (8) (a-b) Compliance with Applicable Law and Regulations, states in part, “a. Recipient agrees to comply with the requirements of Section 501 and Treasury interpretive guidance regarding such requirements. Recipient also agrees to comply with all other applicable federal statutes, regulations, and executive orders, and Recipient shall provide for such compliance in any agreements it enters into with other parties relating to this award. b. Federal regulations applicable to this award include, without limitation, the following: i. Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, 2 C.F.R. Part 200, other than such provisions as Treasury may determine are inapplicable to this Award and subject to such exceptions as may be otherwise provided by Treasury.” 2 CFR § 200.303(a) – Internal Controls states in part, “The Non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” The Consolidated Appropriations Act § Section 501 (c)(5) Use of Funds - Administrative Costs states in part, “A. IN GENERAL.- Not more than 10 percent of the amount paid to an eligible grantee under this section may be used for administrative costs attributable to providing financial assistance and housing stability services under paragraphs (2) and (3), respectively, including for data collection and reporting requirements related to such funds. B. No OTHER ADMINISTRATIVE COSTS.- Amounts paid under this section shall not be used for any administrative costs other than to the extent allowed under subparagraph (A)” 2 CFR § 200.334 – Retention requirements for records state in part, “Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient.” 2 CFR § 200.337 – Access to records states in part, “(a) Records of non-Federal entities. The Federal awarding agency, Inspectors General, the Comptroller General of the United States, and the pass-through entity, or any of their authorized representatives, must have the right of access to any documents, papers, or other records of the non-Federal entity which are pertinent to the Federal award, in order to make audits, examinations, excerpts, and transcripts. The right also includes timely and reasonable access to the non-Federal entity's personnel for the purpose of interview and discussion related to such documents.” 2 CFR § 200.403 – Factors affecting allowability of costs states in part, “Except where otherwise authorized by statute, costs must meet the following criteria to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles.” Condition and Context: When reviewing SFY23 payroll administrative expenditures, we noted that Communities Foundation of Oklahoma paid $2,372,400 in bonuses to 146 employees. Of these bonuses, 47 people received between $10,000 - $19,999, and 44 people received more than $20,000. We found the expenditures to be unallowable; we found no guidance that stated ERA administrative funds could be expended on bonuses. Also, while testing 116 of 5,284 payroll administrative expenditures we noted the following: • For 4 of 116, or 3.45% of claims tested, the contract was for an unreasonable rate and the invoices provided were not itemized and specific enough to determine if the time spent was for an allowable activity related to ERA 1 or ERA 2. • For 9 of 116, or 7.76% of claims tested, the payment was for more than the contracted rate. • For 23 of 116, or 19.83% of claims tested, the subrecipient was unable to provide a contract for the period paid. • For 9 of 116, or 7.76% of claims tested, the contract was not signed by the Executive Director and was not valid. • For 22 of 115, or 19.13% of claims tested, the payroll cost was allowable; however, the expense was attributable to multiple jurisdictions and only 90.33% of the cost should have been charged to the State of Oklahoma, but the subrecipient was unable to support the allocation was completed and that 100% of the cost was not charged to the State. The issues noted above resulted in total questioned cost of $37,851. We are unable to note the questioned costs per exception due to the same sample items being noted on multiple exceptions. Cause: OMES personnel responsible for oversight of the ERA 1 and ERA 2 grants do not normally oversee Federal grant programs; they do not understand the types of activities that may be supported by the ERA 1 and ERA 2 grants, nor do they have adequate experience with administering Federal grant funds. OMES did not establish and maintain effective internal control over the Federal award that provides reasonable assurance that OMES is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. OMES did not ensure that the subrecipients established and maintained effective internal control over the Federal award to provide reasonable assurance that the non-Federal entity was managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Effect: Unallowable payroll costs totaling $2,410,251, including unallowable bonus payments of $2,372,400, were charged to the ERA program as payroll administrative expenditures. These funds could have been used toward Oklahoma applicants in need of ERA funding. Recommendation: We recommend that OMES develop and implement internal controls to ensure it administers current and future ERA grants in accordance with applicable Federal laws and grant requirements, including ensuring that grant subrecipients are properly informed of federal requirements related to allowable costs. In addition, we recommend that OMES ensure the subrecipient has established effective internal controls over the Federal award to provide reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. We recommend that OMES ensure adequate supporting documentation for administrative expenditures incurred is obtained, reviewed, and maintained by OMES to ensure subrecipients only expend ERA funds for allowable activities and costs. We recommend that OMES only reimburse subrecipients for administrative costs based on supporting documentation of actual costs incurred. We recommend OMES ensure the personnel responsible for oversight for the ERA grant obtain the necessary training and knowledge to ensure compliance with the Federal grant requirements. Views of Responsible Official(s) Contact Person: Brandy Manek Anticipated Completion Date: Ongoing throughout the life of the grant Corrective Action Planned: The Office of Management and Enterprise Services partially agrees with the finding. See corrective action plan located in the corrective action plan section of this report. Auditor Response: Per 2 CFR 200.430(f), the payroll bonuses were not approved per the contract with the State Oklahoma. Further, the bonus policy created by CFO was not written until 2024, which is after the audit period. CFO states the contractors ‘continued to be paid the same remuneration in the time period between the expiration of the original contracts and when the new contracts and/or addendums were created and signed’; however, for nine of 10, SAI did not receive a contract that was for the rate paid for the contractor. OMES states ‘The entities were addressing more urgent matter to assist the people of Oklahoma with the objectives of the program and did not have the bandwidth to draft and sign new agreements.’ SAI disagrees with the lack of bandwidth. We reviewed the number of contracts received per contractors mentioned above and found that we received anywhere from two to six contracts per contractor. In addition, CFO closed their application portal on 8/31/2022, which is a month prior to the first missing contract date. We do understand that applications were still being reviewed and payments were being made; however, we find that CFO had the capacity to create, and sign amended contracts for the time periods being paid.
FINDING NO: 2023-089 (Repeat 2022-086 & 2022-087) STATE AGENCY: State of Oklahoma, Office of Management and Enterprise Services FEDERAL AGENCY: US Department of Treasury ALN: 21.023 FEDERAL PROGRAM NAME: Emergency Rental Assistance (ERA 1 and ERA 2) FEDERAL AWARD NUMBER: ERA028 and ERAE0259 FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; and Allowable Costs/Cost Principles QUESTIONED COSTS: $90,669 Criteria: U.S Department of the Treasury Emergency Rental Assistance Grantee Award Form (8) (a-b) Compliance with Applicable Law and Regulations, states in part, “a. Recipient agrees to comply with the requirements of Section 501 and Treasury interpretive guidance regarding such requirements. Recipient also agrees to comply with all other applicable federal statutes, regulations, and executive orders, and Recipient shall provide for such compliance in any agreements it enters into with other parties relating to this award. b. Federal regulations applicable to this award include, without limitation, the following: i. Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, 2 C.F.R. Part 200, other than such provisions as Treasury may determine are inapplicable to this Award and subject to such exceptions as may be otherwise provided by Treasury.” 2 CFR § 200.303(a) – Internal Controls states in part, “The Non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” The Consolidated Appropriations Act § Section 501 (c)(5) Use of Funds - Administrative Costs states in part, “A. IN GENERAL.- Not more than 10 percent of the amount paid to an eligible grantee under this section may be used for administrative costs attributable to providing financial assistance and housing stability services under paragraphs (2) and (3), respectively, including for data collection and reporting requirements related to such funds. B. No OTHER ADMINISTRATIVE COSTS.- Amounts paid under this section shall not be used for any administrative costs other than to the extent allowed under subparagraph (A)” 2 CFR § 200.334 – Retention requirements for records state in part, “Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient.” 2 CFR § 200.337 Access to records states in part, “(a) Records of non-Federal entities. The Federal awarding agency, Inspectors General, the Comptroller General of the United States, and the pass-through entity, or any of their authorized representatives, must have the right of access to any documents, papers, or other records of the non-Federal entity which are pertinent to the Federal award, in order to make audits, examinations, excerpts, and transcripts. The right also includes timely and reasonable access to the non-Federal entity's personnel for the purpose of interview and discussion related to such documents.” Condition and Context: While documenting controls over subrecipient administrative expenditures for the ERA 1 and ERA 2 grants, we noted that OMES did not require the subrecipients to submit supporting documentation for administrative expenditures charged to the programs. Further, we determined one of the subrecipients, Communities Foundation of Oklahoma (CFO), did not have sufficient internal controls over administrative expenditures to ensure they were for allowable costs and activities. While testing all 17-credit card administrative expenditures totaling $86,267 for, CFO we noted the following: • For 15 of 17, or 88.24%, of credit cards tested, the payment included at least one expenditure for unallowable costs. These unallowable costs also included gift cards. ($53,248.41 questioned costs) • For $28,661 of allowable credit card administrative expenditures, the expense was attributable to multiple jurisdictions and only 90.33% of the cost should have been charged to the State of Oklahoma; however, CFO was unable to support the proper allocation was completed and that 100% of the cost was not charged to the State. We determined we would question 9.67% of the allowable expenditures ($2,771.52 questioned costs), since the State paid for expenditures that were the responsibility of other jurisdictions. Note: all credit card transactions were ‘multi’ jurisdictions; however, the unallowable costs are questioned in the first bullet. While testing 48 of 251 non-payroll and non-credit card administrative expenditures, totaling $875,026 we noted the following: • For 3 of 48, or 6.25%, of claims tested, the costs were for services to non-profit Shelterwell, which is an organization that was formed by the Executive Director of Community Cares Partners (CCP) with CCP team members after CCP stopped accepting ERA applications. Shelterwell works with tenants and landlords to provide education and mediation between tenants and landlords but is not legally part of Communities Foundation of Oklahoma (CFO)/CCP and does not directly provide rental assistance. Therefore, all payments to Shelterwell do not directly support the administration of the ERA program and are not allowable administrative costs. ($3,847.90 questioned costs) • For 3 of 48, or 6.25%, of claims tested, the costs were for services for non-profit SidexSide (formerly LastMile) also created by CFO/CCP, which is an organization that provides job skills training and connects employers with participants seeking employment. SidexSide is not legally part of CFO/CCP and does not directly provide rental assistance; therefore, payments made to SidexSide do not directly support the administration of ERA program and are not allowable administrative costs. ($8,824.00 questioned costs) • For 4 of 48, or 8.33%, of claims tested, the costs were unallowable and included items such as trainings unrelated to ERA, gift cards, alcohol, and food. ($1,549.76 questioned costs) • For 1 of 48, or 2.08%, of claims tested, the costs were for the Afghan Legal Network project which partnered with CFO to provide ERA funds to Afghanistan refugees; SAI determined these costs are unallowable as the refugees were not Oklahoma residents, and not eligible for assistance. Therefore, administrative costs related to this project were also unallowable. ($498.00 questioned costs) • For 1 of 48, or 2.08%, of claims tested, the cost was unrelated to ERA and unallowable. CFO/CCP has refunded the expense using private funds after SAI determined it was unallowable. ($250.00 questioned costs) • For 29 of 48, or 60.42%, of claims tested, the cost was allowable; however, the expense was attributable to multiple jurisdictions and only 90.33% of the cost should have been charged to the State. However, CFO/CCP was unable to support the proper allocation was completed and that 100% of the cost was not charged to the State. We question 9.67% of the allowable expenditures ($19,679.00 questioned costs) The issues noted above for the credit card expenditures and non-payroll admin expenditures resulted in a total questioned cost of $90,669. Cause: OMES personnel responsible for oversight of the ERA 1 and ERA 2 grants do not normally oversee Federal grant programs, do not understand the types of activities that may be supported by the ERA 1 and ERA 2 grants, and do not have adequate experience with administering Federal grant funds. OMES did not ensure the personnel responsible for oversight of the ERA 1 And ERA 2 grants received the proper training to understand and did not ensure they used available resources to help them understand, the grant requirements. OMES did not establish and maintain effective internal control over the Federal award that provides reasonable assurance that OMES manages the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. OMES did not ensure that the subrecipients established and maintained effective internal control over the Federal award to provide reasonable assurance that the non-Federal entity was managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. OMES advanced a set rate of 10% (ERA 1) and 15% (ERA 2) and to another subrecipient 9.3% (ERA 1) of program funds for administrative costs instead of reimbursing administrative costs actually incurred by the subrecipient that were attributable to providing financial assistance and housing stability services under the ERA 1 and ERA 2 programs. OMES did not obtain, review, approve, or maintain adequate supporting documentation for administrative costs. Effect: Unallowable costs, totaling $120,106.53, were charged to the ERA program as administrative expenditures by CFO for SFY 2023. Recommendation: We recommend that OMES develop and implement internal controls to ensure it has the knowledge and experience to administer current and future ERA grants in accordance with applicable Federal laws and grant requirements, including ensuring that grant subrecipients are properly informed of Federal requirements related to allowable costs. In addition, we recommend that OMES ensure subrecipients have established effective internal controls over the Federal award to provide reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Lastly, we recommend that OMES ensure adequate supporting documentation for administrative costs charged to the program is obtained, reviewed, approved, and maintained to ensure subrecipients are only reimbursed for allowable activities and costs based on proper supporting documentation. Views of Responsible Official(s) Contact Person: Brandy Manek Anticipated Completion Date: Ongoing throughout the life of the grant Corrective Action Planned: The Office of Management and Enterprise Services partially agrees with the finding. See corrective action plan located in the corrective action plan section of this report. Auditor Response: CFO Response 1. - SAI questioned these costs as they were not refunded until SAI inquired about them. CFO Response 2 – The response at 2023-028, condition and context 2, does not fit with the context and condition noted in this finding. CFO Response 3 – This was cleared and removed from the finding. CFO Response 4 – While Treasury allowed grantees to make subawards to other entities, these subawards should have been made to existing entities. Shelterwell was created by CFO and Shelterwell is required to pay CFO a percentage to perform their accounting function. Additionally, the services being provided by Shelterwell do not fall under the umbrella of those allowed under housing stability. CFO Response 5 – While Treasury allowed grantees to make subawards to other entities, these subawards should have been made to existing entities. Side x Side was created by CFO and Side x Side is required to pay CFO a percentage to perform their accounting function. Additionally, the expenses being questioned for Side x Side do not fall under the umbrella of those allowed under housing stability as these were for. consulting, website design, and nonprofit/professional development trainings CFO Response 6 – CFO concurred CFO Response 7 – CFO concurred CFO Response 8 – CFO concurred CFO Response 9 – The response at 2023-028, condition and context 2, does not fit with the context and condition noted in this finding.
FINDING NO: 2023-092 (Repeat Finding 2022-028) STATE AGENCY: State of Oklahoma, Office of Management and Enterprise Services (OMES) FEDERAL AGENCY: US Department of Treasury (Treasury) ALN: 21.023 FEDERAL PROGRAM NAME: Emergency Rental Assistance (ERA 1 and ERA 2) FEDERAL AWARD NUMBER: ERA0028 and ERAE0259 FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Reporting QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.303 – Internal Controls states in part, “The Non-Federal entity must; (a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” 2 CFR § 200.334 – Retention requirements for records states in part, “Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient.” The US Department of Treasury Emergency Rental Assistance: Closeout Resource states in part, “Per the ERA 2 Award Terms, financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to the ERA1 award must be retained for a period of five years after all funds have been expended or returned to Treasury.” The US Department of Treasury Emergency Rental Assistance Reallocation Guidance (as of 9/6/2022) states, “Grantees are encouraged to partner with local nonprofit organizations and governmental agencies to expedite the obligation process and delivery of assistance to eligible households. However, Grantees may not use subrecipient agreements with these entities to avoid meeting the statutory obligation deadlines, and funds will not be considered obligated based solely on the fact they are subject to an agreement that provides for another entity to administer assistance on the Grantee’s behalf.” Condition and Context: While performing testwork of the Q1 2023 Compliance Report (January 1, 2023 – March 31, 2023), we noted the following: • The report did not include the demographics section, which is a required reporting element. Per Treasury Guidance, the State is required to retain documentation for five years after all funds have been expended or returned. They State contacted Treasury to obtain the original submission that includes the demographic section and Treasury noted it is a common issue for that section to be missing when downloaded from the reporting portal. Treasury was unable to provide the original report but provided an excel spreadsheet with the information used in the report. However, the excel spreadsheet provided only included 16 of the 21 reporting elements that were missing from the report and the State did not retain all supporting documentation. The required reporting element "Cumulative Total Dollar Amount of ERA Award Funds Approved (Obligated) for Administrative Expenses" was not included on the report or information provided by Treasury. • The State considers amounts expended as soon as they have left the State's coffers and have been distributed to the subrecipients rather than reporting actual expenditures for program assistance. Per Treasury guidance, funds will not be considered obligated based solely on the fact they are subject to an agreement that provides for another entity to administer assistance on the Grantee's behalf. Therefore, the required reporting elements were not appropriately included and or supported by underlying data of actual expenditures. • The State was unable to provide underlying data for the cumulative administrative expenditures; therefore, we were unable to determine if the amounts reported trace to supporting documentation. Further, this indicates the report was not appropriately reviewed by OMES personnel prior to submission. SAI calculated the State overstated cumulative expenditures by $41,024,695.56. • The amount reported for 'Cumulative Number of Unique Households Receiving Housing Stability' does not trace to supporting documentation. Although the support provided was not for the reporting period and covered more than a year after the report was due, SAI still filtered the supporting data to only include dates through the reporting period and determined the reported number of unique households was 9,812 larger than the supporting data indicated. While performing procedures for ERA 1 period of performance, we noted program assistance payments that were canceled or returned to the subrecipient were after the period of performance ended. The State did not amend prior period reports to reflect the changes in number of participant households or amount of program expenditures in those periods. Cause: OMES did not establish and maintain effective internal control over the Federal award that provides reasonable assurance that the State is managing the Federal award in compliance with federal statutes, regulations, and the terms and conditions of the Federal award. OMES personnel responsible for oversight of the ERA grant do not understand the reporting requirements, do not normally oversee Federal grant programs, and do not have adequate experience with administering Federal grant funds. OMES did not retain supporting documentation as required by Treasury. OMES fully relied on the subrecipients to administer the program and meet reporting requirements with little guidance. Effect: OMES did not accurately and correctly report ERA program expenditures on federal reports. In addition, not all reporting elements were present or accurately presented. Lastly, prior ERA reports were overstated and do not accurately reflect refunds of program expenditures. Recommendation: We recommend the OMES develop and implement internal controls to ensure that program obligations and expenditures are accurately reported. In addition, we also recommend OMES obtain, review and retain reports and supporting documentation, before submitting to the Federal agency. Lastly, we recommend the OMES personnel responsible for oversight of the ERA grant obtain the necessary training and knowledge to ensure compliance with federal reporting requirements. Views of Responsible Official(s) Contact Person: Brandy Manek Anticipated Completion Date: Ongoing throughout the life of the grant Corrective Action Planned: The Office of Management and Enterprise Services partially agrees with the finding. See corrective action plan located in the corrective action plan section of this report. Auditor Response: The demographic data originally provided to the State did not include the required reporting element “Cumulative Total Dollar Amount of ERA Award Funds Approved (Obligated) for Administrative Expenses”. The support provided in response to the finding for administrative expenses was for the Cleveland County Project not the State of Oklahoma portion. Further, the State was unable to provide their underlying data for the Cumulative administrative expenditures to support the reported amounts. No additional support was provided for the discrepancies between the reported amounts and underlying support from the subrecipient. Therefore, these findings will stand.
FINDING NO: 2023-026 (Repeat 2022-032, 2022-033, 2022-034) STATE AGENCY: State of Oklahoma, Office of Management and Enterprise Services (OMES) FEDERAL AGENCY: US Department of Treasury ALN: 21.023 FEDERAL PROGRAM NAME: Emergency Rental Assistance (ERA 1 and ERA 2) FEDERAL AWARD NUMBER: ERA028 and ERAE0259 FEDERAL AWARD YEAR: 2022 and 2023 CONTROL CATEGORY: Subrecipient Monitoring QUESTIONED COSTS: $0 Criteria: U.S Department of the Treasury Emergency Rental Assistance Grantee Award Form (8) (a-b) Compliance with Applicable Law and Regulations, states in part, “ a. Recipient agrees to comply with the requirements of Section 501 and Treasury interpretive guidance regarding such requirements. Recipient also agrees to comply with all other applicable federal statutes, regulations, and executive orders, and Recipient shall provide for such compliance in any agreements it enters into with other parties relating to this award. b. Federal regulations applicable to this award include, without limitation, the following: i. Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, 2 C.F.R. Part 200, other than such provisions as Treasury may determine are inapplicable to this Award and subject to such exceptions as may be otherwise provided by Treasury. Subpart F -Audit Requirements of the Uniform Guidance, implementing the Single Audit Act, shall apply to this award… iii. Reporting Subaward and Executive Compensation Information, 2 C.F.R. Part 170, pursuant to which the award term set forth in Appendix A to 2 C.F.R. Part 170 is hereby incorporated by reference. 2 CFR § 200.303(a) – Internal Controls states in part, “The Non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” 2 CFR § 200.332 Requirements for pass-through entities states in part, “All pass-through entities must: … (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, 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). … (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. … (f) 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.” 2 CFR § 200.334 – Retention requirements for records states in part, “Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient.” 2 CFR § 200.337 Access to records states in part, “(a) Records of non-Federal entities. The Federal awarding agency, Inspectors General, the Comptroller General of the United States, and the pass-through entity, or any of their authorized representatives, must have the right of access to any documents, papers, or other records of the non-Federal entity which are pertinent to the Federal award, in order to make audits, examinations, excerpts, and transcripts. The right also includes timely and reasonable access to the non-Federal entity's personnel for the purpose of interview and discussion related to such documents.” Condition and Context: The State of Oklahoma entered into agreements with two non-profit entities, Restore Hope Ministries and Communities Foundation of Oklahoma (RHM and CFO), to administer the ERA program for the State of Oklahoma. SAI reviewed the agreements for these two entities and determined that both agreements constituted a subrecipient relationship that would be subject to Part M Subrecipient Monitoring requirements. The Office of Management Enterprise Services (OMES) did not perform any subrecipient monitoring procedures during State Fiscal Year (SFY) 2023. In addition, the agreements with both subrecipients to administer the ERA 1 program ended on March 31, 2022, and stated funds were “to be used for necessary expenditures/obligations that were or will be incurred through March 31, 2022.” The State did not obtain a new agreement to cover fiscal year 2023 when they advanced ERA 1 payments totaling $25,878,270.13, of which the subrecipients expended $9,459,407.08. OMES provided these subrecipients advance payments based on expected program rental and utility expenditures for the month and administrative costs on a set percentage, 9.3% for RHM for ERA 1; and 10 % and 15% for CFO for ERA 1 and ERA 2 respectively. The subrecipients did not submit, and OMES did not review, any supporting documentation for program expenditures incurred by the subrecipients. While OMES did obtain summary information related to rental and utility payments and housing stability payments made for reporting purposes, OMES did not obtain or review any support for administrative costs to ensure that the costs were attributable to providing financial assistance and housing stability services to eligible households. OMES did not have a process in place to review potential fraud identified by the subrecipients and ensure that the agency’s response was adequate. OMES also did not have a process in place to ensure subrecipients were adequately evaluating for the types of fraud that may occur or identifying fraud risk factors applicable to the ERA program. OMES was unable to provide documentation to support that a risk assessment was performed in which each subrecipient would have been verified to have maintained an active status in the SAM.gov system, and that subrecipients were not suspended or disbarred. Cause: OMES did not 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. Adequate subrecipient monitoring policies and procedures were not established by the State prior to entering into agreements with subrecipients. OMES personnel responsible for oversight of the ERA grant do not normally oversee Federal grant programs, and do not have an adequate understanding or experience with administering Federal grant funds and understanding the types of activities that may be supported by the ERA grant. Effect: Failure to ensure subrecipient agreements are appropriately updated to cover the Federal grant period could result in inappropriate use of federal funds past the expiration date of the agreement. The OMES did not comply with 2 CFR § 200.332. In addition, without proper monitoring the subrecipients may not comply with the award terms and there is an increased risk of mismanagement and fraud by the subrecipients. Recommendation: We recommend that OMES develop and implement internal controls to ensure: • Each subrecipient’s risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward is appropriately evaluated for monitoring purposes. • Current and future ERA grant funds are administered in accordance with applicable Federal laws and grant requirements, including ensuring that grant subrecipients are provided the proper award documentation. • Adequate supporting documentation for actual program and administrative expenditures incurred is obtained, reviewed, and maintained by the State in order to ensure subrecipients are only expending ERA funds for allowable costs. • Fraud identified by subrecipients is appropriately reviewed and response is adequate. • Subrecipients adequately evaluate types of fraud that may occur and identify fraud risk factors applicable to ERA program. • Subrecipients are reimbursed for administrative costs based on supporting documentation for actual costs incurred rather than making advanced payments for a set percentage of program funds advanced. • Subrecipient records are available for inspection for monitoring and other audit purposes as required by OMES. • Subrecipient agreements are reviewed and updated regularly so the subrecipient is not operating under an expired agreement. Views of Responsible Official(s) Contact Person: Brandy Manek Anticipated Completion Date: Ongoing throughout the life of the grant Corrective Action Planned: The Office of Management and Enterprise Services agrees with the finding. See corrective action plan located in the corrective action plan section of this report. Auditor Response: The attached risk assessments were completed in 2020 by another agency, and SAI would have no way of knowing if they were used by OMES. In addition, a risk assessment needs to be performed annually by OMES.
FINDING NO: 2023-027 (Repeat 2022-032 and 2022-036) STATE AGENCY: State of Oklahoma, Office of Management and Enterprise Services FEDERAL AGENCY: US Department of Treasury ALN: 21.023 FEDERAL PROGRAM NAME: Emergency Rental Assistance (ERA 1 and ERA 2) FEDERAL AWARD NUMBER: ERA028 and ERAE0259 FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Eligibility QUESTIONED COSTS: $2,686,050 Criteria: U.S Department of the Treasury Emergency Rental Assistance Grantee Award Form (8) (a-b) Compliance with Applicable Law and Regulations, states in part, “a. Recipient agrees to comply with the requirements of Section 501 and Treasury interpretive guidance regarding such requirements. Recipient also agrees to comply with all other applicable federal statutes, regulations, and executive orders, and Recipient shall provide for such compliance in any agreements it enters into with other parties relating to this award. b. Federal regulations applicable to this award include, without limitation, the following: i. Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, 2 C.F.R. Part 200, other than such provisions as Treasury may determine are inapplicable to this Award and subject to such exceptions as may be otherwise provided by Treasury.” Per the U.S. Department of the Treasury Emergency Rental Assistance Frequently Asked Questions document revised August 25, 2021, “The Department of the Treasury (Treasury) is providing these frequently asked questions (FAQs) as guidance regarding the requirements of the Emergency Rental Assistance program (ERA1) established by section 501 of Division N of the Consolidated Appropriations Act, 2021, Pub. L. No. 116-260 (Dec. 27, 2020) and the Emergency Rental Assistance program (ERA2) established by section 3201 of the American Rescue Plan Act of 2021, Pub. L. No. 117-2 (March 11, 2021). Grantees must establish policies and procedures to govern the implementation of their ERA programs consistent with the statutes and these FAQs. To the extent that these FAQs do not provide specific guidance on a particular issue, a grantee should establish its own policy or procedure that is consistent with the statutes and follow it consistently.” The US Department of Treasury Emergency Rental Assistance (ERA) FAQ #1 states in part “A grantee may only use the funds provided in the ERA to provide financial assistance and housing stability services to eligible households. To be eligible, a household must be obligated to pay rent on a residential dwelling [emphasis added] and the grantee must determine that: i. for ERA1: a. one or more individuals within the household has qualified for unemployment benefits or experienced a reduction in household income, incurred significant costs, or experienced other financial hardship due, directly or indirectly, to the COVID-19 outbreak. b. one or more individuals within the household can demonstrate a risk of experiencing homelessness or housing instability; and c. the household has a household income at or below 80 percent of area median income. ii. for ERA2: a. one or more individuals within the household has qualified for unemployment benefits or experienced a reduction in household income, incurred significant costs, or experienced other financial hardship during or due, directly or indirectly, to the coronavirus pandemic. b. one or more individuals within the household can demonstrate a risk of experiencing homelessness or housing instability; and c. the household is a low-income family (as such term is defined in section 3(b) of the United States Housing Act of 1937 (42 U.S.C. 1437a(b))).2.” The US Department of Treasury Emergency Rental Assistance (ERA) FAQ #4 states in part “If a written attestation without further verification is relied on to document the majority of the applicant’s income, the grantee must reassess the household’s income every three months by obtaining appropriate documentation or a new self-attestation.” The US Department of Treasury Emergency Rental Assistance (ERA) FAQ #5 states in part “Grantees must obtain, if available, a current lease, signed by the applicant and the landlord or sublessor, that identifies the unit where the applicant resides and establishes the rental payment amount.” The US Department of Treasury Emergency Rental Assistance (ERA) FAQ #6 states in part “All payments for utilities and home energy costs should be supported by a bill, invoice, or evidence of payment to the provider of the utility or home energy service.” The US Department of Treasury Emergency Rental Assistance (ERA) FAQ #10 states in part, “In ERA1, an eligible household may receive up to twelve (12) months of assistance (plus an additional three (3) months if necessary to ensure housing stability for the household, subject to the availability of funds). The aggregate amount of financial assistance an eligible household may receive under ERA2, when combined with financial assistance under ERA1, must not exceed 18 months.” 2 CFR § 200.303(a) – Internal Controls states in part, “The Non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” 2 CFR § 200.334 – Retention requirements for records state in part, “Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient.” 2 CFR § 200.337 Access to records states in part, “(a) Records of non-Federal entities. The Federal awarding agency, Inspectors General, the Comptroller General of the United States, and the pass-through entity, or any of their authorized representatives, must have the right of access to any documents, papers, or other records of the non-Federal entity which are pertinent to the Federal award, in order to make audits, examinations, excerpts, and transcripts. The right also includes timely and reasonable access to the non-Federal entity's personnel for the purpose of interview and discussion related to such documents.” Per Community Cares Partners (CCP) Emergency Rental Assistance Policies and Procedures “Steps to Quality for Assistance, Section B, Qualifications - to be approved to receive assistance, a. Live in Oklahoma b. Rent [Refers to a household being obligated to pay rent on a dwelling in order to be eligible] c. Qualified for unemployment OR one of the three below due, directly or indirectly, to COVID-19 i. Reduction in household income ii. Incurred significant costs iii. Other financial hardship d. Risk of housing instability or homelessness e. 80% AMI” The CCP application contains the following regarding “rent”: *Qualification Checklist Instructions: Use this form to verify eligibility for each applicant. USE THE CHECKBOXES BELOW TO CONFIRM THE APPLICANT QUALIFIES FOR CCP ASSISTANCE. Check 2 • Verify Applicant is a Renter Reason(s) for Denial • Applicant owns home. Condition and Context: While documenting controls over activities allowed or unallowed and allowable costs/cost principles, we noted that one subrecipient’s system which tracks the number of months approved for arrears and prospective rent and utilities for each applicant does not distinguish between months paid for rent, utilities, or deposits. In addition, if an applicant originally applied through their prior system and then reapplied in the current system, the subrecipient would have to manually check both systems for each applicant to determine the number of months of assistance provided. We noted that an accurate tracking sheet was not maintained to ensure each applicant was in compliance with program assistance limits. In addition, while testing 89 of 18,553 rent and utilities program expenditures, totaling $1,161,976, we noted the following: Activities Allowed or Unallowed and Allowable Costs/Cost Principles and Eligibility exceptions: • For 22 of 89, or 24.72%, of items tested, the applicant was an Afghanistan refugee and not a renter who lived in Oklahoma at the time of applying for assistance; therefore, they were not eligible and the payment was unallowable. The subrecipient, Communities Foundation of Oklahoma, paid for the applicant to be in a hotel and then subsequently paid for their rent and utilities. Since the applicants were not eligible all payments were unallowable; therefore, we did not determine if the payment was calculated correctly or if the assistance exceeded 15 months for ERA 1 or 18 months for ERA 2. However, of these unallowable costs, we noted several payments were made to the applicants after the initial payment without receiving an additional application or additional funds request (AFR) form (See FAQ #10). • For 1 of 89, or 1.12% of items tested, the subrecipient approved two separate pledges days apart and paid the tenant and the landlord the same amount to cover the same months. A pledge is confirmation from the utility company or ledger to confirm how much was owed by the tenants and the pledge served as a promise to pay and not disconnect services. Per the landlord, the tenant did not submit the funds for rent and appears to have kept the funds for other uses. CCP noted it was a duplicate payment and requested the tenant return the money but to date have not recovered the funds. • For 5 of 89, or 5.62% of items tested, the subrecipient paid for utilities but they were unable to provide support from the utility company showing how much the applicant owed and for which months. Therefore, we were unable to determine which months were paid or the number of months paid to ensure they were not prior to March 13, 2020 and did not exceed 15 months for ERA 1 or 18 months for ERA 2. • For 5 of 89 home rental payments, or 5.62% of items tested, the applicant was an Afghanistan refugee and not a renter who lived in Oklahoma at the time of applying for assistance; therefore, they were not eligible and the payment was unallowable. The application was submitted prior to the applicant having a lease. • For 1 of 89, or 1.12% of items tested, the applicant received assistance from both subrecipients administering the State of Oklahoma ERA program and duplicate months were paid. Community Cares Partners (CCP) provided a list of payments to Restore Hope Ministries (RHM) weekly so RHM would not make a duplicate payment to an applicant who already received assistance from CCP. However, this process did not identify payments made by RHM prior to CCP and allowed for a duplicate payment. • For 1 of 89, or 1.12% of items tested, the subrecipient paid a month that was paid by the tenant per the ledger; therefore, the amount paid did not agree to the amount owed per the ledger. Upon SAI's inquiry of the payment the subrecipient stated they would send a new pledge, moving the month in question to be prospective rent covering a different month. However, the subrecipient had already pledged 3 months prospective rent on the original pledge and therefore, would be paying 4 months prospective which is unallowable (See FAQ #10). • For 2 of 89, or 2.25% of items tested, the subrecipient determined the applicant was ineligible after making the payment but to date has not recovered the funds. • For 1 of 89, or 1.12% of items tested, the subrecipient obtained a ledger in August 2022 and made a payment that agreed to the ledger on 9/13/2022. However, the landlord returned the payment on 11/7/2022 and CCP paid the returned funds directly to the tenant on 12/13/2022. The landlord returning the funds indicates the funds were no longer needed and CCP did not obtain an updated ledger prior to making payment to the tenant; therefore, we are unable to determine if the amount paid agreed to the amount owed at the time of payment. • For 2 of 89, or 2.25% of items tested, the applicant stated they had received prior ERA assistance but the subrecipient did not inquire about the prior assistance. Therefore, the subrecipient did not determine the number of months of assistance the applicant had previously received to ensure they did not exceed 15 months for ERA 1 or 18 months for ERA 2. • One of the applicants received prior assistance from CCP during FY22 and CCP should have looked up the prior payment information in their system to ensure assistance did not exceed the number of months allowed. • One of the applicants does not appear in the FY21 or FY22 CCP State expenditure data; however, they could have received funds from City, County, or Tribal sources and CCP made no attempt to investigate the prior payments to ensure assistance did not exceed the number of months allowed. • For 1 of 89, or 1.12% of items tested, the subrecipient paid for 19 months of assistance, which is one month more than allowed for the ERA 2 program. • For 4 of 89, or 4.49% of items tested, the assistance payment was not calculated correctly per the lease/ledger and the subrecipient paid more than the amount owed. • For 1 of 89, or 1.12% of items tested, the subrecipient paid for 2 months of rent after the lease agreement expired and the lease did not have a month-to-month renewal clause. Therefore, the applicant was not properly screened for eligibility. • For 1 of 89, or 1.12% of items tested, the subrecipient made several payments to the applicant without receiving additional applications or additional funds requests (AFR). Per CCP, this was because the applicant was part of the ORR (Office of Refugee Resettlement) program. The subrecipient did not properly screen for eligibility and obtain all required documents for all FY23 payments (FAQ #10). • For 1 of 89, or 1.12% of items tested, the address on the lease, driver’s license, and utility bill do not agree to the address on the application, ledger, or pledge to pay and the discrepancy was not noted or investigated by the subrecipient. Therefore, it does not appear proper eligibility screening or determinations were done. • Questioned costs related to the previous bullets for Rent/Utilities totaled $958,362. Further, while summarizing the data on ‘applicant’, we noted one line item was made up of 498 individual payments made to hotels on behalf of the Afghanistan refugees, which consisted of 186 applicants. We identified 185 of these applicants had payments for Afghanistan refugees to live in hotels prior to applying to the ERA program. Since, at the time of the application, they were not obligated to pay rent on a residential dwelling per Department of Treasury FAQ 1 and established CCP ERA policy, the cost is unallowable. This resulted in $1,727,687.64 in questioned costs (these costs do not include payments previously questioned in the first bullet). Lastly, while testing 72 of 6,576 application denials we noted the following: • For 1 of 72, or 1.39%, of items tested, the applicant was eligible and the subrecipient was unable to provide a reason for the denial other than it was when the team first formed, denoting an inadequate review. • For 6 of 72, or 8.33%, of items tested, the secondary review was not conducted by someone separate from the original case worker, denoting an inadequate review. Cause: OMES personnel responsible for oversight of the ERA 1 and ERA 2 grants do not normally oversee Federal grant programs, do not understand the types of activities that may be supported by the ERA 1 and ERA 2 grant funds, and do not have adequate experience with administering Federal grant funds. OMES did not establish and maintain effective internal control over the Federal award that provides reasonable assurance that OMES is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. OMES did not monitor subrecipients to ensure they established and maintained effective internal control over the Federal award to provide reasonable assurance that the non-Federal entity was managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. The Communities Foundation of Oklahoma (CFO) did not maintain effective internal control over payments to applicants for rent and utility expenses to ensure compliance with allowability requirements and did not obtain all supporting documentation. Effect: Unallowable costs, totaling $2,686,050 were charged to the ERA program. In addition, at least 1,700 Oklahomans were denied assistance due to lack of funding. In addition, CCP, and therefore the State of Oklahoma, did not follow their established ERA policies and procedures for determining eligibility. Recommendation: We recommend that OMES develop and implement internal controls to ensure it administers current and future ERA grants in accordance with applicable Federal laws and grant requirements, including ensuring that grant subrecipients are properly informed of Federal requirements related to allowable costs and eligibility. Further, we recommend OMES ensure subrecipients have established effective internal control over the Federal award to provide reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. We recommend that OMES ensure the personnel responsible for oversight of the ERA grant obtain the necessary training and knowledge to ensure compliance with Federal grant requirements. Views of Responsible Official(s) Contact Person: Brandy Manek Anticipated Completion Date: Ongoing throughout the life of the grant Corrective Action Planned: The Office of Management and Enterprise Services partially agrees with the finding. See corrective action plan located in the corrective action plan section of this report. Auditor Response: While U.S. Department of Treasury guidance does not require U.S. citizenship or legal residency to be eligible, FAQ #1 states the household must be obligated to pay rent on a residential dwelling. Further CCP’s application in page 3 lists eligibility requirements which include “Live in the State of Oklahoma and rent their home or primary residence”. SAI is not concerned with the immigration status of the applicants but rather their eligibility status at the time of applying for the program. Staying in a hotel can establish the applicant was living in the State of Oklahoma and renting their residence; however, there was no documentation supporting the Afghan refugees were renting hotels and had established a residential dwelling prior to CCP’s assistance and therefore they did not meet the rental requirement for eligibility prior to applying to the program. Further, we noted 48 of the hotel payments tested CCP paid for the hotel stay prior to an ERA application being completed, indicating they were not properly screening for eligibility. While FAQ #26 allows for the cost of a hotel or motel room occupied by an eligible household, it also states “grantees should consider the cost effectiveness of offering assistance for this purpose as compared to other uses. If a household is eligible for an existing program with narrower eligibility criteria that can provide similar assistance for hotel or motel stays, such as the HUD Emergency Solutions Grant program or FEMA Public Assistance, grantees should utilize such programs prior to providing similar assistance under the ERA program.” Other sources of assistance were available to refugees. According to the Administration for Children and Families (ACF) Office of Refugee Resettlement (ORR) some Afghanistan humanitarian parolees are eligible to apply for federal mainstream benefits in their state, such as cash assistance through Supplemental Security Income (SSI) or Temporary Assistance for Needy Families (TANF), health insurance through Medicaid, and food assistance through Supplemental Nutrition Assistance Program (SNAP). The ORR also contracted with nine organizations nationally and were eligible to use CRF funds. Therefore, SAI determined this was not an appropriate use of ERA funds that could have helped Oklahoma renters whose only available assistance was ERA. While CCP’s policies and procedures no longer required additional funds requests (AFR), additional applications were still required by FAQ #10. Further, per FAQ #1 “Treasury strongly encourages grantees to avoid establishing documentation requirements that are likely to be barriers to participation for eligible households, including those with irregular incomes such as those operating small businesses or gig workers whose income is reported on Internal Revenue Service Form 1099. However, grantees must require all applications for assistance to include an attestation from the applicant that all information included is correct and complete.”. Applications to determine eligibility are required by Treasury guidance and therefore, are not considered an administrative barrier that could be removed, regardless of CCP’s policies and procedures.
FINDING NO: 2023-028 (Repeat 2022-087) STATE AGENCY: State of Oklahoma, Office of Management and Enterprise Services FEDERAL AGENCY: US Department of Treasury ALN: 21.023 FEDERAL PROGRAM NAME: Emergency Rental Assistance (ERA 1 and ERA 2) FEDERAL AWARD NUMBER: ERA0028 and ERAE0259 FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed and Allowable Costs/Cost Principles QUESTIONED COSTS: $5,585,127 Criteria: U.S Department of the Treasury Emergency Rental Assistance Grantee Award Form (8) (a-b) Compliance with Applicable Law and Regulations, states in part, “a. Recipient agrees to comply with the requirements of Section 501 and Treasury interpretive guidance regarding such requirements. Recipient also agrees to comply with all other applicable federal statutes, regulations, and executive orders, and Recipient shall provide for such compliance in any agreements it enters into with other parties relating to this award. b. Federal regulations applicable to this award include, without limitation, the following: i. Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, 2 C.F.R. Part 200, other than such provisions as Treasury may determine are inapplicable to this Award and subject to such exceptions as may be otherwise provided by Treasury.” 2 CFR § 200.303(a) – Internal Controls states in part, “The Non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” The Consolidated Appropriations Act § Section 501 (c)(5) Use of Funds - Administrative Costs states in part, “A. IN GENERAL.- Not more than 10 percent of the amount paid to an eligible grantee under this section may be used for administrative costs attributable to providing financial assistance and housing stability services under paragraphs (2) and (3), respectively, including for data collection and reporting requirements related to such funds. B. No OTHER ADMINISTRATIVE COSTS.- Amounts paid under this section shall not be used for any administrative costs other than to the extent allowed under subparagraph (A)” The American Rescue Plan Act of 2021 § Section 3201 (d)(1)(C) Use of Funds – Administrative Costs states in part, “Not more than 15 percent of the total amount paid to an eligible grantee under this section may be used for administrative costs attributable to providing financial assistance, housing stability services, and other affordable rental housing and eviction prevention activities, including for data collection and reporting requirements related to such funds.” 2 CFR § 200.334 – Retention requirements for records states in part, “Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient.” 2 CFR § 200.337 Access to records states in part, “(a) Records of non-Federal entities. The Federal awarding agency, Inspectors General, the Comptroller General of the United States, and the pass-through entity, or any of their authorized representatives, must have the right of access to any documents, papers, or other records of the non-Federal entity which are pertinent to the Federal award, in order to make audits, examinations, excerpts, and transcripts. The right also includes timely and reasonable access to the non-Federal entity's personnel for the purpose of interview and discussion related to such documents.” The US Department of Treasury Emergency Rental Assistance (ERA) FAQ #29 states in part “A grantee may permit a subrecipient to incur more than 10 or 15 percent, as applicable, of the amount of the subaward issued to that subrecipient as long as the total of all administrative costs incurred by the grantee and all subrecipients, whether as direct or indirect costs, does not exceed 10 or 15 percent, as applicable, of the total amount of the award provided to the grantee from Treasury.” Condition and Context: While documenting controls over subrecipient program and administrative expenditures for the ERA 1 and ERA 2 grants, we noted that OMES did not require the subrecipients to submit supporting documentation for expenditures charged to the programs. Further, we determined one subrecipient, Communities Foundation of Oklahoma (CFO) did not have sufficient internal controls over program or administrative expenditures to ensure they were for allowable costs and activities. While reviewing all administrative management fees, we noted one of the subrecipients charged the ERA 1 and ERA 2 grants $5,585,126.89 in unallowable administrative costs (management fees) that were retained by the subrecipient and were not attributable to providing financial assistance and housing stability services. The management fees the subrecipient charged to the grant do not represent actual admin expenditures, but rather an arbitrary amount retained by CFO (Questioned costs - $5,585,126.89). See management fees referenced in finding 2023-091. In addition, during our testwork for the ERA 1 program administrative limit, we noted that administrative costs charged to the program exceeded the 10% allowable limit by 5.81%, or $1,259,429. Cause: OMES personnel responsible for oversight of the ERA 1 and ERA 2 grants do not normally oversee Federal grant programs, and do not have adequate experience with administering Federal grant funds and understanding the types of activities that may be supported by the ERA 1 and ERA 2 grants. OMES did not ensure the personnel responsible for oversight of the ERA 1 And ERA 2 grants received the proper training to understand and did not ensure they used available resources to help them understand, the grant requirements. OMES did not ensure the subrecipients established and maintained effective internal control over the Federal award to provide reasonable assurance that the non-Federal entity was managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. OMES advanced to one subrecipient a set rate of 10% (ERA 1) and 15% (ERA 2) and to another subrecipient 9.3% (ERA 1) of program funds for administrative costs instead of reimbursing administrative costs actually incurred by the subrecipient that were attributable to providing financial assistance and housing stability services under the ERA 1 and ERA 2 programs. OMES did not obtain, review, approve, or maintain adequate supporting documentation for administrative costs. Effect: Unallowable costs, totaling $5,585,126.89, were charged to the ERA program by one subrecipient as administrative costs. Recommendation: We recommend that OMES develop and implement internal controls to ensure it has the knowledge and experience to administer current and future ERA grants in accordance with applicable Federal laws and grant requirements, including ensuring that grant subrecipients are properly informed of Federal requirements related to allowable costs. In addition, we recommend that OMES ensure subrecipients have established effective internal controls over the Federal award to provide reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Further, we recommend that OMES ensure adequate supporting documentation for administrative costs charged to the program is obtained, reviewed, approved, and maintained by OMES to ensure subrecipients are only paid or reimbursed for allowable activities and costs based on that supporting documentation. Views of Responsible Official(s) Contact Person: Brandy Manek Anticipated Completion Date: Brandy Manek Corrective Action Planned: The Office of Management and Enterprise Services partially agrees with the finding. See corrective action plan located in the corrective action plan section of this report. Auditor Response: CFO: Condition and Context 1 Response - SAI requested CFO’s ERA accounting data on 9/27/2024. On 1/15/2025 CFO provided spreadsheets of CFO ERA expenditures for FFY21-FFY23. SAI noted the CFO expenditures only accounted for 28.05% of all management fees paid to CFO and therefore, the management fees “expended” by CCP to pay CFO were retained without representing actual admin expenditures. CFO: Condition and Context 2 Response - The ERA 1 program’s period of performance ended within the SFY23 audit period; therefore, SAI performed testwork to determine whether the 10% administrative limit was exceeded using data for the entirety of the ERA 1 program (FFY21-FFY23). We noted the 10% limit was exceeded by 5.81% or $1,259,429.
FINDING NO: 2023-088 (Repeat 2022-085) STATE AGENCY: State of Oklahoma, Office of Management and Enterprise Services FEDERAL AGENCY: US Department of Treasury ALN: 21.023 FEDERAL PROGRAM NAME: Emergency Rental Assistance (ERA 1 and ERA 2) FEDERAL AWARD NUMBER: ERA028 and ERAE0259 FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; and Allowable Costs/Cost Principles QUESTIONED COSTS: $2,410,251 Criteria: U.S. Department of the Treasury Emergency Rental Assistance Grantee Award Form (8) (a-b) Compliance with Applicable Law and Regulations, states in part, “a. Recipient agrees to comply with the requirements of Section 501 and Treasury interpretive guidance regarding such requirements. Recipient also agrees to comply with all other applicable federal statutes, regulations, and executive orders, and Recipient shall provide for such compliance in any agreements it enters into with other parties relating to this award. b. Federal regulations applicable to this award include, without limitation, the following: i. Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, 2 C.F.R. Part 200, other than such provisions as Treasury may determine are inapplicable to this Award and subject to such exceptions as may be otherwise provided by Treasury.” 2 CFR § 200.303(a) – Internal Controls states in part, “The Non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” The Consolidated Appropriations Act § Section 501 (c)(5) Use of Funds - Administrative Costs states in part, “A. IN GENERAL.- Not more than 10 percent of the amount paid to an eligible grantee under this section may be used for administrative costs attributable to providing financial assistance and housing stability services under paragraphs (2) and (3), respectively, including for data collection and reporting requirements related to such funds. B. No OTHER ADMINISTRATIVE COSTS.- Amounts paid under this section shall not be used for any administrative costs other than to the extent allowed under subparagraph (A)” 2 CFR § 200.334 – Retention requirements for records state in part, “Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient.” 2 CFR § 200.337 – Access to records states in part, “(a) Records of non-Federal entities. The Federal awarding agency, Inspectors General, the Comptroller General of the United States, and the pass-through entity, or any of their authorized representatives, must have the right of access to any documents, papers, or other records of the non-Federal entity which are pertinent to the Federal award, in order to make audits, examinations, excerpts, and transcripts. The right also includes timely and reasonable access to the non-Federal entity's personnel for the purpose of interview and discussion related to such documents.” 2 CFR § 200.403 – Factors affecting allowability of costs states in part, “Except where otherwise authorized by statute, costs must meet the following criteria to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles.” Condition and Context: When reviewing SFY23 payroll administrative expenditures, we noted that Communities Foundation of Oklahoma paid $2,372,400 in bonuses to 146 employees. Of these bonuses, 47 people received between $10,000 - $19,999, and 44 people received more than $20,000. We found the expenditures to be unallowable; we found no guidance that stated ERA administrative funds could be expended on bonuses. Also, while testing 116 of 5,284 payroll administrative expenditures we noted the following: • For 4 of 116, or 3.45% of claims tested, the contract was for an unreasonable rate and the invoices provided were not itemized and specific enough to determine if the time spent was for an allowable activity related to ERA 1 or ERA 2. • For 9 of 116, or 7.76% of claims tested, the payment was for more than the contracted rate. • For 23 of 116, or 19.83% of claims tested, the subrecipient was unable to provide a contract for the period paid. • For 9 of 116, or 7.76% of claims tested, the contract was not signed by the Executive Director and was not valid. • For 22 of 115, or 19.13% of claims tested, the payroll cost was allowable; however, the expense was attributable to multiple jurisdictions and only 90.33% of the cost should have been charged to the State of Oklahoma, but the subrecipient was unable to support the allocation was completed and that 100% of the cost was not charged to the State. The issues noted above resulted in total questioned cost of $37,851. We are unable to note the questioned costs per exception due to the same sample items being noted on multiple exceptions. Cause: OMES personnel responsible for oversight of the ERA 1 and ERA 2 grants do not normally oversee Federal grant programs; they do not understand the types of activities that may be supported by the ERA 1 and ERA 2 grants, nor do they have adequate experience with administering Federal grant funds. OMES did not establish and maintain effective internal control over the Federal award that provides reasonable assurance that OMES is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. OMES did not ensure that the subrecipients established and maintained effective internal control over the Federal award to provide reasonable assurance that the non-Federal entity was managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Effect: Unallowable payroll costs totaling $2,410,251, including unallowable bonus payments of $2,372,400, were charged to the ERA program as payroll administrative expenditures. These funds could have been used toward Oklahoma applicants in need of ERA funding. Recommendation: We recommend that OMES develop and implement internal controls to ensure it administers current and future ERA grants in accordance with applicable Federal laws and grant requirements, including ensuring that grant subrecipients are properly informed of federal requirements related to allowable costs. In addition, we recommend that OMES ensure the subrecipient has established effective internal controls over the Federal award to provide reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. We recommend that OMES ensure adequate supporting documentation for administrative expenditures incurred is obtained, reviewed, and maintained by OMES to ensure subrecipients only expend ERA funds for allowable activities and costs. We recommend that OMES only reimburse subrecipients for administrative costs based on supporting documentation of actual costs incurred. We recommend OMES ensure the personnel responsible for oversight for the ERA grant obtain the necessary training and knowledge to ensure compliance with the Federal grant requirements. Views of Responsible Official(s) Contact Person: Brandy Manek Anticipated Completion Date: Ongoing throughout the life of the grant Corrective Action Planned: The Office of Management and Enterprise Services partially agrees with the finding. See corrective action plan located in the corrective action plan section of this report. Auditor Response: Per 2 CFR 200.430(f), the payroll bonuses were not approved per the contract with the State Oklahoma. Further, the bonus policy created by CFO was not written until 2024, which is after the audit period. CFO states the contractors ‘continued to be paid the same remuneration in the time period between the expiration of the original contracts and when the new contracts and/or addendums were created and signed’; however, for nine of 10, SAI did not receive a contract that was for the rate paid for the contractor. OMES states ‘The entities were addressing more urgent matter to assist the people of Oklahoma with the objectives of the program and did not have the bandwidth to draft and sign new agreements.’ SAI disagrees with the lack of bandwidth. We reviewed the number of contracts received per contractors mentioned above and found that we received anywhere from two to six contracts per contractor. In addition, CFO closed their application portal on 8/31/2022, which is a month prior to the first missing contract date. We do understand that applications were still being reviewed and payments were being made; however, we find that CFO had the capacity to create, and sign amended contracts for the time periods being paid.
FINDING NO: 2023-089 (Repeat 2022-086 & 2022-087) STATE AGENCY: State of Oklahoma, Office of Management and Enterprise Services FEDERAL AGENCY: US Department of Treasury ALN: 21.023 FEDERAL PROGRAM NAME: Emergency Rental Assistance (ERA 1 and ERA 2) FEDERAL AWARD NUMBER: ERA028 and ERAE0259 FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; and Allowable Costs/Cost Principles QUESTIONED COSTS: $90,669 Criteria: U.S Department of the Treasury Emergency Rental Assistance Grantee Award Form (8) (a-b) Compliance with Applicable Law and Regulations, states in part, “a. Recipient agrees to comply with the requirements of Section 501 and Treasury interpretive guidance regarding such requirements. Recipient also agrees to comply with all other applicable federal statutes, regulations, and executive orders, and Recipient shall provide for such compliance in any agreements it enters into with other parties relating to this award. b. Federal regulations applicable to this award include, without limitation, the following: i. Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, 2 C.F.R. Part 200, other than such provisions as Treasury may determine are inapplicable to this Award and subject to such exceptions as may be otherwise provided by Treasury.” 2 CFR § 200.303(a) – Internal Controls states in part, “The Non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” The Consolidated Appropriations Act § Section 501 (c)(5) Use of Funds - Administrative Costs states in part, “A. IN GENERAL.- Not more than 10 percent of the amount paid to an eligible grantee under this section may be used for administrative costs attributable to providing financial assistance and housing stability services under paragraphs (2) and (3), respectively, including for data collection and reporting requirements related to such funds. B. No OTHER ADMINISTRATIVE COSTS.- Amounts paid under this section shall not be used for any administrative costs other than to the extent allowed under subparagraph (A)” 2 CFR § 200.334 – Retention requirements for records state in part, “Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient.” 2 CFR § 200.337 Access to records states in part, “(a) Records of non-Federal entities. The Federal awarding agency, Inspectors General, the Comptroller General of the United States, and the pass-through entity, or any of their authorized representatives, must have the right of access to any documents, papers, or other records of the non-Federal entity which are pertinent to the Federal award, in order to make audits, examinations, excerpts, and transcripts. The right also includes timely and reasonable access to the non-Federal entity's personnel for the purpose of interview and discussion related to such documents.” Condition and Context: While documenting controls over subrecipient administrative expenditures for the ERA 1 and ERA 2 grants, we noted that OMES did not require the subrecipients to submit supporting documentation for administrative expenditures charged to the programs. Further, we determined one of the subrecipients, Communities Foundation of Oklahoma (CFO), did not have sufficient internal controls over administrative expenditures to ensure they were for allowable costs and activities. While testing all 17-credit card administrative expenditures totaling $86,267 for, CFO we noted the following: • For 15 of 17, or 88.24%, of credit cards tested, the payment included at least one expenditure for unallowable costs. These unallowable costs also included gift cards. ($53,248.41 questioned costs) • For $28,661 of allowable credit card administrative expenditures, the expense was attributable to multiple jurisdictions and only 90.33% of the cost should have been charged to the State of Oklahoma; however, CFO was unable to support the proper allocation was completed and that 100% of the cost was not charged to the State. We determined we would question 9.67% of the allowable expenditures ($2,771.52 questioned costs), since the State paid for expenditures that were the responsibility of other jurisdictions. Note: all credit card transactions were ‘multi’ jurisdictions; however, the unallowable costs are questioned in the first bullet. While testing 48 of 251 non-payroll and non-credit card administrative expenditures, totaling $875,026 we noted the following: • For 3 of 48, or 6.25%, of claims tested, the costs were for services to non-profit Shelterwell, which is an organization that was formed by the Executive Director of Community Cares Partners (CCP) with CCP team members after CCP stopped accepting ERA applications. Shelterwell works with tenants and landlords to provide education and mediation between tenants and landlords but is not legally part of Communities Foundation of Oklahoma (CFO)/CCP and does not directly provide rental assistance. Therefore, all payments to Shelterwell do not directly support the administration of the ERA program and are not allowable administrative costs. ($3,847.90 questioned costs) • For 3 of 48, or 6.25%, of claims tested, the costs were for services for non-profit SidexSide (formerly LastMile) also created by CFO/CCP, which is an organization that provides job skills training and connects employers with participants seeking employment. SidexSide is not legally part of CFO/CCP and does not directly provide rental assistance; therefore, payments made to SidexSide do not directly support the administration of ERA program and are not allowable administrative costs. ($8,824.00 questioned costs) • For 4 of 48, or 8.33%, of claims tested, the costs were unallowable and included items such as trainings unrelated to ERA, gift cards, alcohol, and food. ($1,549.76 questioned costs) • For 1 of 48, or 2.08%, of claims tested, the costs were for the Afghan Legal Network project which partnered with CFO to provide ERA funds to Afghanistan refugees; SAI determined these costs are unallowable as the refugees were not Oklahoma residents, and not eligible for assistance. Therefore, administrative costs related to this project were also unallowable. ($498.00 questioned costs) • For 1 of 48, or 2.08%, of claims tested, the cost was unrelated to ERA and unallowable. CFO/CCP has refunded the expense using private funds after SAI determined it was unallowable. ($250.00 questioned costs) • For 29 of 48, or 60.42%, of claims tested, the cost was allowable; however, the expense was attributable to multiple jurisdictions and only 90.33% of the cost should have been charged to the State. However, CFO/CCP was unable to support the proper allocation was completed and that 100% of the cost was not charged to the State. We question 9.67% of the allowable expenditures ($19,679.00 questioned costs) The issues noted above for the credit card expenditures and non-payroll admin expenditures resulted in a total questioned cost of $90,669. Cause: OMES personnel responsible for oversight of the ERA 1 and ERA 2 grants do not normally oversee Federal grant programs, do not understand the types of activities that may be supported by the ERA 1 and ERA 2 grants, and do not have adequate experience with administering Federal grant funds. OMES did not ensure the personnel responsible for oversight of the ERA 1 And ERA 2 grants received the proper training to understand and did not ensure they used available resources to help them understand, the grant requirements. OMES did not establish and maintain effective internal control over the Federal award that provides reasonable assurance that OMES manages the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. OMES did not ensure that the subrecipients established and maintained effective internal control over the Federal award to provide reasonable assurance that the non-Federal entity was managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. OMES advanced a set rate of 10% (ERA 1) and 15% (ERA 2) and to another subrecipient 9.3% (ERA 1) of program funds for administrative costs instead of reimbursing administrative costs actually incurred by the subrecipient that were attributable to providing financial assistance and housing stability services under the ERA 1 and ERA 2 programs. OMES did not obtain, review, approve, or maintain adequate supporting documentation for administrative costs. Effect: Unallowable costs, totaling $120,106.53, were charged to the ERA program as administrative expenditures by CFO for SFY 2023. Recommendation: We recommend that OMES develop and implement internal controls to ensure it has the knowledge and experience to administer current and future ERA grants in accordance with applicable Federal laws and grant requirements, including ensuring that grant subrecipients are properly informed of Federal requirements related to allowable costs. In addition, we recommend that OMES ensure subrecipients have established effective internal controls over the Federal award to provide reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Lastly, we recommend that OMES ensure adequate supporting documentation for administrative costs charged to the program is obtained, reviewed, approved, and maintained to ensure subrecipients are only reimbursed for allowable activities and costs based on proper supporting documentation. Views of Responsible Official(s) Contact Person: Brandy Manek Anticipated Completion Date: Ongoing throughout the life of the grant Corrective Action Planned: The Office of Management and Enterprise Services partially agrees with the finding. See corrective action plan located in the corrective action plan section of this report. Auditor Response: CFO Response 1. - SAI questioned these costs as they were not refunded until SAI inquired about them. CFO Response 2 – The response at 2023-028, condition and context 2, does not fit with the context and condition noted in this finding. CFO Response 3 – This was cleared and removed from the finding. CFO Response 4 – While Treasury allowed grantees to make subawards to other entities, these subawards should have been made to existing entities. Shelterwell was created by CFO and Shelterwell is required to pay CFO a percentage to perform their accounting function. Additionally, the services being provided by Shelterwell do not fall under the umbrella of those allowed under housing stability. CFO Response 5 – While Treasury allowed grantees to make subawards to other entities, these subawards should have been made to existing entities. Side x Side was created by CFO and Side x Side is required to pay CFO a percentage to perform their accounting function. Additionally, the expenses being questioned for Side x Side do not fall under the umbrella of those allowed under housing stability as these were for. consulting, website design, and nonprofit/professional development trainings CFO Response 6 – CFO concurred CFO Response 7 – CFO concurred CFO Response 8 – CFO concurred CFO Response 9 – The response at 2023-028, condition and context 2, does not fit with the context and condition noted in this finding.
FINDING NO: 2023-092 (Repeat Finding 2022-028) STATE AGENCY: State of Oklahoma, Office of Management and Enterprise Services (OMES) FEDERAL AGENCY: US Department of Treasury (Treasury) ALN: 21.023 FEDERAL PROGRAM NAME: Emergency Rental Assistance (ERA 1 and ERA 2) FEDERAL AWARD NUMBER: ERA0028 and ERAE0259 FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Reporting QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.303 – Internal Controls states in part, “The Non-Federal entity must; (a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” 2 CFR § 200.334 – Retention requirements for records states in part, “Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient.” The US Department of Treasury Emergency Rental Assistance: Closeout Resource states in part, “Per the ERA 2 Award Terms, financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to the ERA1 award must be retained for a period of five years after all funds have been expended or returned to Treasury.” The US Department of Treasury Emergency Rental Assistance Reallocation Guidance (as of 9/6/2022) states, “Grantees are encouraged to partner with local nonprofit organizations and governmental agencies to expedite the obligation process and delivery of assistance to eligible households. However, Grantees may not use subrecipient agreements with these entities to avoid meeting the statutory obligation deadlines, and funds will not be considered obligated based solely on the fact they are subject to an agreement that provides for another entity to administer assistance on the Grantee’s behalf.” Condition and Context: While performing testwork of the Q1 2023 Compliance Report (January 1, 2023 – March 31, 2023), we noted the following: • The report did not include the demographics section, which is a required reporting element. Per Treasury Guidance, the State is required to retain documentation for five years after all funds have been expended or returned. They State contacted Treasury to obtain the original submission that includes the demographic section and Treasury noted it is a common issue for that section to be missing when downloaded from the reporting portal. Treasury was unable to provide the original report but provided an excel spreadsheet with the information used in the report. However, the excel spreadsheet provided only included 16 of the 21 reporting elements that were missing from the report and the State did not retain all supporting documentation. The required reporting element "Cumulative Total Dollar Amount of ERA Award Funds Approved (Obligated) for Administrative Expenses" was not included on the report or information provided by Treasury. • The State considers amounts expended as soon as they have left the State's coffers and have been distributed to the subrecipients rather than reporting actual expenditures for program assistance. Per Treasury guidance, funds will not be considered obligated based solely on the fact they are subject to an agreement that provides for another entity to administer assistance on the Grantee's behalf. Therefore, the required reporting elements were not appropriately included and or supported by underlying data of actual expenditures. • The State was unable to provide underlying data for the cumulative administrative expenditures; therefore, we were unable to determine if the amounts reported trace to supporting documentation. Further, this indicates the report was not appropriately reviewed by OMES personnel prior to submission. SAI calculated the State overstated cumulative expenditures by $41,024,695.56. • The amount reported for 'Cumulative Number of Unique Households Receiving Housing Stability' does not trace to supporting documentation. Although the support provided was not for the reporting period and covered more than a year after the report was due, SAI still filtered the supporting data to only include dates through the reporting period and determined the reported number of unique households was 9,812 larger than the supporting data indicated. While performing procedures for ERA 1 period of performance, we noted program assistance payments that were canceled or returned to the subrecipient were after the period of performance ended. The State did not amend prior period reports to reflect the changes in number of participant households or amount of program expenditures in those periods. Cause: OMES did not establish and maintain effective internal control over the Federal award that provides reasonable assurance that the State is managing the Federal award in compliance with federal statutes, regulations, and the terms and conditions of the Federal award. OMES personnel responsible for oversight of the ERA grant do not understand the reporting requirements, do not normally oversee Federal grant programs, and do not have adequate experience with administering Federal grant funds. OMES did not retain supporting documentation as required by Treasury. OMES fully relied on the subrecipients to administer the program and meet reporting requirements with little guidance. Effect: OMES did not accurately and correctly report ERA program expenditures on federal reports. In addition, not all reporting elements were present or accurately presented. Lastly, prior ERA reports were overstated and do not accurately reflect refunds of program expenditures. Recommendation: We recommend the OMES develop and implement internal controls to ensure that program obligations and expenditures are accurately reported. In addition, we also recommend OMES obtain, review and retain reports and supporting documentation, before submitting to the Federal agency. Lastly, we recommend the OMES personnel responsible for oversight of the ERA grant obtain the necessary training and knowledge to ensure compliance with federal reporting requirements. Views of Responsible Official(s) Contact Person: Brandy Manek Anticipated Completion Date: Ongoing throughout the life of the grant Corrective Action Planned: The Office of Management and Enterprise Services partially agrees with the finding. See corrective action plan located in the corrective action plan section of this report. Auditor Response: The demographic data originally provided to the State did not include the required reporting element “Cumulative Total Dollar Amount of ERA Award Funds Approved (Obligated) for Administrative Expenses”. The support provided in response to the finding for administrative expenses was for the Cleveland County Project not the State of Oklahoma portion. Further, the State was unable to provide their underlying data for the Cumulative administrative expenditures to support the reported amounts. No additional support was provided for the discrepancies between the reported amounts and underlying support from the subrecipient. Therefore, these findings will stand.
FINDING NO: 2023-102 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Subrecipient Monitoring QUESTIONED COSTS: $348,761 Criteria: 2 CFR § 200.303 – Internal Controls states in part, “The Non-Federal entity must; (a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” 2 CFR § 200.334 – Retention requirements for records states, in part, “Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient.” Condition and Context: The State of Oklahoma transfers all CSLFRF funds to state agencies so they can work directly with the subrecipient to ensure the project(s) are executed correctly. The State of Oklahoma had seven (7) state agencies make payments totaling $51,454,078 to subrecipients during SFY 2023. For the three (3) state agencies selected for testing, we sampled 14 of 43 subrecipient payments totaling $5,192,951 from a population of $8,694,772; and noted the following issue: • An Oklahoma State Department of Health (OSDH) subrecipient was reimbursed $825,223.40 on 6/16/23; however, $429,592.97 was later determined unallowed on 8/21/23 after an internal review. The subrecipient purchased pharmacy supplies which were unallowed. The subrecipient was only approved to purchase buildings and perform renovations in accordance with the contract and funding packet between OSDH and the subrecipient. The subrecipient then submitted an additional $80,831.48 of allowable costs on 11/8/23 to be applied against the unallowed costs he was already reimbursed. The remaining $348,761.49 was to be paid by the subrecipient for future capital expenditures. We requested supporting documentation for the $348,761.49 submitted by subrecipient for future capital expenditures; however, support could not be provided. Cause: The Oklahoma State Department of Health (OSDH) did not obtain and adequately review all supporting documents prior to payment. Effect: Unallowable costs, totaling $348,761.49, were charged to the CSLFRF program and not supported. Recommendation: We recommend the Oklahoma State Department of Health (OSDH) strengthen their internal controls to ensure adequate supporting documentation for program expenditures incurred is obtained, reviewed, and maintained to ensure subrecipients are expending CSLFRF funds for allowable costs. Views of Responsible Official(s) Contact Person: OMES: Parker Wise OSDH: Diane Brown, Danielle Smith, Tracey Douglas Anticipated Completion Date: 5/1/2025 Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-102 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Subrecipient Monitoring QUESTIONED COSTS: $348,761 Criteria: 2 CFR § 200.303 – Internal Controls states in part, “The Non-Federal entity must; (a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” 2 CFR § 200.334 – Retention requirements for records states, in part, “Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient.” Condition and Context: The State of Oklahoma transfers all CSLFRF funds to state agencies so they can work directly with the subrecipient to ensure the project(s) are executed correctly. The State of Oklahoma had seven (7) state agencies make payments totaling $51,454,078 to subrecipients during SFY 2023. For the three (3) state agencies selected for testing, we sampled 14 of 43 subrecipient payments totaling $5,192,951 from a population of $8,694,772; and noted the following issue: • An Oklahoma State Department of Health (OSDH) subrecipient was reimbursed $825,223.40 on 6/16/23; however, $429,592.97 was later determined unallowed on 8/21/23 after an internal review. The subrecipient purchased pharmacy supplies which were unallowed. The subrecipient was only approved to purchase buildings and perform renovations in accordance with the contract and funding packet between OSDH and the subrecipient. The subrecipient then submitted an additional $80,831.48 of allowable costs on 11/8/23 to be applied against the unallowed costs he was already reimbursed. The remaining $348,761.49 was to be paid by the subrecipient for future capital expenditures. We requested supporting documentation for the $348,761.49 submitted by subrecipient for future capital expenditures; however, support could not be provided. Cause: The Oklahoma State Department of Health (OSDH) did not obtain and adequately review all supporting documents prior to payment. Effect: Unallowable costs, totaling $348,761.49, were charged to the CSLFRF program and not supported. Recommendation: We recommend the Oklahoma State Department of Health (OSDH) strengthen their internal controls to ensure adequate supporting documentation for program expenditures incurred is obtained, reviewed, and maintained to ensure subrecipients are expending CSLFRF funds for allowable costs. Views of Responsible Official(s) Contact Person: OMES: Parker Wise OSDH: Diane Brown, Danielle Smith, Tracey Douglas Anticipated Completion Date: 5/1/2025 Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-102 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Subrecipient Monitoring QUESTIONED COSTS: $348,761 Criteria: 2 CFR § 200.303 – Internal Controls states in part, “The Non-Federal entity must; (a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” 2 CFR § 200.334 – Retention requirements for records states, in part, “Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient.” Condition and Context: The State of Oklahoma transfers all CSLFRF funds to state agencies so they can work directly with the subrecipient to ensure the project(s) are executed correctly. The State of Oklahoma had seven (7) state agencies make payments totaling $51,454,078 to subrecipients during SFY 2023. For the three (3) state agencies selected for testing, we sampled 14 of 43 subrecipient payments totaling $5,192,951 from a population of $8,694,772; and noted the following issue: • An Oklahoma State Department of Health (OSDH) subrecipient was reimbursed $825,223.40 on 6/16/23; however, $429,592.97 was later determined unallowed on 8/21/23 after an internal review. The subrecipient purchased pharmacy supplies which were unallowed. The subrecipient was only approved to purchase buildings and perform renovations in accordance with the contract and funding packet between OSDH and the subrecipient. The subrecipient then submitted an additional $80,831.48 of allowable costs on 11/8/23 to be applied against the unallowed costs he was already reimbursed. The remaining $348,761.49 was to be paid by the subrecipient for future capital expenditures. We requested supporting documentation for the $348,761.49 submitted by subrecipient for future capital expenditures; however, support could not be provided. Cause: The Oklahoma State Department of Health (OSDH) did not obtain and adequately review all supporting documents prior to payment. Effect: Unallowable costs, totaling $348,761.49, were charged to the CSLFRF program and not supported. Recommendation: We recommend the Oklahoma State Department of Health (OSDH) strengthen their internal controls to ensure adequate supporting documentation for program expenditures incurred is obtained, reviewed, and maintained to ensure subrecipients are expending CSLFRF funds for allowable costs. Views of Responsible Official(s) Contact Person: OMES: Parker Wise OSDH: Diane Brown, Danielle Smith, Tracey Douglas Anticipated Completion Date: 5/1/2025 Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-102 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Subrecipient Monitoring QUESTIONED COSTS: $348,761 Criteria: 2 CFR § 200.303 – Internal Controls states in part, “The Non-Federal entity must; (a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” 2 CFR § 200.334 – Retention requirements for records states, in part, “Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient.” Condition and Context: The State of Oklahoma transfers all CSLFRF funds to state agencies so they can work directly with the subrecipient to ensure the project(s) are executed correctly. The State of Oklahoma had seven (7) state agencies make payments totaling $51,454,078 to subrecipients during SFY 2023. For the three (3) state agencies selected for testing, we sampled 14 of 43 subrecipient payments totaling $5,192,951 from a population of $8,694,772; and noted the following issue: • An Oklahoma State Department of Health (OSDH) subrecipient was reimbursed $825,223.40 on 6/16/23; however, $429,592.97 was later determined unallowed on 8/21/23 after an internal review. The subrecipient purchased pharmacy supplies which were unallowed. The subrecipient was only approved to purchase buildings and perform renovations in accordance with the contract and funding packet between OSDH and the subrecipient. The subrecipient then submitted an additional $80,831.48 of allowable costs on 11/8/23 to be applied against the unallowed costs he was already reimbursed. The remaining $348,761.49 was to be paid by the subrecipient for future capital expenditures. We requested supporting documentation for the $348,761.49 submitted by subrecipient for future capital expenditures; however, support could not be provided. Cause: The Oklahoma State Department of Health (OSDH) did not obtain and adequately review all supporting documents prior to payment. Effect: Unallowable costs, totaling $348,761.49, were charged to the CSLFRF program and not supported. Recommendation: We recommend the Oklahoma State Department of Health (OSDH) strengthen their internal controls to ensure adequate supporting documentation for program expenditures incurred is obtained, reviewed, and maintained to ensure subrecipients are expending CSLFRF funds for allowable costs. Views of Responsible Official(s) Contact Person: OMES: Parker Wise OSDH: Diane Brown, Danielle Smith, Tracey Douglas Anticipated Completion Date: 5/1/2025 Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-102 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Subrecipient Monitoring QUESTIONED COSTS: $348,761 Criteria: 2 CFR § 200.303 – Internal Controls states in part, “The Non-Federal entity must; (a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” 2 CFR § 200.334 – Retention requirements for records states, in part, “Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient.” Condition and Context: The State of Oklahoma transfers all CSLFRF funds to state agencies so they can work directly with the subrecipient to ensure the project(s) are executed correctly. The State of Oklahoma had seven (7) state agencies make payments totaling $51,454,078 to subrecipients during SFY 2023. For the three (3) state agencies selected for testing, we sampled 14 of 43 subrecipient payments totaling $5,192,951 from a population of $8,694,772; and noted the following issue: • An Oklahoma State Department of Health (OSDH) subrecipient was reimbursed $825,223.40 on 6/16/23; however, $429,592.97 was later determined unallowed on 8/21/23 after an internal review. The subrecipient purchased pharmacy supplies which were unallowed. The subrecipient was only approved to purchase buildings and perform renovations in accordance with the contract and funding packet between OSDH and the subrecipient. The subrecipient then submitted an additional $80,831.48 of allowable costs on 11/8/23 to be applied against the unallowed costs he was already reimbursed. The remaining $348,761.49 was to be paid by the subrecipient for future capital expenditures. We requested supporting documentation for the $348,761.49 submitted by subrecipient for future capital expenditures; however, support could not be provided. Cause: The Oklahoma State Department of Health (OSDH) did not obtain and adequately review all supporting documents prior to payment. Effect: Unallowable costs, totaling $348,761.49, were charged to the CSLFRF program and not supported. Recommendation: We recommend the Oklahoma State Department of Health (OSDH) strengthen their internal controls to ensure adequate supporting documentation for program expenditures incurred is obtained, reviewed, and maintained to ensure subrecipients are expending CSLFRF funds for allowable costs. Views of Responsible Official(s) Contact Person: OMES: Parker Wise OSDH: Diane Brown, Danielle Smith, Tracey Douglas Anticipated Completion Date: 5/1/2025 Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-102 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Subrecipient Monitoring QUESTIONED COSTS: $348,761 Criteria: 2 CFR § 200.303 – Internal Controls states in part, “The Non-Federal entity must; (a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” 2 CFR § 200.334 – Retention requirements for records states, in part, “Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient.” Condition and Context: The State of Oklahoma transfers all CSLFRF funds to state agencies so they can work directly with the subrecipient to ensure the project(s) are executed correctly. The State of Oklahoma had seven (7) state agencies make payments totaling $51,454,078 to subrecipients during SFY 2023. For the three (3) state agencies selected for testing, we sampled 14 of 43 subrecipient payments totaling $5,192,951 from a population of $8,694,772; and noted the following issue: • An Oklahoma State Department of Health (OSDH) subrecipient was reimbursed $825,223.40 on 6/16/23; however, $429,592.97 was later determined unallowed on 8/21/23 after an internal review. The subrecipient purchased pharmacy supplies which were unallowed. The subrecipient was only approved to purchase buildings and perform renovations in accordance with the contract and funding packet between OSDH and the subrecipient. The subrecipient then submitted an additional $80,831.48 of allowable costs on 11/8/23 to be applied against the unallowed costs he was already reimbursed. The remaining $348,761.49 was to be paid by the subrecipient for future capital expenditures. We requested supporting documentation for the $348,761.49 submitted by subrecipient for future capital expenditures; however, support could not be provided. Cause: The Oklahoma State Department of Health (OSDH) did not obtain and adequately review all supporting documents prior to payment. Effect: Unallowable costs, totaling $348,761.49, were charged to the CSLFRF program and not supported. Recommendation: We recommend the Oklahoma State Department of Health (OSDH) strengthen their internal controls to ensure adequate supporting documentation for program expenditures incurred is obtained, reviewed, and maintained to ensure subrecipients are expending CSLFRF funds for allowable costs. Views of Responsible Official(s) Contact Person: OMES: Parker Wise OSDH: Diane Brown, Danielle Smith, Tracey Douglas Anticipated Completion Date: 5/1/2025 Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-102 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Subrecipient Monitoring QUESTIONED COSTS: $348,761 Criteria: 2 CFR § 200.303 – Internal Controls states in part, “The Non-Federal entity must; (a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” 2 CFR § 200.334 – Retention requirements for records states, in part, “Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient.” Condition and Context: The State of Oklahoma transfers all CSLFRF funds to state agencies so they can work directly with the subrecipient to ensure the project(s) are executed correctly. The State of Oklahoma had seven (7) state agencies make payments totaling $51,454,078 to subrecipients during SFY 2023. For the three (3) state agencies selected for testing, we sampled 14 of 43 subrecipient payments totaling $5,192,951 from a population of $8,694,772; and noted the following issue: • An Oklahoma State Department of Health (OSDH) subrecipient was reimbursed $825,223.40 on 6/16/23; however, $429,592.97 was later determined unallowed on 8/21/23 after an internal review. The subrecipient purchased pharmacy supplies which were unallowed. The subrecipient was only approved to purchase buildings and perform renovations in accordance with the contract and funding packet between OSDH and the subrecipient. The subrecipient then submitted an additional $80,831.48 of allowable costs on 11/8/23 to be applied against the unallowed costs he was already reimbursed. The remaining $348,761.49 was to be paid by the subrecipient for future capital expenditures. We requested supporting documentation for the $348,761.49 submitted by subrecipient for future capital expenditures; however, support could not be provided. Cause: The Oklahoma State Department of Health (OSDH) did not obtain and adequately review all supporting documents prior to payment. Effect: Unallowable costs, totaling $348,761.49, were charged to the CSLFRF program and not supported. Recommendation: We recommend the Oklahoma State Department of Health (OSDH) strengthen their internal controls to ensure adequate supporting documentation for program expenditures incurred is obtained, reviewed, and maintained to ensure subrecipients are expending CSLFRF funds for allowable costs. Views of Responsible Official(s) Contact Person: OMES: Parker Wise OSDH: Diane Brown, Danielle Smith, Tracey Douglas Anticipated Completion Date: 5/1/2025 Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-102 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Subrecipient Monitoring QUESTIONED COSTS: $348,761 Criteria: 2 CFR § 200.303 – Internal Controls states in part, “The Non-Federal entity must; (a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” 2 CFR § 200.334 – Retention requirements for records states, in part, “Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient.” Condition and Context: The State of Oklahoma transfers all CSLFRF funds to state agencies so they can work directly with the subrecipient to ensure the project(s) are executed correctly. The State of Oklahoma had seven (7) state agencies make payments totaling $51,454,078 to subrecipients during SFY 2023. For the three (3) state agencies selected for testing, we sampled 14 of 43 subrecipient payments totaling $5,192,951 from a population of $8,694,772; and noted the following issue: • An Oklahoma State Department of Health (OSDH) subrecipient was reimbursed $825,223.40 on 6/16/23; however, $429,592.97 was later determined unallowed on 8/21/23 after an internal review. The subrecipient purchased pharmacy supplies which were unallowed. The subrecipient was only approved to purchase buildings and perform renovations in accordance with the contract and funding packet between OSDH and the subrecipient. The subrecipient then submitted an additional $80,831.48 of allowable costs on 11/8/23 to be applied against the unallowed costs he was already reimbursed. The remaining $348,761.49 was to be paid by the subrecipient for future capital expenditures. We requested supporting documentation for the $348,761.49 submitted by subrecipient for future capital expenditures; however, support could not be provided. Cause: The Oklahoma State Department of Health (OSDH) did not obtain and adequately review all supporting documents prior to payment. Effect: Unallowable costs, totaling $348,761.49, were charged to the CSLFRF program and not supported. Recommendation: We recommend the Oklahoma State Department of Health (OSDH) strengthen their internal controls to ensure adequate supporting documentation for program expenditures incurred is obtained, reviewed, and maintained to ensure subrecipients are expending CSLFRF funds for allowable costs. Views of Responsible Official(s) Contact Person: OMES: Parker Wise OSDH: Diane Brown, Danielle Smith, Tracey Douglas Anticipated Completion Date: 5/1/2025 Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-102 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Subrecipient Monitoring QUESTIONED COSTS: $348,761 Criteria: 2 CFR § 200.303 – Internal Controls states in part, “The Non-Federal entity must; (a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” 2 CFR § 200.334 – Retention requirements for records states, in part, “Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient.” Condition and Context: The State of Oklahoma transfers all CSLFRF funds to state agencies so they can work directly with the subrecipient to ensure the project(s) are executed correctly. The State of Oklahoma had seven (7) state agencies make payments totaling $51,454,078 to subrecipients during SFY 2023. For the three (3) state agencies selected for testing, we sampled 14 of 43 subrecipient payments totaling $5,192,951 from a population of $8,694,772; and noted the following issue: • An Oklahoma State Department of Health (OSDH) subrecipient was reimbursed $825,223.40 on 6/16/23; however, $429,592.97 was later determined unallowed on 8/21/23 after an internal review. The subrecipient purchased pharmacy supplies which were unallowed. The subrecipient was only approved to purchase buildings and perform renovations in accordance with the contract and funding packet between OSDH and the subrecipient. The subrecipient then submitted an additional $80,831.48 of allowable costs on 11/8/23 to be applied against the unallowed costs he was already reimbursed. The remaining $348,761.49 was to be paid by the subrecipient for future capital expenditures. We requested supporting documentation for the $348,761.49 submitted by subrecipient for future capital expenditures; however, support could not be provided. Cause: The Oklahoma State Department of Health (OSDH) did not obtain and adequately review all supporting documents prior to payment. Effect: Unallowable costs, totaling $348,761.49, were charged to the CSLFRF program and not supported. Recommendation: We recommend the Oklahoma State Department of Health (OSDH) strengthen their internal controls to ensure adequate supporting documentation for program expenditures incurred is obtained, reviewed, and maintained to ensure subrecipients are expending CSLFRF funds for allowable costs. Views of Responsible Official(s) Contact Person: OMES: Parker Wise OSDH: Diane Brown, Danielle Smith, Tracey Douglas Anticipated Completion Date: 5/1/2025 Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-102 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Subrecipient Monitoring QUESTIONED COSTS: $348,761 Criteria: 2 CFR § 200.303 – Internal Controls states in part, “The Non-Federal entity must; (a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” 2 CFR § 200.334 – Retention requirements for records states, in part, “Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient.” Condition and Context: The State of Oklahoma transfers all CSLFRF funds to state agencies so they can work directly with the subrecipient to ensure the project(s) are executed correctly. The State of Oklahoma had seven (7) state agencies make payments totaling $51,454,078 to subrecipients during SFY 2023. For the three (3) state agencies selected for testing, we sampled 14 of 43 subrecipient payments totaling $5,192,951 from a population of $8,694,772; and noted the following issue: • An Oklahoma State Department of Health (OSDH) subrecipient was reimbursed $825,223.40 on 6/16/23; however, $429,592.97 was later determined unallowed on 8/21/23 after an internal review. The subrecipient purchased pharmacy supplies which were unallowed. The subrecipient was only approved to purchase buildings and perform renovations in accordance with the contract and funding packet between OSDH and the subrecipient. The subrecipient then submitted an additional $80,831.48 of allowable costs on 11/8/23 to be applied against the unallowed costs he was already reimbursed. The remaining $348,761.49 was to be paid by the subrecipient for future capital expenditures. We requested supporting documentation for the $348,761.49 submitted by subrecipient for future capital expenditures; however, support could not be provided. Cause: The Oklahoma State Department of Health (OSDH) did not obtain and adequately review all supporting documents prior to payment. Effect: Unallowable costs, totaling $348,761.49, were charged to the CSLFRF program and not supported. Recommendation: We recommend the Oklahoma State Department of Health (OSDH) strengthen their internal controls to ensure adequate supporting documentation for program expenditures incurred is obtained, reviewed, and maintained to ensure subrecipients are expending CSLFRF funds for allowable costs. Views of Responsible Official(s) Contact Person: OMES: Parker Wise OSDH: Diane Brown, Danielle Smith, Tracey Douglas Anticipated Completion Date: 5/1/2025 Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-102 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Subrecipient Monitoring QUESTIONED COSTS: $348,761 Criteria: 2 CFR § 200.303 – Internal Controls states in part, “The Non-Federal entity must; (a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” 2 CFR § 200.334 – Retention requirements for records states, in part, “Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient.” Condition and Context: The State of Oklahoma transfers all CSLFRF funds to state agencies so they can work directly with the subrecipient to ensure the project(s) are executed correctly. The State of Oklahoma had seven (7) state agencies make payments totaling $51,454,078 to subrecipients during SFY 2023. For the three (3) state agencies selected for testing, we sampled 14 of 43 subrecipient payments totaling $5,192,951 from a population of $8,694,772; and noted the following issue: • An Oklahoma State Department of Health (OSDH) subrecipient was reimbursed $825,223.40 on 6/16/23; however, $429,592.97 was later determined unallowed on 8/21/23 after an internal review. The subrecipient purchased pharmacy supplies which were unallowed. The subrecipient was only approved to purchase buildings and perform renovations in accordance with the contract and funding packet between OSDH and the subrecipient. The subrecipient then submitted an additional $80,831.48 of allowable costs on 11/8/23 to be applied against the unallowed costs he was already reimbursed. The remaining $348,761.49 was to be paid by the subrecipient for future capital expenditures. We requested supporting documentation for the $348,761.49 submitted by subrecipient for future capital expenditures; however, support could not be provided. Cause: The Oklahoma State Department of Health (OSDH) did not obtain and adequately review all supporting documents prior to payment. Effect: Unallowable costs, totaling $348,761.49, were charged to the CSLFRF program and not supported. Recommendation: We recommend the Oklahoma State Department of Health (OSDH) strengthen their internal controls to ensure adequate supporting documentation for program expenditures incurred is obtained, reviewed, and maintained to ensure subrecipients are expending CSLFRF funds for allowable costs. Views of Responsible Official(s) Contact Person: OMES: Parker Wise OSDH: Diane Brown, Danielle Smith, Tracey Douglas Anticipated Completion Date: 5/1/2025 Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-102 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Subrecipient Monitoring QUESTIONED COSTS: $348,761 Criteria: 2 CFR § 200.303 – Internal Controls states in part, “The Non-Federal entity must; (a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” 2 CFR § 200.334 – Retention requirements for records states, in part, “Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient.” Condition and Context: The State of Oklahoma transfers all CSLFRF funds to state agencies so they can work directly with the subrecipient to ensure the project(s) are executed correctly. The State of Oklahoma had seven (7) state agencies make payments totaling $51,454,078 to subrecipients during SFY 2023. For the three (3) state agencies selected for testing, we sampled 14 of 43 subrecipient payments totaling $5,192,951 from a population of $8,694,772; and noted the following issue: • An Oklahoma State Department of Health (OSDH) subrecipient was reimbursed $825,223.40 on 6/16/23; however, $429,592.97 was later determined unallowed on 8/21/23 after an internal review. The subrecipient purchased pharmacy supplies which were unallowed. The subrecipient was only approved to purchase buildings and perform renovations in accordance with the contract and funding packet between OSDH and the subrecipient. The subrecipient then submitted an additional $80,831.48 of allowable costs on 11/8/23 to be applied against the unallowed costs he was already reimbursed. The remaining $348,761.49 was to be paid by the subrecipient for future capital expenditures. We requested supporting documentation for the $348,761.49 submitted by subrecipient for future capital expenditures; however, support could not be provided. Cause: The Oklahoma State Department of Health (OSDH) did not obtain and adequately review all supporting documents prior to payment. Effect: Unallowable costs, totaling $348,761.49, were charged to the CSLFRF program and not supported. Recommendation: We recommend the Oklahoma State Department of Health (OSDH) strengthen their internal controls to ensure adequate supporting documentation for program expenditures incurred is obtained, reviewed, and maintained to ensure subrecipients are expending CSLFRF funds for allowable costs. Views of Responsible Official(s) Contact Person: OMES: Parker Wise OSDH: Diane Brown, Danielle Smith, Tracey Douglas Anticipated Completion Date: 5/1/2025 Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-102 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Subrecipient Monitoring QUESTIONED COSTS: $348,761 Criteria: 2 CFR § 200.303 – Internal Controls states in part, “The Non-Federal entity must; (a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” 2 CFR § 200.334 – Retention requirements for records states, in part, “Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient.” Condition and Context: The State of Oklahoma transfers all CSLFRF funds to state agencies so they can work directly with the subrecipient to ensure the project(s) are executed correctly. The State of Oklahoma had seven (7) state agencies make payments totaling $51,454,078 to subrecipients during SFY 2023. For the three (3) state agencies selected for testing, we sampled 14 of 43 subrecipient payments totaling $5,192,951 from a population of $8,694,772; and noted the following issue: • An Oklahoma State Department of Health (OSDH) subrecipient was reimbursed $825,223.40 on 6/16/23; however, $429,592.97 was later determined unallowed on 8/21/23 after an internal review. The subrecipient purchased pharmacy supplies which were unallowed. The subrecipient was only approved to purchase buildings and perform renovations in accordance with the contract and funding packet between OSDH and the subrecipient. The subrecipient then submitted an additional $80,831.48 of allowable costs on 11/8/23 to be applied against the unallowed costs he was already reimbursed. The remaining $348,761.49 was to be paid by the subrecipient for future capital expenditures. We requested supporting documentation for the $348,761.49 submitted by subrecipient for future capital expenditures; however, support could not be provided. Cause: The Oklahoma State Department of Health (OSDH) did not obtain and adequately review all supporting documents prior to payment. Effect: Unallowable costs, totaling $348,761.49, were charged to the CSLFRF program and not supported. Recommendation: We recommend the Oklahoma State Department of Health (OSDH) strengthen their internal controls to ensure adequate supporting documentation for program expenditures incurred is obtained, reviewed, and maintained to ensure subrecipients are expending CSLFRF funds for allowable costs. Views of Responsible Official(s) Contact Person: OMES: Parker Wise OSDH: Diane Brown, Danielle Smith, Tracey Douglas Anticipated Completion Date: 5/1/2025 Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-102 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Subrecipient Monitoring QUESTIONED COSTS: $348,761 Criteria: 2 CFR § 200.303 – Internal Controls states in part, “The Non-Federal entity must; (a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” 2 CFR § 200.334 – Retention requirements for records states, in part, “Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient.” Condition and Context: The State of Oklahoma transfers all CSLFRF funds to state agencies so they can work directly with the subrecipient to ensure the project(s) are executed correctly. The State of Oklahoma had seven (7) state agencies make payments totaling $51,454,078 to subrecipients during SFY 2023. For the three (3) state agencies selected for testing, we sampled 14 of 43 subrecipient payments totaling $5,192,951 from a population of $8,694,772; and noted the following issue: • An Oklahoma State Department of Health (OSDH) subrecipient was reimbursed $825,223.40 on 6/16/23; however, $429,592.97 was later determined unallowed on 8/21/23 after an internal review. The subrecipient purchased pharmacy supplies which were unallowed. The subrecipient was only approved to purchase buildings and perform renovations in accordance with the contract and funding packet between OSDH and the subrecipient. The subrecipient then submitted an additional $80,831.48 of allowable costs on 11/8/23 to be applied against the unallowed costs he was already reimbursed. The remaining $348,761.49 was to be paid by the subrecipient for future capital expenditures. We requested supporting documentation for the $348,761.49 submitted by subrecipient for future capital expenditures; however, support could not be provided. Cause: The Oklahoma State Department of Health (OSDH) did not obtain and adequately review all supporting documents prior to payment. Effect: Unallowable costs, totaling $348,761.49, were charged to the CSLFRF program and not supported. Recommendation: We recommend the Oklahoma State Department of Health (OSDH) strengthen their internal controls to ensure adequate supporting documentation for program expenditures incurred is obtained, reviewed, and maintained to ensure subrecipients are expending CSLFRF funds for allowable costs. Views of Responsible Official(s) Contact Person: OMES: Parker Wise OSDH: Diane Brown, Danielle Smith, Tracey Douglas Anticipated Completion Date: 5/1/2025 Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-102 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Subrecipient Monitoring QUESTIONED COSTS: $348,761 Criteria: 2 CFR § 200.303 – Internal Controls states in part, “The Non-Federal entity must; (a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” 2 CFR § 200.334 – Retention requirements for records states, in part, “Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient.” Condition and Context: The State of Oklahoma transfers all CSLFRF funds to state agencies so they can work directly with the subrecipient to ensure the project(s) are executed correctly. The State of Oklahoma had seven (7) state agencies make payments totaling $51,454,078 to subrecipients during SFY 2023. For the three (3) state agencies selected for testing, we sampled 14 of 43 subrecipient payments totaling $5,192,951 from a population of $8,694,772; and noted the following issue: • An Oklahoma State Department of Health (OSDH) subrecipient was reimbursed $825,223.40 on 6/16/23; however, $429,592.97 was later determined unallowed on 8/21/23 after an internal review. The subrecipient purchased pharmacy supplies which were unallowed. The subrecipient was only approved to purchase buildings and perform renovations in accordance with the contract and funding packet between OSDH and the subrecipient. The subrecipient then submitted an additional $80,831.48 of allowable costs on 11/8/23 to be applied against the unallowed costs he was already reimbursed. The remaining $348,761.49 was to be paid by the subrecipient for future capital expenditures. We requested supporting documentation for the $348,761.49 submitted by subrecipient for future capital expenditures; however, support could not be provided. Cause: The Oklahoma State Department of Health (OSDH) did not obtain and adequately review all supporting documents prior to payment. Effect: Unallowable costs, totaling $348,761.49, were charged to the CSLFRF program and not supported. Recommendation: We recommend the Oklahoma State Department of Health (OSDH) strengthen their internal controls to ensure adequate supporting documentation for program expenditures incurred is obtained, reviewed, and maintained to ensure subrecipients are expending CSLFRF funds for allowable costs. Views of Responsible Official(s) Contact Person: OMES: Parker Wise OSDH: Diane Brown, Danielle Smith, Tracey Douglas Anticipated Completion Date: 5/1/2025 Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-102 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Subrecipient Monitoring QUESTIONED COSTS: $348,761 Criteria: 2 CFR § 200.303 – Internal Controls states in part, “The Non-Federal entity must; (a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” 2 CFR § 200.334 – Retention requirements for records states, in part, “Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient.” Condition and Context: The State of Oklahoma transfers all CSLFRF funds to state agencies so they can work directly with the subrecipient to ensure the project(s) are executed correctly. The State of Oklahoma had seven (7) state agencies make payments totaling $51,454,078 to subrecipients during SFY 2023. For the three (3) state agencies selected for testing, we sampled 14 of 43 subrecipient payments totaling $5,192,951 from a population of $8,694,772; and noted the following issue: • An Oklahoma State Department of Health (OSDH) subrecipient was reimbursed $825,223.40 on 6/16/23; however, $429,592.97 was later determined unallowed on 8/21/23 after an internal review. The subrecipient purchased pharmacy supplies which were unallowed. The subrecipient was only approved to purchase buildings and perform renovations in accordance with the contract and funding packet between OSDH and the subrecipient. The subrecipient then submitted an additional $80,831.48 of allowable costs on 11/8/23 to be applied against the unallowed costs he was already reimbursed. The remaining $348,761.49 was to be paid by the subrecipient for future capital expenditures. We requested supporting documentation for the $348,761.49 submitted by subrecipient for future capital expenditures; however, support could not be provided. Cause: The Oklahoma State Department of Health (OSDH) did not obtain and adequately review all supporting documents prior to payment. Effect: Unallowable costs, totaling $348,761.49, were charged to the CSLFRF program and not supported. Recommendation: We recommend the Oklahoma State Department of Health (OSDH) strengthen their internal controls to ensure adequate supporting documentation for program expenditures incurred is obtained, reviewed, and maintained to ensure subrecipients are expending CSLFRF funds for allowable costs. Views of Responsible Official(s) Contact Person: OMES: Parker Wise OSDH: Diane Brown, Danielle Smith, Tracey Douglas Anticipated Completion Date: 5/1/2025 Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-059 (Partial Repeat 2022-049) STATE AGENCY: Oklahoma State Department of Education (OSDE) FEDERAL AGENCY: United States Department of Education (USDE) ALN: 84.425 – 84.425D, 84.425U; 84.425R FEDERAL PROGRAM NAME: Education Stabilization Fund (ESF) - Elementary and Secondary Schools Emergency Relief Fund (ESSER II); American Rescue Plan – Elementary and Secondary Schools Emergency Relief Fund (ARP ESSER III); Coronavirus Response and Relief Supplemental Appropriations Act, 2021 – Emergency Assistance To Non-Public Schools (CRRSA EANS) FEDERAL AWARD NUMBER: S425D210024; S425U210024 FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Reporting QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.303(a) – Internal Controls states in part, “The Non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” 2 CFR § 200.334 Record retention requirements states in part, “The recipient and subrecipient must retain all Federal award records for three years from the date of submission of their final financial report. For awards that are renewed quarterly or annually, the recipient and subrecipient must retain records for three years from the date of submission of their quarterly or annual financial report, respectively. Records to be retained include but are not limited to, financial records, supporting documentation, and statistical records. Federal agencies or pass-through entities may not impose any other record retention requirements except for the following: (a) The records must be retained until all litigation, claims, or audit findings involving the records have been resolved and final action taken if any litigation, claim, or audit is started before the expiration of the three-year period.” United States Department of Education website ESSER Annual Reporting states in part, “All grantees are required to report on ESSER funds received under the Coronavirus Aid, Relief, and Economic Security (CARES) Act; the Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act; and the American Rescue Plan (ARP) Act. Grantees must submit an annual report describing how the State and subrecipients used the awarded funds during the performance period. Similar to CARES Act Year 1 annual reporting, grantees will use the Annual Report Data Collection Tool to submit the State report.” Condition and Context: We were unable to verify compliance with several key line items on the ESSER I, ESSER II, ARP ESSER III, and CRRSA EANS SFY 22 Annual Reports submitted during the audit period due to a lack of supporting documentation (i.e., supporting data and questionnaires sent to LEAs/nonpublic schools to collect the FTE, Student Participation data, and expenditures by category and object code). These key line items include the following: • Line 3.b1 LEA expenditures by category, and object code for ESSER I, ESSER II and ARP ESSER III • Line 3.b10 Number of specific positions supported with ESSER Funds • Line 5.a Full Time Equivalent positions for ESSER I, ESSER II and ARP ESSER III • SEA obligations (including reimbursements) by allowable activity for CRRSA EANS • Other information for Non-public schools receiving services or assistance under CRRSA EANS While documenting controls over the Annual Report we noted one LEA with a subaward/allocation of $16,832,303.63 and re-allocation of $28,177.30 and SFY 22 current expenditures of $5,509,241.03 was not included on the ARP ESSER III Annual Report. While reviewing a sample of 62 of 1,275 LEA subaward allocations and total expenditures reported on the ESSER Annual Reports, we noted the following: • For 25 of 62 (40.32%) subawards tested, the SFY 22 allocations reported on the LEA’s Grant Management System (GMS) application was less than the amount reported on the ESSER II Annual Report, totaling $12,707.62. In addition, OSDE did not provide the supporting documentation for ESSER II re-allocations. Therefore, we were unable to verify whether the total allocation for these LEAs were reported correctly in the ESSER II Annual Report. • For three of 62 (4.84%) subawards tested, the SFY 22 current expenditures reported on the LEA’s GMS Closeout Report or Summary Expenditures reports were less than the amount reported on the ARP ESSER III Annual Report. OSDE was unable to provide support for the variances totaling $218,392.41. Cause: Due to staff turnover and inadequate record retention policies and procedures, OSDE was unable to locate and/or provide all the supporting documentation used by previous staff members to prepare the reports. Effect: The amount reported for the total ARP ESSER III subaward was understated by $16,860,480.93, and the amount reported for the total ARP ESSER III current year expenditures was understated by $5,290,848.62 Information being reported on the USDOE website is not accurate and/or complete. Data previously reported cannot be verified by current staff or other entities required to perform audits or reviews. Recommendation: We recommend OSDE develop and implement appropriate record retention policies and procedures to ensure records are maintained, especially during staff turnovers. We recommend OSDE develop and implement policies and procedures to ensure personnel have an adequate understanding of the requirements for the Annual Report and to ensure the amounts reported are correct. Views of Responsible Official(s) Contact Person: Tammy Smith, Senior Director of Federal Programs | Office of Title Services Anticipated Completion Date: March 2024 Corrective Action Planned: The Oklahoma State Department of Education agrees with the finding. See corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-059 (Partial Repeat 2022-049) STATE AGENCY: Oklahoma State Department of Education (OSDE) FEDERAL AGENCY: United States Department of Education (USDE) ALN: 84.425 – 84.425D, 84.425U; 84.425R FEDERAL PROGRAM NAME: Education Stabilization Fund (ESF) - Elementary and Secondary Schools Emergency Relief Fund (ESSER II); American Rescue Plan – Elementary and Secondary Schools Emergency Relief Fund (ARP ESSER III); Coronavirus Response and Relief Supplemental Appropriations Act, 2021 – Emergency Assistance To Non-Public Schools (CRRSA EANS) FEDERAL AWARD NUMBER: S425D210024; S425U210024 FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Reporting QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.303(a) – Internal Controls states in part, “The Non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” 2 CFR § 200.334 Record retention requirements states in part, “The recipient and subrecipient must retain all Federal award records for three years from the date of submission of their final financial report. For awards that are renewed quarterly or annually, the recipient and subrecipient must retain records for three years from the date of submission of their quarterly or annual financial report, respectively. Records to be retained include but are not limited to, financial records, supporting documentation, and statistical records. Federal agencies or pass-through entities may not impose any other record retention requirements except for the following: (a) The records must be retained until all litigation, claims, or audit findings involving the records have been resolved and final action taken if any litigation, claim, or audit is started before the expiration of the three-year period.” United States Department of Education website ESSER Annual Reporting states in part, “All grantees are required to report on ESSER funds received under the Coronavirus Aid, Relief, and Economic Security (CARES) Act; the Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act; and the American Rescue Plan (ARP) Act. Grantees must submit an annual report describing how the State and subrecipients used the awarded funds during the performance period. Similar to CARES Act Year 1 annual reporting, grantees will use the Annual Report Data Collection Tool to submit the State report.” Condition and Context: We were unable to verify compliance with several key line items on the ESSER I, ESSER II, ARP ESSER III, and CRRSA EANS SFY 22 Annual Reports submitted during the audit period due to a lack of supporting documentation (i.e., supporting data and questionnaires sent to LEAs/nonpublic schools to collect the FTE, Student Participation data, and expenditures by category and object code). These key line items include the following: • Line 3.b1 LEA expenditures by category, and object code for ESSER I, ESSER II and ARP ESSER III • Line 3.b10 Number of specific positions supported with ESSER Funds • Line 5.a Full Time Equivalent positions for ESSER I, ESSER II and ARP ESSER III • SEA obligations (including reimbursements) by allowable activity for CRRSA EANS • Other information for Non-public schools receiving services or assistance under CRRSA EANS While documenting controls over the Annual Report we noted one LEA with a subaward/allocation of $16,832,303.63 and re-allocation of $28,177.30 and SFY 22 current expenditures of $5,509,241.03 was not included on the ARP ESSER III Annual Report. While reviewing a sample of 62 of 1,275 LEA subaward allocations and total expenditures reported on the ESSER Annual Reports, we noted the following: • For 25 of 62 (40.32%) subawards tested, the SFY 22 allocations reported on the LEA’s Grant Management System (GMS) application was less than the amount reported on the ESSER II Annual Report, totaling $12,707.62. In addition, OSDE did not provide the supporting documentation for ESSER II re-allocations. Therefore, we were unable to verify whether the total allocation for these LEAs were reported correctly in the ESSER II Annual Report. • For three of 62 (4.84%) subawards tested, the SFY 22 current expenditures reported on the LEA’s GMS Closeout Report or Summary Expenditures reports were less than the amount reported on the ARP ESSER III Annual Report. OSDE was unable to provide support for the variances totaling $218,392.41. Cause: Due to staff turnover and inadequate record retention policies and procedures, OSDE was unable to locate and/or provide all the supporting documentation used by previous staff members to prepare the reports. Effect: The amount reported for the total ARP ESSER III subaward was understated by $16,860,480.93, and the amount reported for the total ARP ESSER III current year expenditures was understated by $5,290,848.62 Information being reported on the USDOE website is not accurate and/or complete. Data previously reported cannot be verified by current staff or other entities required to perform audits or reviews. Recommendation: We recommend OSDE develop and implement appropriate record retention policies and procedures to ensure records are maintained, especially during staff turnovers. We recommend OSDE develop and implement policies and procedures to ensure personnel have an adequate understanding of the requirements for the Annual Report and to ensure the amounts reported are correct. Views of Responsible Official(s) Contact Person: Tammy Smith, Senior Director of Federal Programs | Office of Title Services Anticipated Completion Date: March 2024 Corrective Action Planned: The Oklahoma State Department of Education agrees with the finding. See corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-059 (Partial Repeat 2022-049) STATE AGENCY: Oklahoma State Department of Education (OSDE) FEDERAL AGENCY: United States Department of Education (USDE) ALN: 84.425 – 84.425D, 84.425U; 84.425R FEDERAL PROGRAM NAME: Education Stabilization Fund (ESF) - Elementary and Secondary Schools Emergency Relief Fund (ESSER II); American Rescue Plan – Elementary and Secondary Schools Emergency Relief Fund (ARP ESSER III); Coronavirus Response and Relief Supplemental Appropriations Act, 2021 – Emergency Assistance To Non-Public Schools (CRRSA EANS) FEDERAL AWARD NUMBER: S425D210024; S425U210024 FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Reporting QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.303(a) – Internal Controls states in part, “The Non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” 2 CFR § 200.334 Record retention requirements states in part, “The recipient and subrecipient must retain all Federal award records for three years from the date of submission of their final financial report. For awards that are renewed quarterly or annually, the recipient and subrecipient must retain records for three years from the date of submission of their quarterly or annual financial report, respectively. Records to be retained include but are not limited to, financial records, supporting documentation, and statistical records. Federal agencies or pass-through entities may not impose any other record retention requirements except for the following: (a) The records must be retained until all litigation, claims, or audit findings involving the records have been resolved and final action taken if any litigation, claim, or audit is started before the expiration of the three-year period.” United States Department of Education website ESSER Annual Reporting states in part, “All grantees are required to report on ESSER funds received under the Coronavirus Aid, Relief, and Economic Security (CARES) Act; the Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act; and the American Rescue Plan (ARP) Act. Grantees must submit an annual report describing how the State and subrecipients used the awarded funds during the performance period. Similar to CARES Act Year 1 annual reporting, grantees will use the Annual Report Data Collection Tool to submit the State report.” Condition and Context: We were unable to verify compliance with several key line items on the ESSER I, ESSER II, ARP ESSER III, and CRRSA EANS SFY 22 Annual Reports submitted during the audit period due to a lack of supporting documentation (i.e., supporting data and questionnaires sent to LEAs/nonpublic schools to collect the FTE, Student Participation data, and expenditures by category and object code). These key line items include the following: • Line 3.b1 LEA expenditures by category, and object code for ESSER I, ESSER II and ARP ESSER III • Line 3.b10 Number of specific positions supported with ESSER Funds • Line 5.a Full Time Equivalent positions for ESSER I, ESSER II and ARP ESSER III • SEA obligations (including reimbursements) by allowable activity for CRRSA EANS • Other information for Non-public schools receiving services or assistance under CRRSA EANS While documenting controls over the Annual Report we noted one LEA with a subaward/allocation of $16,832,303.63 and re-allocation of $28,177.30 and SFY 22 current expenditures of $5,509,241.03 was not included on the ARP ESSER III Annual Report. While reviewing a sample of 62 of 1,275 LEA subaward allocations and total expenditures reported on the ESSER Annual Reports, we noted the following: • For 25 of 62 (40.32%) subawards tested, the SFY 22 allocations reported on the LEA’s Grant Management System (GMS) application was less than the amount reported on the ESSER II Annual Report, totaling $12,707.62. In addition, OSDE did not provide the supporting documentation for ESSER II re-allocations. Therefore, we were unable to verify whether the total allocation for these LEAs were reported correctly in the ESSER II Annual Report. • For three of 62 (4.84%) subawards tested, the SFY 22 current expenditures reported on the LEA’s GMS Closeout Report or Summary Expenditures reports were less than the amount reported on the ARP ESSER III Annual Report. OSDE was unable to provide support for the variances totaling $218,392.41. Cause: Due to staff turnover and inadequate record retention policies and procedures, OSDE was unable to locate and/or provide all the supporting documentation used by previous staff members to prepare the reports. Effect: The amount reported for the total ARP ESSER III subaward was understated by $16,860,480.93, and the amount reported for the total ARP ESSER III current year expenditures was understated by $5,290,848.62 Information being reported on the USDOE website is not accurate and/or complete. Data previously reported cannot be verified by current staff or other entities required to perform audits or reviews. Recommendation: We recommend OSDE develop and implement appropriate record retention policies and procedures to ensure records are maintained, especially during staff turnovers. We recommend OSDE develop and implement policies and procedures to ensure personnel have an adequate understanding of the requirements for the Annual Report and to ensure the amounts reported are correct. Views of Responsible Official(s) Contact Person: Tammy Smith, Senior Director of Federal Programs | Office of Title Services Anticipated Completion Date: March 2024 Corrective Action Planned: The Oklahoma State Department of Education agrees with the finding. See corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-059 (Partial Repeat 2022-049) STATE AGENCY: Oklahoma State Department of Education (OSDE) FEDERAL AGENCY: United States Department of Education (USDE) ALN: 84.425 – 84.425D, 84.425U; 84.425R FEDERAL PROGRAM NAME: Education Stabilization Fund (ESF) - Elementary and Secondary Schools Emergency Relief Fund (ESSER II); American Rescue Plan – Elementary and Secondary Schools Emergency Relief Fund (ARP ESSER III); Coronavirus Response and Relief Supplemental Appropriations Act, 2021 – Emergency Assistance To Non-Public Schools (CRRSA EANS) FEDERAL AWARD NUMBER: S425D210024; S425U210024 FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Reporting QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.303(a) – Internal Controls states in part, “The Non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” 2 CFR § 200.334 Record retention requirements states in part, “The recipient and subrecipient must retain all Federal award records for three years from the date of submission of their final financial report. For awards that are renewed quarterly or annually, the recipient and subrecipient must retain records for three years from the date of submission of their quarterly or annual financial report, respectively. Records to be retained include but are not limited to, financial records, supporting documentation, and statistical records. Federal agencies or pass-through entities may not impose any other record retention requirements except for the following: (a) The records must be retained until all litigation, claims, or audit findings involving the records have been resolved and final action taken if any litigation, claim, or audit is started before the expiration of the three-year period.” United States Department of Education website ESSER Annual Reporting states in part, “All grantees are required to report on ESSER funds received under the Coronavirus Aid, Relief, and Economic Security (CARES) Act; the Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act; and the American Rescue Plan (ARP) Act. Grantees must submit an annual report describing how the State and subrecipients used the awarded funds during the performance period. Similar to CARES Act Year 1 annual reporting, grantees will use the Annual Report Data Collection Tool to submit the State report.” Condition and Context: We were unable to verify compliance with several key line items on the ESSER I, ESSER II, ARP ESSER III, and CRRSA EANS SFY 22 Annual Reports submitted during the audit period due to a lack of supporting documentation (i.e., supporting data and questionnaires sent to LEAs/nonpublic schools to collect the FTE, Student Participation data, and expenditures by category and object code). These key line items include the following: • Line 3.b1 LEA expenditures by category, and object code for ESSER I, ESSER II and ARP ESSER III • Line 3.b10 Number of specific positions supported with ESSER Funds • Line 5.a Full Time Equivalent positions for ESSER I, ESSER II and ARP ESSER III • SEA obligations (including reimbursements) by allowable activity for CRRSA EANS • Other information for Non-public schools receiving services or assistance under CRRSA EANS While documenting controls over the Annual Report we noted one LEA with a subaward/allocation of $16,832,303.63 and re-allocation of $28,177.30 and SFY 22 current expenditures of $5,509,241.03 was not included on the ARP ESSER III Annual Report. While reviewing a sample of 62 of 1,275 LEA subaward allocations and total expenditures reported on the ESSER Annual Reports, we noted the following: • For 25 of 62 (40.32%) subawards tested, the SFY 22 allocations reported on the LEA’s Grant Management System (GMS) application was less than the amount reported on the ESSER II Annual Report, totaling $12,707.62. In addition, OSDE did not provide the supporting documentation for ESSER II re-allocations. Therefore, we were unable to verify whether the total allocation for these LEAs were reported correctly in the ESSER II Annual Report. • For three of 62 (4.84%) subawards tested, the SFY 22 current expenditures reported on the LEA’s GMS Closeout Report or Summary Expenditures reports were less than the amount reported on the ARP ESSER III Annual Report. OSDE was unable to provide support for the variances totaling $218,392.41. Cause: Due to staff turnover and inadequate record retention policies and procedures, OSDE was unable to locate and/or provide all the supporting documentation used by previous staff members to prepare the reports. Effect: The amount reported for the total ARP ESSER III subaward was understated by $16,860,480.93, and the amount reported for the total ARP ESSER III current year expenditures was understated by $5,290,848.62 Information being reported on the USDOE website is not accurate and/or complete. Data previously reported cannot be verified by current staff or other entities required to perform audits or reviews. Recommendation: We recommend OSDE develop and implement appropriate record retention policies and procedures to ensure records are maintained, especially during staff turnovers. We recommend OSDE develop and implement policies and procedures to ensure personnel have an adequate understanding of the requirements for the Annual Report and to ensure the amounts reported are correct. Views of Responsible Official(s) Contact Person: Tammy Smith, Senior Director of Federal Programs | Office of Title Services Anticipated Completion Date: March 2024 Corrective Action Planned: The Oklahoma State Department of Education agrees with the finding. See corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-059 (Partial Repeat 2022-049) STATE AGENCY: Oklahoma State Department of Education (OSDE) FEDERAL AGENCY: United States Department of Education (USDE) ALN: 84.425 – 84.425D, 84.425U; 84.425R FEDERAL PROGRAM NAME: Education Stabilization Fund (ESF) - Elementary and Secondary Schools Emergency Relief Fund (ESSER II); American Rescue Plan – Elementary and Secondary Schools Emergency Relief Fund (ARP ESSER III); Coronavirus Response and Relief Supplemental Appropriations Act, 2021 – Emergency Assistance To Non-Public Schools (CRRSA EANS) FEDERAL AWARD NUMBER: S425D210024; S425U210024 FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Reporting QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.303(a) – Internal Controls states in part, “The Non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” 2 CFR § 200.334 Record retention requirements states in part, “The recipient and subrecipient must retain all Federal award records for three years from the date of submission of their final financial report. For awards that are renewed quarterly or annually, the recipient and subrecipient must retain records for three years from the date of submission of their quarterly or annual financial report, respectively. Records to be retained include but are not limited to, financial records, supporting documentation, and statistical records. Federal agencies or pass-through entities may not impose any other record retention requirements except for the following: (a) The records must be retained until all litigation, claims, or audit findings involving the records have been resolved and final action taken if any litigation, claim, or audit is started before the expiration of the three-year period.” United States Department of Education website ESSER Annual Reporting states in part, “All grantees are required to report on ESSER funds received under the Coronavirus Aid, Relief, and Economic Security (CARES) Act; the Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act; and the American Rescue Plan (ARP) Act. Grantees must submit an annual report describing how the State and subrecipients used the awarded funds during the performance period. Similar to CARES Act Year 1 annual reporting, grantees will use the Annual Report Data Collection Tool to submit the State report.” Condition and Context: We were unable to verify compliance with several key line items on the ESSER I, ESSER II, ARP ESSER III, and CRRSA EANS SFY 22 Annual Reports submitted during the audit period due to a lack of supporting documentation (i.e., supporting data and questionnaires sent to LEAs/nonpublic schools to collect the FTE, Student Participation data, and expenditures by category and object code). These key line items include the following: • Line 3.b1 LEA expenditures by category, and object code for ESSER I, ESSER II and ARP ESSER III • Line 3.b10 Number of specific positions supported with ESSER Funds • Line 5.a Full Time Equivalent positions for ESSER I, ESSER II and ARP ESSER III • SEA obligations (including reimbursements) by allowable activity for CRRSA EANS • Other information for Non-public schools receiving services or assistance under CRRSA EANS While documenting controls over the Annual Report we noted one LEA with a subaward/allocation of $16,832,303.63 and re-allocation of $28,177.30 and SFY 22 current expenditures of $5,509,241.03 was not included on the ARP ESSER III Annual Report. While reviewing a sample of 62 of 1,275 LEA subaward allocations and total expenditures reported on the ESSER Annual Reports, we noted the following: • For 25 of 62 (40.32%) subawards tested, the SFY 22 allocations reported on the LEA’s Grant Management System (GMS) application was less than the amount reported on the ESSER II Annual Report, totaling $12,707.62. In addition, OSDE did not provide the supporting documentation for ESSER II re-allocations. Therefore, we were unable to verify whether the total allocation for these LEAs were reported correctly in the ESSER II Annual Report. • For three of 62 (4.84%) subawards tested, the SFY 22 current expenditures reported on the LEA’s GMS Closeout Report or Summary Expenditures reports were less than the amount reported on the ARP ESSER III Annual Report. OSDE was unable to provide support for the variances totaling $218,392.41. Cause: Due to staff turnover and inadequate record retention policies and procedures, OSDE was unable to locate and/or provide all the supporting documentation used by previous staff members to prepare the reports. Effect: The amount reported for the total ARP ESSER III subaward was understated by $16,860,480.93, and the amount reported for the total ARP ESSER III current year expenditures was understated by $5,290,848.62 Information being reported on the USDOE website is not accurate and/or complete. Data previously reported cannot be verified by current staff or other entities required to perform audits or reviews. Recommendation: We recommend OSDE develop and implement appropriate record retention policies and procedures to ensure records are maintained, especially during staff turnovers. We recommend OSDE develop and implement policies and procedures to ensure personnel have an adequate understanding of the requirements for the Annual Report and to ensure the amounts reported are correct. Views of Responsible Official(s) Contact Person: Tammy Smith, Senior Director of Federal Programs | Office of Title Services Anticipated Completion Date: March 2024 Corrective Action Planned: The Oklahoma State Department of Education agrees with the finding. See corrective action plan located in the corrective action plan section of this report.