2022-014 Special Tests and Provisions ? Provider Eligibility ? Lack of Documentation Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Medicaid Cluster ALN: 93.775, 93.777, 93.778 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 2105TX5ADM, 2105TX5MAP, 2105TXIMPL, 2105TXINCT; 2205TX5ADM, 2205TX5MAP, 2205TXIMPL, 2205TXINCT October 1, 2020 ? September 30, 2021, October 1, 2021 ? September 30, 2022 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria or specific requirement: Per 2 CFR 200.303, Health and Human Services Commission (HHSC) must establish and maintain effective internal controls over federal awards that provide reasonable assurance they are managing federal awards in compliance with federal statutes, regulations, and the provisions of contracts or grant agreements that could have a material effect on each of its federal programs. Per 2 CFR 200.334, 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. Federal awarding agencies and pass-through entities must not impose any other record retention requirements upon non-Federal entities. In order to comply with federal provider eligibility requirements, HHSC must adhere to various subsections of 42 CFR Section 455 including but not limited to: ? 455.104 ? HHSC must require that disclosing entities, fiscal agents, and managed care entities provide the following disclosures: ? The name and address of any person (individual or corporation) with an ownership or control interest in the disclosing entity, fiscal agent, or managed care entity. The address for corporate entities must include as applicable primary business address, every business location, and P.O. Box address. ? Date of birth and Social Security Number (in the case of an individual) ? Other tax identification number (in the case of a corporation) with an ownership or control interest in the disclosing entity (or fiscal agent or managed care entity) or in any subcontractor in which the disclosing entity (or fiscal agent or managed care entity) has a 5 percent or more interest. ? Whether the person (individual or corporation) with an ownership or control interest in the disclosing entity (or fiscal agent or managed care entity) is related to another person with ownership or control interest in the disclosing entity as a spouse, parent, child, or sibling; or whether the person (individual or corporation) with an ownership or control interest in any subcontractor in which the disclosing entity (or fiscal agent or managed care entity) has a 5 percent or more interest is related to another person with ownership or control interest in the disclosing entity as a spouse, parent, child, or sibling. ? The name of any other disclosing entity (or fiscal agent or managed care entity) in which an owner of the disclosing entity (or fiscal agent or managed care entity) has an ownership or control interest. ? The name, address, date of birth, and Social Security Number of any managing employee of the disclosing entity (or fiscal agent or managed care entity). ? 455.105 ? HHSC must enter into an agreement with each provider under which the provider agrees to furnish to it the following information related to business transactions within 35 days of request: ? The ownership of any subcontractor with whom the provider has had business transactions totaling more than $25,000 during the 12-month period ending on the date of the request; and ? Any significant business transactions between the provider and any wholly owned supplier, or between the provider and any subcontractor, during the 5-year period ending on the date of the request. ? 455.106 ? Before HHSC enters into or renews a provider agreement, or at any time upon written request by HHSC, the provider must disclose to HHSC the identity of any person who: ? Has ownership or control interest in the provider, or is an agent or managing employee of the provider; and ? Has been convicted of a criminal offense related to that person's involvement in any program under Medicare, Medicaid, or the title XX services program since the inception of those programs. ? 455.410 ? HHSC must require all ordering or referring physicians or other professionals providing services under the State plan or under a waiver of the plan to be enrolled as participating providers. ? 455.412 ? HHSC must: ? Have a method for verifying that any provider purporting to be licensed in accordance with the laws of any State is licensed by such State ? Confirm that the provider's license has not expired and that there are no current limitations on the provider's license ? 455.414 ? HHSC must revalidate the enrollment of all providers regardless of provider type at least every five years. ? 455.432 ? HHSC must: ? Conduct pre-enrollment and post-enrollment site visits of providers who are designated as ?moderate? or ?high? categorical risks to the Medicaid program. ? Require any enrolled provider to permit CMS, its agents, its designated contractors, or HHSC to conduct unannounced on-site inspections of any and all provider locations. ? 455.434 ? HHSC must: ? Require providers to consent to criminal background checks including fingerprinting when required to do so under State law or by the level of screening based on risk of fraud, waste or abuse as determined for that category of provider.? Establish categorical risk levels for providers and provider categories who pose an increased financial risk of fraud, waste or abuse to the Medicaid program. ? Upon HHSC determining that a provider, or a person with a 5 percent or more direct or indirect ownership interest in the provider, meets HHSC's criteria hereunder for criminal background checks as a ?high? risk to the Medicaid program, HHSC will require that each such provider or person submit fingerprints, in a form and manner to be determined by HHSC, within 30 days upon request from CMS or HHSC. ? 455.436 ? HHSC must confirm the identity and determine the exclusion status of providers and any person with an ownership or control interest or who is an agent or managing employee of the provider through routine checks of Federal databases. Upon enrollment and reenrollment, HHSC must check the Social Security Administration's Death Master File (SSADMF), the National Plan and Provider Enumeration System (NPPES), the List of Excluded Individuals/Entities (LEIE), the Excluded Parties List System (EPLS), and any such other databases as the Secretary may prescribe. During the period the provider is enrolled, HHSC must check the LEIE and EPLS no less frequently than monthly. ? 455.434 ? HHSC must screen all initial applications, including applications for a new practice location, and any applications received in response to a re-enrollment or revalidation of enrollment request based on a categorical risk level of ?limited,? ?moderate,? or ?high.? If a provider could fit within more than one risk level described in this section, the highest level of screening is applicable. Condition: Various departments within and contractors of HHSC are responsible for ensuring medical providers are properly licensed, screened, and enrolled in the Medicaid Program including Contract Administration and Provider Monitoring (CAPM), Access and Eligibility Services (AES), Procurement and Contracting Services, and the Texas Medicaid and Healthcare Partnership. Audit procedures included a review of 40 long-term care providers, which resulted in the following: ? For 11 samples, a copy of the completed Medicaid application was not included in the file. ? For 12 samples, enrollment of the provider was not completed within the last 5 years. ? For 20 samples, verification of the provider?s license was not included in the file. ? For 15 samples, required information on ownership and control was not disclosed. ? For 20 samples, supporting documentation was not included in the file indicating the SSADMF database was checked at the time of the most recent enrollment. ? For 16 samples, supporting documentation was not included in the file indicating the NPPES database was checked at the time of the most recent enrollment. ? For 11 samples, supporting documentation was not included in the file indicating the LEIE database was checked at the time of the most recent enrollment. ? For 14 samples, supporting documentation was not included in the file indicating the EPLS database was checked at the time of the most recent enrollment. ? For 20 samples, supporting documentation was not included in the file indicating the LEIE and EPLS databases were checked at least monthly during the enrollment period. ? For 20 samples, supporting documentation was not included in the file indicating the provider was categorized during screening as limited, moderate, or high risk. ? For 19 samples, a copy of the provider agreement was not included in the files. ? For 20 samples, supporting documentation was not included indicating a pre- or post-enrollment site visit was conducted as required for providers designated as moderate or high risk. ? For 11 samples, supporting documentation was not included indicating the provider disclosed the identity of any person who had been convicted of a criminal offense related to that person's involvement in any program under Medicare, Medicaid, or the Title XX services program since the inception of those programs. Questioned costs: NoneContext: See ?Condition.? Cause: HHSC does not have adequate procedures in place to ensure required documentation is obtained and maintained to comply with federal provider eligibility requirements. Effect: Failure to obtain and maintain adequate documentation during the provider screening and enrollment process may result in otherwise ineligible or fraudulent providers receiving Medicaid funds. Repeat Finding: 2021-008 Recommendation: HHSC should implement controls to ensure: ? Documentation is maintained for at least the length of the providers? current enrollment period or three years, whichever is greater in accordance with 2 CFR 200.334. ? Provider licenses are verified during enrollment. ? Providers are re-enrolled at least once every five years. ? Provider agreements are obtained, and the proper disclosures are made. ? Providers are categorized according to risk level and pre- and post-enrollment site visits are conducted as required for those deemed moderate or high risk. ? Relevant federal databases are checked during initial enrollment and at least monthly for all providers currently enrolled in Medicaid. Views of responsible officials: Agree.
2022-014 Special Tests and Provisions ? Provider Eligibility ? Lack of Documentation Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Medicaid Cluster ALN: 93.775, 93.777, 93.778 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 2105TX5ADM, 2105TX5MAP, 2105TXIMPL, 2105TXINCT; 2205TX5ADM, 2205TX5MAP, 2205TXIMPL, 2205TXINCT October 1, 2020 ? September 30, 2021, October 1, 2021 ? September 30, 2022 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria or specific requirement: Per 2 CFR 200.303, Health and Human Services Commission (HHSC) must establish and maintain effective internal controls over federal awards that provide reasonable assurance they are managing federal awards in compliance with federal statutes, regulations, and the provisions of contracts or grant agreements that could have a material effect on each of its federal programs. Per 2 CFR 200.334, 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. Federal awarding agencies and pass-through entities must not impose any other record retention requirements upon non-Federal entities. In order to comply with federal provider eligibility requirements, HHSC must adhere to various subsections of 42 CFR Section 455 including but not limited to: ? 455.104 ? HHSC must require that disclosing entities, fiscal agents, and managed care entities provide the following disclosures: ? The name and address of any person (individual or corporation) with an ownership or control interest in the disclosing entity, fiscal agent, or managed care entity. The address for corporate entities must include as applicable primary business address, every business location, and P.O. Box address. ? Date of birth and Social Security Number (in the case of an individual) ? Other tax identification number (in the case of a corporation) with an ownership or control interest in the disclosing entity (or fiscal agent or managed care entity) or in any subcontractor in which the disclosing entity (or fiscal agent or managed care entity) has a 5 percent or more interest. ? Whether the person (individual or corporation) with an ownership or control interest in the disclosing entity (or fiscal agent or managed care entity) is related to another person with ownership or control interest in the disclosing entity as a spouse, parent, child, or sibling; or whether the person (individual or corporation) with an ownership or control interest in any subcontractor in which the disclosing entity (or fiscal agent or managed care entity) has a 5 percent or more interest is related to another person with ownership or control interest in the disclosing entity as a spouse, parent, child, or sibling. ? The name of any other disclosing entity (or fiscal agent or managed care entity) in which an owner of the disclosing entity (or fiscal agent or managed care entity) has an ownership or control interest. ? The name, address, date of birth, and Social Security Number of any managing employee of the disclosing entity (or fiscal agent or managed care entity). ? 455.105 ? HHSC must enter into an agreement with each provider under which the provider agrees to furnish to it the following information related to business transactions within 35 days of request: ? The ownership of any subcontractor with whom the provider has had business transactions totaling more than $25,000 during the 12-month period ending on the date of the request; and ? Any significant business transactions between the provider and any wholly owned supplier, or between the provider and any subcontractor, during the 5-year period ending on the date of the request. ? 455.106 ? Before HHSC enters into or renews a provider agreement, or at any time upon written request by HHSC, the provider must disclose to HHSC the identity of any person who: ? Has ownership or control interest in the provider, or is an agent or managing employee of the provider; and ? Has been convicted of a criminal offense related to that person's involvement in any program under Medicare, Medicaid, or the title XX services program since the inception of those programs. ? 455.410 ? HHSC must require all ordering or referring physicians or other professionals providing services under the State plan or under a waiver of the plan to be enrolled as participating providers. ? 455.412 ? HHSC must: ? Have a method for verifying that any provider purporting to be licensed in accordance with the laws of any State is licensed by such State ? Confirm that the provider's license has not expired and that there are no current limitations on the provider's license ? 455.414 ? HHSC must revalidate the enrollment of all providers regardless of provider type at least every five years. ? 455.432 ? HHSC must: ? Conduct pre-enrollment and post-enrollment site visits of providers who are designated as ?moderate? or ?high? categorical risks to the Medicaid program. ? Require any enrolled provider to permit CMS, its agents, its designated contractors, or HHSC to conduct unannounced on-site inspections of any and all provider locations. ? 455.434 ? HHSC must: ? Require providers to consent to criminal background checks including fingerprinting when required to do so under State law or by the level of screening based on risk of fraud, waste or abuse as determined for that category of provider.? Establish categorical risk levels for providers and provider categories who pose an increased financial risk of fraud, waste or abuse to the Medicaid program. ? Upon HHSC determining that a provider, or a person with a 5 percent or more direct or indirect ownership interest in the provider, meets HHSC's criteria hereunder for criminal background checks as a ?high? risk to the Medicaid program, HHSC will require that each such provider or person submit fingerprints, in a form and manner to be determined by HHSC, within 30 days upon request from CMS or HHSC. ? 455.436 ? HHSC must confirm the identity and determine the exclusion status of providers and any person with an ownership or control interest or who is an agent or managing employee of the provider through routine checks of Federal databases. Upon enrollment and reenrollment, HHSC must check the Social Security Administration's Death Master File (SSADMF), the National Plan and Provider Enumeration System (NPPES), the List of Excluded Individuals/Entities (LEIE), the Excluded Parties List System (EPLS), and any such other databases as the Secretary may prescribe. During the period the provider is enrolled, HHSC must check the LEIE and EPLS no less frequently than monthly. ? 455.434 ? HHSC must screen all initial applications, including applications for a new practice location, and any applications received in response to a re-enrollment or revalidation of enrollment request based on a categorical risk level of ?limited,? ?moderate,? or ?high.? If a provider could fit within more than one risk level described in this section, the highest level of screening is applicable. Condition: Various departments within and contractors of HHSC are responsible for ensuring medical providers are properly licensed, screened, and enrolled in the Medicaid Program including Contract Administration and Provider Monitoring (CAPM), Access and Eligibility Services (AES), Procurement and Contracting Services, and the Texas Medicaid and Healthcare Partnership. Audit procedures included a review of 40 long-term care providers, which resulted in the following: ? For 11 samples, a copy of the completed Medicaid application was not included in the file. ? For 12 samples, enrollment of the provider was not completed within the last 5 years. ? For 20 samples, verification of the provider?s license was not included in the file. ? For 15 samples, required information on ownership and control was not disclosed. ? For 20 samples, supporting documentation was not included in the file indicating the SSADMF database was checked at the time of the most recent enrollment. ? For 16 samples, supporting documentation was not included in the file indicating the NPPES database was checked at the time of the most recent enrollment. ? For 11 samples, supporting documentation was not included in the file indicating the LEIE database was checked at the time of the most recent enrollment. ? For 14 samples, supporting documentation was not included in the file indicating the EPLS database was checked at the time of the most recent enrollment. ? For 20 samples, supporting documentation was not included in the file indicating the LEIE and EPLS databases were checked at least monthly during the enrollment period. ? For 20 samples, supporting documentation was not included in the file indicating the provider was categorized during screening as limited, moderate, or high risk. ? For 19 samples, a copy of the provider agreement was not included in the files. ? For 20 samples, supporting documentation was not included indicating a pre- or post-enrollment site visit was conducted as required for providers designated as moderate or high risk. ? For 11 samples, supporting documentation was not included indicating the provider disclosed the identity of any person who had been convicted of a criminal offense related to that person's involvement in any program under Medicare, Medicaid, or the Title XX services program since the inception of those programs. Questioned costs: NoneContext: See ?Condition.? Cause: HHSC does not have adequate procedures in place to ensure required documentation is obtained and maintained to comply with federal provider eligibility requirements. Effect: Failure to obtain and maintain adequate documentation during the provider screening and enrollment process may result in otherwise ineligible or fraudulent providers receiving Medicaid funds. Repeat Finding: 2021-008 Recommendation: HHSC should implement controls to ensure: ? Documentation is maintained for at least the length of the providers? current enrollment period or three years, whichever is greater in accordance with 2 CFR 200.334. ? Provider licenses are verified during enrollment. ? Providers are re-enrolled at least once every five years. ? Provider agreements are obtained, and the proper disclosures are made. ? Providers are categorized according to risk level and pre- and post-enrollment site visits are conducted as required for those deemed moderate or high risk. ? Relevant federal databases are checked during initial enrollment and at least monthly for all providers currently enrolled in Medicaid. Views of responsible officials: Agree.
2022-014 Special Tests and Provisions ? Provider Eligibility ? Lack of Documentation Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Medicaid Cluster ALN: 93.775, 93.777, 93.778 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 2105TX5ADM, 2105TX5MAP, 2105TXIMPL, 2105TXINCT; 2205TX5ADM, 2205TX5MAP, 2205TXIMPL, 2205TXINCT October 1, 2020 ? September 30, 2021, October 1, 2021 ? September 30, 2022 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria or specific requirement: Per 2 CFR 200.303, Health and Human Services Commission (HHSC) must establish and maintain effective internal controls over federal awards that provide reasonable assurance they are managing federal awards in compliance with federal statutes, regulations, and the provisions of contracts or grant agreements that could have a material effect on each of its federal programs. Per 2 CFR 200.334, 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. Federal awarding agencies and pass-through entities must not impose any other record retention requirements upon non-Federal entities. In order to comply with federal provider eligibility requirements, HHSC must adhere to various subsections of 42 CFR Section 455 including but not limited to: ? 455.104 ? HHSC must require that disclosing entities, fiscal agents, and managed care entities provide the following disclosures: ? The name and address of any person (individual or corporation) with an ownership or control interest in the disclosing entity, fiscal agent, or managed care entity. The address for corporate entities must include as applicable primary business address, every business location, and P.O. Box address. ? Date of birth and Social Security Number (in the case of an individual) ? Other tax identification number (in the case of a corporation) with an ownership or control interest in the disclosing entity (or fiscal agent or managed care entity) or in any subcontractor in which the disclosing entity (or fiscal agent or managed care entity) has a 5 percent or more interest. ? Whether the person (individual or corporation) with an ownership or control interest in the disclosing entity (or fiscal agent or managed care entity) is related to another person with ownership or control interest in the disclosing entity as a spouse, parent, child, or sibling; or whether the person (individual or corporation) with an ownership or control interest in any subcontractor in which the disclosing entity (or fiscal agent or managed care entity) has a 5 percent or more interest is related to another person with ownership or control interest in the disclosing entity as a spouse, parent, child, or sibling. ? The name of any other disclosing entity (or fiscal agent or managed care entity) in which an owner of the disclosing entity (or fiscal agent or managed care entity) has an ownership or control interest. ? The name, address, date of birth, and Social Security Number of any managing employee of the disclosing entity (or fiscal agent or managed care entity). ? 455.105 ? HHSC must enter into an agreement with each provider under which the provider agrees to furnish to it the following information related to business transactions within 35 days of request: ? The ownership of any subcontractor with whom the provider has had business transactions totaling more than $25,000 during the 12-month period ending on the date of the request; and ? Any significant business transactions between the provider and any wholly owned supplier, or between the provider and any subcontractor, during the 5-year period ending on the date of the request. ? 455.106 ? Before HHSC enters into or renews a provider agreement, or at any time upon written request by HHSC, the provider must disclose to HHSC the identity of any person who: ? Has ownership or control interest in the provider, or is an agent or managing employee of the provider; and ? Has been convicted of a criminal offense related to that person's involvement in any program under Medicare, Medicaid, or the title XX services program since the inception of those programs. ? 455.410 ? HHSC must require all ordering or referring physicians or other professionals providing services under the State plan or under a waiver of the plan to be enrolled as participating providers. ? 455.412 ? HHSC must: ? Have a method for verifying that any provider purporting to be licensed in accordance with the laws of any State is licensed by such State ? Confirm that the provider's license has not expired and that there are no current limitations on the provider's license ? 455.414 ? HHSC must revalidate the enrollment of all providers regardless of provider type at least every five years. ? 455.432 ? HHSC must: ? Conduct pre-enrollment and post-enrollment site visits of providers who are designated as ?moderate? or ?high? categorical risks to the Medicaid program. ? Require any enrolled provider to permit CMS, its agents, its designated contractors, or HHSC to conduct unannounced on-site inspections of any and all provider locations. ? 455.434 ? HHSC must: ? Require providers to consent to criminal background checks including fingerprinting when required to do so under State law or by the level of screening based on risk of fraud, waste or abuse as determined for that category of provider.? Establish categorical risk levels for providers and provider categories who pose an increased financial risk of fraud, waste or abuse to the Medicaid program. ? Upon HHSC determining that a provider, or a person with a 5 percent or more direct or indirect ownership interest in the provider, meets HHSC's criteria hereunder for criminal background checks as a ?high? risk to the Medicaid program, HHSC will require that each such provider or person submit fingerprints, in a form and manner to be determined by HHSC, within 30 days upon request from CMS or HHSC. ? 455.436 ? HHSC must confirm the identity and determine the exclusion status of providers and any person with an ownership or control interest or who is an agent or managing employee of the provider through routine checks of Federal databases. Upon enrollment and reenrollment, HHSC must check the Social Security Administration's Death Master File (SSADMF), the National Plan and Provider Enumeration System (NPPES), the List of Excluded Individuals/Entities (LEIE), the Excluded Parties List System (EPLS), and any such other databases as the Secretary may prescribe. During the period the provider is enrolled, HHSC must check the LEIE and EPLS no less frequently than monthly. ? 455.434 ? HHSC must screen all initial applications, including applications for a new practice location, and any applications received in response to a re-enrollment or revalidation of enrollment request based on a categorical risk level of ?limited,? ?moderate,? or ?high.? If a provider could fit within more than one risk level described in this section, the highest level of screening is applicable. Condition: Various departments within and contractors of HHSC are responsible for ensuring medical providers are properly licensed, screened, and enrolled in the Medicaid Program including Contract Administration and Provider Monitoring (CAPM), Access and Eligibility Services (AES), Procurement and Contracting Services, and the Texas Medicaid and Healthcare Partnership. Audit procedures included a review of 40 long-term care providers, which resulted in the following: ? For 11 samples, a copy of the completed Medicaid application was not included in the file. ? For 12 samples, enrollment of the provider was not completed within the last 5 years. ? For 20 samples, verification of the provider?s license was not included in the file. ? For 15 samples, required information on ownership and control was not disclosed. ? For 20 samples, supporting documentation was not included in the file indicating the SSADMF database was checked at the time of the most recent enrollment. ? For 16 samples, supporting documentation was not included in the file indicating the NPPES database was checked at the time of the most recent enrollment. ? For 11 samples, supporting documentation was not included in the file indicating the LEIE database was checked at the time of the most recent enrollment. ? For 14 samples, supporting documentation was not included in the file indicating the EPLS database was checked at the time of the most recent enrollment. ? For 20 samples, supporting documentation was not included in the file indicating the LEIE and EPLS databases were checked at least monthly during the enrollment period. ? For 20 samples, supporting documentation was not included in the file indicating the provider was categorized during screening as limited, moderate, or high risk. ? For 19 samples, a copy of the provider agreement was not included in the files. ? For 20 samples, supporting documentation was not included indicating a pre- or post-enrollment site visit was conducted as required for providers designated as moderate or high risk. ? For 11 samples, supporting documentation was not included indicating the provider disclosed the identity of any person who had been convicted of a criminal offense related to that person's involvement in any program under Medicare, Medicaid, or the Title XX services program since the inception of those programs. Questioned costs: NoneContext: See ?Condition.? Cause: HHSC does not have adequate procedures in place to ensure required documentation is obtained and maintained to comply with federal provider eligibility requirements. Effect: Failure to obtain and maintain adequate documentation during the provider screening and enrollment process may result in otherwise ineligible or fraudulent providers receiving Medicaid funds. Repeat Finding: 2021-008 Recommendation: HHSC should implement controls to ensure: ? Documentation is maintained for at least the length of the providers? current enrollment period or three years, whichever is greater in accordance with 2 CFR 200.334. ? Provider licenses are verified during enrollment. ? Providers are re-enrolled at least once every five years. ? Provider agreements are obtained, and the proper disclosures are made. ? Providers are categorized according to risk level and pre- and post-enrollment site visits are conducted as required for those deemed moderate or high risk. ? Relevant federal databases are checked during initial enrollment and at least monthly for all providers currently enrolled in Medicaid. Views of responsible officials: Agree.
2022-014 Special Tests and Provisions ? Provider Eligibility ? Lack of Documentation Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Medicaid Cluster ALN: 93.775, 93.777, 93.778 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 2105TX5ADM, 2105TX5MAP, 2105TXIMPL, 2105TXINCT; 2205TX5ADM, 2205TX5MAP, 2205TXIMPL, 2205TXINCT October 1, 2020 ? September 30, 2021, October 1, 2021 ? September 30, 2022 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria or specific requirement: Per 2 CFR 200.303, Health and Human Services Commission (HHSC) must establish and maintain effective internal controls over federal awards that provide reasonable assurance they are managing federal awards in compliance with federal statutes, regulations, and the provisions of contracts or grant agreements that could have a material effect on each of its federal programs. Per 2 CFR 200.334, 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. Federal awarding agencies and pass-through entities must not impose any other record retention requirements upon non-Federal entities. In order to comply with federal provider eligibility requirements, HHSC must adhere to various subsections of 42 CFR Section 455 including but not limited to: ? 455.104 ? HHSC must require that disclosing entities, fiscal agents, and managed care entities provide the following disclosures: ? The name and address of any person (individual or corporation) with an ownership or control interest in the disclosing entity, fiscal agent, or managed care entity. The address for corporate entities must include as applicable primary business address, every business location, and P.O. Box address. ? Date of birth and Social Security Number (in the case of an individual) ? Other tax identification number (in the case of a corporation) with an ownership or control interest in the disclosing entity (or fiscal agent or managed care entity) or in any subcontractor in which the disclosing entity (or fiscal agent or managed care entity) has a 5 percent or more interest. ? Whether the person (individual or corporation) with an ownership or control interest in the disclosing entity (or fiscal agent or managed care entity) is related to another person with ownership or control interest in the disclosing entity as a spouse, parent, child, or sibling; or whether the person (individual or corporation) with an ownership or control interest in any subcontractor in which the disclosing entity (or fiscal agent or managed care entity) has a 5 percent or more interest is related to another person with ownership or control interest in the disclosing entity as a spouse, parent, child, or sibling. ? The name of any other disclosing entity (or fiscal agent or managed care entity) in which an owner of the disclosing entity (or fiscal agent or managed care entity) has an ownership or control interest. ? The name, address, date of birth, and Social Security Number of any managing employee of the disclosing entity (or fiscal agent or managed care entity). ? 455.105 ? HHSC must enter into an agreement with each provider under which the provider agrees to furnish to it the following information related to business transactions within 35 days of request: ? The ownership of any subcontractor with whom the provider has had business transactions totaling more than $25,000 during the 12-month period ending on the date of the request; and ? Any significant business transactions between the provider and any wholly owned supplier, or between the provider and any subcontractor, during the 5-year period ending on the date of the request. ? 455.106 ? Before HHSC enters into or renews a provider agreement, or at any time upon written request by HHSC, the provider must disclose to HHSC the identity of any person who: ? Has ownership or control interest in the provider, or is an agent or managing employee of the provider; and ? Has been convicted of a criminal offense related to that person's involvement in any program under Medicare, Medicaid, or the title XX services program since the inception of those programs. ? 455.410 ? HHSC must require all ordering or referring physicians or other professionals providing services under the State plan or under a waiver of the plan to be enrolled as participating providers. ? 455.412 ? HHSC must: ? Have a method for verifying that any provider purporting to be licensed in accordance with the laws of any State is licensed by such State ? Confirm that the provider's license has not expired and that there are no current limitations on the provider's license ? 455.414 ? HHSC must revalidate the enrollment of all providers regardless of provider type at least every five years. ? 455.432 ? HHSC must: ? Conduct pre-enrollment and post-enrollment site visits of providers who are designated as ?moderate? or ?high? categorical risks to the Medicaid program. ? Require any enrolled provider to permit CMS, its agents, its designated contractors, or HHSC to conduct unannounced on-site inspections of any and all provider locations. ? 455.434 ? HHSC must: ? Require providers to consent to criminal background checks including fingerprinting when required to do so under State law or by the level of screening based on risk of fraud, waste or abuse as determined for that category of provider.? Establish categorical risk levels for providers and provider categories who pose an increased financial risk of fraud, waste or abuse to the Medicaid program. ? Upon HHSC determining that a provider, or a person with a 5 percent or more direct or indirect ownership interest in the provider, meets HHSC's criteria hereunder for criminal background checks as a ?high? risk to the Medicaid program, HHSC will require that each such provider or person submit fingerprints, in a form and manner to be determined by HHSC, within 30 days upon request from CMS or HHSC. ? 455.436 ? HHSC must confirm the identity and determine the exclusion status of providers and any person with an ownership or control interest or who is an agent or managing employee of the provider through routine checks of Federal databases. Upon enrollment and reenrollment, HHSC must check the Social Security Administration's Death Master File (SSADMF), the National Plan and Provider Enumeration System (NPPES), the List of Excluded Individuals/Entities (LEIE), the Excluded Parties List System (EPLS), and any such other databases as the Secretary may prescribe. During the period the provider is enrolled, HHSC must check the LEIE and EPLS no less frequently than monthly. ? 455.434 ? HHSC must screen all initial applications, including applications for a new practice location, and any applications received in response to a re-enrollment or revalidation of enrollment request based on a categorical risk level of ?limited,? ?moderate,? or ?high.? If a provider could fit within more than one risk level described in this section, the highest level of screening is applicable. Condition: Various departments within and contractors of HHSC are responsible for ensuring medical providers are properly licensed, screened, and enrolled in the Medicaid Program including Contract Administration and Provider Monitoring (CAPM), Access and Eligibility Services (AES), Procurement and Contracting Services, and the Texas Medicaid and Healthcare Partnership. Audit procedures included a review of 40 long-term care providers, which resulted in the following: ? For 11 samples, a copy of the completed Medicaid application was not included in the file. ? For 12 samples, enrollment of the provider was not completed within the last 5 years. ? For 20 samples, verification of the provider?s license was not included in the file. ? For 15 samples, required information on ownership and control was not disclosed. ? For 20 samples, supporting documentation was not included in the file indicating the SSADMF database was checked at the time of the most recent enrollment. ? For 16 samples, supporting documentation was not included in the file indicating the NPPES database was checked at the time of the most recent enrollment. ? For 11 samples, supporting documentation was not included in the file indicating the LEIE database was checked at the time of the most recent enrollment. ? For 14 samples, supporting documentation was not included in the file indicating the EPLS database was checked at the time of the most recent enrollment. ? For 20 samples, supporting documentation was not included in the file indicating the LEIE and EPLS databases were checked at least monthly during the enrollment period. ? For 20 samples, supporting documentation was not included in the file indicating the provider was categorized during screening as limited, moderate, or high risk. ? For 19 samples, a copy of the provider agreement was not included in the files. ? For 20 samples, supporting documentation was not included indicating a pre- or post-enrollment site visit was conducted as required for providers designated as moderate or high risk. ? For 11 samples, supporting documentation was not included indicating the provider disclosed the identity of any person who had been convicted of a criminal offense related to that person's involvement in any program under Medicare, Medicaid, or the Title XX services program since the inception of those programs. Questioned costs: NoneContext: See ?Condition.? Cause: HHSC does not have adequate procedures in place to ensure required documentation is obtained and maintained to comply with federal provider eligibility requirements. Effect: Failure to obtain and maintain adequate documentation during the provider screening and enrollment process may result in otherwise ineligible or fraudulent providers receiving Medicaid funds. Repeat Finding: 2021-008 Recommendation: HHSC should implement controls to ensure: ? Documentation is maintained for at least the length of the providers? current enrollment period or three years, whichever is greater in accordance with 2 CFR 200.334. ? Provider licenses are verified during enrollment. ? Providers are re-enrolled at least once every five years. ? Provider agreements are obtained, and the proper disclosures are made. ? Providers are categorized according to risk level and pre- and post-enrollment site visits are conducted as required for those deemed moderate or high risk. ? Relevant federal databases are checked during initial enrollment and at least monthly for all providers currently enrolled in Medicaid. Views of responsible officials: Agree.
2022-014 Special Tests and Provisions ? Provider Eligibility ? Lack of Documentation Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Medicaid Cluster ALN: 93.775, 93.777, 93.778 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 2105TX5ADM, 2105TX5MAP, 2105TXIMPL, 2105TXINCT; 2205TX5ADM, 2205TX5MAP, 2205TXIMPL, 2205TXINCT October 1, 2020 ? September 30, 2021, October 1, 2021 ? September 30, 2022 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria or specific requirement: Per 2 CFR 200.303, Health and Human Services Commission (HHSC) must establish and maintain effective internal controls over federal awards that provide reasonable assurance they are managing federal awards in compliance with federal statutes, regulations, and the provisions of contracts or grant agreements that could have a material effect on each of its federal programs. Per 2 CFR 200.334, 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. Federal awarding agencies and pass-through entities must not impose any other record retention requirements upon non-Federal entities. In order to comply with federal provider eligibility requirements, HHSC must adhere to various subsections of 42 CFR Section 455 including but not limited to: ? 455.104 ? HHSC must require that disclosing entities, fiscal agents, and managed care entities provide the following disclosures: ? The name and address of any person (individual or corporation) with an ownership or control interest in the disclosing entity, fiscal agent, or managed care entity. The address for corporate entities must include as applicable primary business address, every business location, and P.O. Box address. ? Date of birth and Social Security Number (in the case of an individual) ? Other tax identification number (in the case of a corporation) with an ownership or control interest in the disclosing entity (or fiscal agent or managed care entity) or in any subcontractor in which the disclosing entity (or fiscal agent or managed care entity) has a 5 percent or more interest. ? Whether the person (individual or corporation) with an ownership or control interest in the disclosing entity (or fiscal agent or managed care entity) is related to another person with ownership or control interest in the disclosing entity as a spouse, parent, child, or sibling; or whether the person (individual or corporation) with an ownership or control interest in any subcontractor in which the disclosing entity (or fiscal agent or managed care entity) has a 5 percent or more interest is related to another person with ownership or control interest in the disclosing entity as a spouse, parent, child, or sibling. ? The name of any other disclosing entity (or fiscal agent or managed care entity) in which an owner of the disclosing entity (or fiscal agent or managed care entity) has an ownership or control interest. ? The name, address, date of birth, and Social Security Number of any managing employee of the disclosing entity (or fiscal agent or managed care entity). ? 455.105 ? HHSC must enter into an agreement with each provider under which the provider agrees to furnish to it the following information related to business transactions within 35 days of request: ? The ownership of any subcontractor with whom the provider has had business transactions totaling more than $25,000 during the 12-month period ending on the date of the request; and ? Any significant business transactions between the provider and any wholly owned supplier, or between the provider and any subcontractor, during the 5-year period ending on the date of the request. ? 455.106 ? Before HHSC enters into or renews a provider agreement, or at any time upon written request by HHSC, the provider must disclose to HHSC the identity of any person who: ? Has ownership or control interest in the provider, or is an agent or managing employee of the provider; and ? Has been convicted of a criminal offense related to that person's involvement in any program under Medicare, Medicaid, or the title XX services program since the inception of those programs. ? 455.410 ? HHSC must require all ordering or referring physicians or other professionals providing services under the State plan or under a waiver of the plan to be enrolled as participating providers. ? 455.412 ? HHSC must: ? Have a method for verifying that any provider purporting to be licensed in accordance with the laws of any State is licensed by such State ? Confirm that the provider's license has not expired and that there are no current limitations on the provider's license ? 455.414 ? HHSC must revalidate the enrollment of all providers regardless of provider type at least every five years. ? 455.432 ? HHSC must: ? Conduct pre-enrollment and post-enrollment site visits of providers who are designated as ?moderate? or ?high? categorical risks to the Medicaid program. ? Require any enrolled provider to permit CMS, its agents, its designated contractors, or HHSC to conduct unannounced on-site inspections of any and all provider locations. ? 455.434 ? HHSC must: ? Require providers to consent to criminal background checks including fingerprinting when required to do so under State law or by the level of screening based on risk of fraud, waste or abuse as determined for that category of provider.? Establish categorical risk levels for providers and provider categories who pose an increased financial risk of fraud, waste or abuse to the Medicaid program. ? Upon HHSC determining that a provider, or a person with a 5 percent or more direct or indirect ownership interest in the provider, meets HHSC's criteria hereunder for criminal background checks as a ?high? risk to the Medicaid program, HHSC will require that each such provider or person submit fingerprints, in a form and manner to be determined by HHSC, within 30 days upon request from CMS or HHSC. ? 455.436 ? HHSC must confirm the identity and determine the exclusion status of providers and any person with an ownership or control interest or who is an agent or managing employee of the provider through routine checks of Federal databases. Upon enrollment and reenrollment, HHSC must check the Social Security Administration's Death Master File (SSADMF), the National Plan and Provider Enumeration System (NPPES), the List of Excluded Individuals/Entities (LEIE), the Excluded Parties List System (EPLS), and any such other databases as the Secretary may prescribe. During the period the provider is enrolled, HHSC must check the LEIE and EPLS no less frequently than monthly. ? 455.434 ? HHSC must screen all initial applications, including applications for a new practice location, and any applications received in response to a re-enrollment or revalidation of enrollment request based on a categorical risk level of ?limited,? ?moderate,? or ?high.? If a provider could fit within more than one risk level described in this section, the highest level of screening is applicable. Condition: Various departments within and contractors of HHSC are responsible for ensuring medical providers are properly licensed, screened, and enrolled in the Medicaid Program including Contract Administration and Provider Monitoring (CAPM), Access and Eligibility Services (AES), Procurement and Contracting Services, and the Texas Medicaid and Healthcare Partnership. Audit procedures included a review of 40 long-term care providers, which resulted in the following: ? For 11 samples, a copy of the completed Medicaid application was not included in the file. ? For 12 samples, enrollment of the provider was not completed within the last 5 years. ? For 20 samples, verification of the provider?s license was not included in the file. ? For 15 samples, required information on ownership and control was not disclosed. ? For 20 samples, supporting documentation was not included in the file indicating the SSADMF database was checked at the time of the most recent enrollment. ? For 16 samples, supporting documentation was not included in the file indicating the NPPES database was checked at the time of the most recent enrollment. ? For 11 samples, supporting documentation was not included in the file indicating the LEIE database was checked at the time of the most recent enrollment. ? For 14 samples, supporting documentation was not included in the file indicating the EPLS database was checked at the time of the most recent enrollment. ? For 20 samples, supporting documentation was not included in the file indicating the LEIE and EPLS databases were checked at least monthly during the enrollment period. ? For 20 samples, supporting documentation was not included in the file indicating the provider was categorized during screening as limited, moderate, or high risk. ? For 19 samples, a copy of the provider agreement was not included in the files. ? For 20 samples, supporting documentation was not included indicating a pre- or post-enrollment site visit was conducted as required for providers designated as moderate or high risk. ? For 11 samples, supporting documentation was not included indicating the provider disclosed the identity of any person who had been convicted of a criminal offense related to that person's involvement in any program under Medicare, Medicaid, or the Title XX services program since the inception of those programs. Questioned costs: NoneContext: See ?Condition.? Cause: HHSC does not have adequate procedures in place to ensure required documentation is obtained and maintained to comply with federal provider eligibility requirements. Effect: Failure to obtain and maintain adequate documentation during the provider screening and enrollment process may result in otherwise ineligible or fraudulent providers receiving Medicaid funds. Repeat Finding: 2021-008 Recommendation: HHSC should implement controls to ensure: ? Documentation is maintained for at least the length of the providers? current enrollment period or three years, whichever is greater in accordance with 2 CFR 200.334. ? Provider licenses are verified during enrollment. ? Providers are re-enrolled at least once every five years. ? Provider agreements are obtained, and the proper disclosures are made. ? Providers are categorized according to risk level and pre- and post-enrollment site visits are conducted as required for those deemed moderate or high risk. ? Relevant federal databases are checked during initial enrollment and at least monthly for all providers currently enrolled in Medicaid. Views of responsible officials: Agree.
2022-014 Special Tests and Provisions ? Provider Eligibility ? Lack of Documentation Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Medicaid Cluster ALN: 93.775, 93.777, 93.778 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 2105TX5ADM, 2105TX5MAP, 2105TXIMPL, 2105TXINCT; 2205TX5ADM, 2205TX5MAP, 2205TXIMPL, 2205TXINCT October 1, 2020 ? September 30, 2021, October 1, 2021 ? September 30, 2022 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria or specific requirement: Per 2 CFR 200.303, Health and Human Services Commission (HHSC) must establish and maintain effective internal controls over federal awards that provide reasonable assurance they are managing federal awards in compliance with federal statutes, regulations, and the provisions of contracts or grant agreements that could have a material effect on each of its federal programs. Per 2 CFR 200.334, 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. Federal awarding agencies and pass-through entities must not impose any other record retention requirements upon non-Federal entities. In order to comply with federal provider eligibility requirements, HHSC must adhere to various subsections of 42 CFR Section 455 including but not limited to: ? 455.104 ? HHSC must require that disclosing entities, fiscal agents, and managed care entities provide the following disclosures: ? The name and address of any person (individual or corporation) with an ownership or control interest in the disclosing entity, fiscal agent, or managed care entity. The address for corporate entities must include as applicable primary business address, every business location, and P.O. Box address. ? Date of birth and Social Security Number (in the case of an individual) ? Other tax identification number (in the case of a corporation) with an ownership or control interest in the disclosing entity (or fiscal agent or managed care entity) or in any subcontractor in which the disclosing entity (or fiscal agent or managed care entity) has a 5 percent or more interest. ? Whether the person (individual or corporation) with an ownership or control interest in the disclosing entity (or fiscal agent or managed care entity) is related to another person with ownership or control interest in the disclosing entity as a spouse, parent, child, or sibling; or whether the person (individual or corporation) with an ownership or control interest in any subcontractor in which the disclosing entity (or fiscal agent or managed care entity) has a 5 percent or more interest is related to another person with ownership or control interest in the disclosing entity as a spouse, parent, child, or sibling. ? The name of any other disclosing entity (or fiscal agent or managed care entity) in which an owner of the disclosing entity (or fiscal agent or managed care entity) has an ownership or control interest. ? The name, address, date of birth, and Social Security Number of any managing employee of the disclosing entity (or fiscal agent or managed care entity). ? 455.105 ? HHSC must enter into an agreement with each provider under which the provider agrees to furnish to it the following information related to business transactions within 35 days of request: ? The ownership of any subcontractor with whom the provider has had business transactions totaling more than $25,000 during the 12-month period ending on the date of the request; and ? Any significant business transactions between the provider and any wholly owned supplier, or between the provider and any subcontractor, during the 5-year period ending on the date of the request. ? 455.106 ? Before HHSC enters into or renews a provider agreement, or at any time upon written request by HHSC, the provider must disclose to HHSC the identity of any person who: ? Has ownership or control interest in the provider, or is an agent or managing employee of the provider; and ? Has been convicted of a criminal offense related to that person's involvement in any program under Medicare, Medicaid, or the title XX services program since the inception of those programs. ? 455.410 ? HHSC must require all ordering or referring physicians or other professionals providing services under the State plan or under a waiver of the plan to be enrolled as participating providers. ? 455.412 ? HHSC must: ? Have a method for verifying that any provider purporting to be licensed in accordance with the laws of any State is licensed by such State ? Confirm that the provider's license has not expired and that there are no current limitations on the provider's license ? 455.414 ? HHSC must revalidate the enrollment of all providers regardless of provider type at least every five years. ? 455.432 ? HHSC must: ? Conduct pre-enrollment and post-enrollment site visits of providers who are designated as ?moderate? or ?high? categorical risks to the Medicaid program. ? Require any enrolled provider to permit CMS, its agents, its designated contractors, or HHSC to conduct unannounced on-site inspections of any and all provider locations. ? 455.434 ? HHSC must: ? Require providers to consent to criminal background checks including fingerprinting when required to do so under State law or by the level of screening based on risk of fraud, waste or abuse as determined for that category of provider.? Establish categorical risk levels for providers and provider categories who pose an increased financial risk of fraud, waste or abuse to the Medicaid program. ? Upon HHSC determining that a provider, or a person with a 5 percent or more direct or indirect ownership interest in the provider, meets HHSC's criteria hereunder for criminal background checks as a ?high? risk to the Medicaid program, HHSC will require that each such provider or person submit fingerprints, in a form and manner to be determined by HHSC, within 30 days upon request from CMS or HHSC. ? 455.436 ? HHSC must confirm the identity and determine the exclusion status of providers and any person with an ownership or control interest or who is an agent or managing employee of the provider through routine checks of Federal databases. Upon enrollment and reenrollment, HHSC must check the Social Security Administration's Death Master File (SSADMF), the National Plan and Provider Enumeration System (NPPES), the List of Excluded Individuals/Entities (LEIE), the Excluded Parties List System (EPLS), and any such other databases as the Secretary may prescribe. During the period the provider is enrolled, HHSC must check the LEIE and EPLS no less frequently than monthly. ? 455.434 ? HHSC must screen all initial applications, including applications for a new practice location, and any applications received in response to a re-enrollment or revalidation of enrollment request based on a categorical risk level of ?limited,? ?moderate,? or ?high.? If a provider could fit within more than one risk level described in this section, the highest level of screening is applicable. Condition: Various departments within and contractors of HHSC are responsible for ensuring medical providers are properly licensed, screened, and enrolled in the Medicaid Program including Contract Administration and Provider Monitoring (CAPM), Access and Eligibility Services (AES), Procurement and Contracting Services, and the Texas Medicaid and Healthcare Partnership. Audit procedures included a review of 40 long-term care providers, which resulted in the following: ? For 11 samples, a copy of the completed Medicaid application was not included in the file. ? For 12 samples, enrollment of the provider was not completed within the last 5 years. ? For 20 samples, verification of the provider?s license was not included in the file. ? For 15 samples, required information on ownership and control was not disclosed. ? For 20 samples, supporting documentation was not included in the file indicating the SSADMF database was checked at the time of the most recent enrollment. ? For 16 samples, supporting documentation was not included in the file indicating the NPPES database was checked at the time of the most recent enrollment. ? For 11 samples, supporting documentation was not included in the file indicating the LEIE database was checked at the time of the most recent enrollment. ? For 14 samples, supporting documentation was not included in the file indicating the EPLS database was checked at the time of the most recent enrollment. ? For 20 samples, supporting documentation was not included in the file indicating the LEIE and EPLS databases were checked at least monthly during the enrollment period. ? For 20 samples, supporting documentation was not included in the file indicating the provider was categorized during screening as limited, moderate, or high risk. ? For 19 samples, a copy of the provider agreement was not included in the files. ? For 20 samples, supporting documentation was not included indicating a pre- or post-enrollment site visit was conducted as required for providers designated as moderate or high risk. ? For 11 samples, supporting documentation was not included indicating the provider disclosed the identity of any person who had been convicted of a criminal offense related to that person's involvement in any program under Medicare, Medicaid, or the Title XX services program since the inception of those programs. Questioned costs: NoneContext: See ?Condition.? Cause: HHSC does not have adequate procedures in place to ensure required documentation is obtained and maintained to comply with federal provider eligibility requirements. Effect: Failure to obtain and maintain adequate documentation during the provider screening and enrollment process may result in otherwise ineligible or fraudulent providers receiving Medicaid funds. Repeat Finding: 2021-008 Recommendation: HHSC should implement controls to ensure: ? Documentation is maintained for at least the length of the providers? current enrollment period or three years, whichever is greater in accordance with 2 CFR 200.334. ? Provider licenses are verified during enrollment. ? Providers are re-enrolled at least once every five years. ? Provider agreements are obtained, and the proper disclosures are made. ? Providers are categorized according to risk level and pre- and post-enrollment site visits are conducted as required for those deemed moderate or high risk. ? Relevant federal databases are checked during initial enrollment and at least monthly for all providers currently enrolled in Medicaid. Views of responsible officials: Agree.
2022-014 Special Tests and Provisions ? Provider Eligibility ? Lack of Documentation Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Medicaid Cluster ALN: 93.775, 93.777, 93.778 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 2105TX5ADM, 2105TX5MAP, 2105TXIMPL, 2105TXINCT; 2205TX5ADM, 2205TX5MAP, 2205TXIMPL, 2205TXINCT October 1, 2020 ? September 30, 2021, October 1, 2021 ? September 30, 2022 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria or specific requirement: Per 2 CFR 200.303, Health and Human Services Commission (HHSC) must establish and maintain effective internal controls over federal awards that provide reasonable assurance they are managing federal awards in compliance with federal statutes, regulations, and the provisions of contracts or grant agreements that could have a material effect on each of its federal programs. Per 2 CFR 200.334, 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. Federal awarding agencies and pass-through entities must not impose any other record retention requirements upon non-Federal entities. In order to comply with federal provider eligibility requirements, HHSC must adhere to various subsections of 42 CFR Section 455 including but not limited to: ? 455.104 ? HHSC must require that disclosing entities, fiscal agents, and managed care entities provide the following disclosures: ? The name and address of any person (individual or corporation) with an ownership or control interest in the disclosing entity, fiscal agent, or managed care entity. The address for corporate entities must include as applicable primary business address, every business location, and P.O. Box address. ? Date of birth and Social Security Number (in the case of an individual) ? Other tax identification number (in the case of a corporation) with an ownership or control interest in the disclosing entity (or fiscal agent or managed care entity) or in any subcontractor in which the disclosing entity (or fiscal agent or managed care entity) has a 5 percent or more interest. ? Whether the person (individual or corporation) with an ownership or control interest in the disclosing entity (or fiscal agent or managed care entity) is related to another person with ownership or control interest in the disclosing entity as a spouse, parent, child, or sibling; or whether the person (individual or corporation) with an ownership or control interest in any subcontractor in which the disclosing entity (or fiscal agent or managed care entity) has a 5 percent or more interest is related to another person with ownership or control interest in the disclosing entity as a spouse, parent, child, or sibling. ? The name of any other disclosing entity (or fiscal agent or managed care entity) in which an owner of the disclosing entity (or fiscal agent or managed care entity) has an ownership or control interest. ? The name, address, date of birth, and Social Security Number of any managing employee of the disclosing entity (or fiscal agent or managed care entity). ? 455.105 ? HHSC must enter into an agreement with each provider under which the provider agrees to furnish to it the following information related to business transactions within 35 days of request: ? The ownership of any subcontractor with whom the provider has had business transactions totaling more than $25,000 during the 12-month period ending on the date of the request; and ? Any significant business transactions between the provider and any wholly owned supplier, or between the provider and any subcontractor, during the 5-year period ending on the date of the request. ? 455.106 ? Before HHSC enters into or renews a provider agreement, or at any time upon written request by HHSC, the provider must disclose to HHSC the identity of any person who: ? Has ownership or control interest in the provider, or is an agent or managing employee of the provider; and ? Has been convicted of a criminal offense related to that person's involvement in any program under Medicare, Medicaid, or the title XX services program since the inception of those programs. ? 455.410 ? HHSC must require all ordering or referring physicians or other professionals providing services under the State plan or under a waiver of the plan to be enrolled as participating providers. ? 455.412 ? HHSC must: ? Have a method for verifying that any provider purporting to be licensed in accordance with the laws of any State is licensed by such State ? Confirm that the provider's license has not expired and that there are no current limitations on the provider's license ? 455.414 ? HHSC must revalidate the enrollment of all providers regardless of provider type at least every five years. ? 455.432 ? HHSC must: ? Conduct pre-enrollment and post-enrollment site visits of providers who are designated as ?moderate? or ?high? categorical risks to the Medicaid program. ? Require any enrolled provider to permit CMS, its agents, its designated contractors, or HHSC to conduct unannounced on-site inspections of any and all provider locations. ? 455.434 ? HHSC must: ? Require providers to consent to criminal background checks including fingerprinting when required to do so under State law or by the level of screening based on risk of fraud, waste or abuse as determined for that category of provider.? Establish categorical risk levels for providers and provider categories who pose an increased financial risk of fraud, waste or abuse to the Medicaid program. ? Upon HHSC determining that a provider, or a person with a 5 percent or more direct or indirect ownership interest in the provider, meets HHSC's criteria hereunder for criminal background checks as a ?high? risk to the Medicaid program, HHSC will require that each such provider or person submit fingerprints, in a form and manner to be determined by HHSC, within 30 days upon request from CMS or HHSC. ? 455.436 ? HHSC must confirm the identity and determine the exclusion status of providers and any person with an ownership or control interest or who is an agent or managing employee of the provider through routine checks of Federal databases. Upon enrollment and reenrollment, HHSC must check the Social Security Administration's Death Master File (SSADMF), the National Plan and Provider Enumeration System (NPPES), the List of Excluded Individuals/Entities (LEIE), the Excluded Parties List System (EPLS), and any such other databases as the Secretary may prescribe. During the period the provider is enrolled, HHSC must check the LEIE and EPLS no less frequently than monthly. ? 455.434 ? HHSC must screen all initial applications, including applications for a new practice location, and any applications received in response to a re-enrollment or revalidation of enrollment request based on a categorical risk level of ?limited,? ?moderate,? or ?high.? If a provider could fit within more than one risk level described in this section, the highest level of screening is applicable. Condition: Various departments within and contractors of HHSC are responsible for ensuring medical providers are properly licensed, screened, and enrolled in the Medicaid Program including Contract Administration and Provider Monitoring (CAPM), Access and Eligibility Services (AES), Procurement and Contracting Services, and the Texas Medicaid and Healthcare Partnership. Audit procedures included a review of 40 long-term care providers, which resulted in the following: ? For 11 samples, a copy of the completed Medicaid application was not included in the file. ? For 12 samples, enrollment of the provider was not completed within the last 5 years. ? For 20 samples, verification of the provider?s license was not included in the file. ? For 15 samples, required information on ownership and control was not disclosed. ? For 20 samples, supporting documentation was not included in the file indicating the SSADMF database was checked at the time of the most recent enrollment. ? For 16 samples, supporting documentation was not included in the file indicating the NPPES database was checked at the time of the most recent enrollment. ? For 11 samples, supporting documentation was not included in the file indicating the LEIE database was checked at the time of the most recent enrollment. ? For 14 samples, supporting documentation was not included in the file indicating the EPLS database was checked at the time of the most recent enrollment. ? For 20 samples, supporting documentation was not included in the file indicating the LEIE and EPLS databases were checked at least monthly during the enrollment period. ? For 20 samples, supporting documentation was not included in the file indicating the provider was categorized during screening as limited, moderate, or high risk. ? For 19 samples, a copy of the provider agreement was not included in the files. ? For 20 samples, supporting documentation was not included indicating a pre- or post-enrollment site visit was conducted as required for providers designated as moderate or high risk. ? For 11 samples, supporting documentation was not included indicating the provider disclosed the identity of any person who had been convicted of a criminal offense related to that person's involvement in any program under Medicare, Medicaid, or the Title XX services program since the inception of those programs. Questioned costs: NoneContext: See ?Condition.? Cause: HHSC does not have adequate procedures in place to ensure required documentation is obtained and maintained to comply with federal provider eligibility requirements. Effect: Failure to obtain and maintain adequate documentation during the provider screening and enrollment process may result in otherwise ineligible or fraudulent providers receiving Medicaid funds. Repeat Finding: 2021-008 Recommendation: HHSC should implement controls to ensure: ? Documentation is maintained for at least the length of the providers? current enrollment period or three years, whichever is greater in accordance with 2 CFR 200.334. ? Provider licenses are verified during enrollment. ? Providers are re-enrolled at least once every five years. ? Provider agreements are obtained, and the proper disclosures are made. ? Providers are categorized according to risk level and pre- and post-enrollment site visits are conducted as required for those deemed moderate or high risk. ? Relevant federal databases are checked during initial enrollment and at least monthly for all providers currently enrolled in Medicaid. Views of responsible officials: Agree.
Condition: The District has not retained transaction support for all expenditures related to federal programs. Auditor substantively tested 29 expenditures across all major programs noting that 10 items did not have proper supporting documentation. Criteria: 2 CFR 200.334. Cause of Condition: Records retention procedures were not sufficient to ensure fiscal year 2022 transactions were retained through October 2025. Effect of Condition: Records supporting expenditures of federal awards were not located. Consequently, the auditors could not adequately test these items. Questioned Cost: $ 35,017.55 Recommendation: Draft and adopt policies and procedures to ensure compliance with record retention requirements. Corrective Action Plan: The District will adopt updated record retention policies. Procedures will require all supporting documentation for federal expenditures to be retained for a minimum of five years after final closeout, in both electronic and hard-copy form. Contact Person: Grant Accounting Specialist Anticipated Completion Date: 01/31/2026
Assistance listing program: Education Stabilization Fund - Higher Education Emergency Relief Fund (HEERF) Assistance Listing Number: 84.425E / 84.425F Award identification number: P425F204999 / P425E205418 Award period: September 29, 2020 to June 30, 2023 and July 23, 2020 to May 23, 2022 Federal agency: U.S. Department of Education Pass-through entity: N/A Category: Internal Control / Compliance Finding Type: Material Weakness Compliance requirement: Reporting Condition and context For testing internal controls and compliance with reporting requirements applicable to the HEERF programs, we inquired the Institution about the internal controls and procedures for determining the criteria and methodology used in compiling and reporting the data to be included in the annual and quarterly special reports. We requested a copy of the annual report for the calendar year 2021 and the quarterly reports for the quarter ended on December 31, 2021 related to the institutional aid portion and the student aid portion. As part of our procedures, we tested the method of distribution of grants to ascertain consistency with the method that was actually employed by the Institution to distribute emergency financial aid grants to students. After our examination and tests performed, we noted the following: a) The methodology used to compile the information in the annual report was based on the funds drawdowns which were based on disbursements rather than the actual program expenditures for the Institutional aid funds in accordance with GAAP. b) After examination of the institutional aid portion expenditures amounts reported in the annual special report for the calendar year ended December 31, 2021 to the support provided by the Institution, we noted that the total of institutional annual expenditures was understated by $7,160. c) From the sample of enrollment statistical data selected for verification to the source documents and/or information we noted several differences and were unable to identify some of the information in the source documents in nineteen (19) out of a sample of thirty (30) statistical data lines examined in the annual special report. The exceptions were as follows: d) After examination of the quarterly special report of the student aid portion for the quarter ended December 31, 2021, we noted a difference in the Item #5: ?The total number of students who have received an Emergency Financial Aid Grant to students under the CARES (a)(1) subprogram and the CRRSAA and ARP (a)(1) subprograms?. The total of students that received assistance aid reported was 443; however, the number per the student aid payroll reports examined was 460. Additionally, no support was available to determine if the Institution was timely and accurate in publicly posting the quarterly Student Aid Portion Report selected for testing. e) In one out of a sample of forty (40) disbursements of financial aid to students (2.5%) we noted that the payment made did not agree with the Institution's fund distribution plan to prioritize students with financial need. The aid in excess disbursed to that student was $200. Criteria 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 own funds. In addition, the state's and the other non-Federal entity's 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 general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.302 (b) (2) to (4) establish that accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in ?? 200.328 and 200.329. If a Federal awarding agency requires reporting on an accrual basis from a recipient that maintains its records on other than an accrual basis, the recipient must not be required to establish an accrual accounting system. This recipient may develop accrual data for its reports on the basis of an analysis of the documentation on hand. Records that identify adequately the source and application of funds for federally-funded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income, and interest and be supported by source documentation. Effective control over, and accountability for, all funds, property, and other assets. 2 CFR 200.303 (a) to (d) establish that the non-Federal entity must: (a) Establish and maintain effective internal control over the Federal awards that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. 2 CFR 200.334 establishes that 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. Cause The cause of the deficiencies noted were due to the following situations: a) The source of information provided by the Institution related to the financial information was the G5 report. Such information is on a cash basis; therefore, financial information was not reported on an accrual basis of accounting which is the basis of accounting followed by the Institution. Additionally, the Institution did not appropriately design and maintained documentation and/or analysis performed to prepare and complete the financial information required to be reported in the quarterly and annual reports. b) Lack of recordkeeping controls and procedures to document and maintain the source of information used for the financial and statistical data required in the annual and quarterly special reports. c) The Institution used the student EFC per the ISIR/SAR available at the time of the distribution, even though, an ISIR with a valid EFC was not available since the student FAFSA application was selected for verification by USDE. After the Institution completed the verification the student EFC increased from 0 to 3676. Effect Noncompliance with the reporting requirements could lead to significant administrative actions by the grantor, including a reduction in the amounts to be awarded. It could also be interpreted as a failure to achieve the programs objectives. Questioned costs Likely questioned costs are less than $25,000. Identification as a Repeat Finding No repeated finding. Recommendation We recommend the Institution to establish adequate procedures and controls to ensure that financial and statistical data information is properly supported and detailed to allow adequate audit trail of the information. Establish adequate supervisory procedures to identify, in a reasonable period of time, deficiencies or possible deficiencies in the procedures or guidance established by management to ascertain that the Institution reports the information as required by grantors, and that accurate and adequate support is properly maintained. Views of Responsible Officials Refer to the Institutional comments included in the Corrective Action Plan.
Assistance listing program: Education Stabilization Fund - Higher Education Emergency Relief Fund (HEERF) Assistance Listing Number: 84.425F Award identification number: P425F204999 Award period: September 29, 2020 to June 30, 2023 Federal agency: U.S. Department of Education Pass-through entity: N/A Category: Internal Control / Compliance Finding Type: Material Weakness Compliance requirement: Allowed Cost / Cost Principles Condition and context In testing compliance and internal controls over cost allowability / cost principles, we selected a sample of ten (10) transactions which amounted to $445,522 of HEERF Institutional aid funds expenditures. Our sample was a statistically valid sample. During our expenditure test, we noted the following deficiencies: a) In one transaction of a sample of ten (10) disbursements (10%) the vendor quote was not available for examination. The transaction amounted to $5,899. The Institution indicated that they followed the micro purchase threshold of $10,000 as defined in 48CFR Part 2, subpart 2.1. However, this determination was not properly documented. b) In two (2) transactions of our sample (20%) the cost per quote did not agree with the amount of the invoice. The amount invoiced in excess of the quote cost was $1,090. c) In three (3) transactions of our sample (30%) we did not find documentation that the equipment was received (date and the employee who received the item). We inquired the Institution?s Management about this matter, and they explained that the Institution does not have a formal procedure or form to document the receipt of goods. Management confirmed and represented us that the items were properly received. d) In one transaction of our sample (10%) the expenditure was related to the amount of lost revenue claimed by the Institution in the fiscal year 2021-22. Upon examination of the Institution analysis, we noted that the lost revenue was not properly determined because the following situations: 1. For the loss of revenue calculation, the Institution used the unaudited figures for the fiscal year ended July 31, 2021. 2. We noted that the Institution considered in its analysis revenue that was not in accordance with the program guidelines (transactions that were not reimbursable under the HEERF grant program). 3. We noted that the lost revenue determined by the Institution was incorrectly determined (lost revenue claimed was understated by approximately $80,000) as result of the net effect of the deficiencies 1 and 2, above. Criteria 2 CFR 200.302 (b) (3) and (7) require records that identify adequately the source and application of funds for federally funded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income, and interest and be supported by source documentation. Written procedures for determining the allowability of costs in accordance with subpart E of this part and the terms and conditions of the Federal award. 2 CFR 200.303 (a) to (d) establish that the non-Federal entity must: (a) Establish and maintain effective internal control over the Federal awards that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. 2 CFR 200.400 (a) to (d) establish that the application of these cost principles is based on the fundamental premises that: (a) The non-Federal entity is responsible for the efficient and effective administration of the Federal award through the application of sound management practices. (b) The non-Federal entity assumes responsibility for administering Federal funds in a manner consistent with underlying agreements, program objectives, and the terms and conditions of the Federal award. (c) The non-Federal entity, in recognition of its own unique combination of staff, facilities, and experience, has the primary responsibility for employing whatever form of sound organization and management techniques may be necessary in order to assure proper and efficient administration of the Federal award. (d) The application of these cost principles should require no significant changes in the internal accounting policies and practices of the non-Federal entity. However, the accounting practices of the non-Federal entity must be consistent with these cost principles and support the accumulation of costs as required by the principles and must provide for adequate documentation to support costs charged to the Federal awards. 2 CFR 200.403, related to factors affecting allowability of cost, (c) and (g) establish that except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity, and be adequately documented. 2 CFR 200.404 establishes that a cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to: (a) whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award; (b) the restraints or requirements imposed by such factors as: sound business practices; arm's-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award; (c) market prices for comparable goods or services for the geographic area; (d) whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government; and (e) whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award's cost. 2 CFR 200.406 (a) establishes that applicable credits refer to those receipts or reduction-of-expenditure-type transactions that offset or reduce expense items allocable to the Federal awards as direct or indirect (F&A) costs. Examples of such transactions are: purchase discounts, rebates or allowances, recoveries or indemnities on losses, insurance refunds or rebates, and adjustments of overpayments or erroneous charges. To the extent that such credits accruing to or received by the non-Federal entity relate to allowable costs, they must be credited to the Federal award either as a cost reduction or cash refund, as appropriate. 2 CFR 200.334 establishes that 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 (a) establishes that 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 Higher Education Emergency Relief Fund (HEERF I, II, and III) Lost Revenue Frequently Asked Questions (FAQs) published on March 19, 2021, in question number four establishes that sources of lost revenue that are not reimbursable under the HEERF grant programs include the following: capital outlays associated with facilities related to athletics (including fees assessed for capital athletic facility construction), acquisition of real property (including bond revenue), contributions or donations to the institution, marketing or recruitment activities, revenue related to sectarian instruction or religious worship, alcohol sales, and investment income (including endowment and quasi-endowment revenue. Cause The cause of the deficiencies noted were the result of the following situations: a) Lack of written policies and procedures did not provide the Institution?s personnel responsible for the purchasing process a guidance on how to perform and document the purchase transactions under this federal program. b) The vendor invoice was not compared to the quote and no inquiries were made and/or documented explaining the cause of the difference. c) The Institution does not have formal and written procedures to document when materials and/or equipment are received by the Institution?s personnel. d) The Institution management did not consult or requested assistance from the Department of Education program coordinator to ascertain that the request was properly performed and to clarify questions related to the allowable revenue to be considered in the analysis. Also, the Institution failed to review the financial figures of the audited trial balance for 2021. Effect Noncompliance with the above-mentioned requirements could lead to administrative actions by the grantor. It could also be interpreted as a failure to manage federal awards in compliance with laws, regulations, and provisions of contracts and grant agreements. Also, the above conditions could result in the reimbursement of federal funds to the grantors for those disbursements not properly supported and reviewed by the Institution?s management. Questioned costs Refer to finding 2022-010. Identification as a Repeat Finding No repeated finding. Recommendations We recommend the Institution to establish adequate procedures and controls, which shall consider, among others, the following: ? Maintain adequate documentation to support the allowability of its expenditures. ? Purchases must be properly documented to provide the appropriate audit trail of the transactions and allow proper review of the transactions. Adequate documentation should be sufficient to explain the Institution?s analysis and determination. ? Improve its policies and procedures, and internal controls to incorporate the comparison of the vendor invoices with the quotes after the invoice is received to ascertain that expenses and liabilities are properly recorded. Instruct personnel of accounts payable to contact the vendor when discrepancies are identified and document in writing the inquiry performed, the results, and conclusions. ? Implement a formal process with receiving reports or checklist where upon receipt of equipment and/or materials purchased could detail description, amount received, date of receipt, and a reference to the invoice. Copies of the receiving reports and invoices should then be forwarded to the accounting department for processing. Payment of a vendor?s invoice should not be made unless a copy of a receiving report is attached. ? The Institution management should review the Loss of Revenue claims and/or analysis performed by any employee or consultant that was designated to perform such a task. The Institution?s management should verify and ascertain that the analysis performed using the Institution?s financial information agree with the Institution?s audited financial statements. ? The Institution?s management should consult with the US Department of Education program coordinator when questions or concerns arise, especially if management is not familiar with program regulations and/or the federal program is new. Views of Responsible Officials Refer to the Institutional comments included in the Corrective Action Plan.
Assistance listing program: Education Stabilization Fund - Higher Education Emergency Relief Fund (HEERF) Assistance Listing Number: 84.425F Award identification number: P425F204999 Award period: September 29, 2020 to June 30, 2023 Federal agency: U.S. Department of Education Pass-through entity: N/A Category: Internal Control / Compliance Finding Type: Material Weakness Compliance requirement: Earmarking Condition and context We inquired the Institution?s management on the amount of institutional funds assigned to: (a) implement evidence-based practices to monitor and suppress coronavirus in accordance with public health guidelines; and (b) conduct direct outreach to financial aid applicants about the opportunity to receive a financial aid adjustment due to the recent unemployment of a family member or independent student, or other circumstances, described in section 479A of the HEA, and how the Institution documented how the amount of the HEERF grant spent on these two required activities was reasonable and necessary given the unique needs and circumstances of the institution. However, this information was not available for our examination. Criteria The Higher Education Emergency Relief Fund III frequently asked questions published on May 11, 2021 and updated on May 24, 2021 and October 25, 2022 in questions number 21, 28 and 35, respectively, establish that the ARP has added two new required uses of HEERF III institutional portion grant funds for public and private nonprofit institutions. Namely, a portion of their institutional funds must: (a) implement evidence-based practices to monitor and suppress coronavirus in accordance with public health guidelines; and (b) conduct direct outreach to financial aid applicants about the opportunity to receive a financial aid adjustment due to the recent unemployment of a family member or independent student, or other circumstances, described in section 479A of the HEA. This provision of ARP requires institutions to use some of their ARP (a)(1) Institutional Portion funds to help fight the spread and transmission of COVID-19 on their campuses and among their student, faculty, and staff community members. This provision also applies to future ARP awards the Department will make under (a)(2) and (a)(3). It is critical that institutions take steps to prevent and mitigate the spread of coronavirus on their campuses and local communities. Institutions should document how they implemented these two required activities consistent with 2 CFR ? 200.334. Specifically, institutions should document (1) the strategies used to monitor and suppress COVID-19, (2) the evidence to support those strategies, (3) how those strategies were in accordance with public health guidelines, (4) the manner and extent of the direct outreach the institution conducted to financial aid applicants, and (5) how the amount of the HEERF grant spent on these two required activities was reasonable and necessary given the unique needs and circumstances of the institution. 2 CFR 200.303 (a) to (d) establish that the non-Federal entity must: (a) Establish and maintain effective internal control over the Federal awards that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. 2 CFR 200.334 establishes that 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. Cause The Institution?s management was not familiar with this requirement. Effect Noncompliance with the above-mentioned requirements could lead to administrative actions by the grantor. It could also be interpreted as a failure to manage federal awards in compliance with laws, regulations, and provisions of contracts and grant agreements. Questioned costs Unable to determine. Identification as a Repeat Finding No repeated finding. Recommendation We recommend that the Institution management review this compliance requirement and verify if the Institution assigned and expended funds related to these activities. It is important that the Institution management ascertain that expenditures identified comply with the characteristics and requirements as explained in the Higher Education Emergency Relief Fund III frequently asked questions published on May 11, 2021, as subsequently updated. Also, the Institution must document and maintain an audit trail of the transactions incurred to comply with this requirement. Views of Responsible Officials Refer to the Institutional comments included in the Corrective Action Plan.
Assistance listing program: Education Stabilization Fund - Higher Education Emergency Relief Fund (HEERF) Assistance Listing Number: 84.425F Award identification number: P425F204999 Award period: September 29, 2020 to June 30, 2023 Federal agency: U.S. Department of Education Pass-through entity: N/A Category: Internal Control / Compliance Finding Type: Material Weakness Compliance requirement: Procurement, and suspension and debarment Condition and context In testing compliance and internal controls over the procurement, and suspension and debarment requirement, we tested the procurement documentation related to the expenditures selected for the allowable cost / cost principles test (see Finding No. 2022-006). Of the ten (10) transactions selected, nine (9) transactions required compliance with this requirement. We noted that those nine (9) transactions, which amounted to $164,592, were related to seven (7) procurement transactions. Our sample was not a statistically valid sample. During our test, we noted the following deficiencies: a) In one of seven (7) procurement transactions tested (14%), no quotes were available for examination. The Institution indicated that they followed the micro purchase threshold of $10,000 as defined in 48CFR Part 2, subpart 2.1. However, this determination was not properly documented. b) In one of seven (7) procurement transactions tested (14%), only two quotes were available for examination. As per inquiry to the Institution?s management no other quotes were requested. c) In five of seven (7) procurement transactions tested (72%), only one quote was available for examination. As per inquiry to the Institution?s management no other quotes were requested. Condition and context d) For five (5) of the seven (7) procurement transactions tested (71%), a suspension and debarred verification requirement was applicable. For 100% of those five (5) transactions no evidence was provided that the Institution verified the contractors were not debarred, suspended, or otherwise excluded (2 CFR sections 200.212 and 200.318(h); 2 CFR section 180.300; 48 CFR section 52.209-6). However, on March 20, 2023 we performed an inquiry in the Sam system and no records of exclusion were found for those contractors. Criteria 2 CFR 200.303 (a) to (d) establish that the non-Federal entity must: (a) Establish and maintain effective internal control over the Federal awards that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. 2 CFR 200.318 (i) establishes that the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. 2 CFR 200.319 (a) establishes that all procurement transactions for the acquisition of property or services required under a Federal award must be conducted in a manner providing full and open competition consistent with the standards of this section and ? 200.320. 2 CFR 200.319 (d) establishes that the non-Federal entity must have written procedures for procurement transactions. These procedures must ensure that all solicitations: incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured. Such description must not, in competitive procurements, contain features which unduly restrict competition. The description may include a statement of the qualitative nature of the material, product, or service to be procured and, when necessary, must set forth those minimum essential characteristics and standards to which it must conform if it is to satisfy its intended use. Detailed product specifications should be avoided if at all possible. When it is impractical or uneconomical to make a clear and accurate description of the technical requirements, a ?brand name or equivalent? description may be used as a means to define the performance or other salient requirements of procurement. The specific features of the named brand which must be met by offers must be clearly stated; and identify all requirements which the offerors must fulfill and all other factors to be used in evaluating bids or proposals. 2 CFR 200.319 (f) establishes that noncompetitive procurements can only be awarded in accordance with ? 200.320(c). 2 CFR 200.320 establishes that the non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and ?? 200.317, 200.318, and 200.319 for any of the methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. 2 CFR 200.320 (a) (1) (ii) and (a) (2) (i) establish that micro-purchases may be awarded without soliciting competitive price or rate quotations if the non-Federal entity considers the price to be reasonable based on research, experience, purchase history or other information and documents it files accordingly. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. 2 CFR 200.320 (c) establishes that there are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) the acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (2) the item is available only from a single source; (3) the public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) the Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) after solicitation of a number of sources, competition is determined inadequate. 2 CFR 200.334 establishes that 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 200.318 (h) establishes that the non-Federal entity must award contracts only to responsible contractors possessing the ability to perform successfully under the terms and conditions of a proposed procurement. Consideration will be given to such matters as contractor integrity, compliance with public policy, record of past performance, and financial and technical resources. 2 CFR 200.214 establishes that non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. The regulations in 2 CFR part 180 restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. Cause Lack of written policies and procedures did not provide the Institution?s personnel responsible for the procurement process a guidance on how to perform and document the procurement transactions under this federal program. Also, the failure to implement adequate internal control procedures, such as thorough management review, which should detect and correct, on a timely basis, instances where controls are not being followed. Effect Noncompliance with the above-mentioned requirements could lead to administrative actions by the grantor. It could also be interpreted as a failure to manage federal awards in compliance with laws, regulations, and provisions of contracts and grant agreements. Also, above conditions could result in the reimbursement of federal funds to the grantors for those transactions not properly supported and/or in compliance with regulations. Questioned costs $158,693 Identification as a Repeat Finding No repeated finding. Recommendations The Institution should verify that its policies and procedures are in accordance with federal regulations requirements. In addition, the Institution should develop written procedures before entering into new federal programs or before incurring transactions subject to compliance with federal regulations to prevent and reduce the risk of non-compliance. Also, all procurement transactions must be properly documented to provide the appropriate audit trail of the transactions and allow proper review of the transactions. Adequate documentation should be sufficient to explain the Institution?s analysis and determination. The Institution?s personnel responsible for the management and processing of procurement transactions subject to federal regulations must be provided adequate training and supervision. Views of Responsible Officials Refer to the Institutional comments included in the Corrective Action Plan.
Assistance listing program: Education Stabilization Fund - Higher Education Emergency Relief Fund (HEERF) Assistance Listing Number: 84.425E / 84.425F Award identification number: P425F204999 / P425E205418 Award period: September 29, 2020 to June 30, 2023 and July 23, 2020 to May 23, 2022 Federal agency: U.S. Department of Education Pass-through entity: N/A Category: Internal Control / Compliance Finding Type: Material Weakness Compliance requirement: Reporting Condition and context For testing internal controls and compliance with reporting requirements applicable to the HEERF programs, we inquired the Institution about the internal controls and procedures for determining the criteria and methodology used in compiling and reporting the data to be included in the annual and quarterly special reports. We requested a copy of the annual report for the calendar year 2021 and the quarterly reports for the quarter ended on December 31, 2021 related to the institutional aid portion and the student aid portion. As part of our procedures, we tested the method of distribution of grants to ascertain consistency with the method that was actually employed by the Institution to distribute emergency financial aid grants to students. After our examination and tests performed, we noted the following: a) The methodology used to compile the information in the annual report was based on the funds drawdowns which were based on disbursements rather than the actual program expenditures for the Institutional aid funds in accordance with GAAP. b) After examination of the institutional aid portion expenditures amounts reported in the annual special report for the calendar year ended December 31, 2021 to the support provided by the Institution, we noted that the total of institutional annual expenditures was understated by $7,160. c) From the sample of enrollment statistical data selected for verification to the source documents and/or information we noted several differences and were unable to identify some of the information in the source documents in nineteen (19) out of a sample of thirty (30) statistical data lines examined in the annual special report. The exceptions were as follows: d) After examination of the quarterly special report of the student aid portion for the quarter ended December 31, 2021, we noted a difference in the Item #5: ?The total number of students who have received an Emergency Financial Aid Grant to students under the CARES (a)(1) subprogram and the CRRSAA and ARP (a)(1) subprograms?. The total of students that received assistance aid reported was 443; however, the number per the student aid payroll reports examined was 460. Additionally, no support was available to determine if the Institution was timely and accurate in publicly posting the quarterly Student Aid Portion Report selected for testing. e) In one out of a sample of forty (40) disbursements of financial aid to students (2.5%) we noted that the payment made did not agree with the Institution's fund distribution plan to prioritize students with financial need. The aid in excess disbursed to that student was $200. Criteria 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 own funds. In addition, the state's and the other non-Federal entity's 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 general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.302 (b) (2) to (4) establish that accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in ?? 200.328 and 200.329. If a Federal awarding agency requires reporting on an accrual basis from a recipient that maintains its records on other than an accrual basis, the recipient must not be required to establish an accrual accounting system. This recipient may develop accrual data for its reports on the basis of an analysis of the documentation on hand. Records that identify adequately the source and application of funds for federally-funded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income, and interest and be supported by source documentation. Effective control over, and accountability for, all funds, property, and other assets. 2 CFR 200.303 (a) to (d) establish that the non-Federal entity must: (a) Establish and maintain effective internal control over the Federal awards that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. 2 CFR 200.334 establishes that 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. Cause The cause of the deficiencies noted were due to the following situations: a) The source of information provided by the Institution related to the financial information was the G5 report. Such information is on a cash basis; therefore, financial information was not reported on an accrual basis of accounting which is the basis of accounting followed by the Institution. Additionally, the Institution did not appropriately design and maintained documentation and/or analysis performed to prepare and complete the financial information required to be reported in the quarterly and annual reports. b) Lack of recordkeeping controls and procedures to document and maintain the source of information used for the financial and statistical data required in the annual and quarterly special reports. c) The Institution used the student EFC per the ISIR/SAR available at the time of the distribution, even though, an ISIR with a valid EFC was not available since the student FAFSA application was selected for verification by USDE. After the Institution completed the verification the student EFC increased from 0 to 3676. Effect Noncompliance with the reporting requirements could lead to significant administrative actions by the grantor, including a reduction in the amounts to be awarded. It could also be interpreted as a failure to achieve the programs objectives. Questioned costs Likely questioned costs are less than $25,000. Identification as a Repeat Finding No repeated finding. Recommendation We recommend the Institution to establish adequate procedures and controls to ensure that financial and statistical data information is properly supported and detailed to allow adequate audit trail of the information. Establish adequate supervisory procedures to identify, in a reasonable period of time, deficiencies or possible deficiencies in the procedures or guidance established by management to ascertain that the Institution reports the information as required by grantors, and that accurate and adequate support is properly maintained. Views of Responsible Officials Refer to the Institutional comments included in the Corrective Action Plan.
Assistance listing program: Education Stabilization Fund - Higher Education Emergency Relief Fund (HEERF) Assistance Listing Number: 84.425E / 84.425F Award identification number: P425F204999 / P425E205418 Award period: September 29, 2020 to June 30, 2023 and July 23, 2020 to May 23, 2022 Federal agency: U.S. Department of Education Pass-through entity: N/A Category: Internal Control / Compliance Finding Type: Material Weakness Compliance requirement: Reporting Condition and context For testing internal controls and compliance with reporting requirements applicable to the HEERF programs, we inquired the Institution about the internal controls and procedures for determining the criteria and methodology used in compiling and reporting the data to be included in the annual and quarterly special reports. We requested a copy of the annual report for the calendar year 2021 and the quarterly reports for the quarter ended on December 31, 2021 related to the institutional aid portion and the student aid portion. As part of our procedures, we tested the method of distribution of grants to ascertain consistency with the method that was actually employed by the Institution to distribute emergency financial aid grants to students. After our examination and tests performed, we noted the following: a) The methodology used to compile the information in the annual report was based on the funds drawdowns which were based on disbursements rather than the actual program expenditures for the Institutional aid funds in accordance with GAAP. b) After examination of the institutional aid portion expenditures amounts reported in the annual special report for the calendar year ended December 31, 2021 to the support provided by the Institution, we noted that the total of institutional annual expenditures was understated by $7,160. c) From the sample of enrollment statistical data selected for verification to the source documents and/or information we noted several differences and were unable to identify some of the information in the source documents in nineteen (19) out of a sample of thirty (30) statistical data lines examined in the annual special report. The exceptions were as follows: d) After examination of the quarterly special report of the student aid portion for the quarter ended December 31, 2021, we noted a difference in the Item #5: ?The total number of students who have received an Emergency Financial Aid Grant to students under the CARES (a)(1) subprogram and the CRRSAA and ARP (a)(1) subprograms?. The total of students that received assistance aid reported was 443; however, the number per the student aid payroll reports examined was 460. Additionally, no support was available to determine if the Institution was timely and accurate in publicly posting the quarterly Student Aid Portion Report selected for testing. e) In one out of a sample of forty (40) disbursements of financial aid to students (2.5%) we noted that the payment made did not agree with the Institution's fund distribution plan to prioritize students with financial need. The aid in excess disbursed to that student was $200. Criteria 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 own funds. In addition, the state's and the other non-Federal entity's 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 general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.302 (b) (2) to (4) establish that accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in ?? 200.328 and 200.329. If a Federal awarding agency requires reporting on an accrual basis from a recipient that maintains its records on other than an accrual basis, the recipient must not be required to establish an accrual accounting system. This recipient may develop accrual data for its reports on the basis of an analysis of the documentation on hand. Records that identify adequately the source and application of funds for federally-funded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income, and interest and be supported by source documentation. Effective control over, and accountability for, all funds, property, and other assets. 2 CFR 200.303 (a) to (d) establish that the non-Federal entity must: (a) Establish and maintain effective internal control over the Federal awards that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. 2 CFR 200.334 establishes that 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. Cause The cause of the deficiencies noted were due to the following situations: a) The source of information provided by the Institution related to the financial information was the G5 report. Such information is on a cash basis; therefore, financial information was not reported on an accrual basis of accounting which is the basis of accounting followed by the Institution. Additionally, the Institution did not appropriately design and maintained documentation and/or analysis performed to prepare and complete the financial information required to be reported in the quarterly and annual reports. b) Lack of recordkeeping controls and procedures to document and maintain the source of information used for the financial and statistical data required in the annual and quarterly special reports. c) The Institution used the student EFC per the ISIR/SAR available at the time of the distribution, even though, an ISIR with a valid EFC was not available since the student FAFSA application was selected for verification by USDE. After the Institution completed the verification the student EFC increased from 0 to 3676. Effect Noncompliance with the reporting requirements could lead to significant administrative actions by the grantor, including a reduction in the amounts to be awarded. It could also be interpreted as a failure to achieve the programs objectives. Questioned costs Likely questioned costs are less than $25,000. Identification as a Repeat Finding No repeated finding. Recommendation We recommend the Institution to establish adequate procedures and controls to ensure that financial and statistical data information is properly supported and detailed to allow adequate audit trail of the information. Establish adequate supervisory procedures to identify, in a reasonable period of time, deficiencies or possible deficiencies in the procedures or guidance established by management to ascertain that the Institution reports the information as required by grantors, and that accurate and adequate support is properly maintained. Views of Responsible Officials Refer to the Institutional comments included in the Corrective Action Plan.
Assistance listing program: Education Stabilization Fund - Higher Education Emergency Relief Fund (HEERF) Assistance Listing Number: 84.425F Award identification number: P425F204999 Award period: September 29, 2020 to June 30, 2023 Federal agency: U.S. Department of Education Pass-through entity: N/A Category: Internal Control / Compliance Finding Type: Material Weakness Compliance requirement: Allowed Cost / Cost Principles Condition and context In testing compliance and internal controls over cost allowability / cost principles, we selected a sample of ten (10) transactions which amounted to $445,522 of HEERF Institutional aid funds expenditures. Our sample was a statistically valid sample. During our expenditure test, we noted the following deficiencies: a) In one transaction of a sample of ten (10) disbursements (10%) the vendor quote was not available for examination. The transaction amounted to $5,899. The Institution indicated that they followed the micro purchase threshold of $10,000 as defined in 48CFR Part 2, subpart 2.1. However, this determination was not properly documented. b) In two (2) transactions of our sample (20%) the cost per quote did not agree with the amount of the invoice. The amount invoiced in excess of the quote cost was $1,090. c) In three (3) transactions of our sample (30%) we did not find documentation that the equipment was received (date and the employee who received the item). We inquired the Institution?s Management about this matter, and they explained that the Institution does not have a formal procedure or form to document the receipt of goods. Management confirmed and represented us that the items were properly received. d) In one transaction of our sample (10%) the expenditure was related to the amount of lost revenue claimed by the Institution in the fiscal year 2021-22. Upon examination of the Institution analysis, we noted that the lost revenue was not properly determined because the following situations: 1. For the loss of revenue calculation, the Institution used the unaudited figures for the fiscal year ended July 31, 2021. 2. We noted that the Institution considered in its analysis revenue that was not in accordance with the program guidelines (transactions that were not reimbursable under the HEERF grant program). 3. We noted that the lost revenue determined by the Institution was incorrectly determined (lost revenue claimed was understated by approximately $80,000) as result of the net effect of the deficiencies 1 and 2, above. Criteria 2 CFR 200.302 (b) (3) and (7) require records that identify adequately the source and application of funds for federally funded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income, and interest and be supported by source documentation. Written procedures for determining the allowability of costs in accordance with subpart E of this part and the terms and conditions of the Federal award. 2 CFR 200.303 (a) to (d) establish that the non-Federal entity must: (a) Establish and maintain effective internal control over the Federal awards that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. 2 CFR 200.400 (a) to (d) establish that the application of these cost principles is based on the fundamental premises that: (a) The non-Federal entity is responsible for the efficient and effective administration of the Federal award through the application of sound management practices. (b) The non-Federal entity assumes responsibility for administering Federal funds in a manner consistent with underlying agreements, program objectives, and the terms and conditions of the Federal award. (c) The non-Federal entity, in recognition of its own unique combination of staff, facilities, and experience, has the primary responsibility for employing whatever form of sound organization and management techniques may be necessary in order to assure proper and efficient administration of the Federal award. (d) The application of these cost principles should require no significant changes in the internal accounting policies and practices of the non-Federal entity. However, the accounting practices of the non-Federal entity must be consistent with these cost principles and support the accumulation of costs as required by the principles and must provide for adequate documentation to support costs charged to the Federal awards. 2 CFR 200.403, related to factors affecting allowability of cost, (c) and (g) establish that except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity, and be adequately documented. 2 CFR 200.404 establishes that a cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to: (a) whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award; (b) the restraints or requirements imposed by such factors as: sound business practices; arm's-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award; (c) market prices for comparable goods or services for the geographic area; (d) whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government; and (e) whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award's cost. 2 CFR 200.406 (a) establishes that applicable credits refer to those receipts or reduction-of-expenditure-type transactions that offset or reduce expense items allocable to the Federal awards as direct or indirect (F&A) costs. Examples of such transactions are: purchase discounts, rebates or allowances, recoveries or indemnities on losses, insurance refunds or rebates, and adjustments of overpayments or erroneous charges. To the extent that such credits accruing to or received by the non-Federal entity relate to allowable costs, they must be credited to the Federal award either as a cost reduction or cash refund, as appropriate. 2 CFR 200.334 establishes that 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 (a) establishes that 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 Higher Education Emergency Relief Fund (HEERF I, II, and III) Lost Revenue Frequently Asked Questions (FAQs) published on March 19, 2021, in question number four establishes that sources of lost revenue that are not reimbursable under the HEERF grant programs include the following: capital outlays associated with facilities related to athletics (including fees assessed for capital athletic facility construction), acquisition of real property (including bond revenue), contributions or donations to the institution, marketing or recruitment activities, revenue related to sectarian instruction or religious worship, alcohol sales, and investment income (including endowment and quasi-endowment revenue. Cause The cause of the deficiencies noted were the result of the following situations: a) Lack of written policies and procedures did not provide the Institution?s personnel responsible for the purchasing process a guidance on how to perform and document the purchase transactions under this federal program. b) The vendor invoice was not compared to the quote and no inquiries were made and/or documented explaining the cause of the difference. c) The Institution does not have formal and written procedures to document when materials and/or equipment are received by the Institution?s personnel. d) The Institution management did not consult or requested assistance from the Department of Education program coordinator to ascertain that the request was properly performed and to clarify questions related to the allowable revenue to be considered in the analysis. Also, the Institution failed to review the financial figures of the audited trial balance for 2021. Effect Noncompliance with the above-mentioned requirements could lead to administrative actions by the grantor. It could also be interpreted as a failure to manage federal awards in compliance with laws, regulations, and provisions of contracts and grant agreements. Also, the above conditions could result in the reimbursement of federal funds to the grantors for those disbursements not properly supported and reviewed by the Institution?s management. Questioned costs Refer to finding 2022-010. Identification as a Repeat Finding No repeated finding. Recommendations We recommend the Institution to establish adequate procedures and controls, which shall consider, among others, the following: ? Maintain adequate documentation to support the allowability of its expenditures. ? Purchases must be properly documented to provide the appropriate audit trail of the transactions and allow proper review of the transactions. Adequate documentation should be sufficient to explain the Institution?s analysis and determination. ? Improve its policies and procedures, and internal controls to incorporate the comparison of the vendor invoices with the quotes after the invoice is received to ascertain that expenses and liabilities are properly recorded. Instruct personnel of accounts payable to contact the vendor when discrepancies are identified and document in writing the inquiry performed, the results, and conclusions. ? Implement a formal process with receiving reports or checklist where upon receipt of equipment and/or materials purchased could detail description, amount received, date of receipt, and a reference to the invoice. Copies of the receiving reports and invoices should then be forwarded to the accounting department for processing. Payment of a vendor?s invoice should not be made unless a copy of a receiving report is attached. ? The Institution management should review the Loss of Revenue claims and/or analysis performed by any employee or consultant that was designated to perform such a task. The Institution?s management should verify and ascertain that the analysis performed using the Institution?s financial information agree with the Institution?s audited financial statements. ? The Institution?s management should consult with the US Department of Education program coordinator when questions or concerns arise, especially if management is not familiar with program regulations and/or the federal program is new. Views of Responsible Officials Refer to the Institutional comments included in the Corrective Action Plan.
Assistance listing program: Education Stabilization Fund - Higher Education Emergency Relief Fund (HEERF) Assistance Listing Number: 84.425F Award identification number: P425F204999 Award period: September 29, 2020 to June 30, 2023 Federal agency: U.S. Department of Education Pass-through entity: N/A Category: Internal Control / Compliance Finding Type: Material Weakness Compliance requirement: Earmarking Condition and context We inquired the Institution?s management on the amount of institutional funds assigned to: (a) implement evidence-based practices to monitor and suppress coronavirus in accordance with public health guidelines; and (b) conduct direct outreach to financial aid applicants about the opportunity to receive a financial aid adjustment due to the recent unemployment of a family member or independent student, or other circumstances, described in section 479A of the HEA, and how the Institution documented how the amount of the HEERF grant spent on these two required activities was reasonable and necessary given the unique needs and circumstances of the institution. However, this information was not available for our examination. Criteria The Higher Education Emergency Relief Fund III frequently asked questions published on May 11, 2021 and updated on May 24, 2021 and October 25, 2022 in questions number 21, 28 and 35, respectively, establish that the ARP has added two new required uses of HEERF III institutional portion grant funds for public and private nonprofit institutions. Namely, a portion of their institutional funds must: (a) implement evidence-based practices to monitor and suppress coronavirus in accordance with public health guidelines; and (b) conduct direct outreach to financial aid applicants about the opportunity to receive a financial aid adjustment due to the recent unemployment of a family member or independent student, or other circumstances, described in section 479A of the HEA. This provision of ARP requires institutions to use some of their ARP (a)(1) Institutional Portion funds to help fight the spread and transmission of COVID-19 on their campuses and among their student, faculty, and staff community members. This provision also applies to future ARP awards the Department will make under (a)(2) and (a)(3). It is critical that institutions take steps to prevent and mitigate the spread of coronavirus on their campuses and local communities. Institutions should document how they implemented these two required activities consistent with 2 CFR ? 200.334. Specifically, institutions should document (1) the strategies used to monitor and suppress COVID-19, (2) the evidence to support those strategies, (3) how those strategies were in accordance with public health guidelines, (4) the manner and extent of the direct outreach the institution conducted to financial aid applicants, and (5) how the amount of the HEERF grant spent on these two required activities was reasonable and necessary given the unique needs and circumstances of the institution. 2 CFR 200.303 (a) to (d) establish that the non-Federal entity must: (a) Establish and maintain effective internal control over the Federal awards that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. 2 CFR 200.334 establishes that 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. Cause The Institution?s management was not familiar with this requirement. Effect Noncompliance with the above-mentioned requirements could lead to administrative actions by the grantor. It could also be interpreted as a failure to manage federal awards in compliance with laws, regulations, and provisions of contracts and grant agreements. Questioned costs Unable to determine. Identification as a Repeat Finding No repeated finding. Recommendation We recommend that the Institution management review this compliance requirement and verify if the Institution assigned and expended funds related to these activities. It is important that the Institution management ascertain that expenditures identified comply with the characteristics and requirements as explained in the Higher Education Emergency Relief Fund III frequently asked questions published on May 11, 2021, as subsequently updated. Also, the Institution must document and maintain an audit trail of the transactions incurred to comply with this requirement. Views of Responsible Officials Refer to the Institutional comments included in the Corrective Action Plan.
Assistance listing program: Education Stabilization Fund - Higher Education Emergency Relief Fund (HEERF) Assistance Listing Number: 84.425F Award identification number: P425F204999 Award period: September 29, 2020 to June 30, 2023 Federal agency: U.S. Department of Education Pass-through entity: N/A Category: Internal Control / Compliance Finding Type: Material Weakness Compliance requirement: Procurement, and suspension and debarment Condition and context In testing compliance and internal controls over the procurement, and suspension and debarment requirement, we tested the procurement documentation related to the expenditures selected for the allowable cost / cost principles test (see Finding No. 2022-006). Of the ten (10) transactions selected, nine (9) transactions required compliance with this requirement. We noted that those nine (9) transactions, which amounted to $164,592, were related to seven (7) procurement transactions. Our sample was not a statistically valid sample. During our test, we noted the following deficiencies: a) In one of seven (7) procurement transactions tested (14%), no quotes were available for examination. The Institution indicated that they followed the micro purchase threshold of $10,000 as defined in 48CFR Part 2, subpart 2.1. However, this determination was not properly documented. b) In one of seven (7) procurement transactions tested (14%), only two quotes were available for examination. As per inquiry to the Institution?s management no other quotes were requested. c) In five of seven (7) procurement transactions tested (72%), only one quote was available for examination. As per inquiry to the Institution?s management no other quotes were requested. Condition and context d) For five (5) of the seven (7) procurement transactions tested (71%), a suspension and debarred verification requirement was applicable. For 100% of those five (5) transactions no evidence was provided that the Institution verified the contractors were not debarred, suspended, or otherwise excluded (2 CFR sections 200.212 and 200.318(h); 2 CFR section 180.300; 48 CFR section 52.209-6). However, on March 20, 2023 we performed an inquiry in the Sam system and no records of exclusion were found for those contractors. Criteria 2 CFR 200.303 (a) to (d) establish that the non-Federal entity must: (a) Establish and maintain effective internal control over the Federal awards that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. 2 CFR 200.318 (i) establishes that the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. 2 CFR 200.319 (a) establishes that all procurement transactions for the acquisition of property or services required under a Federal award must be conducted in a manner providing full and open competition consistent with the standards of this section and ? 200.320. 2 CFR 200.319 (d) establishes that the non-Federal entity must have written procedures for procurement transactions. These procedures must ensure that all solicitations: incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured. Such description must not, in competitive procurements, contain features which unduly restrict competition. The description may include a statement of the qualitative nature of the material, product, or service to be procured and, when necessary, must set forth those minimum essential characteristics and standards to which it must conform if it is to satisfy its intended use. Detailed product specifications should be avoided if at all possible. When it is impractical or uneconomical to make a clear and accurate description of the technical requirements, a ?brand name or equivalent? description may be used as a means to define the performance or other salient requirements of procurement. The specific features of the named brand which must be met by offers must be clearly stated; and identify all requirements which the offerors must fulfill and all other factors to be used in evaluating bids or proposals. 2 CFR 200.319 (f) establishes that noncompetitive procurements can only be awarded in accordance with ? 200.320(c). 2 CFR 200.320 establishes that the non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and ?? 200.317, 200.318, and 200.319 for any of the methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. 2 CFR 200.320 (a) (1) (ii) and (a) (2) (i) establish that micro-purchases may be awarded without soliciting competitive price or rate quotations if the non-Federal entity considers the price to be reasonable based on research, experience, purchase history or other information and documents it files accordingly. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. 2 CFR 200.320 (c) establishes that there are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) the acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (2) the item is available only from a single source; (3) the public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) the Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) after solicitation of a number of sources, competition is determined inadequate. 2 CFR 200.334 establishes that 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 200.318 (h) establishes that the non-Federal entity must award contracts only to responsible contractors possessing the ability to perform successfully under the terms and conditions of a proposed procurement. Consideration will be given to such matters as contractor integrity, compliance with public policy, record of past performance, and financial and technical resources. 2 CFR 200.214 establishes that non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. The regulations in 2 CFR part 180 restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. Cause Lack of written policies and procedures did not provide the Institution?s personnel responsible for the procurement process a guidance on how to perform and document the procurement transactions under this federal program. Also, the failure to implement adequate internal control procedures, such as thorough management review, which should detect and correct, on a timely basis, instances where controls are not being followed. Effect Noncompliance with the above-mentioned requirements could lead to administrative actions by the grantor. It could also be interpreted as a failure to manage federal awards in compliance with laws, regulations, and provisions of contracts and grant agreements. Also, above conditions could result in the reimbursement of federal funds to the grantors for those transactions not properly supported and/or in compliance with regulations. Questioned costs $158,693 Identification as a Repeat Finding No repeated finding. Recommendations The Institution should verify that its policies and procedures are in accordance with federal regulations requirements. In addition, the Institution should develop written procedures before entering into new federal programs or before incurring transactions subject to compliance with federal regulations to prevent and reduce the risk of non-compliance. Also, all procurement transactions must be properly documented to provide the appropriate audit trail of the transactions and allow proper review of the transactions. Adequate documentation should be sufficient to explain the Institution?s analysis and determination. The Institution?s personnel responsible for the management and processing of procurement transactions subject to federal regulations must be provided adequate training and supervision. Views of Responsible Officials Refer to the Institutional comments included in the Corrective Action Plan.
Assistance listing program: Education Stabilization Fund - Higher Education Emergency Relief Fund (HEERF) Assistance Listing Number: 84.425E / 84.425F Award identification number: P425F204999 / P425E205418 Award period: September 29, 2020 to June 30, 2023 and July 23, 2020 to May 23, 2022 Federal agency: U.S. Department of Education Pass-through entity: N/A Category: Internal Control / Compliance Finding Type: Material Weakness Compliance requirement: Reporting Condition and context For testing internal controls and compliance with reporting requirements applicable to the HEERF programs, we inquired the Institution about the internal controls and procedures for determining the criteria and methodology used in compiling and reporting the data to be included in the annual and quarterly special reports. We requested a copy of the annual report for the calendar year 2021 and the quarterly reports for the quarter ended on December 31, 2021 related to the institutional aid portion and the student aid portion. As part of our procedures, we tested the method of distribution of grants to ascertain consistency with the method that was actually employed by the Institution to distribute emergency financial aid grants to students. After our examination and tests performed, we noted the following: a) The methodology used to compile the information in the annual report was based on the funds drawdowns which were based on disbursements rather than the actual program expenditures for the Institutional aid funds in accordance with GAAP. b) After examination of the institutional aid portion expenditures amounts reported in the annual special report for the calendar year ended December 31, 2021 to the support provided by the Institution, we noted that the total of institutional annual expenditures was understated by $7,160. c) From the sample of enrollment statistical data selected for verification to the source documents and/or information we noted several differences and were unable to identify some of the information in the source documents in nineteen (19) out of a sample of thirty (30) statistical data lines examined in the annual special report. The exceptions were as follows: d) After examination of the quarterly special report of the student aid portion for the quarter ended December 31, 2021, we noted a difference in the Item #5: ?The total number of students who have received an Emergency Financial Aid Grant to students under the CARES (a)(1) subprogram and the CRRSAA and ARP (a)(1) subprograms?. The total of students that received assistance aid reported was 443; however, the number per the student aid payroll reports examined was 460. Additionally, no support was available to determine if the Institution was timely and accurate in publicly posting the quarterly Student Aid Portion Report selected for testing. e) In one out of a sample of forty (40) disbursements of financial aid to students (2.5%) we noted that the payment made did not agree with the Institution's fund distribution plan to prioritize students with financial need. The aid in excess disbursed to that student was $200. Criteria 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 own funds. In addition, the state's and the other non-Federal entity's 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 general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.302 (b) (2) to (4) establish that accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in ?? 200.328 and 200.329. If a Federal awarding agency requires reporting on an accrual basis from a recipient that maintains its records on other than an accrual basis, the recipient must not be required to establish an accrual accounting system. This recipient may develop accrual data for its reports on the basis of an analysis of the documentation on hand. Records that identify adequately the source and application of funds for federally-funded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income, and interest and be supported by source documentation. Effective control over, and accountability for, all funds, property, and other assets. 2 CFR 200.303 (a) to (d) establish that the non-Federal entity must: (a) Establish and maintain effective internal control over the Federal awards that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. 2 CFR 200.334 establishes that 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. Cause The cause of the deficiencies noted were due to the following situations: a) The source of information provided by the Institution related to the financial information was the G5 report. Such information is on a cash basis; therefore, financial information was not reported on an accrual basis of accounting which is the basis of accounting followed by the Institution. Additionally, the Institution did not appropriately design and maintained documentation and/or analysis performed to prepare and complete the financial information required to be reported in the quarterly and annual reports. b) Lack of recordkeeping controls and procedures to document and maintain the source of information used for the financial and statistical data required in the annual and quarterly special reports. c) The Institution used the student EFC per the ISIR/SAR available at the time of the distribution, even though, an ISIR with a valid EFC was not available since the student FAFSA application was selected for verification by USDE. After the Institution completed the verification the student EFC increased from 0 to 3676. Effect Noncompliance with the reporting requirements could lead to significant administrative actions by the grantor, including a reduction in the amounts to be awarded. It could also be interpreted as a failure to achieve the programs objectives. Questioned costs Likely questioned costs are less than $25,000. Identification as a Repeat Finding No repeated finding. Recommendation We recommend the Institution to establish adequate procedures and controls to ensure that financial and statistical data information is properly supported and detailed to allow adequate audit trail of the information. Establish adequate supervisory procedures to identify, in a reasonable period of time, deficiencies or possible deficiencies in the procedures or guidance established by management to ascertain that the Institution reports the information as required by grantors, and that accurate and adequate support is properly maintained. Views of Responsible Officials Refer to the Institutional comments included in the Corrective Action Plan.
Assistance Listings number and name: 12.401 National Guard Military Operations and Maintenance (O&M) Projects Award numbers and years: W912L2-21-2-1000, October 1, 2020 through September 30, 2021; W912L2-22-2-1000, October 1, 2021 through September 30, 2022 Federal agency: U.S. Department of Defense Compliance requirements: Activities allowed or unallowed and allowable costs/cost principles Questioned costs: $125,288 Condition—Contrary to federal regulations and its policies, the Department of Emergency Military Affairs (Department) did not always retain documentation supporting the payroll costs it charged to the program. Specifically, the Department had not retained the personnel action forms supporting and approving employees’ pay rates and authorizing them to work on the program for 4 of 21 employees we tested, as follows: • $123,968 for 3 employees’ annual payroll costs and employee-related expenses for which each employee’s salaries and wages and authorization to work on the program were not supported by documented personnel action forms. • $1,320 for 1 employee whose previous personnel action form authorized their working on the program but whose most recent pay rate increase was not supported by a documented personnel action form. Effect—The Department’s failure to retain documentation supporting payroll costs could potentially result in the Department being required to return monies spent on unallowable costs to the federal agency or adjust its program’s costs so that monies are spent for allowable costs.1 During fiscal year 2022, the Department paid 323 employees $15,486,984 of salaries and wages, including employee-related expenses, that were charged to the program. There is a risk that the Department could have potentially charged additional payroll costs to the program without maintaining the required supporting documentation. Finally, the Department is at risk that this finding applies to other federal programs it administers. Cause—The Department’s Administrative Services Office (Office) was not adequately trained to follow the documentation and record retention policy. Specifically, the Office reported that it did not retain the personnel action records as they were unaware that all employee personnel records were required to be retained for 5 years after an employee’s termination. Instead, the Office interpreted the policy to only require these documents to be retained for 5 years after the documents were originally created. Criteria—The Department’s record retention policies require its Administrative Services Office to retain for 5 years after an employee’s termination all the employee’s employment records, including personnel action forms authorizing employee pay rate changes and program assignments.2 Federal regulation requires the Department to retain all records related to a federal program for a period of 3 years from the date the program’s final report was submitted to the federal awarding agency or pass-through grantor (2 CFR §200.334). Also, federal regulation requires the Department to maintain records for salaries and wages charged to federal awards that accurately reflect the work performed and are supported by policies and internal controls to ensure they are accurate, allowable, and properly allocated (2 CFR §200.430[i][1][i]). Further, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Ensure documentation is retained for all personnel actions to demonstrate employees’ salaries and wages, including employee-related expenses, are authorized to be charged to the program. 2. Review all employee personnel files for employees currently paid under the program to ensure the required documentation has been retained. If the documentation has not been retained, program management should review the employees’ activities to ensure they are allowable under the program and prepare and retain the required documentation. Further, if employee activities are determined to be unallowable, coordinate with the U.S. Department of Defense to adjust future federal reimbursement requests or repay any unallowable costs the Department charged to the program. 3. Train its Administrative Services Office and Department employees who are responsible for administering federal programs on the documentation and record retention requirements for payroll costs charged to federal programs. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 Federal Uniform Guidance requires federal awarding agencies to follow up on audit findings and issue a management decision to ensure the recipient, the Office, takes appropriate and timely corrective action (2 CFR §200.513[c]). Further, it requires that federal awarding agencies’ management decisions clearly state whether or not the audit finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action, as directed by the federal awarding agencies (2 CFR §200.521). 2 Arizona Department of Emergency Military Affairs (DEMA), State Human Resources Administration. (2007, October). DEMA Directive 20.1, section 1.3. Retrieved 9/13/2023 from https://dema.az.gov/sites/default/files/2023-08/20.1_State_Human_Resources_Administration_20071001.pdf.
Assistance Listings number and name: 12.401 National Guard Military Operations and Maintenance (O&M) Projects Award numbers and years: W912L2-21-2-1000, October 1, 2020 through September 30, 2021; W912L2-22-2-1000, October 1, 2021 through September 30, 2022 Federal agency: U.S. Department of Defense Compliance requirements: Activities allowed or unallowed and allowable costs/cost principles Questioned costs: $125,288 Condition—Contrary to federal regulations and its policies, the Department of Emergency Military Affairs (Department) did not always retain documentation supporting the payroll costs it charged to the program. Specifically, the Department had not retained the personnel action forms supporting and approving employees’ pay rates and authorizing them to work on the program for 4 of 21 employees we tested, as follows: • $123,968 for 3 employees’ annual payroll costs and employee-related expenses for which each employee’s salaries and wages and authorization to work on the program were not supported by documented personnel action forms. • $1,320 for 1 employee whose previous personnel action form authorized their working on the program but whose most recent pay rate increase was not supported by a documented personnel action form. Effect—The Department’s failure to retain documentation supporting payroll costs could potentially result in the Department being required to return monies spent on unallowable costs to the federal agency or adjust its program’s costs so that monies are spent for allowable costs.1 During fiscal year 2022, the Department paid 323 employees $15,486,984 of salaries and wages, including employee-related expenses, that were charged to the program. There is a risk that the Department could have potentially charged additional payroll costs to the program without maintaining the required supporting documentation. Finally, the Department is at risk that this finding applies to other federal programs it administers. Cause—The Department’s Administrative Services Office (Office) was not adequately trained to follow the documentation and record retention policy. Specifically, the Office reported that it did not retain the personnel action records as they were unaware that all employee personnel records were required to be retained for 5 years after an employee’s termination. Instead, the Office interpreted the policy to only require these documents to be retained for 5 years after the documents were originally created. Criteria—The Department’s record retention policies require its Administrative Services Office to retain for 5 years after an employee’s termination all the employee’s employment records, including personnel action forms authorizing employee pay rate changes and program assignments.2 Federal regulation requires the Department to retain all records related to a federal program for a period of 3 years from the date the program’s final report was submitted to the federal awarding agency or pass-through grantor (2 CFR §200.334). Also, federal regulation requires the Department to maintain records for salaries and wages charged to federal awards that accurately reflect the work performed and are supported by policies and internal controls to ensure they are accurate, allowable, and properly allocated (2 CFR §200.430[i][1][i]). Further, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Ensure documentation is retained for all personnel actions to demonstrate employees’ salaries and wages, including employee-related expenses, are authorized to be charged to the program. 2. Review all employee personnel files for employees currently paid under the program to ensure the required documentation has been retained. If the documentation has not been retained, program management should review the employees’ activities to ensure they are allowable under the program and prepare and retain the required documentation. Further, if employee activities are determined to be unallowable, coordinate with the U.S. Department of Defense to adjust future federal reimbursement requests or repay any unallowable costs the Department charged to the program. 3. Train its Administrative Services Office and Department employees who are responsible for administering federal programs on the documentation and record retention requirements for payroll costs charged to federal programs. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 Federal Uniform Guidance requires federal awarding agencies to follow up on audit findings and issue a management decision to ensure the recipient, the Office, takes appropriate and timely corrective action (2 CFR §200.513[c]). Further, it requires that federal awarding agencies’ management decisions clearly state whether or not the audit finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action, as directed by the federal awarding agencies (2 CFR §200.521). 2 Arizona Department of Emergency Military Affairs (DEMA), State Human Resources Administration. (2007, October). DEMA Directive 20.1, section 1.3. Retrieved 9/13/2023 from https://dema.az.gov/sites/default/files/2023-08/20.1_State_Human_Resources_Administration_20071001.pdf.
Assistance Listings number and name: 21.023 COVID-19 Emergency Rental Assistance Program Award numbers and years: ERA-2101070596, January 8, 2021, through September 30, 2022; ERA2-0165, May 10, 2021 through September 30, 2025 Federal agency: U.S. Department of the Treasury Compliance requirement: Reporting Questioned costs: Not applicable Condition—Contrary to federal law and guidance, for information it reported to the federal agency for its Emergency Rental Assistance (ERA) 1 and 2 programs, the Department of Economic Security—Division of Community Assistance and Development (Division) did not retain documentation to support and/or accurately report some information. Further, it did not retain some reports submitted to the federal agency or the associated documentation.1 Specifically, for 8 reports we selected for test work, we found the following: • The Division did not retain some documentation—The Division did not retain documentation, like system reports, queries, or screenshots, to support the information it reported on 3 monthly reports: the ERA 1 October 2021 and March 2022 compliance reports and the ERA 2 May 2022 compliance report. • The Division did not accurately report some information—The Division failed to report any expenditures for the ERA 2 November 2021 monthly report even though we identified ERA 2 expenditures recorded during the month in the system. It also incorrectly reported comingled ERA 1 and ERA 2 program applicant expenditures, project data, and participant demographics in all amounts reported as being all ERA 1 program information for the ERA 1 October 1, 2021 through December 31, 2021, compliance report. Finally, it incorrectly reported comingled ERA 1 and ERA 2 program applicant expenditures as being all ERA 1 program applicant expenditures within the cash disbursements and the federal share of expenditures line items rather than reporting this information for both programs separately as required, and understated cash receipts and the federal share of unliquidated obligations by $19.2 million and $4.1 million, respectively, for the ERA 1 October 1, 2021 through December 31, 2021, financial report. • The Division did not retain reports and associated documentation—The Division did not provide us the reports and related supporting documentation for the ERA 2 April 1, 2022 through June 30, 2022, compliance report and financial report even though the federal agency website indicated the reports were submitted. Therefore, we were unable to test them. Effect—The Division’s reporting inaccurate or unsupported program information and not retaining reports and associated documentation for audit purposes results in the federal agency being unable to rely on the reports to effectively monitor the Division’s program administration, including its compliance with program requirements and ability to prevent and detect fraud, and to evaluate the program’s success. Cause—The Division reported that it contracted to use a new benefits system for the ERA program in March 2021 and relied on the system’s federal reporting dashboard screen for the summarized program information to compile its reports. Although the Division’s policy was to record applicant expenditures for months 1-15 to ERA 1 and months 16-18 to ERA 2, this was not the criteria established for the federal reporting dashboard until February 1, 2022, when the contractor corrected the system programming error, which resulted in the Division reporting ERA 2 information as ERA 1 information in all monthly and quarterly reports prior to February 1, 2022. When implementing the new system and after the contractor corrected the system programming error, the Division did not verify that the federal reporting dashboard reported complete program information and accurately summarized the underlying system data. Additionally, during the ERA reporting review and approval process, the Division did not verify the reported program information and the federal reporting dashboard to the underlying system data. Finally, the Division did not follow its policies and procedures to retain submitted reports or documentation to support the information it reported. Criteria—Federal law and guidance require the Division to separately report and certify accurate and complete program information for each ERA award to the federal agency. For the monthly reports, the Division is required to report monthly key information, such as the number of participating households that received ERA of any kind and the total ERA monies expended to or for participating households on behalf of eligible households, which is used by the federal agency for reallocation purposes. For the quarterly financial and compliance reports, the Division is required to report information, such as cash it disbursed, the federal share of expenditures, unliquidated obligations, and the cumulative amounts it obligated and expended so that the federal agency could monitor performance and compliance, including funding needs and the spending of any reallocated monies.2 In addition, the Division’s policies and procedures and federal regulation requires the Division to retain all records relating to a federal award for a period of 3 years from the date of its submission of the final expenditure report (2 CFR §200.334). Further, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Division should: 1. Develop and implement written policies and procedures to ensure the system used to process ERA claims and report program information produces summarized data on its federal reporting dashboard that are complete and accurate and comply with the federal agency’s reporting guidelines. 2. Follow its policies and procedures to retain all records relating to a federal award for a period of 3 years from the date of its submission of the final expenditure report. 3. Verify the ERA-reported program information and the federal reporting dashboard to the underlying system data during each report’s review and approval process. 4. Prepare and retain detailed documentation and submitted reports, such as system reports, queries, or screenshots, to support the program information it reports to the federal agency for each ERA award. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 The ERA Program was established by Section 501 of Title V, Division N, of the Consolidated Appropriations Act of 2021 (Public Law No. 116-260) in response to the coronavirus pandemic and to provide financial relief to help keep individuals who rent housing in their homes and provide financial assistance to landlords who rely on rental income. The initial ERA program is referred to as ERA 1. ERA 2 was established by Sec. 3201 of Title III, Subtitle B, of the American Rescue Plan Act of 2021 (Public Law No. 117-2). 2 U.S. Department of the Treasury. (2022, December). Reporting Guidance—Emergency Rental Assistance Program, Version 3.4. Monthly, Quarterly, and Final Reporting. Retrieved 9/20/2023 from https://home.treasury.gov/system/files/136/ERA-Reporting-Guidance-v2.pdf
Assistance Listings number and name: 21.023 COVID-19 Emergency Rental Assistance Program Award numbers and years: ERA-2101070596, January 8, 2021, through September 30, 2022; ERA2-0165, May 10, 2021 through September 30, 2025 Federal agency: U.S. Department of the Treasury Compliance requirement: Reporting Questioned costs: Not applicable Condition—Contrary to federal law and guidance, for information it reported to the federal agency for its Emergency Rental Assistance (ERA) 1 and 2 programs, the Department of Economic Security—Division of Community Assistance and Development (Division) did not retain documentation to support and/or accurately report some information. Further, it did not retain some reports submitted to the federal agency or the associated documentation.1 Specifically, for 8 reports we selected for test work, we found the following: • The Division did not retain some documentation—The Division did not retain documentation, like system reports, queries, or screenshots, to support the information it reported on 3 monthly reports: the ERA 1 October 2021 and March 2022 compliance reports and the ERA 2 May 2022 compliance report. • The Division did not accurately report some information—The Division failed to report any expenditures for the ERA 2 November 2021 monthly report even though we identified ERA 2 expenditures recorded during the month in the system. It also incorrectly reported comingled ERA 1 and ERA 2 program applicant expenditures, project data, and participant demographics in all amounts reported as being all ERA 1 program information for the ERA 1 October 1, 2021 through December 31, 2021, compliance report. Finally, it incorrectly reported comingled ERA 1 and ERA 2 program applicant expenditures as being all ERA 1 program applicant expenditures within the cash disbursements and the federal share of expenditures line items rather than reporting this information for both programs separately as required, and understated cash receipts and the federal share of unliquidated obligations by $19.2 million and $4.1 million, respectively, for the ERA 1 October 1, 2021 through December 31, 2021, financial report. • The Division did not retain reports and associated documentation—The Division did not provide us the reports and related supporting documentation for the ERA 2 April 1, 2022 through June 30, 2022, compliance report and financial report even though the federal agency website indicated the reports were submitted. Therefore, we were unable to test them. Effect—The Division’s reporting inaccurate or unsupported program information and not retaining reports and associated documentation for audit purposes results in the federal agency being unable to rely on the reports to effectively monitor the Division’s program administration, including its compliance with program requirements and ability to prevent and detect fraud, and to evaluate the program’s success. Cause—The Division reported that it contracted to use a new benefits system for the ERA program in March 2021 and relied on the system’s federal reporting dashboard screen for the summarized program information to compile its reports. Although the Division’s policy was to record applicant expenditures for months 1-15 to ERA 1 and months 16-18 to ERA 2, this was not the criteria established for the federal reporting dashboard until February 1, 2022, when the contractor corrected the system programming error, which resulted in the Division reporting ERA 2 information as ERA 1 information in all monthly and quarterly reports prior to February 1, 2022. When implementing the new system and after the contractor corrected the system programming error, the Division did not verify that the federal reporting dashboard reported complete program information and accurately summarized the underlying system data. Additionally, during the ERA reporting review and approval process, the Division did not verify the reported program information and the federal reporting dashboard to the underlying system data. Finally, the Division did not follow its policies and procedures to retain submitted reports or documentation to support the information it reported. Criteria—Federal law and guidance require the Division to separately report and certify accurate and complete program information for each ERA award to the federal agency. For the monthly reports, the Division is required to report monthly key information, such as the number of participating households that received ERA of any kind and the total ERA monies expended to or for participating households on behalf of eligible households, which is used by the federal agency for reallocation purposes. For the quarterly financial and compliance reports, the Division is required to report information, such as cash it disbursed, the federal share of expenditures, unliquidated obligations, and the cumulative amounts it obligated and expended so that the federal agency could monitor performance and compliance, including funding needs and the spending of any reallocated monies.2 In addition, the Division’s policies and procedures and federal regulation requires the Division to retain all records relating to a federal award for a period of 3 years from the date of its submission of the final expenditure report (2 CFR §200.334). Further, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Division should: 1. Develop and implement written policies and procedures to ensure the system used to process ERA claims and report program information produces summarized data on its federal reporting dashboard that are complete and accurate and comply with the federal agency’s reporting guidelines. 2. Follow its policies and procedures to retain all records relating to a federal award for a period of 3 years from the date of its submission of the final expenditure report. 3. Verify the ERA-reported program information and the federal reporting dashboard to the underlying system data during each report’s review and approval process. 4. Prepare and retain detailed documentation and submitted reports, such as system reports, queries, or screenshots, to support the program information it reports to the federal agency for each ERA award. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 The ERA Program was established by Section 501 of Title V, Division N, of the Consolidated Appropriations Act of 2021 (Public Law No. 116-260) in response to the coronavirus pandemic and to provide financial relief to help keep individuals who rent housing in their homes and provide financial assistance to landlords who rely on rental income. The initial ERA program is referred to as ERA 1. ERA 2 was established by Sec. 3201 of Title III, Subtitle B, of the American Rescue Plan Act of 2021 (Public Law No. 117-2). 2 U.S. Department of the Treasury. (2022, December). Reporting Guidance—Emergency Rental Assistance Program, Version 3.4. Monthly, Quarterly, and Final Reporting. Retrieved 9/20/2023 from https://home.treasury.gov/system/files/136/ERA-Reporting-Guidance-v2.pdf
Assistance Listings number and name: 21.023 COVID-19 Emergency Rental Assistance Program Award numbers and years: ERA-2101070596, January 8, 2021, through September 30, 2022; ERA2-0165, May 10, 2021 through September 30, 2025 Federal agency: U.S. Department of the Treasury Compliance requirement: Reporting Questioned costs: Not applicable Condition—Contrary to federal law and guidance, for information it reported to the federal agency for its Emergency Rental Assistance (ERA) 1 and 2 programs, the Department of Economic Security—Division of Community Assistance and Development (Division) did not retain documentation to support and/or accurately report some information. Further, it did not retain some reports submitted to the federal agency or the associated documentation.1 Specifically, for 8 reports we selected for test work, we found the following: • The Division did not retain some documentation—The Division did not retain documentation, like system reports, queries, or screenshots, to support the information it reported on 3 monthly reports: the ERA 1 October 2021 and March 2022 compliance reports and the ERA 2 May 2022 compliance report. • The Division did not accurately report some information—The Division failed to report any expenditures for the ERA 2 November 2021 monthly report even though we identified ERA 2 expenditures recorded during the month in the system. It also incorrectly reported comingled ERA 1 and ERA 2 program applicant expenditures, project data, and participant demographics in all amounts reported as being all ERA 1 program information for the ERA 1 October 1, 2021 through December 31, 2021, compliance report. Finally, it incorrectly reported comingled ERA 1 and ERA 2 program applicant expenditures as being all ERA 1 program applicant expenditures within the cash disbursements and the federal share of expenditures line items rather than reporting this information for both programs separately as required, and understated cash receipts and the federal share of unliquidated obligations by $19.2 million and $4.1 million, respectively, for the ERA 1 October 1, 2021 through December 31, 2021, financial report. • The Division did not retain reports and associated documentation—The Division did not provide us the reports and related supporting documentation for the ERA 2 April 1, 2022 through June 30, 2022, compliance report and financial report even though the federal agency website indicated the reports were submitted. Therefore, we were unable to test them. Effect—The Division’s reporting inaccurate or unsupported program information and not retaining reports and associated documentation for audit purposes results in the federal agency being unable to rely on the reports to effectively monitor the Division’s program administration, including its compliance with program requirements and ability to prevent and detect fraud, and to evaluate the program’s success. Cause—The Division reported that it contracted to use a new benefits system for the ERA program in March 2021 and relied on the system’s federal reporting dashboard screen for the summarized program information to compile its reports. Although the Division’s policy was to record applicant expenditures for months 1-15 to ERA 1 and months 16-18 to ERA 2, this was not the criteria established for the federal reporting dashboard until February 1, 2022, when the contractor corrected the system programming error, which resulted in the Division reporting ERA 2 information as ERA 1 information in all monthly and quarterly reports prior to February 1, 2022. When implementing the new system and after the contractor corrected the system programming error, the Division did not verify that the federal reporting dashboard reported complete program information and accurately summarized the underlying system data. Additionally, during the ERA reporting review and approval process, the Division did not verify the reported program information and the federal reporting dashboard to the underlying system data. Finally, the Division did not follow its policies and procedures to retain submitted reports or documentation to support the information it reported. Criteria—Federal law and guidance require the Division to separately report and certify accurate and complete program information for each ERA award to the federal agency. For the monthly reports, the Division is required to report monthly key information, such as the number of participating households that received ERA of any kind and the total ERA monies expended to or for participating households on behalf of eligible households, which is used by the federal agency for reallocation purposes. For the quarterly financial and compliance reports, the Division is required to report information, such as cash it disbursed, the federal share of expenditures, unliquidated obligations, and the cumulative amounts it obligated and expended so that the federal agency could monitor performance and compliance, including funding needs and the spending of any reallocated monies.2 In addition, the Division’s policies and procedures and federal regulation requires the Division to retain all records relating to a federal award for a period of 3 years from the date of its submission of the final expenditure report (2 CFR §200.334). Further, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Division should: 1. Develop and implement written policies and procedures to ensure the system used to process ERA claims and report program information produces summarized data on its federal reporting dashboard that are complete and accurate and comply with the federal agency’s reporting guidelines. 2. Follow its policies and procedures to retain all records relating to a federal award for a period of 3 years from the date of its submission of the final expenditure report. 3. Verify the ERA-reported program information and the federal reporting dashboard to the underlying system data during each report’s review and approval process. 4. Prepare and retain detailed documentation and submitted reports, such as system reports, queries, or screenshots, to support the program information it reports to the federal agency for each ERA award. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 The ERA Program was established by Section 501 of Title V, Division N, of the Consolidated Appropriations Act of 2021 (Public Law No. 116-260) in response to the coronavirus pandemic and to provide financial relief to help keep individuals who rent housing in their homes and provide financial assistance to landlords who rely on rental income. The initial ERA program is referred to as ERA 1. ERA 2 was established by Sec. 3201 of Title III, Subtitle B, of the American Rescue Plan Act of 2021 (Public Law No. 117-2). 2 U.S. Department of the Treasury. (2022, December). Reporting Guidance—Emergency Rental Assistance Program, Version 3.4. Monthly, Quarterly, and Final Reporting. Retrieved 9/20/2023 from https://home.treasury.gov/system/files/136/ERA-Reporting-Guidance-v2.pdf
Assistance Listings number and name: 21.023 COVID-19 Emergency Rental Assistance Program Award numbers and years: ERA-2101070596, January 8, 2021, through September 30, 2022; ERA2-0165, May 10, 2021 through September 30, 2025 Federal agency: U.S. Department of the Treasury Compliance requirement: Reporting Questioned costs: Not applicable Condition—Contrary to federal law and guidance, for information it reported to the federal agency for its Emergency Rental Assistance (ERA) 1 and 2 programs, the Department of Economic Security—Division of Community Assistance and Development (Division) did not retain documentation to support and/or accurately report some information. Further, it did not retain some reports submitted to the federal agency or the associated documentation.1 Specifically, for 8 reports we selected for test work, we found the following: • The Division did not retain some documentation—The Division did not retain documentation, like system reports, queries, or screenshots, to support the information it reported on 3 monthly reports: the ERA 1 October 2021 and March 2022 compliance reports and the ERA 2 May 2022 compliance report. • The Division did not accurately report some information—The Division failed to report any expenditures for the ERA 2 November 2021 monthly report even though we identified ERA 2 expenditures recorded during the month in the system. It also incorrectly reported comingled ERA 1 and ERA 2 program applicant expenditures, project data, and participant demographics in all amounts reported as being all ERA 1 program information for the ERA 1 October 1, 2021 through December 31, 2021, compliance report. Finally, it incorrectly reported comingled ERA 1 and ERA 2 program applicant expenditures as being all ERA 1 program applicant expenditures within the cash disbursements and the federal share of expenditures line items rather than reporting this information for both programs separately as required, and understated cash receipts and the federal share of unliquidated obligations by $19.2 million and $4.1 million, respectively, for the ERA 1 October 1, 2021 through December 31, 2021, financial report. • The Division did not retain reports and associated documentation—The Division did not provide us the reports and related supporting documentation for the ERA 2 April 1, 2022 through June 30, 2022, compliance report and financial report even though the federal agency website indicated the reports were submitted. Therefore, we were unable to test them. Effect—The Division’s reporting inaccurate or unsupported program information and not retaining reports and associated documentation for audit purposes results in the federal agency being unable to rely on the reports to effectively monitor the Division’s program administration, including its compliance with program requirements and ability to prevent and detect fraud, and to evaluate the program’s success. Cause—The Division reported that it contracted to use a new benefits system for the ERA program in March 2021 and relied on the system’s federal reporting dashboard screen for the summarized program information to compile its reports. Although the Division’s policy was to record applicant expenditures for months 1-15 to ERA 1 and months 16-18 to ERA 2, this was not the criteria established for the federal reporting dashboard until February 1, 2022, when the contractor corrected the system programming error, which resulted in the Division reporting ERA 2 information as ERA 1 information in all monthly and quarterly reports prior to February 1, 2022. When implementing the new system and after the contractor corrected the system programming error, the Division did not verify that the federal reporting dashboard reported complete program information and accurately summarized the underlying system data. Additionally, during the ERA reporting review and approval process, the Division did not verify the reported program information and the federal reporting dashboard to the underlying system data. Finally, the Division did not follow its policies and procedures to retain submitted reports or documentation to support the information it reported. Criteria—Federal law and guidance require the Division to separately report and certify accurate and complete program information for each ERA award to the federal agency. For the monthly reports, the Division is required to report monthly key information, such as the number of participating households that received ERA of any kind and the total ERA monies expended to or for participating households on behalf of eligible households, which is used by the federal agency for reallocation purposes. For the quarterly financial and compliance reports, the Division is required to report information, such as cash it disbursed, the federal share of expenditures, unliquidated obligations, and the cumulative amounts it obligated and expended so that the federal agency could monitor performance and compliance, including funding needs and the spending of any reallocated monies.2 In addition, the Division’s policies and procedures and federal regulation requires the Division to retain all records relating to a federal award for a period of 3 years from the date of its submission of the final expenditure report (2 CFR §200.334). Further, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Division should: 1. Develop and implement written policies and procedures to ensure the system used to process ERA claims and report program information produces summarized data on its federal reporting dashboard that are complete and accurate and comply with the federal agency’s reporting guidelines. 2. Follow its policies and procedures to retain all records relating to a federal award for a period of 3 years from the date of its submission of the final expenditure report. 3. Verify the ERA-reported program information and the federal reporting dashboard to the underlying system data during each report’s review and approval process. 4. Prepare and retain detailed documentation and submitted reports, such as system reports, queries, or screenshots, to support the program information it reports to the federal agency for each ERA award. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 The ERA Program was established by Section 501 of Title V, Division N, of the Consolidated Appropriations Act of 2021 (Public Law No. 116-260) in response to the coronavirus pandemic and to provide financial relief to help keep individuals who rent housing in their homes and provide financial assistance to landlords who rely on rental income. The initial ERA program is referred to as ERA 1. ERA 2 was established by Sec. 3201 of Title III, Subtitle B, of the American Rescue Plan Act of 2021 (Public Law No. 117-2). 2 U.S. Department of the Treasury. (2022, December). Reporting Guidance—Emergency Rental Assistance Program, Version 3.4. Monthly, Quarterly, and Final Reporting. Retrieved 9/20/2023 from https://home.treasury.gov/system/files/136/ERA-Reporting-Guidance-v2.pdf
Assistance Listings number and name: 21.023 COVID-19 Emergency Rental Assistance Program Award numbers and years: ERA-2101070596, January 8, 2021, through September 30, 2022; ERA2-0165, May 10, 2021 through September 30, 2025 Federal agency: U.S. Department of the Treasury Compliance requirement: Reporting Questioned costs: Not applicable Condition—Contrary to federal law and guidance, for information it reported to the federal agency for its Emergency Rental Assistance (ERA) 1 and 2 programs, the Department of Economic Security—Division of Community Assistance and Development (Division) did not retain documentation to support and/or accurately report some information. Further, it did not retain some reports submitted to the federal agency or the associated documentation.1 Specifically, for 8 reports we selected for test work, we found the following: • The Division did not retain some documentation—The Division did not retain documentation, like system reports, queries, or screenshots, to support the information it reported on 3 monthly reports: the ERA 1 October 2021 and March 2022 compliance reports and the ERA 2 May 2022 compliance report. • The Division did not accurately report some information—The Division failed to report any expenditures for the ERA 2 November 2021 monthly report even though we identified ERA 2 expenditures recorded during the month in the system. It also incorrectly reported comingled ERA 1 and ERA 2 program applicant expenditures, project data, and participant demographics in all amounts reported as being all ERA 1 program information for the ERA 1 October 1, 2021 through December 31, 2021, compliance report. Finally, it incorrectly reported comingled ERA 1 and ERA 2 program applicant expenditures as being all ERA 1 program applicant expenditures within the cash disbursements and the federal share of expenditures line items rather than reporting this information for both programs separately as required, and understated cash receipts and the federal share of unliquidated obligations by $19.2 million and $4.1 million, respectively, for the ERA 1 October 1, 2021 through December 31, 2021, financial report. • The Division did not retain reports and associated documentation—The Division did not provide us the reports and related supporting documentation for the ERA 2 April 1, 2022 through June 30, 2022, compliance report and financial report even though the federal agency website indicated the reports were submitted. Therefore, we were unable to test them. Effect—The Division’s reporting inaccurate or unsupported program information and not retaining reports and associated documentation for audit purposes results in the federal agency being unable to rely on the reports to effectively monitor the Division’s program administration, including its compliance with program requirements and ability to prevent and detect fraud, and to evaluate the program’s success. Cause—The Division reported that it contracted to use a new benefits system for the ERA program in March 2021 and relied on the system’s federal reporting dashboard screen for the summarized program information to compile its reports. Although the Division’s policy was to record applicant expenditures for months 1-15 to ERA 1 and months 16-18 to ERA 2, this was not the criteria established for the federal reporting dashboard until February 1, 2022, when the contractor corrected the system programming error, which resulted in the Division reporting ERA 2 information as ERA 1 information in all monthly and quarterly reports prior to February 1, 2022. When implementing the new system and after the contractor corrected the system programming error, the Division did not verify that the federal reporting dashboard reported complete program information and accurately summarized the underlying system data. Additionally, during the ERA reporting review and approval process, the Division did not verify the reported program information and the federal reporting dashboard to the underlying system data. Finally, the Division did not follow its policies and procedures to retain submitted reports or documentation to support the information it reported. Criteria—Federal law and guidance require the Division to separately report and certify accurate and complete program information for each ERA award to the federal agency. For the monthly reports, the Division is required to report monthly key information, such as the number of participating households that received ERA of any kind and the total ERA monies expended to or for participating households on behalf of eligible households, which is used by the federal agency for reallocation purposes. For the quarterly financial and compliance reports, the Division is required to report information, such as cash it disbursed, the federal share of expenditures, unliquidated obligations, and the cumulative amounts it obligated and expended so that the federal agency could monitor performance and compliance, including funding needs and the spending of any reallocated monies.2 In addition, the Division’s policies and procedures and federal regulation requires the Division to retain all records relating to a federal award for a period of 3 years from the date of its submission of the final expenditure report (2 CFR §200.334). Further, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Division should: 1. Develop and implement written policies and procedures to ensure the system used to process ERA claims and report program information produces summarized data on its federal reporting dashboard that are complete and accurate and comply with the federal agency’s reporting guidelines. 2. Follow its policies and procedures to retain all records relating to a federal award for a period of 3 years from the date of its submission of the final expenditure report. 3. Verify the ERA-reported program information and the federal reporting dashboard to the underlying system data during each report’s review and approval process. 4. Prepare and retain detailed documentation and submitted reports, such as system reports, queries, or screenshots, to support the program information it reports to the federal agency for each ERA award. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 The ERA Program was established by Section 501 of Title V, Division N, of the Consolidated Appropriations Act of 2021 (Public Law No. 116-260) in response to the coronavirus pandemic and to provide financial relief to help keep individuals who rent housing in their homes and provide financial assistance to landlords who rely on rental income. The initial ERA program is referred to as ERA 1. ERA 2 was established by Sec. 3201 of Title III, Subtitle B, of the American Rescue Plan Act of 2021 (Public Law No. 117-2). 2 U.S. Department of the Treasury. (2022, December). Reporting Guidance—Emergency Rental Assistance Program, Version 3.4. Monthly, Quarterly, and Final Reporting. Retrieved 9/20/2023 from https://home.treasury.gov/system/files/136/ERA-Reporting-Guidance-v2.pdf
Assistance Listings number and name: 21.027 COVID-19 State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Eligibility Questioned costs: $10,000 Condition—Contrary to federal regulations and its policies and procedures, the Department of Economic Security—Division of Employment and Rehabilitation Services (Division) made benefits payments totaling $10,000 to individuals for the State’s Return-to-Work Bonus Program for which it lacked documentation to support that it paid only those individuals who were eligible to receive them. We tested 67 individuals who received benefit payments and found that the Division made benefit payments to 5 individuals totaling $10,000 for which it lacked documentation to support the eligibility determinations.1 This calculates to a 7.5 percent exception rate for our 67 individual eligibility sample, totaling $133,000. Effect—The Division’s payment of $10,000 of program benefits for which it lacked documentation showing the 5 individuals were eligible beneficiaries increases the risk that the Division may not have been able to effectively prevent or detect fraud. Consequently, the Division may be required to return $10,000 to the federal agency.2 Cause—The Division’s management reported that it contracted with a third party to implement and use a new, temporary benefits system for the State’s Return-to-Work Bonus Program from July 1, 2021, through December 31, 2021.1 When the program and the Department’s contract with the third party ended, the Division did not ensure that the third-party contractor provided it with a complete set of program documentation that was derived from the system. Criteria—Federal regulations require the Division to retain all federal program records for a period of 3 years from the submission date of the final expenditure report to the federal agency (2 CFR §200.334). In addition, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—This program ended on December 31, 2021, and the Division’s management reported to us that it received all the records related to the federal program from the third-party contractor when operations of the State’s Return-to-Work Bonus Program and related benefits system ceased.1 However, to the extent possible for this program and for all future federal programs the Division administers, the Division should: 1. Ensure subaward entities provide all records and the Division retains all records relating to a federal award for a period of 3 years from the date it submits the final expenditure report. 2. Work with the State of Arizona Office of the Governor and U.S. Department of the Treasury to resolve the $10,000 in questioned costs.2 The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 To be eligible for the State’s Return-to-Work Bonus Program benefits, individuals had to have filed, received, and been deemed eligible for Unemployment Insurance program benefits in Arizona between the period of May 8, 2021, and May 15, 2021. The benefit payments consisted of bonus payments of either $1,000 or $2,000, with a total maximum benefit amount of $2,000 per eligible individual. The State’s Return-to-Work Bonus Program was funded by the federal Coronavirus State and Local Fiscal Recovery Funds, an American Rescue Plan Act of 2021 program (Public Law 117-2), as administered by the Arizona Governor’s Office. The Department of Economic Security operated the program from July 1, 2021, through December 31, 2021, and the program ended on December 31, 2021. (State of Arizona, Office of the Governor and Department of Economic Security Interagency Service Agreement No. ISA-DES-ARPA-070121-02). 2 Federal Uniform Guidance requires federal awarding agencies to follow up on audit findings and issue a management decision to ensure the recipient, the Office of the Governor, takes appropriate and timely corrective action (2 CFR §200.513[c]). Further, it requires that federal awarding agencies’ management decisions clearly state whether or not the audit finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action, as directed by the federal awarding agencies (2 CFR §200.521).
Assistance Listings number and name: 21.027 COVID-19 State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Eligibility Questioned costs: $10,000 Condition—Contrary to federal regulations and its policies and procedures, the Department of Economic Security—Division of Employment and Rehabilitation Services (Division) made benefits payments totaling $10,000 to individuals for the State’s Return-to-Work Bonus Program for which it lacked documentation to support that it paid only those individuals who were eligible to receive them. We tested 67 individuals who received benefit payments and found that the Division made benefit payments to 5 individuals totaling $10,000 for which it lacked documentation to support the eligibility determinations.1 This calculates to a 7.5 percent exception rate for our 67 individual eligibility sample, totaling $133,000. Effect—The Division’s payment of $10,000 of program benefits for which it lacked documentation showing the 5 individuals were eligible beneficiaries increases the risk that the Division may not have been able to effectively prevent or detect fraud. Consequently, the Division may be required to return $10,000 to the federal agency.2 Cause—The Division’s management reported that it contracted with a third party to implement and use a new, temporary benefits system for the State’s Return-to-Work Bonus Program from July 1, 2021, through December 31, 2021.1 When the program and the Department’s contract with the third party ended, the Division did not ensure that the third-party contractor provided it with a complete set of program documentation that was derived from the system. Criteria—Federal regulations require the Division to retain all federal program records for a period of 3 years from the submission date of the final expenditure report to the federal agency (2 CFR §200.334). In addition, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—This program ended on December 31, 2021, and the Division’s management reported to us that it received all the records related to the federal program from the third-party contractor when operations of the State’s Return-to-Work Bonus Program and related benefits system ceased.1 However, to the extent possible for this program and for all future federal programs the Division administers, the Division should: 1. Ensure subaward entities provide all records and the Division retains all records relating to a federal award for a period of 3 years from the date it submits the final expenditure report. 2. Work with the State of Arizona Office of the Governor and U.S. Department of the Treasury to resolve the $10,000 in questioned costs.2 The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 To be eligible for the State’s Return-to-Work Bonus Program benefits, individuals had to have filed, received, and been deemed eligible for Unemployment Insurance program benefits in Arizona between the period of May 8, 2021, and May 15, 2021. The benefit payments consisted of bonus payments of either $1,000 or $2,000, with a total maximum benefit amount of $2,000 per eligible individual. The State’s Return-to-Work Bonus Program was funded by the federal Coronavirus State and Local Fiscal Recovery Funds, an American Rescue Plan Act of 2021 program (Public Law 117-2), as administered by the Arizona Governor’s Office. The Department of Economic Security operated the program from July 1, 2021, through December 31, 2021, and the program ended on December 31, 2021. (State of Arizona, Office of the Governor and Department of Economic Security Interagency Service Agreement No. ISA-DES-ARPA-070121-02). 2 Federal Uniform Guidance requires federal awarding agencies to follow up on audit findings and issue a management decision to ensure the recipient, the Office of the Governor, takes appropriate and timely corrective action (2 CFR §200.513[c]). Further, it requires that federal awarding agencies’ management decisions clearly state whether or not the audit finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action, as directed by the federal awarding agencies (2 CFR §200.521).
Assistance Listings number and name: 21.027 COVID-19 State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Eligibility Questioned costs: $10,000 Condition—Contrary to federal regulations and its policies and procedures, the Department of Economic Security—Division of Employment and Rehabilitation Services (Division) made benefits payments totaling $10,000 to individuals for the State’s Return-to-Work Bonus Program for which it lacked documentation to support that it paid only those individuals who were eligible to receive them. We tested 67 individuals who received benefit payments and found that the Division made benefit payments to 5 individuals totaling $10,000 for which it lacked documentation to support the eligibility determinations.1 This calculates to a 7.5 percent exception rate for our 67 individual eligibility sample, totaling $133,000. Effect—The Division’s payment of $10,000 of program benefits for which it lacked documentation showing the 5 individuals were eligible beneficiaries increases the risk that the Division may not have been able to effectively prevent or detect fraud. Consequently, the Division may be required to return $10,000 to the federal agency.2 Cause—The Division’s management reported that it contracted with a third party to implement and use a new, temporary benefits system for the State’s Return-to-Work Bonus Program from July 1, 2021, through December 31, 2021.1 When the program and the Department’s contract with the third party ended, the Division did not ensure that the third-party contractor provided it with a complete set of program documentation that was derived from the system. Criteria—Federal regulations require the Division to retain all federal program records for a period of 3 years from the submission date of the final expenditure report to the federal agency (2 CFR §200.334). In addition, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—This program ended on December 31, 2021, and the Division’s management reported to us that it received all the records related to the federal program from the third-party contractor when operations of the State’s Return-to-Work Bonus Program and related benefits system ceased.1 However, to the extent possible for this program and for all future federal programs the Division administers, the Division should: 1. Ensure subaward entities provide all records and the Division retains all records relating to a federal award for a period of 3 years from the date it submits the final expenditure report. 2. Work with the State of Arizona Office of the Governor and U.S. Department of the Treasury to resolve the $10,000 in questioned costs.2 The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 To be eligible for the State’s Return-to-Work Bonus Program benefits, individuals had to have filed, received, and been deemed eligible for Unemployment Insurance program benefits in Arizona between the period of May 8, 2021, and May 15, 2021. The benefit payments consisted of bonus payments of either $1,000 or $2,000, with a total maximum benefit amount of $2,000 per eligible individual. The State’s Return-to-Work Bonus Program was funded by the federal Coronavirus State and Local Fiscal Recovery Funds, an American Rescue Plan Act of 2021 program (Public Law 117-2), as administered by the Arizona Governor’s Office. The Department of Economic Security operated the program from July 1, 2021, through December 31, 2021, and the program ended on December 31, 2021. (State of Arizona, Office of the Governor and Department of Economic Security Interagency Service Agreement No. ISA-DES-ARPA-070121-02). 2 Federal Uniform Guidance requires federal awarding agencies to follow up on audit findings and issue a management decision to ensure the recipient, the Office of the Governor, takes appropriate and timely corrective action (2 CFR §200.513[c]). Further, it requires that federal awarding agencies’ management decisions clearly state whether or not the audit finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action, as directed by the federal awarding agencies (2 CFR §200.521).
Assistance Listings number and name: 21.027 COVID-19 State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Eligibility Questioned costs: $10,000 Condition—Contrary to federal regulations and its policies and procedures, the Department of Economic Security—Division of Employment and Rehabilitation Services (Division) made benefits payments totaling $10,000 to individuals for the State’s Return-to-Work Bonus Program for which it lacked documentation to support that it paid only those individuals who were eligible to receive them. We tested 67 individuals who received benefit payments and found that the Division made benefit payments to 5 individuals totaling $10,000 for which it lacked documentation to support the eligibility determinations.1 This calculates to a 7.5 percent exception rate for our 67 individual eligibility sample, totaling $133,000. Effect—The Division’s payment of $10,000 of program benefits for which it lacked documentation showing the 5 individuals were eligible beneficiaries increases the risk that the Division may not have been able to effectively prevent or detect fraud. Consequently, the Division may be required to return $10,000 to the federal agency.2 Cause—The Division’s management reported that it contracted with a third party to implement and use a new, temporary benefits system for the State’s Return-to-Work Bonus Program from July 1, 2021, through December 31, 2021.1 When the program and the Department’s contract with the third party ended, the Division did not ensure that the third-party contractor provided it with a complete set of program documentation that was derived from the system. Criteria—Federal regulations require the Division to retain all federal program records for a period of 3 years from the submission date of the final expenditure report to the federal agency (2 CFR §200.334). In addition, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—This program ended on December 31, 2021, and the Division’s management reported to us that it received all the records related to the federal program from the third-party contractor when operations of the State’s Return-to-Work Bonus Program and related benefits system ceased.1 However, to the extent possible for this program and for all future federal programs the Division administers, the Division should: 1. Ensure subaward entities provide all records and the Division retains all records relating to a federal award for a period of 3 years from the date it submits the final expenditure report. 2. Work with the State of Arizona Office of the Governor and U.S. Department of the Treasury to resolve the $10,000 in questioned costs.2 The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 To be eligible for the State’s Return-to-Work Bonus Program benefits, individuals had to have filed, received, and been deemed eligible for Unemployment Insurance program benefits in Arizona between the period of May 8, 2021, and May 15, 2021. The benefit payments consisted of bonus payments of either $1,000 or $2,000, with a total maximum benefit amount of $2,000 per eligible individual. The State’s Return-to-Work Bonus Program was funded by the federal Coronavirus State and Local Fiscal Recovery Funds, an American Rescue Plan Act of 2021 program (Public Law 117-2), as administered by the Arizona Governor’s Office. The Department of Economic Security operated the program from July 1, 2021, through December 31, 2021, and the program ended on December 31, 2021. (State of Arizona, Office of the Governor and Department of Economic Security Interagency Service Agreement No. ISA-DES-ARPA-070121-02). 2 Federal Uniform Guidance requires federal awarding agencies to follow up on audit findings and issue a management decision to ensure the recipient, the Office of the Governor, takes appropriate and timely corrective action (2 CFR §200.513[c]). Further, it requires that federal awarding agencies’ management decisions clearly state whether or not the audit finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action, as directed by the federal awarding agencies (2 CFR §200.521).
Assistance Listings number and name: 21.027 COVID-19 State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Eligibility Questioned costs: $10,000 Condition—Contrary to federal regulations and its policies and procedures, the Department of Economic Security—Division of Employment and Rehabilitation Services (Division) made benefits payments totaling $10,000 to individuals for the State’s Return-to-Work Bonus Program for which it lacked documentation to support that it paid only those individuals who were eligible to receive them. We tested 67 individuals who received benefit payments and found that the Division made benefit payments to 5 individuals totaling $10,000 for which it lacked documentation to support the eligibility determinations.1 This calculates to a 7.5 percent exception rate for our 67 individual eligibility sample, totaling $133,000. Effect—The Division’s payment of $10,000 of program benefits for which it lacked documentation showing the 5 individuals were eligible beneficiaries increases the risk that the Division may not have been able to effectively prevent or detect fraud. Consequently, the Division may be required to return $10,000 to the federal agency.2 Cause—The Division’s management reported that it contracted with a third party to implement and use a new, temporary benefits system for the State’s Return-to-Work Bonus Program from July 1, 2021, through December 31, 2021.1 When the program and the Department’s contract with the third party ended, the Division did not ensure that the third-party contractor provided it with a complete set of program documentation that was derived from the system. Criteria—Federal regulations require the Division to retain all federal program records for a period of 3 years from the submission date of the final expenditure report to the federal agency (2 CFR §200.334). In addition, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—This program ended on December 31, 2021, and the Division’s management reported to us that it received all the records related to the federal program from the third-party contractor when operations of the State’s Return-to-Work Bonus Program and related benefits system ceased.1 However, to the extent possible for this program and for all future federal programs the Division administers, the Division should: 1. Ensure subaward entities provide all records and the Division retains all records relating to a federal award for a period of 3 years from the date it submits the final expenditure report. 2. Work with the State of Arizona Office of the Governor and U.S. Department of the Treasury to resolve the $10,000 in questioned costs.2 The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 To be eligible for the State’s Return-to-Work Bonus Program benefits, individuals had to have filed, received, and been deemed eligible for Unemployment Insurance program benefits in Arizona between the period of May 8, 2021, and May 15, 2021. The benefit payments consisted of bonus payments of either $1,000 or $2,000, with a total maximum benefit amount of $2,000 per eligible individual. The State’s Return-to-Work Bonus Program was funded by the federal Coronavirus State and Local Fiscal Recovery Funds, an American Rescue Plan Act of 2021 program (Public Law 117-2), as administered by the Arizona Governor’s Office. The Department of Economic Security operated the program from July 1, 2021, through December 31, 2021, and the program ended on December 31, 2021. (State of Arizona, Office of the Governor and Department of Economic Security Interagency Service Agreement No. ISA-DES-ARPA-070121-02). 2 Federal Uniform Guidance requires federal awarding agencies to follow up on audit findings and issue a management decision to ensure the recipient, the Office of the Governor, takes appropriate and timely corrective action (2 CFR §200.513[c]). Further, it requires that federal awarding agencies’ management decisions clearly state whether or not the audit finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action, as directed by the federal awarding agencies (2 CFR §200.521).
Assistance Listings number and name: 21.027 COVID-19 State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Eligibility Questioned costs: $10,000 Condition—Contrary to federal regulations and its policies and procedures, the Department of Economic Security—Division of Employment and Rehabilitation Services (Division) made benefits payments totaling $10,000 to individuals for the State’s Return-to-Work Bonus Program for which it lacked documentation to support that it paid only those individuals who were eligible to receive them. We tested 67 individuals who received benefit payments and found that the Division made benefit payments to 5 individuals totaling $10,000 for which it lacked documentation to support the eligibility determinations.1 This calculates to a 7.5 percent exception rate for our 67 individual eligibility sample, totaling $133,000. Effect—The Division’s payment of $10,000 of program benefits for which it lacked documentation showing the 5 individuals were eligible beneficiaries increases the risk that the Division may not have been able to effectively prevent or detect fraud. Consequently, the Division may be required to return $10,000 to the federal agency.2 Cause—The Division’s management reported that it contracted with a third party to implement and use a new, temporary benefits system for the State’s Return-to-Work Bonus Program from July 1, 2021, through December 31, 2021.1 When the program and the Department’s contract with the third party ended, the Division did not ensure that the third-party contractor provided it with a complete set of program documentation that was derived from the system. Criteria—Federal regulations require the Division to retain all federal program records for a period of 3 years from the submission date of the final expenditure report to the federal agency (2 CFR §200.334). In addition, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—This program ended on December 31, 2021, and the Division’s management reported to us that it received all the records related to the federal program from the third-party contractor when operations of the State’s Return-to-Work Bonus Program and related benefits system ceased.1 However, to the extent possible for this program and for all future federal programs the Division administers, the Division should: 1. Ensure subaward entities provide all records and the Division retains all records relating to a federal award for a period of 3 years from the date it submits the final expenditure report. 2. Work with the State of Arizona Office of the Governor and U.S. Department of the Treasury to resolve the $10,000 in questioned costs.2 The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 To be eligible for the State’s Return-to-Work Bonus Program benefits, individuals had to have filed, received, and been deemed eligible for Unemployment Insurance program benefits in Arizona between the period of May 8, 2021, and May 15, 2021. The benefit payments consisted of bonus payments of either $1,000 or $2,000, with a total maximum benefit amount of $2,000 per eligible individual. The State’s Return-to-Work Bonus Program was funded by the federal Coronavirus State and Local Fiscal Recovery Funds, an American Rescue Plan Act of 2021 program (Public Law 117-2), as administered by the Arizona Governor’s Office. The Department of Economic Security operated the program from July 1, 2021, through December 31, 2021, and the program ended on December 31, 2021. (State of Arizona, Office of the Governor and Department of Economic Security Interagency Service Agreement No. ISA-DES-ARPA-070121-02). 2 Federal Uniform Guidance requires federal awarding agencies to follow up on audit findings and issue a management decision to ensure the recipient, the Office of the Governor, takes appropriate and timely corrective action (2 CFR §200.513[c]). Further, it requires that federal awarding agencies’ management decisions clearly state whether or not the audit finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action, as directed by the federal awarding agencies (2 CFR §200.521).
Assistance Listings number and name: 21.027 COVID-19 State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Eligibility Questioned costs: $10,000 Condition—Contrary to federal regulations and its policies and procedures, the Department of Economic Security—Division of Employment and Rehabilitation Services (Division) made benefits payments totaling $10,000 to individuals for the State’s Return-to-Work Bonus Program for which it lacked documentation to support that it paid only those individuals who were eligible to receive them. We tested 67 individuals who received benefit payments and found that the Division made benefit payments to 5 individuals totaling $10,000 for which it lacked documentation to support the eligibility determinations.1 This calculates to a 7.5 percent exception rate for our 67 individual eligibility sample, totaling $133,000. Effect—The Division’s payment of $10,000 of program benefits for which it lacked documentation showing the 5 individuals were eligible beneficiaries increases the risk that the Division may not have been able to effectively prevent or detect fraud. Consequently, the Division may be required to return $10,000 to the federal agency.2 Cause—The Division’s management reported that it contracted with a third party to implement and use a new, temporary benefits system for the State’s Return-to-Work Bonus Program from July 1, 2021, through December 31, 2021.1 When the program and the Department’s contract with the third party ended, the Division did not ensure that the third-party contractor provided it with a complete set of program documentation that was derived from the system. Criteria—Federal regulations require the Division to retain all federal program records for a period of 3 years from the submission date of the final expenditure report to the federal agency (2 CFR §200.334). In addition, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—This program ended on December 31, 2021, and the Division’s management reported to us that it received all the records related to the federal program from the third-party contractor when operations of the State’s Return-to-Work Bonus Program and related benefits system ceased.1 However, to the extent possible for this program and for all future federal programs the Division administers, the Division should: 1. Ensure subaward entities provide all records and the Division retains all records relating to a federal award for a period of 3 years from the date it submits the final expenditure report. 2. Work with the State of Arizona Office of the Governor and U.S. Department of the Treasury to resolve the $10,000 in questioned costs.2 The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 To be eligible for the State’s Return-to-Work Bonus Program benefits, individuals had to have filed, received, and been deemed eligible for Unemployment Insurance program benefits in Arizona between the period of May 8, 2021, and May 15, 2021. The benefit payments consisted of bonus payments of either $1,000 or $2,000, with a total maximum benefit amount of $2,000 per eligible individual. The State’s Return-to-Work Bonus Program was funded by the federal Coronavirus State and Local Fiscal Recovery Funds, an American Rescue Plan Act of 2021 program (Public Law 117-2), as administered by the Arizona Governor’s Office. The Department of Economic Security operated the program from July 1, 2021, through December 31, 2021, and the program ended on December 31, 2021. (State of Arizona, Office of the Governor and Department of Economic Security Interagency Service Agreement No. ISA-DES-ARPA-070121-02). 2 Federal Uniform Guidance requires federal awarding agencies to follow up on audit findings and issue a management decision to ensure the recipient, the Office of the Governor, takes appropriate and timely corrective action (2 CFR §200.513[c]). Further, it requires that federal awarding agencies’ management decisions clearly state whether or not the audit finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action, as directed by the federal awarding agencies (2 CFR §200.521).
Assistance Listings number and name: 21.027 COVID-19 State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Eligibility Questioned costs: $10,000 Condition—Contrary to federal regulations and its policies and procedures, the Department of Economic Security—Division of Employment and Rehabilitation Services (Division) made benefits payments totaling $10,000 to individuals for the State’s Return-to-Work Bonus Program for which it lacked documentation to support that it paid only those individuals who were eligible to receive them. We tested 67 individuals who received benefit payments and found that the Division made benefit payments to 5 individuals totaling $10,000 for which it lacked documentation to support the eligibility determinations.1 This calculates to a 7.5 percent exception rate for our 67 individual eligibility sample, totaling $133,000. Effect—The Division’s payment of $10,000 of program benefits for which it lacked documentation showing the 5 individuals were eligible beneficiaries increases the risk that the Division may not have been able to effectively prevent or detect fraud. Consequently, the Division may be required to return $10,000 to the federal agency.2 Cause—The Division’s management reported that it contracted with a third party to implement and use a new, temporary benefits system for the State’s Return-to-Work Bonus Program from July 1, 2021, through December 31, 2021.1 When the program and the Department’s contract with the third party ended, the Division did not ensure that the third-party contractor provided it with a complete set of program documentation that was derived from the system. Criteria—Federal regulations require the Division to retain all federal program records for a period of 3 years from the submission date of the final expenditure report to the federal agency (2 CFR §200.334). In addition, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—This program ended on December 31, 2021, and the Division’s management reported to us that it received all the records related to the federal program from the third-party contractor when operations of the State’s Return-to-Work Bonus Program and related benefits system ceased.1 However, to the extent possible for this program and for all future federal programs the Division administers, the Division should: 1. Ensure subaward entities provide all records and the Division retains all records relating to a federal award for a period of 3 years from the date it submits the final expenditure report. 2. Work with the State of Arizona Office of the Governor and U.S. Department of the Treasury to resolve the $10,000 in questioned costs.2 The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 To be eligible for the State’s Return-to-Work Bonus Program benefits, individuals had to have filed, received, and been deemed eligible for Unemployment Insurance program benefits in Arizona between the period of May 8, 2021, and May 15, 2021. The benefit payments consisted of bonus payments of either $1,000 or $2,000, with a total maximum benefit amount of $2,000 per eligible individual. The State’s Return-to-Work Bonus Program was funded by the federal Coronavirus State and Local Fiscal Recovery Funds, an American Rescue Plan Act of 2021 program (Public Law 117-2), as administered by the Arizona Governor’s Office. The Department of Economic Security operated the program from July 1, 2021, through December 31, 2021, and the program ended on December 31, 2021. (State of Arizona, Office of the Governor and Department of Economic Security Interagency Service Agreement No. ISA-DES-ARPA-070121-02). 2 Federal Uniform Guidance requires federal awarding agencies to follow up on audit findings and issue a management decision to ensure the recipient, the Office of the Governor, takes appropriate and timely corrective action (2 CFR §200.513[c]). Further, it requires that federal awarding agencies’ management decisions clearly state whether or not the audit finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action, as directed by the federal awarding agencies (2 CFR §200.521).
Assistance Listings number and name: 21.027 COVID-19 State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Eligibility Questioned costs: $10,000 Condition—Contrary to federal regulations and its policies and procedures, the Department of Economic Security—Division of Employment and Rehabilitation Services (Division) made benefits payments totaling $10,000 to individuals for the State’s Return-to-Work Bonus Program for which it lacked documentation to support that it paid only those individuals who were eligible to receive them. We tested 67 individuals who received benefit payments and found that the Division made benefit payments to 5 individuals totaling $10,000 for which it lacked documentation to support the eligibility determinations.1 This calculates to a 7.5 percent exception rate for our 67 individual eligibility sample, totaling $133,000. Effect—The Division’s payment of $10,000 of program benefits for which it lacked documentation showing the 5 individuals were eligible beneficiaries increases the risk that the Division may not have been able to effectively prevent or detect fraud. Consequently, the Division may be required to return $10,000 to the federal agency.2 Cause—The Division’s management reported that it contracted with a third party to implement and use a new, temporary benefits system for the State’s Return-to-Work Bonus Program from July 1, 2021, through December 31, 2021.1 When the program and the Department’s contract with the third party ended, the Division did not ensure that the third-party contractor provided it with a complete set of program documentation that was derived from the system. Criteria—Federal regulations require the Division to retain all federal program records for a period of 3 years from the submission date of the final expenditure report to the federal agency (2 CFR §200.334). In addition, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—This program ended on December 31, 2021, and the Division’s management reported to us that it received all the records related to the federal program from the third-party contractor when operations of the State’s Return-to-Work Bonus Program and related benefits system ceased.1 However, to the extent possible for this program and for all future federal programs the Division administers, the Division should: 1. Ensure subaward entities provide all records and the Division retains all records relating to a federal award for a period of 3 years from the date it submits the final expenditure report. 2. Work with the State of Arizona Office of the Governor and U.S. Department of the Treasury to resolve the $10,000 in questioned costs.2 The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 To be eligible for the State’s Return-to-Work Bonus Program benefits, individuals had to have filed, received, and been deemed eligible for Unemployment Insurance program benefits in Arizona between the period of May 8, 2021, and May 15, 2021. The benefit payments consisted of bonus payments of either $1,000 or $2,000, with a total maximum benefit amount of $2,000 per eligible individual. The State’s Return-to-Work Bonus Program was funded by the federal Coronavirus State and Local Fiscal Recovery Funds, an American Rescue Plan Act of 2021 program (Public Law 117-2), as administered by the Arizona Governor’s Office. The Department of Economic Security operated the program from July 1, 2021, through December 31, 2021, and the program ended on December 31, 2021. (State of Arizona, Office of the Governor and Department of Economic Security Interagency Service Agreement No. ISA-DES-ARPA-070121-02). 2 Federal Uniform Guidance requires federal awarding agencies to follow up on audit findings and issue a management decision to ensure the recipient, the Office of the Governor, takes appropriate and timely corrective action (2 CFR §200.513[c]). Further, it requires that federal awarding agencies’ management decisions clearly state whether or not the audit finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action, as directed by the federal awarding agencies (2 CFR §200.521).
Assistance Listings number and name: 21.027 COVID-19 State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Eligibility Questioned costs: $10,000 Condition—Contrary to federal regulations and its policies and procedures, the Department of Economic Security—Division of Employment and Rehabilitation Services (Division) made benefits payments totaling $10,000 to individuals for the State’s Return-to-Work Bonus Program for which it lacked documentation to support that it paid only those individuals who were eligible to receive them. We tested 67 individuals who received benefit payments and found that the Division made benefit payments to 5 individuals totaling $10,000 for which it lacked documentation to support the eligibility determinations.1 This calculates to a 7.5 percent exception rate for our 67 individual eligibility sample, totaling $133,000. Effect—The Division’s payment of $10,000 of program benefits for which it lacked documentation showing the 5 individuals were eligible beneficiaries increases the risk that the Division may not have been able to effectively prevent or detect fraud. Consequently, the Division may be required to return $10,000 to the federal agency.2 Cause—The Division’s management reported that it contracted with a third party to implement and use a new, temporary benefits system for the State’s Return-to-Work Bonus Program from July 1, 2021, through December 31, 2021.1 When the program and the Department’s contract with the third party ended, the Division did not ensure that the third-party contractor provided it with a complete set of program documentation that was derived from the system. Criteria—Federal regulations require the Division to retain all federal program records for a period of 3 years from the submission date of the final expenditure report to the federal agency (2 CFR §200.334). In addition, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—This program ended on December 31, 2021, and the Division’s management reported to us that it received all the records related to the federal program from the third-party contractor when operations of the State’s Return-to-Work Bonus Program and related benefits system ceased.1 However, to the extent possible for this program and for all future federal programs the Division administers, the Division should: 1. Ensure subaward entities provide all records and the Division retains all records relating to a federal award for a period of 3 years from the date it submits the final expenditure report. 2. Work with the State of Arizona Office of the Governor and U.S. Department of the Treasury to resolve the $10,000 in questioned costs.2 The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 To be eligible for the State’s Return-to-Work Bonus Program benefits, individuals had to have filed, received, and been deemed eligible for Unemployment Insurance program benefits in Arizona between the period of May 8, 2021, and May 15, 2021. The benefit payments consisted of bonus payments of either $1,000 or $2,000, with a total maximum benefit amount of $2,000 per eligible individual. The State’s Return-to-Work Bonus Program was funded by the federal Coronavirus State and Local Fiscal Recovery Funds, an American Rescue Plan Act of 2021 program (Public Law 117-2), as administered by the Arizona Governor’s Office. The Department of Economic Security operated the program from July 1, 2021, through December 31, 2021, and the program ended on December 31, 2021. (State of Arizona, Office of the Governor and Department of Economic Security Interagency Service Agreement No. ISA-DES-ARPA-070121-02). 2 Federal Uniform Guidance requires federal awarding agencies to follow up on audit findings and issue a management decision to ensure the recipient, the Office of the Governor, takes appropriate and timely corrective action (2 CFR §200.513[c]). Further, it requires that federal awarding agencies’ management decisions clearly state whether or not the audit finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action, as directed by the federal awarding agencies (2 CFR §200.521).
Assistance Listings number and name: 21.027 COVID-19 State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Eligibility Questioned costs: $10,000 Condition—Contrary to federal regulations and its policies and procedures, the Department of Economic Security—Division of Employment and Rehabilitation Services (Division) made benefits payments totaling $10,000 to individuals for the State’s Return-to-Work Bonus Program for which it lacked documentation to support that it paid only those individuals who were eligible to receive them. We tested 67 individuals who received benefit payments and found that the Division made benefit payments to 5 individuals totaling $10,000 for which it lacked documentation to support the eligibility determinations.1 This calculates to a 7.5 percent exception rate for our 67 individual eligibility sample, totaling $133,000. Effect—The Division’s payment of $10,000 of program benefits for which it lacked documentation showing the 5 individuals were eligible beneficiaries increases the risk that the Division may not have been able to effectively prevent or detect fraud. Consequently, the Division may be required to return $10,000 to the federal agency.2 Cause—The Division’s management reported that it contracted with a third party to implement and use a new, temporary benefits system for the State’s Return-to-Work Bonus Program from July 1, 2021, through December 31, 2021.1 When the program and the Department’s contract with the third party ended, the Division did not ensure that the third-party contractor provided it with a complete set of program documentation that was derived from the system. Criteria—Federal regulations require the Division to retain all federal program records for a period of 3 years from the submission date of the final expenditure report to the federal agency (2 CFR §200.334). In addition, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—This program ended on December 31, 2021, and the Division’s management reported to us that it received all the records related to the federal program from the third-party contractor when operations of the State’s Return-to-Work Bonus Program and related benefits system ceased.1 However, to the extent possible for this program and for all future federal programs the Division administers, the Division should: 1. Ensure subaward entities provide all records and the Division retains all records relating to a federal award for a period of 3 years from the date it submits the final expenditure report. 2. Work with the State of Arizona Office of the Governor and U.S. Department of the Treasury to resolve the $10,000 in questioned costs.2 The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 To be eligible for the State’s Return-to-Work Bonus Program benefits, individuals had to have filed, received, and been deemed eligible for Unemployment Insurance program benefits in Arizona between the period of May 8, 2021, and May 15, 2021. The benefit payments consisted of bonus payments of either $1,000 or $2,000, with a total maximum benefit amount of $2,000 per eligible individual. The State’s Return-to-Work Bonus Program was funded by the federal Coronavirus State and Local Fiscal Recovery Funds, an American Rescue Plan Act of 2021 program (Public Law 117-2), as administered by the Arizona Governor’s Office. The Department of Economic Security operated the program from July 1, 2021, through December 31, 2021, and the program ended on December 31, 2021. (State of Arizona, Office of the Governor and Department of Economic Security Interagency Service Agreement No. ISA-DES-ARPA-070121-02). 2 Federal Uniform Guidance requires federal awarding agencies to follow up on audit findings and issue a management decision to ensure the recipient, the Office of the Governor, takes appropriate and timely corrective action (2 CFR §200.513[c]). Further, it requires that federal awarding agencies’ management decisions clearly state whether or not the audit finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action, as directed by the federal awarding agencies (2 CFR §200.521).
Assistance Listings number and name: 21.027 COVID-19 State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Eligibility Questioned costs: $10,000 Condition—Contrary to federal regulations and its policies and procedures, the Department of Economic Security—Division of Employment and Rehabilitation Services (Division) made benefits payments totaling $10,000 to individuals for the State’s Return-to-Work Bonus Program for which it lacked documentation to support that it paid only those individuals who were eligible to receive them. We tested 67 individuals who received benefit payments and found that the Division made benefit payments to 5 individuals totaling $10,000 for which it lacked documentation to support the eligibility determinations.1 This calculates to a 7.5 percent exception rate for our 67 individual eligibility sample, totaling $133,000. Effect—The Division’s payment of $10,000 of program benefits for which it lacked documentation showing the 5 individuals were eligible beneficiaries increases the risk that the Division may not have been able to effectively prevent or detect fraud. Consequently, the Division may be required to return $10,000 to the federal agency.2 Cause—The Division’s management reported that it contracted with a third party to implement and use a new, temporary benefits system for the State’s Return-to-Work Bonus Program from July 1, 2021, through December 31, 2021.1 When the program and the Department’s contract with the third party ended, the Division did not ensure that the third-party contractor provided it with a complete set of program documentation that was derived from the system. Criteria—Federal regulations require the Division to retain all federal program records for a period of 3 years from the submission date of the final expenditure report to the federal agency (2 CFR §200.334). In addition, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—This program ended on December 31, 2021, and the Division’s management reported to us that it received all the records related to the federal program from the third-party contractor when operations of the State’s Return-to-Work Bonus Program and related benefits system ceased.1 However, to the extent possible for this program and for all future federal programs the Division administers, the Division should: 1. Ensure subaward entities provide all records and the Division retains all records relating to a federal award for a period of 3 years from the date it submits the final expenditure report. 2. Work with the State of Arizona Office of the Governor and U.S. Department of the Treasury to resolve the $10,000 in questioned costs.2 The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 To be eligible for the State’s Return-to-Work Bonus Program benefits, individuals had to have filed, received, and been deemed eligible for Unemployment Insurance program benefits in Arizona between the period of May 8, 2021, and May 15, 2021. The benefit payments consisted of bonus payments of either $1,000 or $2,000, with a total maximum benefit amount of $2,000 per eligible individual. The State’s Return-to-Work Bonus Program was funded by the federal Coronavirus State and Local Fiscal Recovery Funds, an American Rescue Plan Act of 2021 program (Public Law 117-2), as administered by the Arizona Governor’s Office. The Department of Economic Security operated the program from July 1, 2021, through December 31, 2021, and the program ended on December 31, 2021. (State of Arizona, Office of the Governor and Department of Economic Security Interagency Service Agreement No. ISA-DES-ARPA-070121-02). 2 Federal Uniform Guidance requires federal awarding agencies to follow up on audit findings and issue a management decision to ensure the recipient, the Office of the Governor, takes appropriate and timely corrective action (2 CFR §200.513[c]). Further, it requires that federal awarding agencies’ management decisions clearly state whether or not the audit finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action, as directed by the federal awarding agencies (2 CFR §200.521).
Assistance Listings number and name: 21.027 COVID-19 State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Eligibility Questioned costs: $10,000 Condition—Contrary to federal regulations and its policies and procedures, the Department of Economic Security—Division of Employment and Rehabilitation Services (Division) made benefits payments totaling $10,000 to individuals for the State’s Return-to-Work Bonus Program for which it lacked documentation to support that it paid only those individuals who were eligible to receive them. We tested 67 individuals who received benefit payments and found that the Division made benefit payments to 5 individuals totaling $10,000 for which it lacked documentation to support the eligibility determinations.1 This calculates to a 7.5 percent exception rate for our 67 individual eligibility sample, totaling $133,000. Effect—The Division’s payment of $10,000 of program benefits for which it lacked documentation showing the 5 individuals were eligible beneficiaries increases the risk that the Division may not have been able to effectively prevent or detect fraud. Consequently, the Division may be required to return $10,000 to the federal agency.2 Cause—The Division’s management reported that it contracted with a third party to implement and use a new, temporary benefits system for the State’s Return-to-Work Bonus Program from July 1, 2021, through December 31, 2021.1 When the program and the Department’s contract with the third party ended, the Division did not ensure that the third-party contractor provided it with a complete set of program documentation that was derived from the system. Criteria—Federal regulations require the Division to retain all federal program records for a period of 3 years from the submission date of the final expenditure report to the federal agency (2 CFR §200.334). In addition, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—This program ended on December 31, 2021, and the Division’s management reported to us that it received all the records related to the federal program from the third-party contractor when operations of the State’s Return-to-Work Bonus Program and related benefits system ceased.1 However, to the extent possible for this program and for all future federal programs the Division administers, the Division should: 1. Ensure subaward entities provide all records and the Division retains all records relating to a federal award for a period of 3 years from the date it submits the final expenditure report. 2. Work with the State of Arizona Office of the Governor and U.S. Department of the Treasury to resolve the $10,000 in questioned costs.2 The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 To be eligible for the State’s Return-to-Work Bonus Program benefits, individuals had to have filed, received, and been deemed eligible for Unemployment Insurance program benefits in Arizona between the period of May 8, 2021, and May 15, 2021. The benefit payments consisted of bonus payments of either $1,000 or $2,000, with a total maximum benefit amount of $2,000 per eligible individual. The State’s Return-to-Work Bonus Program was funded by the federal Coronavirus State and Local Fiscal Recovery Funds, an American Rescue Plan Act of 2021 program (Public Law 117-2), as administered by the Arizona Governor’s Office. The Department of Economic Security operated the program from July 1, 2021, through December 31, 2021, and the program ended on December 31, 2021. (State of Arizona, Office of the Governor and Department of Economic Security Interagency Service Agreement No. ISA-DES-ARPA-070121-02). 2 Federal Uniform Guidance requires federal awarding agencies to follow up on audit findings and issue a management decision to ensure the recipient, the Office of the Governor, takes appropriate and timely corrective action (2 CFR §200.513[c]). Further, it requires that federal awarding agencies’ management decisions clearly state whether or not the audit finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action, as directed by the federal awarding agencies (2 CFR §200.521).
Assistance Listings number and name: 21.027 COVID-19 State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Eligibility Questioned costs: $10,000 Condition—Contrary to federal regulations and its policies and procedures, the Department of Economic Security—Division of Employment and Rehabilitation Services (Division) made benefits payments totaling $10,000 to individuals for the State’s Return-to-Work Bonus Program for which it lacked documentation to support that it paid only those individuals who were eligible to receive them. We tested 67 individuals who received benefit payments and found that the Division made benefit payments to 5 individuals totaling $10,000 for which it lacked documentation to support the eligibility determinations.1 This calculates to a 7.5 percent exception rate for our 67 individual eligibility sample, totaling $133,000. Effect—The Division’s payment of $10,000 of program benefits for which it lacked documentation showing the 5 individuals were eligible beneficiaries increases the risk that the Division may not have been able to effectively prevent or detect fraud. Consequently, the Division may be required to return $10,000 to the federal agency.2 Cause—The Division’s management reported that it contracted with a third party to implement and use a new, temporary benefits system for the State’s Return-to-Work Bonus Program from July 1, 2021, through December 31, 2021.1 When the program and the Department’s contract with the third party ended, the Division did not ensure that the third-party contractor provided it with a complete set of program documentation that was derived from the system. Criteria—Federal regulations require the Division to retain all federal program records for a period of 3 years from the submission date of the final expenditure report to the federal agency (2 CFR §200.334). In addition, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—This program ended on December 31, 2021, and the Division’s management reported to us that it received all the records related to the federal program from the third-party contractor when operations of the State’s Return-to-Work Bonus Program and related benefits system ceased.1 However, to the extent possible for this program and for all future federal programs the Division administers, the Division should: 1. Ensure subaward entities provide all records and the Division retains all records relating to a federal award for a period of 3 years from the date it submits the final expenditure report. 2. Work with the State of Arizona Office of the Governor and U.S. Department of the Treasury to resolve the $10,000 in questioned costs.2 The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 To be eligible for the State’s Return-to-Work Bonus Program benefits, individuals had to have filed, received, and been deemed eligible for Unemployment Insurance program benefits in Arizona between the period of May 8, 2021, and May 15, 2021. The benefit payments consisted of bonus payments of either $1,000 or $2,000, with a total maximum benefit amount of $2,000 per eligible individual. The State’s Return-to-Work Bonus Program was funded by the federal Coronavirus State and Local Fiscal Recovery Funds, an American Rescue Plan Act of 2021 program (Public Law 117-2), as administered by the Arizona Governor’s Office. The Department of Economic Security operated the program from July 1, 2021, through December 31, 2021, and the program ended on December 31, 2021. (State of Arizona, Office of the Governor and Department of Economic Security Interagency Service Agreement No. ISA-DES-ARPA-070121-02). 2 Federal Uniform Guidance requires federal awarding agencies to follow up on audit findings and issue a management decision to ensure the recipient, the Office of the Governor, takes appropriate and timely corrective action (2 CFR §200.513[c]). Further, it requires that federal awarding agencies’ management decisions clearly state whether or not the audit finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action, as directed by the federal awarding agencies (2 CFR §200.521).
Assistance Listings number and name: 21.027 COVID-19 State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Eligibility Questioned costs: $10,000 Condition—Contrary to federal regulations and its policies and procedures, the Department of Economic Security—Division of Employment and Rehabilitation Services (Division) made benefits payments totaling $10,000 to individuals for the State’s Return-to-Work Bonus Program for which it lacked documentation to support that it paid only those individuals who were eligible to receive them. We tested 67 individuals who received benefit payments and found that the Division made benefit payments to 5 individuals totaling $10,000 for which it lacked documentation to support the eligibility determinations.1 This calculates to a 7.5 percent exception rate for our 67 individual eligibility sample, totaling $133,000. Effect—The Division’s payment of $10,000 of program benefits for which it lacked documentation showing the 5 individuals were eligible beneficiaries increases the risk that the Division may not have been able to effectively prevent or detect fraud. Consequently, the Division may be required to return $10,000 to the federal agency.2 Cause—The Division’s management reported that it contracted with a third party to implement and use a new, temporary benefits system for the State’s Return-to-Work Bonus Program from July 1, 2021, through December 31, 2021.1 When the program and the Department’s contract with the third party ended, the Division did not ensure that the third-party contractor provided it with a complete set of program documentation that was derived from the system. Criteria—Federal regulations require the Division to retain all federal program records for a period of 3 years from the submission date of the final expenditure report to the federal agency (2 CFR §200.334). In addition, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—This program ended on December 31, 2021, and the Division’s management reported to us that it received all the records related to the federal program from the third-party contractor when operations of the State’s Return-to-Work Bonus Program and related benefits system ceased.1 However, to the extent possible for this program and for all future federal programs the Division administers, the Division should: 1. Ensure subaward entities provide all records and the Division retains all records relating to a federal award for a period of 3 years from the date it submits the final expenditure report. 2. Work with the State of Arizona Office of the Governor and U.S. Department of the Treasury to resolve the $10,000 in questioned costs.2 The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 To be eligible for the State’s Return-to-Work Bonus Program benefits, individuals had to have filed, received, and been deemed eligible for Unemployment Insurance program benefits in Arizona between the period of May 8, 2021, and May 15, 2021. The benefit payments consisted of bonus payments of either $1,000 or $2,000, with a total maximum benefit amount of $2,000 per eligible individual. The State’s Return-to-Work Bonus Program was funded by the federal Coronavirus State and Local Fiscal Recovery Funds, an American Rescue Plan Act of 2021 program (Public Law 117-2), as administered by the Arizona Governor’s Office. The Department of Economic Security operated the program from July 1, 2021, through December 31, 2021, and the program ended on December 31, 2021. (State of Arizona, Office of the Governor and Department of Economic Security Interagency Service Agreement No. ISA-DES-ARPA-070121-02). 2 Federal Uniform Guidance requires federal awarding agencies to follow up on audit findings and issue a management decision to ensure the recipient, the Office of the Governor, takes appropriate and timely corrective action (2 CFR §200.513[c]). Further, it requires that federal awarding agencies’ management decisions clearly state whether or not the audit finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action, as directed by the federal awarding agencies (2 CFR §200.521).
Assistance Listings number and name: 21.027 COVID-19 State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Eligibility Questioned costs: $10,000 Condition—Contrary to federal regulations and its policies and procedures, the Department of Economic Security—Division of Employment and Rehabilitation Services (Division) made benefits payments totaling $10,000 to individuals for the State’s Return-to-Work Bonus Program for which it lacked documentation to support that it paid only those individuals who were eligible to receive them. We tested 67 individuals who received benefit payments and found that the Division made benefit payments to 5 individuals totaling $10,000 for which it lacked documentation to support the eligibility determinations.1 This calculates to a 7.5 percent exception rate for our 67 individual eligibility sample, totaling $133,000. Effect—The Division’s payment of $10,000 of program benefits for which it lacked documentation showing the 5 individuals were eligible beneficiaries increases the risk that the Division may not have been able to effectively prevent or detect fraud. Consequently, the Division may be required to return $10,000 to the federal agency.2 Cause—The Division’s management reported that it contracted with a third party to implement and use a new, temporary benefits system for the State’s Return-to-Work Bonus Program from July 1, 2021, through December 31, 2021.1 When the program and the Department’s contract with the third party ended, the Division did not ensure that the third-party contractor provided it with a complete set of program documentation that was derived from the system. Criteria—Federal regulations require the Division to retain all federal program records for a period of 3 years from the submission date of the final expenditure report to the federal agency (2 CFR §200.334). In addition, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—This program ended on December 31, 2021, and the Division’s management reported to us that it received all the records related to the federal program from the third-party contractor when operations of the State’s Return-to-Work Bonus Program and related benefits system ceased.1 However, to the extent possible for this program and for all future federal programs the Division administers, the Division should: 1. Ensure subaward entities provide all records and the Division retains all records relating to a federal award for a period of 3 years from the date it submits the final expenditure report. 2. Work with the State of Arizona Office of the Governor and U.S. Department of the Treasury to resolve the $10,000 in questioned costs.2 The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 To be eligible for the State’s Return-to-Work Bonus Program benefits, individuals had to have filed, received, and been deemed eligible for Unemployment Insurance program benefits in Arizona between the period of May 8, 2021, and May 15, 2021. The benefit payments consisted of bonus payments of either $1,000 or $2,000, with a total maximum benefit amount of $2,000 per eligible individual. The State’s Return-to-Work Bonus Program was funded by the federal Coronavirus State and Local Fiscal Recovery Funds, an American Rescue Plan Act of 2021 program (Public Law 117-2), as administered by the Arizona Governor’s Office. The Department of Economic Security operated the program from July 1, 2021, through December 31, 2021, and the program ended on December 31, 2021. (State of Arizona, Office of the Governor and Department of Economic Security Interagency Service Agreement No. ISA-DES-ARPA-070121-02). 2 Federal Uniform Guidance requires federal awarding agencies to follow up on audit findings and issue a management decision to ensure the recipient, the Office of the Governor, takes appropriate and timely corrective action (2 CFR §200.513[c]). Further, it requires that federal awarding agencies’ management decisions clearly state whether or not the audit finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action, as directed by the federal awarding agencies (2 CFR §200.521).
Assistance Listings number and name: 21.027 COVID-19 State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Eligibility Questioned costs: $10,000 Condition—Contrary to federal regulations and its policies and procedures, the Department of Economic Security—Division of Employment and Rehabilitation Services (Division) made benefits payments totaling $10,000 to individuals for the State’s Return-to-Work Bonus Program for which it lacked documentation to support that it paid only those individuals who were eligible to receive them. We tested 67 individuals who received benefit payments and found that the Division made benefit payments to 5 individuals totaling $10,000 for which it lacked documentation to support the eligibility determinations.1 This calculates to a 7.5 percent exception rate for our 67 individual eligibility sample, totaling $133,000. Effect—The Division’s payment of $10,000 of program benefits for which it lacked documentation showing the 5 individuals were eligible beneficiaries increases the risk that the Division may not have been able to effectively prevent or detect fraud. Consequently, the Division may be required to return $10,000 to the federal agency.2 Cause—The Division’s management reported that it contracted with a third party to implement and use a new, temporary benefits system for the State’s Return-to-Work Bonus Program from July 1, 2021, through December 31, 2021.1 When the program and the Department’s contract with the third party ended, the Division did not ensure that the third-party contractor provided it with a complete set of program documentation that was derived from the system. Criteria—Federal regulations require the Division to retain all federal program records for a period of 3 years from the submission date of the final expenditure report to the federal agency (2 CFR §200.334). In addition, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—This program ended on December 31, 2021, and the Division’s management reported to us that it received all the records related to the federal program from the third-party contractor when operations of the State’s Return-to-Work Bonus Program and related benefits system ceased.1 However, to the extent possible for this program and for all future federal programs the Division administers, the Division should: 1. Ensure subaward entities provide all records and the Division retains all records relating to a federal award for a period of 3 years from the date it submits the final expenditure report. 2. Work with the State of Arizona Office of the Governor and U.S. Department of the Treasury to resolve the $10,000 in questioned costs.2 The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 To be eligible for the State’s Return-to-Work Bonus Program benefits, individuals had to have filed, received, and been deemed eligible for Unemployment Insurance program benefits in Arizona between the period of May 8, 2021, and May 15, 2021. The benefit payments consisted of bonus payments of either $1,000 or $2,000, with a total maximum benefit amount of $2,000 per eligible individual. The State’s Return-to-Work Bonus Program was funded by the federal Coronavirus State and Local Fiscal Recovery Funds, an American Rescue Plan Act of 2021 program (Public Law 117-2), as administered by the Arizona Governor’s Office. The Department of Economic Security operated the program from July 1, 2021, through December 31, 2021, and the program ended on December 31, 2021. (State of Arizona, Office of the Governor and Department of Economic Security Interagency Service Agreement No. ISA-DES-ARPA-070121-02). 2 Federal Uniform Guidance requires federal awarding agencies to follow up on audit findings and issue a management decision to ensure the recipient, the Office of the Governor, takes appropriate and timely corrective action (2 CFR §200.513[c]). Further, it requires that federal awarding agencies’ management decisions clearly state whether or not the audit finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action, as directed by the federal awarding agencies (2 CFR §200.521).
Assistance Listings number and name: 21.027 COVID-19 State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Eligibility Questioned costs: $10,000 Condition—Contrary to federal regulations and its policies and procedures, the Department of Economic Security—Division of Employment and Rehabilitation Services (Division) made benefits payments totaling $10,000 to individuals for the State’s Return-to-Work Bonus Program for which it lacked documentation to support that it paid only those individuals who were eligible to receive them. We tested 67 individuals who received benefit payments and found that the Division made benefit payments to 5 individuals totaling $10,000 for which it lacked documentation to support the eligibility determinations.1 This calculates to a 7.5 percent exception rate for our 67 individual eligibility sample, totaling $133,000. Effect—The Division’s payment of $10,000 of program benefits for which it lacked documentation showing the 5 individuals were eligible beneficiaries increases the risk that the Division may not have been able to effectively prevent or detect fraud. Consequently, the Division may be required to return $10,000 to the federal agency.2 Cause—The Division’s management reported that it contracted with a third party to implement and use a new, temporary benefits system for the State’s Return-to-Work Bonus Program from July 1, 2021, through December 31, 2021.1 When the program and the Department’s contract with the third party ended, the Division did not ensure that the third-party contractor provided it with a complete set of program documentation that was derived from the system. Criteria—Federal regulations require the Division to retain all federal program records for a period of 3 years from the submission date of the final expenditure report to the federal agency (2 CFR §200.334). In addition, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—This program ended on December 31, 2021, and the Division’s management reported to us that it received all the records related to the federal program from the third-party contractor when operations of the State’s Return-to-Work Bonus Program and related benefits system ceased.1 However, to the extent possible for this program and for all future federal programs the Division administers, the Division should: 1. Ensure subaward entities provide all records and the Division retains all records relating to a federal award for a period of 3 years from the date it submits the final expenditure report. 2. Work with the State of Arizona Office of the Governor and U.S. Department of the Treasury to resolve the $10,000 in questioned costs.2 The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 To be eligible for the State’s Return-to-Work Bonus Program benefits, individuals had to have filed, received, and been deemed eligible for Unemployment Insurance program benefits in Arizona between the period of May 8, 2021, and May 15, 2021. The benefit payments consisted of bonus payments of either $1,000 or $2,000, with a total maximum benefit amount of $2,000 per eligible individual. The State’s Return-to-Work Bonus Program was funded by the federal Coronavirus State and Local Fiscal Recovery Funds, an American Rescue Plan Act of 2021 program (Public Law 117-2), as administered by the Arizona Governor’s Office. The Department of Economic Security operated the program from July 1, 2021, through December 31, 2021, and the program ended on December 31, 2021. (State of Arizona, Office of the Governor and Department of Economic Security Interagency Service Agreement No. ISA-DES-ARPA-070121-02). 2 Federal Uniform Guidance requires federal awarding agencies to follow up on audit findings and issue a management decision to ensure the recipient, the Office of the Governor, takes appropriate and timely corrective action (2 CFR §200.513[c]). Further, it requires that federal awarding agencies’ management decisions clearly state whether or not the audit finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action, as directed by the federal awarding agencies (2 CFR §200.521).
Assistance Listings number and name: 21.027 COVID-19 State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Eligibility Questioned costs: $10,000 Condition—Contrary to federal regulations and its policies and procedures, the Department of Economic Security—Division of Employment and Rehabilitation Services (Division) made benefits payments totaling $10,000 to individuals for the State’s Return-to-Work Bonus Program for which it lacked documentation to support that it paid only those individuals who were eligible to receive them. We tested 67 individuals who received benefit payments and found that the Division made benefit payments to 5 individuals totaling $10,000 for which it lacked documentation to support the eligibility determinations.1 This calculates to a 7.5 percent exception rate for our 67 individual eligibility sample, totaling $133,000. Effect—The Division’s payment of $10,000 of program benefits for which it lacked documentation showing the 5 individuals were eligible beneficiaries increases the risk that the Division may not have been able to effectively prevent or detect fraud. Consequently, the Division may be required to return $10,000 to the federal agency.2 Cause—The Division’s management reported that it contracted with a third party to implement and use a new, temporary benefits system for the State’s Return-to-Work Bonus Program from July 1, 2021, through December 31, 2021.1 When the program and the Department’s contract with the third party ended, the Division did not ensure that the third-party contractor provided it with a complete set of program documentation that was derived from the system. Criteria—Federal regulations require the Division to retain all federal program records for a period of 3 years from the submission date of the final expenditure report to the federal agency (2 CFR §200.334). In addition, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—This program ended on December 31, 2021, and the Division’s management reported to us that it received all the records related to the federal program from the third-party contractor when operations of the State’s Return-to-Work Bonus Program and related benefits system ceased.1 However, to the extent possible for this program and for all future federal programs the Division administers, the Division should: 1. Ensure subaward entities provide all records and the Division retains all records relating to a federal award for a period of 3 years from the date it submits the final expenditure report. 2. Work with the State of Arizona Office of the Governor and U.S. Department of the Treasury to resolve the $10,000 in questioned costs.2 The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 To be eligible for the State’s Return-to-Work Bonus Program benefits, individuals had to have filed, received, and been deemed eligible for Unemployment Insurance program benefits in Arizona between the period of May 8, 2021, and May 15, 2021. The benefit payments consisted of bonus payments of either $1,000 or $2,000, with a total maximum benefit amount of $2,000 per eligible individual. The State’s Return-to-Work Bonus Program was funded by the federal Coronavirus State and Local Fiscal Recovery Funds, an American Rescue Plan Act of 2021 program (Public Law 117-2), as administered by the Arizona Governor’s Office. The Department of Economic Security operated the program from July 1, 2021, through December 31, 2021, and the program ended on December 31, 2021. (State of Arizona, Office of the Governor and Department of Economic Security Interagency Service Agreement No. ISA-DES-ARPA-070121-02). 2 Federal Uniform Guidance requires federal awarding agencies to follow up on audit findings and issue a management decision to ensure the recipient, the Office of the Governor, takes appropriate and timely corrective action (2 CFR §200.513[c]). Further, it requires that federal awarding agencies’ management decisions clearly state whether or not the audit finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action, as directed by the federal awarding agencies (2 CFR §200.521).
Assistance Listings number and name: 21.027 COVID-19 State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Eligibility Questioned costs: $10,000 Condition—Contrary to federal regulations and its policies and procedures, the Department of Economic Security—Division of Employment and Rehabilitation Services (Division) made benefits payments totaling $10,000 to individuals for the State’s Return-to-Work Bonus Program for which it lacked documentation to support that it paid only those individuals who were eligible to receive them. We tested 67 individuals who received benefit payments and found that the Division made benefit payments to 5 individuals totaling $10,000 for which it lacked documentation to support the eligibility determinations.1 This calculates to a 7.5 percent exception rate for our 67 individual eligibility sample, totaling $133,000. Effect—The Division’s payment of $10,000 of program benefits for which it lacked documentation showing the 5 individuals were eligible beneficiaries increases the risk that the Division may not have been able to effectively prevent or detect fraud. Consequently, the Division may be required to return $10,000 to the federal agency.2 Cause—The Division’s management reported that it contracted with a third party to implement and use a new, temporary benefits system for the State’s Return-to-Work Bonus Program from July 1, 2021, through December 31, 2021.1 When the program and the Department’s contract with the third party ended, the Division did not ensure that the third-party contractor provided it with a complete set of program documentation that was derived from the system. Criteria—Federal regulations require the Division to retain all federal program records for a period of 3 years from the submission date of the final expenditure report to the federal agency (2 CFR §200.334). In addition, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—This program ended on December 31, 2021, and the Division’s management reported to us that it received all the records related to the federal program from the third-party contractor when operations of the State’s Return-to-Work Bonus Program and related benefits system ceased.1 However, to the extent possible for this program and for all future federal programs the Division administers, the Division should: 1. Ensure subaward entities provide all records and the Division retains all records relating to a federal award for a period of 3 years from the date it submits the final expenditure report. 2. Work with the State of Arizona Office of the Governor and U.S. Department of the Treasury to resolve the $10,000 in questioned costs.2 The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 To be eligible for the State’s Return-to-Work Bonus Program benefits, individuals had to have filed, received, and been deemed eligible for Unemployment Insurance program benefits in Arizona between the period of May 8, 2021, and May 15, 2021. The benefit payments consisted of bonus payments of either $1,000 or $2,000, with a total maximum benefit amount of $2,000 per eligible individual. The State’s Return-to-Work Bonus Program was funded by the federal Coronavirus State and Local Fiscal Recovery Funds, an American Rescue Plan Act of 2021 program (Public Law 117-2), as administered by the Arizona Governor’s Office. The Department of Economic Security operated the program from July 1, 2021, through December 31, 2021, and the program ended on December 31, 2021. (State of Arizona, Office of the Governor and Department of Economic Security Interagency Service Agreement No. ISA-DES-ARPA-070121-02). 2 Federal Uniform Guidance requires federal awarding agencies to follow up on audit findings and issue a management decision to ensure the recipient, the Office of the Governor, takes appropriate and timely corrective action (2 CFR §200.513[c]). Further, it requires that federal awarding agencies’ management decisions clearly state whether or not the audit finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action, as directed by the federal awarding agencies (2 CFR §200.521).
Assistance Listings number and name: 21.027 COVID-19 State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Eligibility Questioned costs: $10,000 Condition—Contrary to federal regulations and its policies and procedures, the Department of Economic Security—Division of Employment and Rehabilitation Services (Division) made benefits payments totaling $10,000 to individuals for the State’s Return-to-Work Bonus Program for which it lacked documentation to support that it paid only those individuals who were eligible to receive them. We tested 67 individuals who received benefit payments and found that the Division made benefit payments to 5 individuals totaling $10,000 for which it lacked documentation to support the eligibility determinations.1 This calculates to a 7.5 percent exception rate for our 67 individual eligibility sample, totaling $133,000. Effect—The Division’s payment of $10,000 of program benefits for which it lacked documentation showing the 5 individuals were eligible beneficiaries increases the risk that the Division may not have been able to effectively prevent or detect fraud. Consequently, the Division may be required to return $10,000 to the federal agency.2 Cause—The Division’s management reported that it contracted with a third party to implement and use a new, temporary benefits system for the State’s Return-to-Work Bonus Program from July 1, 2021, through December 31, 2021.1 When the program and the Department’s contract with the third party ended, the Division did not ensure that the third-party contractor provided it with a complete set of program documentation that was derived from the system. Criteria—Federal regulations require the Division to retain all federal program records for a period of 3 years from the submission date of the final expenditure report to the federal agency (2 CFR §200.334). In addition, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—This program ended on December 31, 2021, and the Division’s management reported to us that it received all the records related to the federal program from the third-party contractor when operations of the State’s Return-to-Work Bonus Program and related benefits system ceased.1 However, to the extent possible for this program and for all future federal programs the Division administers, the Division should: 1. Ensure subaward entities provide all records and the Division retains all records relating to a federal award for a period of 3 years from the date it submits the final expenditure report. 2. Work with the State of Arizona Office of the Governor and U.S. Department of the Treasury to resolve the $10,000 in questioned costs.2 The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 To be eligible for the State’s Return-to-Work Bonus Program benefits, individuals had to have filed, received, and been deemed eligible for Unemployment Insurance program benefits in Arizona between the period of May 8, 2021, and May 15, 2021. The benefit payments consisted of bonus payments of either $1,000 or $2,000, with a total maximum benefit amount of $2,000 per eligible individual. The State’s Return-to-Work Bonus Program was funded by the federal Coronavirus State and Local Fiscal Recovery Funds, an American Rescue Plan Act of 2021 program (Public Law 117-2), as administered by the Arizona Governor’s Office. The Department of Economic Security operated the program from July 1, 2021, through December 31, 2021, and the program ended on December 31, 2021. (State of Arizona, Office of the Governor and Department of Economic Security Interagency Service Agreement No. ISA-DES-ARPA-070121-02). 2 Federal Uniform Guidance requires federal awarding agencies to follow up on audit findings and issue a management decision to ensure the recipient, the Office of the Governor, takes appropriate and timely corrective action (2 CFR §200.513[c]). Further, it requires that federal awarding agencies’ management decisions clearly state whether or not the audit finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action, as directed by the federal awarding agencies (2 CFR §200.521).
Assistance Listings number and name: 21.027 COVID-19 State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Eligibility Questioned costs: $10,000 Condition—Contrary to federal regulations and its policies and procedures, the Department of Economic Security—Division of Employment and Rehabilitation Services (Division) made benefits payments totaling $10,000 to individuals for the State’s Return-to-Work Bonus Program for which it lacked documentation to support that it paid only those individuals who were eligible to receive them. We tested 67 individuals who received benefit payments and found that the Division made benefit payments to 5 individuals totaling $10,000 for which it lacked documentation to support the eligibility determinations.1 This calculates to a 7.5 percent exception rate for our 67 individual eligibility sample, totaling $133,000. Effect—The Division’s payment of $10,000 of program benefits for which it lacked documentation showing the 5 individuals were eligible beneficiaries increases the risk that the Division may not have been able to effectively prevent or detect fraud. Consequently, the Division may be required to return $10,000 to the federal agency.2 Cause—The Division’s management reported that it contracted with a third party to implement and use a new, temporary benefits system for the State’s Return-to-Work Bonus Program from July 1, 2021, through December 31, 2021.1 When the program and the Department’s contract with the third party ended, the Division did not ensure that the third-party contractor provided it with a complete set of program documentation that was derived from the system. Criteria—Federal regulations require the Division to retain all federal program records for a period of 3 years from the submission date of the final expenditure report to the federal agency (2 CFR §200.334). In addition, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—This program ended on December 31, 2021, and the Division’s management reported to us that it received all the records related to the federal program from the third-party contractor when operations of the State’s Return-to-Work Bonus Program and related benefits system ceased.1 However, to the extent possible for this program and for all future federal programs the Division administers, the Division should: 1. Ensure subaward entities provide all records and the Division retains all records relating to a federal award for a period of 3 years from the date it submits the final expenditure report. 2. Work with the State of Arizona Office of the Governor and U.S. Department of the Treasury to resolve the $10,000 in questioned costs.2 The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 To be eligible for the State’s Return-to-Work Bonus Program benefits, individuals had to have filed, received, and been deemed eligible for Unemployment Insurance program benefits in Arizona between the period of May 8, 2021, and May 15, 2021. The benefit payments consisted of bonus payments of either $1,000 or $2,000, with a total maximum benefit amount of $2,000 per eligible individual. The State’s Return-to-Work Bonus Program was funded by the federal Coronavirus State and Local Fiscal Recovery Funds, an American Rescue Plan Act of 2021 program (Public Law 117-2), as administered by the Arizona Governor’s Office. The Department of Economic Security operated the program from July 1, 2021, through December 31, 2021, and the program ended on December 31, 2021. (State of Arizona, Office of the Governor and Department of Economic Security Interagency Service Agreement No. ISA-DES-ARPA-070121-02). 2 Federal Uniform Guidance requires federal awarding agencies to follow up on audit findings and issue a management decision to ensure the recipient, the Office of the Governor, takes appropriate and timely corrective action (2 CFR §200.513[c]). Further, it requires that federal awarding agencies’ management decisions clearly state whether or not the audit finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action, as directed by the federal awarding agencies (2 CFR §200.521).
Assistance Listings number and name: 21.027 COVID-19 State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Eligibility Questioned costs: $10,000 Condition—Contrary to federal regulations and its policies and procedures, the Department of Economic Security—Division of Employment and Rehabilitation Services (Division) made benefits payments totaling $10,000 to individuals for the State’s Return-to-Work Bonus Program for which it lacked documentation to support that it paid only those individuals who were eligible to receive them. We tested 67 individuals who received benefit payments and found that the Division made benefit payments to 5 individuals totaling $10,000 for which it lacked documentation to support the eligibility determinations.1 This calculates to a 7.5 percent exception rate for our 67 individual eligibility sample, totaling $133,000. Effect—The Division’s payment of $10,000 of program benefits for which it lacked documentation showing the 5 individuals were eligible beneficiaries increases the risk that the Division may not have been able to effectively prevent or detect fraud. Consequently, the Division may be required to return $10,000 to the federal agency.2 Cause—The Division’s management reported that it contracted with a third party to implement and use a new, temporary benefits system for the State’s Return-to-Work Bonus Program from July 1, 2021, through December 31, 2021.1 When the program and the Department’s contract with the third party ended, the Division did not ensure that the third-party contractor provided it with a complete set of program documentation that was derived from the system. Criteria—Federal regulations require the Division to retain all federal program records for a period of 3 years from the submission date of the final expenditure report to the federal agency (2 CFR §200.334). In addition, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—This program ended on December 31, 2021, and the Division’s management reported to us that it received all the records related to the federal program from the third-party contractor when operations of the State’s Return-to-Work Bonus Program and related benefits system ceased.1 However, to the extent possible for this program and for all future federal programs the Division administers, the Division should: 1. Ensure subaward entities provide all records and the Division retains all records relating to a federal award for a period of 3 years from the date it submits the final expenditure report. 2. Work with the State of Arizona Office of the Governor and U.S. Department of the Treasury to resolve the $10,000 in questioned costs.2 The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 To be eligible for the State’s Return-to-Work Bonus Program benefits, individuals had to have filed, received, and been deemed eligible for Unemployment Insurance program benefits in Arizona between the period of May 8, 2021, and May 15, 2021. The benefit payments consisted of bonus payments of either $1,000 or $2,000, with a total maximum benefit amount of $2,000 per eligible individual. The State’s Return-to-Work Bonus Program was funded by the federal Coronavirus State and Local Fiscal Recovery Funds, an American Rescue Plan Act of 2021 program (Public Law 117-2), as administered by the Arizona Governor’s Office. The Department of Economic Security operated the program from July 1, 2021, through December 31, 2021, and the program ended on December 31, 2021. (State of Arizona, Office of the Governor and Department of Economic Security Interagency Service Agreement No. ISA-DES-ARPA-070121-02). 2 Federal Uniform Guidance requires federal awarding agencies to follow up on audit findings and issue a management decision to ensure the recipient, the Office of the Governor, takes appropriate and timely corrective action (2 CFR §200.513[c]). Further, it requires that federal awarding agencies’ management decisions clearly state whether or not the audit finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action, as directed by the federal awarding agencies (2 CFR §200.521).
Assistance Listings number and name: 21.027 COVID-19 State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Eligibility Questioned costs: $10,000 Condition—Contrary to federal regulations and its policies and procedures, the Department of Economic Security—Division of Employment and Rehabilitation Services (Division) made benefits payments totaling $10,000 to individuals for the State’s Return-to-Work Bonus Program for which it lacked documentation to support that it paid only those individuals who were eligible to receive them. We tested 67 individuals who received benefit payments and found that the Division made benefit payments to 5 individuals totaling $10,000 for which it lacked documentation to support the eligibility determinations.1 This calculates to a 7.5 percent exception rate for our 67 individual eligibility sample, totaling $133,000. Effect—The Division’s payment of $10,000 of program benefits for which it lacked documentation showing the 5 individuals were eligible beneficiaries increases the risk that the Division may not have been able to effectively prevent or detect fraud. Consequently, the Division may be required to return $10,000 to the federal agency.2 Cause—The Division’s management reported that it contracted with a third party to implement and use a new, temporary benefits system for the State’s Return-to-Work Bonus Program from July 1, 2021, through December 31, 2021.1 When the program and the Department’s contract with the third party ended, the Division did not ensure that the third-party contractor provided it with a complete set of program documentation that was derived from the system. Criteria—Federal regulations require the Division to retain all federal program records for a period of 3 years from the submission date of the final expenditure report to the federal agency (2 CFR §200.334). In addition, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—This program ended on December 31, 2021, and the Division’s management reported to us that it received all the records related to the federal program from the third-party contractor when operations of the State’s Return-to-Work Bonus Program and related benefits system ceased.1 However, to the extent possible for this program and for all future federal programs the Division administers, the Division should: 1. Ensure subaward entities provide all records and the Division retains all records relating to a federal award for a period of 3 years from the date it submits the final expenditure report. 2. Work with the State of Arizona Office of the Governor and U.S. Department of the Treasury to resolve the $10,000 in questioned costs.2 The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 To be eligible for the State’s Return-to-Work Bonus Program benefits, individuals had to have filed, received, and been deemed eligible for Unemployment Insurance program benefits in Arizona between the period of May 8, 2021, and May 15, 2021. The benefit payments consisted of bonus payments of either $1,000 or $2,000, with a total maximum benefit amount of $2,000 per eligible individual. The State’s Return-to-Work Bonus Program was funded by the federal Coronavirus State and Local Fiscal Recovery Funds, an American Rescue Plan Act of 2021 program (Public Law 117-2), as administered by the Arizona Governor’s Office. The Department of Economic Security operated the program from July 1, 2021, through December 31, 2021, and the program ended on December 31, 2021. (State of Arizona, Office of the Governor and Department of Economic Security Interagency Service Agreement No. ISA-DES-ARPA-070121-02). 2 Federal Uniform Guidance requires federal awarding agencies to follow up on audit findings and issue a management decision to ensure the recipient, the Office of the Governor, takes appropriate and timely corrective action (2 CFR §200.513[c]). Further, it requires that federal awarding agencies’ management decisions clearly state whether or not the audit finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action, as directed by the federal awarding agencies (2 CFR §200.521).
Assistance Listings number and name: 21.027 COVID-19 State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Eligibility Questioned costs: $10,000 Condition—Contrary to federal regulations and its policies and procedures, the Department of Economic Security—Division of Employment and Rehabilitation Services (Division) made benefits payments totaling $10,000 to individuals for the State’s Return-to-Work Bonus Program for which it lacked documentation to support that it paid only those individuals who were eligible to receive them. We tested 67 individuals who received benefit payments and found that the Division made benefit payments to 5 individuals totaling $10,000 for which it lacked documentation to support the eligibility determinations.1 This calculates to a 7.5 percent exception rate for our 67 individual eligibility sample, totaling $133,000. Effect—The Division’s payment of $10,000 of program benefits for which it lacked documentation showing the 5 individuals were eligible beneficiaries increases the risk that the Division may not have been able to effectively prevent or detect fraud. Consequently, the Division may be required to return $10,000 to the federal agency.2 Cause—The Division’s management reported that it contracted with a third party to implement and use a new, temporary benefits system for the State’s Return-to-Work Bonus Program from July 1, 2021, through December 31, 2021.1 When the program and the Department’s contract with the third party ended, the Division did not ensure that the third-party contractor provided it with a complete set of program documentation that was derived from the system. Criteria—Federal regulations require the Division to retain all federal program records for a period of 3 years from the submission date of the final expenditure report to the federal agency (2 CFR §200.334). In addition, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—This program ended on December 31, 2021, and the Division’s management reported to us that it received all the records related to the federal program from the third-party contractor when operations of the State’s Return-to-Work Bonus Program and related benefits system ceased.1 However, to the extent possible for this program and for all future federal programs the Division administers, the Division should: 1. Ensure subaward entities provide all records and the Division retains all records relating to a federal award for a period of 3 years from the date it submits the final expenditure report. 2. Work with the State of Arizona Office of the Governor and U.S. Department of the Treasury to resolve the $10,000 in questioned costs.2 The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 To be eligible for the State’s Return-to-Work Bonus Program benefits, individuals had to have filed, received, and been deemed eligible for Unemployment Insurance program benefits in Arizona between the period of May 8, 2021, and May 15, 2021. The benefit payments consisted of bonus payments of either $1,000 or $2,000, with a total maximum benefit amount of $2,000 per eligible individual. The State’s Return-to-Work Bonus Program was funded by the federal Coronavirus State and Local Fiscal Recovery Funds, an American Rescue Plan Act of 2021 program (Public Law 117-2), as administered by the Arizona Governor’s Office. The Department of Economic Security operated the program from July 1, 2021, through December 31, 2021, and the program ended on December 31, 2021. (State of Arizona, Office of the Governor and Department of Economic Security Interagency Service Agreement No. ISA-DES-ARPA-070121-02). 2 Federal Uniform Guidance requires federal awarding agencies to follow up on audit findings and issue a management decision to ensure the recipient, the Office of the Governor, takes appropriate and timely corrective action (2 CFR §200.513[c]). Further, it requires that federal awarding agencies’ management decisions clearly state whether or not the audit finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action, as directed by the federal awarding agencies (2 CFR §200.521).