CONDITION The Department of Public Instruction (DPI) did not report Child Nutrition Cluster subawards to the Federal Funding Accountability and Transparency Act (FFATA) correctly. After testing FFATA reporting for the Child Nutrition Cluster, it was discovered that there were FFATA errors in the following areas: 1. The Department of Public Instruction did not report the subaward information timely for the Child Nutrition Cluster (CNC) (Assistance Listing number 10.553, 10.555, 10.559) for the 2023 grant year awards (October 2022-September 2023). After an analysis of grants awarded in 2023, we randomly sampled and pulled 11 awards to test. We found that all 11 were not submitted timely. The samples we pulled should have been reported by 4/30/23, 6/30/23, 7/31/23, 9/30/23, 11/30/23, and 1/31/24, but were not reported until 4/3/24 or 4/5/24. DPI explained that this occurred because all CNP reports from March to October of 2023 had to be resubmitted due to the wrong FEIN # being used on the reports. DPI resubmitted these reports on 4/3/24 and 4/5/24. The resubmitting of reports over a year later and without evidence that the reports were initially submitted timely is the reason for the audit finding. Those grant awards totaled $328,815.19. 2. The Department of Public Instruction did not report the subaward information timely for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559) for the 2024 grant year awards (October 2023-September 2024). After an analysis of grant awards awarded in 2024, we randomly sampled and pulled 4 awards to test. We found one of the four was not reported timely to FFATA. The report should have been submitted by 1/31/24 but it wasn't reported until 3/4/24. 3. The Department of Public Instruction did not report the subaward information for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559) for program months November and December of 2023 of the October 2023-September 2024 grant year. After an analysis of grant awards for that grant year and as reported to the auditor by DPI, it was discovered that 133 subawards should have been reported to FFATA, totaling $1,437,209.93. 4. The Department of Public Instruction did not properly report the subaward action/obligation date in the FSRS system for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559, 10.582). DPI staff run the FFATA report from the ND Foods system at the end of every month which is then uploaded into the FSRS system. In the FSRS system, it is listing the subaward action /obligation date as the day the report was pulled which is not the same day that payments are actually made. DPI reported the wrong subaward action/obligation date for all Child Nutrition Cluster samples that were pulled. There is no dollar error for these awards, only the obligation date. CRITERIA Federal regulation 2 CFR 170, Appendix A requires a Federal Financial Assistance Transparency Act (FFATA) report for each subaward that equals or exceeds $30,000 no later than the end of the month following the month in which the obligation was made. 2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. CAUSE DPI does not have adequate policies and procedures to ensure accurate and timely reporting for FFATA EFFECT Not meeting the FFATA requirements increases the likelihood that the public will not have access to transparent and accurate information regarding expenditures of federal awards. Additionally, federal regulations address actions that federal agencies may impose if a state entity does not comply with the U.S. Constitution, federal statutes, regulations, or the terms and conditions of a federal award. According to 2 CFR 200.208(c), “Specific conditions,” these actions may include • requiring reimbursement instead of advance payments; • not allowing the agency to proceed to the next phase until it submits evidence of acceptable performance; • requiring additional, more detailed financial reports or additional project monitoring; • requiring the agency to obtain technical or management assistance; or • establishing other prior approvals. If the federal agency determines the state agency cannot remedy its noncompliance through the above actions, 2 CFR 200.339, “Remedies for noncompliance,” outlines additional actions the federal agency may take. Depending on the circumstances, these actions may include: • temporarily withholding payments until the noncompliance has been corrected, • Denying the use of funds, • partly or fully suspending or terminating the federal award, • suspending or debarring the agency, • withholding further awards for the project or program, or • pursuing other available legal remedies. CONTEXT During our audit period, there were 407 subrecipients receiving Federal grant awards for the Child Nutrition Cluster program totaling $68,351,704. Out of the 407 subrecipients, 309 were over the $30,000 threshold and should have been reported to FFATA. In 2023, there were 164 subrecipients and, in 2024, 145 subrecipients that met the threshold, for a total of $66,879,778. Where sampling was performed, the audit used a non-statistical sampling method. IDENTIFICATION AS A REPEAT FINDING Finding 2022-022 was reported in the immediate prior year. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding. RECOMMENDATION We recommend the Department of Public Instruction implement policies and procedures to ensure timely and accurate submission of FFATA reports in accordance with federal regulations. DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE The Department of Public Instruction agrees with the issues identified. See “Management’s Response and Corrective Action” section of this report.
CONDITION The Department of Public Instruction (DPI) did not report Child Nutrition Cluster subawards to the Federal Funding Accountability and Transparency Act (FFATA) correctly. After testing FFATA reporting for the Child Nutrition Cluster, it was discovered that there were FFATA errors in the following areas: 1. The Department of Public Instruction did not report the subaward information timely for the Child Nutrition Cluster (CNC) (Assistance Listing number 10.553, 10.555, 10.559) for the 2023 grant year awards (October 2022-September 2023). After an analysis of grants awarded in 2023, we randomly sampled and pulled 11 awards to test. We found that all 11 were not submitted timely. The samples we pulled should have been reported by 4/30/23, 6/30/23, 7/31/23, 9/30/23, 11/30/23, and 1/31/24, but were not reported until 4/3/24 or 4/5/24. DPI explained that this occurred because all CNP reports from March to October of 2023 had to be resubmitted due to the wrong FEIN # being used on the reports. DPI resubmitted these reports on 4/3/24 and 4/5/24. The resubmitting of reports over a year later and without evidence that the reports were initially submitted timely is the reason for the audit finding. Those grant awards totaled $328,815.19. 2. The Department of Public Instruction did not report the subaward information timely for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559) for the 2024 grant year awards (October 2023-September 2024). After an analysis of grant awards awarded in 2024, we randomly sampled and pulled 4 awards to test. We found one of the four was not reported timely to FFATA. The report should have been submitted by 1/31/24 but it wasn't reported until 3/4/24. 3. The Department of Public Instruction did not report the subaward information for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559) for program months November and December of 2023 of the October 2023-September 2024 grant year. After an analysis of grant awards for that grant year and as reported to the auditor by DPI, it was discovered that 133 subawards should have been reported to FFATA, totaling $1,437,209.93. 4. The Department of Public Instruction did not properly report the subaward action/obligation date in the FSRS system for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559, 10.582). DPI staff run the FFATA report from the ND Foods system at the end of every month which is then uploaded into the FSRS system. In the FSRS system, it is listing the subaward action /obligation date as the day the report was pulled which is not the same day that payments are actually made. DPI reported the wrong subaward action/obligation date for all Child Nutrition Cluster samples that were pulled. There is no dollar error for these awards, only the obligation date. CRITERIA Federal regulation 2 CFR 170, Appendix A requires a Federal Financial Assistance Transparency Act (FFATA) report for each subaward that equals or exceeds $30,000 no later than the end of the month following the month in which the obligation was made. 2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. CAUSE DPI does not have adequate policies and procedures to ensure accurate and timely reporting for FFATA EFFECT Not meeting the FFATA requirements increases the likelihood that the public will not have access to transparent and accurate information regarding expenditures of federal awards. Additionally, federal regulations address actions that federal agencies may impose if a state entity does not comply with the U.S. Constitution, federal statutes, regulations, or the terms and conditions of a federal award. According to 2 CFR 200.208(c), “Specific conditions,” these actions may include • requiring reimbursement instead of advance payments; • not allowing the agency to proceed to the next phase until it submits evidence of acceptable performance; • requiring additional, more detailed financial reports or additional project monitoring; • requiring the agency to obtain technical or management assistance; or • establishing other prior approvals. If the federal agency determines the state agency cannot remedy its noncompliance through the above actions, 2 CFR 200.339, “Remedies for noncompliance,” outlines additional actions the federal agency may take. Depending on the circumstances, these actions may include: • temporarily withholding payments until the noncompliance has been corrected, • Denying the use of funds, • partly or fully suspending or terminating the federal award, • suspending or debarring the agency, • withholding further awards for the project or program, or • pursuing other available legal remedies. CONTEXT During our audit period, there were 407 subrecipients receiving Federal grant awards for the Child Nutrition Cluster program totaling $68,351,704. Out of the 407 subrecipients, 309 were over the $30,000 threshold and should have been reported to FFATA. In 2023, there were 164 subrecipients and, in 2024, 145 subrecipients that met the threshold, for a total of $66,879,778. Where sampling was performed, the audit used a non-statistical sampling method. IDENTIFICATION AS A REPEAT FINDING Finding 2022-022 was reported in the immediate prior year. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding. RECOMMENDATION We recommend the Department of Public Instruction implement policies and procedures to ensure timely and accurate submission of FFATA reports in accordance with federal regulations. DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE The Department of Public Instruction agrees with the issues identified. See “Management’s Response and Corrective Action” section of this report.
CONDITION The Department of Public Instruction (DPI) did not report Child Nutrition Cluster subawards to the Federal Funding Accountability and Transparency Act (FFATA) correctly. After testing FFATA reporting for the Child Nutrition Cluster, it was discovered that there were FFATA errors in the following areas: 1. The Department of Public Instruction did not report the subaward information timely for the Child Nutrition Cluster (CNC) (Assistance Listing number 10.553, 10.555, 10.559) for the 2023 grant year awards (October 2022-September 2023). After an analysis of grants awarded in 2023, we randomly sampled and pulled 11 awards to test. We found that all 11 were not submitted timely. The samples we pulled should have been reported by 4/30/23, 6/30/23, 7/31/23, 9/30/23, 11/30/23, and 1/31/24, but were not reported until 4/3/24 or 4/5/24. DPI explained that this occurred because all CNP reports from March to October of 2023 had to be resubmitted due to the wrong FEIN # being used on the reports. DPI resubmitted these reports on 4/3/24 and 4/5/24. The resubmitting of reports over a year later and without evidence that the reports were initially submitted timely is the reason for the audit finding. Those grant awards totaled $328,815.19. 2. The Department of Public Instruction did not report the subaward information timely for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559) for the 2024 grant year awards (October 2023-September 2024). After an analysis of grant awards awarded in 2024, we randomly sampled and pulled 4 awards to test. We found one of the four was not reported timely to FFATA. The report should have been submitted by 1/31/24 but it wasn't reported until 3/4/24. 3. The Department of Public Instruction did not report the subaward information for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559) for program months November and December of 2023 of the October 2023-September 2024 grant year. After an analysis of grant awards for that grant year and as reported to the auditor by DPI, it was discovered that 133 subawards should have been reported to FFATA, totaling $1,437,209.93. 4. The Department of Public Instruction did not properly report the subaward action/obligation date in the FSRS system for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559, 10.582). DPI staff run the FFATA report from the ND Foods system at the end of every month which is then uploaded into the FSRS system. In the FSRS system, it is listing the subaward action /obligation date as the day the report was pulled which is not the same day that payments are actually made. DPI reported the wrong subaward action/obligation date for all Child Nutrition Cluster samples that were pulled. There is no dollar error for these awards, only the obligation date. CRITERIA Federal regulation 2 CFR 170, Appendix A requires a Federal Financial Assistance Transparency Act (FFATA) report for each subaward that equals or exceeds $30,000 no later than the end of the month following the month in which the obligation was made. 2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. CAUSE DPI does not have adequate policies and procedures to ensure accurate and timely reporting for FFATA EFFECT Not meeting the FFATA requirements increases the likelihood that the public will not have access to transparent and accurate information regarding expenditures of federal awards. Additionally, federal regulations address actions that federal agencies may impose if a state entity does not comply with the U.S. Constitution, federal statutes, regulations, or the terms and conditions of a federal award. According to 2 CFR 200.208(c), “Specific conditions,” these actions may include • requiring reimbursement instead of advance payments; • not allowing the agency to proceed to the next phase until it submits evidence of acceptable performance; • requiring additional, more detailed financial reports or additional project monitoring; • requiring the agency to obtain technical or management assistance; or • establishing other prior approvals. If the federal agency determines the state agency cannot remedy its noncompliance through the above actions, 2 CFR 200.339, “Remedies for noncompliance,” outlines additional actions the federal agency may take. Depending on the circumstances, these actions may include: • temporarily withholding payments until the noncompliance has been corrected, • Denying the use of funds, • partly or fully suspending or terminating the federal award, • suspending or debarring the agency, • withholding further awards for the project or program, or • pursuing other available legal remedies. CONTEXT During our audit period, there were 407 subrecipients receiving Federal grant awards for the Child Nutrition Cluster program totaling $68,351,704. Out of the 407 subrecipients, 309 were over the $30,000 threshold and should have been reported to FFATA. In 2023, there were 164 subrecipients and, in 2024, 145 subrecipients that met the threshold, for a total of $66,879,778. Where sampling was performed, the audit used a non-statistical sampling method. IDENTIFICATION AS A REPEAT FINDING Finding 2022-022 was reported in the immediate prior year. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding. RECOMMENDATION We recommend the Department of Public Instruction implement policies and procedures to ensure timely and accurate submission of FFATA reports in accordance with federal regulations. DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE The Department of Public Instruction agrees with the issues identified. See “Management’s Response and Corrective Action” section of this report.
CONDITION The Department of Public Instruction (DPI) did not report Child Nutrition Cluster subawards to the Federal Funding Accountability and Transparency Act (FFATA) correctly. After testing FFATA reporting for the Child Nutrition Cluster, it was discovered that there were FFATA errors in the following areas: 1. The Department of Public Instruction did not report the subaward information timely for the Child Nutrition Cluster (CNC) (Assistance Listing number 10.553, 10.555, 10.559) for the 2023 grant year awards (October 2022-September 2023). After an analysis of grants awarded in 2023, we randomly sampled and pulled 11 awards to test. We found that all 11 were not submitted timely. The samples we pulled should have been reported by 4/30/23, 6/30/23, 7/31/23, 9/30/23, 11/30/23, and 1/31/24, but were not reported until 4/3/24 or 4/5/24. DPI explained that this occurred because all CNP reports from March to October of 2023 had to be resubmitted due to the wrong FEIN # being used on the reports. DPI resubmitted these reports on 4/3/24 and 4/5/24. The resubmitting of reports over a year later and without evidence that the reports were initially submitted timely is the reason for the audit finding. Those grant awards totaled $328,815.19. 2. The Department of Public Instruction did not report the subaward information timely for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559) for the 2024 grant year awards (October 2023-September 2024). After an analysis of grant awards awarded in 2024, we randomly sampled and pulled 4 awards to test. We found one of the four was not reported timely to FFATA. The report should have been submitted by 1/31/24 but it wasn't reported until 3/4/24. 3. The Department of Public Instruction did not report the subaward information for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559) for program months November and December of 2023 of the October 2023-September 2024 grant year. After an analysis of grant awards for that grant year and as reported to the auditor by DPI, it was discovered that 133 subawards should have been reported to FFATA, totaling $1,437,209.93. 4. The Department of Public Instruction did not properly report the subaward action/obligation date in the FSRS system for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559, 10.582). DPI staff run the FFATA report from the ND Foods system at the end of every month which is then uploaded into the FSRS system. In the FSRS system, it is listing the subaward action /obligation date as the day the report was pulled which is not the same day that payments are actually made. DPI reported the wrong subaward action/obligation date for all Child Nutrition Cluster samples that were pulled. There is no dollar error for these awards, only the obligation date. CRITERIA Federal regulation 2 CFR 170, Appendix A requires a Federal Financial Assistance Transparency Act (FFATA) report for each subaward that equals or exceeds $30,000 no later than the end of the month following the month in which the obligation was made. 2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. CAUSE DPI does not have adequate policies and procedures to ensure accurate and timely reporting for FFATA EFFECT Not meeting the FFATA requirements increases the likelihood that the public will not have access to transparent and accurate information regarding expenditures of federal awards. Additionally, federal regulations address actions that federal agencies may impose if a state entity does not comply with the U.S. Constitution, federal statutes, regulations, or the terms and conditions of a federal award. According to 2 CFR 200.208(c), “Specific conditions,” these actions may include • requiring reimbursement instead of advance payments; • not allowing the agency to proceed to the next phase until it submits evidence of acceptable performance; • requiring additional, more detailed financial reports or additional project monitoring; • requiring the agency to obtain technical or management assistance; or • establishing other prior approvals. If the federal agency determines the state agency cannot remedy its noncompliance through the above actions, 2 CFR 200.339, “Remedies for noncompliance,” outlines additional actions the federal agency may take. Depending on the circumstances, these actions may include: • temporarily withholding payments until the noncompliance has been corrected, • Denying the use of funds, • partly or fully suspending or terminating the federal award, • suspending or debarring the agency, • withholding further awards for the project or program, or • pursuing other available legal remedies. CONTEXT During our audit period, there were 407 subrecipients receiving Federal grant awards for the Child Nutrition Cluster program totaling $68,351,704. Out of the 407 subrecipients, 309 were over the $30,000 threshold and should have been reported to FFATA. In 2023, there were 164 subrecipients and, in 2024, 145 subrecipients that met the threshold, for a total of $66,879,778. Where sampling was performed, the audit used a non-statistical sampling method. IDENTIFICATION AS A REPEAT FINDING Finding 2022-022 was reported in the immediate prior year. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding. RECOMMENDATION We recommend the Department of Public Instruction implement policies and procedures to ensure timely and accurate submission of FFATA reports in accordance with federal regulations. DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE The Department of Public Instruction agrees with the issues identified. See “Management’s Response and Corrective Action” section of this report.
CONDITION The Department of Public Instruction (DPI) did not report Child Nutrition Cluster subawards to the Federal Funding Accountability and Transparency Act (FFATA) correctly. After testing FFATA reporting for the Child Nutrition Cluster, it was discovered that there were FFATA errors in the following areas: 1. The Department of Public Instruction did not report the subaward information timely for the Child Nutrition Cluster (CNC) (Assistance Listing number 10.553, 10.555, 10.559) for the 2023 grant year awards (October 2022-September 2023). After an analysis of grants awarded in 2023, we randomly sampled and pulled 11 awards to test. We found that all 11 were not submitted timely. The samples we pulled should have been reported by 4/30/23, 6/30/23, 7/31/23, 9/30/23, 11/30/23, and 1/31/24, but were not reported until 4/3/24 or 4/5/24. DPI explained that this occurred because all CNP reports from March to October of 2023 had to be resubmitted due to the wrong FEIN # being used on the reports. DPI resubmitted these reports on 4/3/24 and 4/5/24. The resubmitting of reports over a year later and without evidence that the reports were initially submitted timely is the reason for the audit finding. Those grant awards totaled $328,815.19. 2. The Department of Public Instruction did not report the subaward information timely for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559) for the 2024 grant year awards (October 2023-September 2024). After an analysis of grant awards awarded in 2024, we randomly sampled and pulled 4 awards to test. We found one of the four was not reported timely to FFATA. The report should have been submitted by 1/31/24 but it wasn't reported until 3/4/24. 3. The Department of Public Instruction did not report the subaward information for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559) for program months November and December of 2023 of the October 2023-September 2024 grant year. After an analysis of grant awards for that grant year and as reported to the auditor by DPI, it was discovered that 133 subawards should have been reported to FFATA, totaling $1,437,209.93. 4. The Department of Public Instruction did not properly report the subaward action/obligation date in the FSRS system for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559, 10.582). DPI staff run the FFATA report from the ND Foods system at the end of every month which is then uploaded into the FSRS system. In the FSRS system, it is listing the subaward action /obligation date as the day the report was pulled which is not the same day that payments are actually made. DPI reported the wrong subaward action/obligation date for all Child Nutrition Cluster samples that were pulled. There is no dollar error for these awards, only the obligation date. CRITERIA Federal regulation 2 CFR 170, Appendix A requires a Federal Financial Assistance Transparency Act (FFATA) report for each subaward that equals or exceeds $30,000 no later than the end of the month following the month in which the obligation was made. 2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. CAUSE DPI does not have adequate policies and procedures to ensure accurate and timely reporting for FFATA EFFECT Not meeting the FFATA requirements increases the likelihood that the public will not have access to transparent and accurate information regarding expenditures of federal awards. Additionally, federal regulations address actions that federal agencies may impose if a state entity does not comply with the U.S. Constitution, federal statutes, regulations, or the terms and conditions of a federal award. According to 2 CFR 200.208(c), “Specific conditions,” these actions may include • requiring reimbursement instead of advance payments; • not allowing the agency to proceed to the next phase until it submits evidence of acceptable performance; • requiring additional, more detailed financial reports or additional project monitoring; • requiring the agency to obtain technical or management assistance; or • establishing other prior approvals. If the federal agency determines the state agency cannot remedy its noncompliance through the above actions, 2 CFR 200.339, “Remedies for noncompliance,” outlines additional actions the federal agency may take. Depending on the circumstances, these actions may include: • temporarily withholding payments until the noncompliance has been corrected, • Denying the use of funds, • partly or fully suspending or terminating the federal award, • suspending or debarring the agency, • withholding further awards for the project or program, or • pursuing other available legal remedies. CONTEXT During our audit period, there were 407 subrecipients receiving Federal grant awards for the Child Nutrition Cluster program totaling $68,351,704. Out of the 407 subrecipients, 309 were over the $30,000 threshold and should have been reported to FFATA. In 2023, there were 164 subrecipients and, in 2024, 145 subrecipients that met the threshold, for a total of $66,879,778. Where sampling was performed, the audit used a non-statistical sampling method. IDENTIFICATION AS A REPEAT FINDING Finding 2022-022 was reported in the immediate prior year. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding. RECOMMENDATION We recommend the Department of Public Instruction implement policies and procedures to ensure timely and accurate submission of FFATA reports in accordance with federal regulations. DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE The Department of Public Instruction agrees with the issues identified. See “Management’s Response and Corrective Action” section of this report.
CONDITION The Department of Public Instruction (DPI) did not report Child Nutrition Cluster subawards to the Federal Funding Accountability and Transparency Act (FFATA) correctly. After testing FFATA reporting for the Child Nutrition Cluster, it was discovered that there were FFATA errors in the following areas: 1. The Department of Public Instruction did not report the subaward information timely for the Child Nutrition Cluster (CNC) (Assistance Listing number 10.553, 10.555, 10.559) for the 2023 grant year awards (October 2022-September 2023). After an analysis of grants awarded in 2023, we randomly sampled and pulled 11 awards to test. We found that all 11 were not submitted timely. The samples we pulled should have been reported by 4/30/23, 6/30/23, 7/31/23, 9/30/23, 11/30/23, and 1/31/24, but were not reported until 4/3/24 or 4/5/24. DPI explained that this occurred because all CNP reports from March to October of 2023 had to be resubmitted due to the wrong FEIN # being used on the reports. DPI resubmitted these reports on 4/3/24 and 4/5/24. The resubmitting of reports over a year later and without evidence that the reports were initially submitted timely is the reason for the audit finding. Those grant awards totaled $328,815.19. 2. The Department of Public Instruction did not report the subaward information timely for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559) for the 2024 grant year awards (October 2023-September 2024). After an analysis of grant awards awarded in 2024, we randomly sampled and pulled 4 awards to test. We found one of the four was not reported timely to FFATA. The report should have been submitted by 1/31/24 but it wasn't reported until 3/4/24. 3. The Department of Public Instruction did not report the subaward information for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559) for program months November and December of 2023 of the October 2023-September 2024 grant year. After an analysis of grant awards for that grant year and as reported to the auditor by DPI, it was discovered that 133 subawards should have been reported to FFATA, totaling $1,437,209.93. 4. The Department of Public Instruction did not properly report the subaward action/obligation date in the FSRS system for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559, 10.582). DPI staff run the FFATA report from the ND Foods system at the end of every month which is then uploaded into the FSRS system. In the FSRS system, it is listing the subaward action /obligation date as the day the report was pulled which is not the same day that payments are actually made. DPI reported the wrong subaward action/obligation date for all Child Nutrition Cluster samples that were pulled. There is no dollar error for these awards, only the obligation date. CRITERIA Federal regulation 2 CFR 170, Appendix A requires a Federal Financial Assistance Transparency Act (FFATA) report for each subaward that equals or exceeds $30,000 no later than the end of the month following the month in which the obligation was made. 2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. CAUSE DPI does not have adequate policies and procedures to ensure accurate and timely reporting for FFATA EFFECT Not meeting the FFATA requirements increases the likelihood that the public will not have access to transparent and accurate information regarding expenditures of federal awards. Additionally, federal regulations address actions that federal agencies may impose if a state entity does not comply with the U.S. Constitution, federal statutes, regulations, or the terms and conditions of a federal award. According to 2 CFR 200.208(c), “Specific conditions,” these actions may include • requiring reimbursement instead of advance payments; • not allowing the agency to proceed to the next phase until it submits evidence of acceptable performance; • requiring additional, more detailed financial reports or additional project monitoring; • requiring the agency to obtain technical or management assistance; or • establishing other prior approvals. If the federal agency determines the state agency cannot remedy its noncompliance through the above actions, 2 CFR 200.339, “Remedies for noncompliance,” outlines additional actions the federal agency may take. Depending on the circumstances, these actions may include: • temporarily withholding payments until the noncompliance has been corrected, • Denying the use of funds, • partly or fully suspending or terminating the federal award, • suspending or debarring the agency, • withholding further awards for the project or program, or • pursuing other available legal remedies. CONTEXT During our audit period, there were 407 subrecipients receiving Federal grant awards for the Child Nutrition Cluster program totaling $68,351,704. Out of the 407 subrecipients, 309 were over the $30,000 threshold and should have been reported to FFATA. In 2023, there were 164 subrecipients and, in 2024, 145 subrecipients that met the threshold, for a total of $66,879,778. Where sampling was performed, the audit used a non-statistical sampling method. IDENTIFICATION AS A REPEAT FINDING Finding 2022-022 was reported in the immediate prior year. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding. RECOMMENDATION We recommend the Department of Public Instruction implement policies and procedures to ensure timely and accurate submission of FFATA reports in accordance with federal regulations. DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE The Department of Public Instruction agrees with the issues identified. See “Management’s Response and Corrective Action” section of this report.
2024-037 Oregon Business Development Department Assign responsibility to ensure review of subrecipient audit reports Federal Awarding Agency: U.S. Department of the Treasury Assistance Listing Number and Name: 21.027 Coronavirus State and Local Fiscal Recovery Fund (COVID-19) Federal Award Numbers and Years: SLFRP4454, 2020 (COVID-19) Compliance Requirements: Subrecipient Monitoring Type of Finding: Significant Deficiency; Noncompliance Prior Year Findings: N/A Questioned Costs: N/A Criteria: 2 CFR 200.332(e)(2), (e)(3), (g), (h), (i); 2 CFR 200.521(a), (c), (d) Federal regulations require recipients of federal awards ensure their subrecipients expending $750,000 or more during fiscal years prior to October 1, 2024, are audited according to requirements in 2 CFR 200 Subpart F, and then to perform certain actions dependent upon audit results. To satisfy this requirement, the Department of Administrative Services assigns Oregon state departments to be audit agencies. An audit agency is to: • Ensure the subrecipient received an audit or consider sanctions per 2 CFR 200.339. • Ensure the subrecipient takes corrective action on all findings negatively affecting subawards. • Issue a management decision within six months of the Federal Audit Clearinghouse’s acceptance of the subrecipient’s audit report if there were findings pertaining to the agency’s subawards. • Contact other state agencies that have also passed through funds to the subrecipients (contributing agencies), alerting them to findings related to their programs. In fiscal year 2024, DAS assigned OBDD to review 24 of the state’s 369 subrecipients’ audits, receiving a total of $42.3 million in pass-through funding from 11 state agencies. OBDD did not review any of these entities due to staff turnover. We reviewed two of these subrecipients and found neither had audit findings. This does not preclude the remaining 22 subrecipients from having audit findings requiring communication We recommend department management complete its review of subrecipient audits as soon as possible to ensure its monitoring procedures are sufficient, and to inform contributing agencies of any deficiencies that may affect their programs.
2024-040 Oregon Department of Emergency Management Assign responsibility to ensure review of subrecipient audit reports Federal Awarding Agency: U.S. Department of Homeland Security Assistance Listing Number and Name: 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disasters) Federal Award Numbers and Years: Multiple Compliance Requirements: Subrecipient Monitoring Type of Finding: Significant Deficiency; Noncompliance Prior Year Findings: N/A Questioned Costs: N/A Criteria: 2 CFR 200.332(e)(2), (e)(3), (g), (h), (i); 2 CFR 200.521(a), (c), (d) Federal regulations require recipients of federal awards ensure its subrecipients expending $750,000 or more during fiscal years prior to October 1, 2024, are audited according to requirements in 2 CFR 200 Subpart F, and then to perform certain actions dependent upon audit results. To satisfy this requirement, the Department of Administrative Services assigns Oregon state departments to be audit agencies. An audit agency is to: • Ensure the subrecipient received an audit or consider sanctions per 2 CFR 200.339. • Ensure the subrecipient takes corrective action on all findings negatively affecting subawards. • Issue a management decision within six months of the Federal Audit Clearinghouse’s acceptance of the subrecipient’s audit report if there were findings pertaining to the agency’s subawards. • Contact other state agencies that have also passed through funds to the subrecipients (contributing agencies), alerting them to findings related to their programs. In fiscal year 2024, DAS assigned the Oregon Department of Emergency Management (department) to review 27 of the state’s 369 subrecipients’ audits, receiving a total of $176.2 million in pass-through funding from 20 state agencies. The department did not review any of these entities because they determined their other commitments were higher priorities. We reviewed two of these subrecipients and found one expended a total of $36 million and had one audit finding that may affect various federal programs. This subrecipient received pass-through funding from five other contributing agencies who were not informed of the finding. This does not preclude the remaining 25 subrecipients from having audit findings requiring communication to the contributing agencies. We recommend department management complete its review of subrecipient audits as soon as possible to ensure its monitoring procedures are sufficient, and to inform contributing agencies of any deficiencies that may affect their programs.
2024-037 Oregon Business Development Department Assign responsibility to ensure review of subrecipient audit reports Federal Awarding Agency: U.S. Department of the Treasury Assistance Listing Number and Name: 21.027 Coronavirus State and Local Fiscal Recovery Fund (COVID-19) Federal Award Numbers and Years: SLFRP4454, 2020 (COVID-19) Compliance Requirements: Subrecipient Monitoring Type of Finding: Significant Deficiency; Noncompliance Prior Year Findings: N/A Questioned Costs: N/A Criteria: 2 CFR 200.332(e)(2), (e)(3), (g), (h), (i); 2 CFR 200.521(a), (c), (d) Federal regulations require recipients of federal awards ensure their subrecipients expending $750,000 or more during fiscal years prior to October 1, 2024, are audited according to requirements in 2 CFR 200 Subpart F, and then to perform certain actions dependent upon audit results. To satisfy this requirement, the Department of Administrative Services assigns Oregon state departments to be audit agencies. An audit agency is to: • Ensure the subrecipient received an audit or consider sanctions per 2 CFR 200.339. • Ensure the subrecipient takes corrective action on all findings negatively affecting subawards. • Issue a management decision within six months of the Federal Audit Clearinghouse’s acceptance of the subrecipient’s audit report if there were findings pertaining to the agency’s subawards. • Contact other state agencies that have also passed through funds to the subrecipients (contributing agencies), alerting them to findings related to their programs. In fiscal year 2024, DAS assigned OBDD to review 24 of the state’s 369 subrecipients’ audits, receiving a total of $42.3 million in pass-through funding from 11 state agencies. OBDD did not review any of these entities due to staff turnover. We reviewed two of these subrecipients and found neither had audit findings. This does not preclude the remaining 22 subrecipients from having audit findings requiring communication We recommend department management complete its review of subrecipient audits as soon as possible to ensure its monitoring procedures are sufficient, and to inform contributing agencies of any deficiencies that may affect their programs.
2024-040 Oregon Department of Emergency Management Assign responsibility to ensure review of subrecipient audit reports Federal Awarding Agency: U.S. Department of Homeland Security Assistance Listing Number and Name: 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disasters) Federal Award Numbers and Years: Multiple Compliance Requirements: Subrecipient Monitoring Type of Finding: Significant Deficiency; Noncompliance Prior Year Findings: N/A Questioned Costs: N/A Criteria: 2 CFR 200.332(e)(2), (e)(3), (g), (h), (i); 2 CFR 200.521(a), (c), (d) Federal regulations require recipients of federal awards ensure its subrecipients expending $750,000 or more during fiscal years prior to October 1, 2024, are audited according to requirements in 2 CFR 200 Subpart F, and then to perform certain actions dependent upon audit results. To satisfy this requirement, the Department of Administrative Services assigns Oregon state departments to be audit agencies. An audit agency is to: • Ensure the subrecipient received an audit or consider sanctions per 2 CFR 200.339. • Ensure the subrecipient takes corrective action on all findings negatively affecting subawards. • Issue a management decision within six months of the Federal Audit Clearinghouse’s acceptance of the subrecipient’s audit report if there were findings pertaining to the agency’s subawards. • Contact other state agencies that have also passed through funds to the subrecipients (contributing agencies), alerting them to findings related to their programs. In fiscal year 2024, DAS assigned the Oregon Department of Emergency Management (department) to review 27 of the state’s 369 subrecipients’ audits, receiving a total of $176.2 million in pass-through funding from 20 state agencies. The department did not review any of these entities because they determined their other commitments were higher priorities. We reviewed two of these subrecipients and found one expended a total of $36 million and had one audit finding that may affect various federal programs. This subrecipient received pass-through funding from five other contributing agencies who were not informed of the finding. This does not preclude the remaining 25 subrecipients from having audit findings requiring communication to the contributing agencies. We recommend department management complete its review of subrecipient audits as soon as possible to ensure its monitoring procedures are sufficient, and to inform contributing agencies of any deficiencies that may affect their programs.
Finding No. 2024-032 Federal Awarding Agency: U.S. Department of the Treasury Impact: Material Weakness, Material Noncompliance AL Number and Title: 21.027 Coronavirus State and Local Fiscal Recovery Funds (SLFRF) – COVID-19 Federal Award Number: SLFRP0006, SLFRP2633, SLFRP4544 Applicable Compliance Requirement: Subrecipient Monitoring Condition: During FY 24, DCCED staff did not sufficiently monitor the subrecipient tasked with administering the SLFRF Tourism and Other Businesses program. Furthermore, DCCED management did not take action with respect to the subrecipient’s noncompliance with requirements to obtain a single audit. Context: One of the purposes of the federal SLFRF program was to provide funding to address the negative economic impacts of the pandemic. For this purpose, DCCED entered into a contract with a subrecipient to administer $90 million in grants to tourism and other businesses. The contract required the subrecipient to determine eligibility, send payments to eligible businesses, and provide disbursement reports to DCCED for monitoring. This activity created a subrecipient relationship. The audit determined that DCCED’s monitoring of the subrecipient was insufficient on two grounds. 1. DCCED staff did not perform monitoring activities to verify that the subrecipient was correctly determining eligibility, calculating award amounts, or correctly disbursing funds. DCCED staff reviewed reports and participated in meetings regarding issues raised by the subrecipient or participating businesses. However, DCCED staff did not obtain and review detailed FY 24 disbursement reports, or perform a desk review or onsite visit, to verify the subrecipients compliance with SLFRF program requirements. DCCED staff did not reconcile the total amount of funds DCCED advanced to the subrecipient with the total funds disbursed by the subrecipient. 2. Furthermore, DCCED staff did not ensure that the subrecipient obtained a single or program-specific audit. In FY 22 and FY 23 DCCED advanced a total of $77 million to the subrecipient. The Department of Administration, Division of Finance (DOF) compiles the amount of pass-through funds by subrecipient in order to identify and track subrecipients that must obtain a single audit. DOF sent the subrecipient single audit noncompliance letters for FY 22 and FY 23 and added the subrecipient to the State’s “Delinquent Audits” tracking log, which is posted on DOF’s webpage. However, DCCED staff did not verify the subrecipient’s single audit status and took no action to address the noncompliance. The subrecipient did not obtain a single audit for FY 22 and FY 23. Cause: DCCED lacked resources in its Division of Community and Regional Affairs to administer the SLFRF program. As a result, the program was administered by staff within the Commissioner’s Office that lacked adequate training, knowledge, and experience to administer a federal pass-through program. Consequently, DCCED staff administering the program were not fully aware of federal subrecipient monitoring requirements. Criteria: Title 2 CFR 200.303 requires the State to establish and maintain effective internal controls over federal awards that provide reasonable assurance that the State is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Title 2 CFR 200.332(d) requires pass-through entities to monitor the activities of a subrecipient as necessary to ensure that the subrecipient complies with statutes, regulations, and the terms and conditions of the subaward. The amount of monitoring should be commensurate with the subrecipient’s fraud risk and risk of noncompliance. Title 2 CFR 200.332(f) requires pass-through entities to verify that a subrecipient is audited as required by Uniform Guidance Subpart F - Audit. When a subrecipient is noncompliant with the single audit requirement, Title 2 CFR 200.505 states that pass-through entities "must take appropriate action." Authorized action includes withholding payments from the subrecipient or terminating the grant per Title 2 CFR 200.339. Effect: Inadequate subrecipient monitoring increases the risk of subrecipient noncompliance with federal statutes, regulations, and the terms and conditions of a program. Subrecipient noncompliance with the terms and conditions of the federal award could result in the State having to repay SLFRF monies to the federal government. Questioned Costs: None Recommendation: DCCED’s commissioner should ensure compliance with federal subrecipient monitoring requirements through adoption of written procedures and staff training. Furthermore, the commissioner should ensure the SLFRF subrecipient obtains single or program-specific audits for all required fiscal years. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2024-032 Federal Awarding Agency: U.S. Department of the Treasury Impact: Material Weakness, Material Noncompliance AL Number and Title: 21.027 Coronavirus State and Local Fiscal Recovery Funds (SLFRF) – COVID-19 Federal Award Number: SLFRP0006, SLFRP2633, SLFRP4544 Applicable Compliance Requirement: Subrecipient Monitoring Condition: During FY 24, DCCED staff did not sufficiently monitor the subrecipient tasked with administering the SLFRF Tourism and Other Businesses program. Furthermore, DCCED management did not take action with respect to the subrecipient’s noncompliance with requirements to obtain a single audit. Context: One of the purposes of the federal SLFRF program was to provide funding to address the negative economic impacts of the pandemic. For this purpose, DCCED entered into a contract with a subrecipient to administer $90 million in grants to tourism and other businesses. The contract required the subrecipient to determine eligibility, send payments to eligible businesses, and provide disbursement reports to DCCED for monitoring. This activity created a subrecipient relationship. The audit determined that DCCED’s monitoring of the subrecipient was insufficient on two grounds. 1. DCCED staff did not perform monitoring activities to verify that the subrecipient was correctly determining eligibility, calculating award amounts, or correctly disbursing funds. DCCED staff reviewed reports and participated in meetings regarding issues raised by the subrecipient or participating businesses. However, DCCED staff did not obtain and review detailed FY 24 disbursement reports, or perform a desk review or onsite visit, to verify the subrecipients compliance with SLFRF program requirements. DCCED staff did not reconcile the total amount of funds DCCED advanced to the subrecipient with the total funds disbursed by the subrecipient. 2. Furthermore, DCCED staff did not ensure that the subrecipient obtained a single or program-specific audit. In FY 22 and FY 23 DCCED advanced a total of $77 million to the subrecipient. The Department of Administration, Division of Finance (DOF) compiles the amount of pass-through funds by subrecipient in order to identify and track subrecipients that must obtain a single audit. DOF sent the subrecipient single audit noncompliance letters for FY 22 and FY 23 and added the subrecipient to the State’s “Delinquent Audits” tracking log, which is posted on DOF’s webpage. However, DCCED staff did not verify the subrecipient’s single audit status and took no action to address the noncompliance. The subrecipient did not obtain a single audit for FY 22 and FY 23. Cause: DCCED lacked resources in its Division of Community and Regional Affairs to administer the SLFRF program. As a result, the program was administered by staff within the Commissioner’s Office that lacked adequate training, knowledge, and experience to administer a federal pass-through program. Consequently, DCCED staff administering the program were not fully aware of federal subrecipient monitoring requirements. Criteria: Title 2 CFR 200.303 requires the State to establish and maintain effective internal controls over federal awards that provide reasonable assurance that the State is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Title 2 CFR 200.332(d) requires pass-through entities to monitor the activities of a subrecipient as necessary to ensure that the subrecipient complies with statutes, regulations, and the terms and conditions of the subaward. The amount of monitoring should be commensurate with the subrecipient’s fraud risk and risk of noncompliance. Title 2 CFR 200.332(f) requires pass-through entities to verify that a subrecipient is audited as required by Uniform Guidance Subpart F - Audit. When a subrecipient is noncompliant with the single audit requirement, Title 2 CFR 200.505 states that pass-through entities "must take appropriate action." Authorized action includes withholding payments from the subrecipient or terminating the grant per Title 2 CFR 200.339. Effect: Inadequate subrecipient monitoring increases the risk of subrecipient noncompliance with federal statutes, regulations, and the terms and conditions of a program. Subrecipient noncompliance with the terms and conditions of the federal award could result in the State having to repay SLFRF monies to the federal government. Questioned Costs: None Recommendation: DCCED’s commissioner should ensure compliance with federal subrecipient monitoring requirements through adoption of written procedures and staff training. Furthermore, the commissioner should ensure the SLFRF subrecipient obtains single or program-specific audits for all required fiscal years. Views of Responsible Officials: Management agrees with this finding.
2024-004 Reserve Account (NOT A MAJOR PROGRAM) Compliance Requirement Cash Management Category Material weakness in Internal Control and Material Noncompliance ALN 10.770 Program Water and Waste Disposal Loans and Grants (Section 306C) Agency US Department of Agriculture (Rural Development) Criteria 2 CFR § 200.303 – Internal Controls, the non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 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).” Water and Waste System Grant Agreement, Section 4, Protection and Disposition of the Funds outlines the reserve account requirements: (c) Reserve Account - From the remaining funds in the General Account, after transfers and payments required in (b) and (c), there shall be set aside into an account(s) designated as the Reserve Account(s) the sum of $1,684 each month until the sum of $201,982 is reached. With the prior written approval of the Government, funds may be withdrawn and used for such things as loan installments, emergency maintenance, extensions to facilities and replacement of short-lived assets, subject to conditions established by the Government. RUS Bulletin 1780-12, Exhibit A – Water and Waste System Grant Agreement, the grantee is required to comply with all terms and conditions of the grant agreement. Specially, Section I – Default and Termination Clause: Default by the Grantee will constitute termination of the grant thereby causing cancellation of Federal assistance under the grant. Condition The Authority has a deposit deficiency of $151,462 in the Reserve Account. The balance of the debt service reserve as of June 30, 2024, shall be $201,982. Cause Lack of oversight controls to comply with the cash management compliance requirement. Effect Default by the Authority constitutes a violation of the grant agreement and may result in termination of federal assistance under RUS Bulletin 1780-12. Additionally, under 2 CFR § 200.339, the federal awarding agency may temporarily withhold cash payments pending correction of the deficiency. The noncompliance also exposes the Authority to potential enforcement actions, including repayment of grant funds with interest and restrictions on future federal funding. Questioned Costs None Repeated Finding This finding has been present since fiscal year 2020. However, it was not disclosed in the Schedule of Prior Audit Findings included in the Single Audit reporting packages for fiscal years 2021, 2022, and 2023, as required by 2 CFR §200.511(c). The omission of this repeated finding from the reporting packages represents a departure from federal audit follow-up requirements and may hinder transparency and accountability in the entity’s corrective action process. Recommendation We recommend that management implement a formal review process to ensure that all prior year findings are properly tracked and disclosed in future Single Audit reporting packages. Additionally, we recommend that the understatement in the reserve debt account be addressed through an appropriate deposit to reconcile the balance. Views of Responsible Official (Unaudited) Refer to Corrective Action Plan
Finding 2024-001: Significant Deficiency – Lack of Procurement Policy and Documentation on Sole Source Contracts and Verification of Vendors Federal Grantor: Department of Health and Human Services Condition: The Organization does not have a procurement policy in place that complies with Uniform Guidance. The Organization contracted with a vendor on a sole-source basis and did not document justification for the use of a sole source vendor. In addition, the Organization did not verify that the vendor was not on the list of vendors suspended or debarred from federal contracting before contracting with the vendor. Criteria: Entities are required to have written standards of conduct that cover conflicts of interest and govern the performance of its employees engaged in the selection, award, and administration of contracts (2 CFR section 200.318(c) and 48 CFR sections 52.203-13 and 52.303-16). Entities are required to follow the procurement standards in 2 CFR sections 200.318 through 200.327, including ensuring that the procurement method used for the contracts are appropriate based on the dollar amount and conditions specified in 2 CFR section 200.320 and noncompetitive procurements. Entities also must comply with 2 CFR Part 1326 that prohibits entities that have been debarred, suspended or voluntarily excluded from participating in Federal procurement. Cause: The Organization does not have a procurement policy that addresses sole source contracting and verifying vendor certification that they are not debarred, suspended, ineligible or voluntarily excluded from Federal procurements. Effect: The Department of Health and Human Services may impose additional conditions on the receipt of a subsequent tranche of future award funds, if any, or take other available remedies as set forth in 2 C.F.C. section 200.339. Recommendation: We recommend the Organization review policies with staff to ensure procurement requirements are followed, and that staff are familiar with federal procurement requirements. Management’s Response: The Organization will develop a procurement policy that complies with federal requirements and will document its justification for vendor selections.
Criteria or Specific Requirement: United States Code of Federal Regulation 2 CFR 200.339 requires the grantee to monitor the activities of the subrecipient to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the pass-through entity. (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies (3) Issuing a management decision for applicable audit findings (4) The pass-through entity is responsible for resolving audit findings specifically related to the subaward and not responsible for resolving crosscutting findings. Condition: The City did not monitor subrecipients during the grant enforcement period as required and as stated to be normal practice by the City in the CAPER (Consolidated Annual Performance and Evaluation Report). Context: No proof of subrecipient monitoring was provided by the City upon requests by the auditor. Cause: The City does not have active subrecipient monitoring procedures. Effect or Potential Effect: The City is noncompliant with the subrecipient monitoring requirements of 2 CFR 200.339. The lack of monitoring increases the risk of the misuse of funds by the subrecipient. Questioned Costs: None. Recommendation: The City must create and adhere to formal subrecipient monitoring processes in accordance with the guidelines set forth in 2 CFR 200.339. Views of Responsible Officials of the Auditee: The City will devise subrecipient monitoring procedures.
Finding Number: 2023-007 Repeat Finding: Yes Type of Finding: Material Weakness in Internal Control and Material Noncompliance Description: Subrecipient Monitoring and Management Major Program: AL#93.772 - Tribal Public Health Capacity Building and Quality Improvement Umbrella Cooperative Agreement – Direct Award (DHHS) – Award numbers: 1 NU38TO000023-01-00, 6 NU38TO000023- 01-01, 6 NU38OT000257-05-03 and 6 NU38OT000257C3 Questioned Costs: None How the questioned costs were computed: N/A Compliance Requirement: Subrecipient Monitoring Condition: The Organization did not comply with any of the subrecipient monitoring and management requirements in accordance with 2 CFR Part 200.332. Criteria: The subrecipient monitoring and management requirements that are codified in 2 CFR Part 200.332 requires the pass-through entity must: a. Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes: 1. Federal award identification; 2. All requirements imposed by the pass-through entity on the subrecipient so that the Federal award is used in accordance with Federal statutes, regulations and the terms and conditions of the Federal award; 3. Any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the Federal awarding agency including identification of any required financial and performance reports. 4. (i) An approved federally recognized indirect cost rate negotiated between the subrecipient and the Federal Government. If no approved rate exists, the passthrough entity must determine the appropriate rate in collaboration with the subrecipient, which is either: 1. The negotiated indirect cost rate between the pass-through entity and the subrecipient; 2. The de minimis indirect cost rate (ii) The pass-through entity must not require use of a de minimis indirect cost rate if the subrecipient has a Federally approved rate. (iii) 5. A requirement that the subrecipient permit the pass-through entity and auditors to have access to the subrecipient’s records and financial statements as necessary for the pass-through entity to meet the requirements of this part; and 6. Appropriate terms and conditions concerning closeout of the subaward. b. Evaluate each subrecipient’s risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring. c. Consider imposing specific subaward conditions upon a subrecipient if appropriate as described in § 200.208. d. Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: 1. Reviewing financial and performance reports required by the pass-through entity. 2. Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. 3. Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521. 4. The pass-through entity is responsible for resolving audit findings specifically related to the subaward and not responsible for resolving crosscutting findings. If a subrecipient has a current Single Audit report posted in the Federal Audit Clearinghouse and has not otherwise been excluded from receipt of Federal funding (e.g., has been debarred or suspended), the pass-through entity may rely on the subrecipient's cognizant audit agency or cognizant oversight agency to perform audit follow-up and make management decisions related to cross-cutting findings in accordance with section § 200.513(a)(3)(vii). Such reliance does not eliminate the responsibility of the passthrough entity to issue subawards that conform to agency and award-specific requirements, to manage risk through ongoing subaward monitoring, and to monitor the status of the findings that are specifically related to the subaward. e. Depending upon the pass-through entity's assessment of risk posed by the subrecipient, the following monitoring tools may be useful for the pass-through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals: 1. Providing subrecipients with training and technical assistance on program-related matters; and 2. Performing on-site reviews of the subrecipient's program operations; 3. Arranging for agreed-upon-procedures engagements as described in § 200.425. f. Verify that every subrecipient is audited as required by Subpart F of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501. g. Consider whether the results of the subrecipient's audits, on-site reviews, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity's own records. h. Consider taking enforcement action against noncompliant subrecipients as described in § 200.339 of this part and in program regulations. Cause: The Organization’s management was not aware of the subrecipient monitoring and management requirements. Effect: The Organization was not in compliance with any of the subrecipient monitoring and management requirements, resulting in a material noncompliance and a material weakness in internal controls over compliance. Recommendation: We recommend the Organization implement systems and procedures to ensure compliance with the subrecipient monitoring and management compliance requirements. View of Responsible Officials: Management agrees with the finding and has committed to a corrective action plan.
Finding Number: 2023-007 Repeat Finding: Yes Type of Finding: Material Weakness in Internal Control and Material Noncompliance Description: Subrecipient Monitoring and Management Major Program: AL#93.772 - Tribal Public Health Capacity Building and Quality Improvement Umbrella Cooperative Agreement – Direct Award (DHHS) – Award numbers: 1 NU38TO000023-01-00, 6 NU38TO000023- 01-01, 6 NU38OT000257-05-03 and 6 NU38OT000257C3 Questioned Costs: None How the questioned costs were computed: N/A Compliance Requirement: Subrecipient Monitoring Condition: The Organization did not comply with any of the subrecipient monitoring and management requirements in accordance with 2 CFR Part 200.332. Criteria: The subrecipient monitoring and management requirements that are codified in 2 CFR Part 200.332 requires the pass-through entity must: a. Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes: 1. Federal award identification; 2. All requirements imposed by the pass-through entity on the subrecipient so that the Federal award is used in accordance with Federal statutes, regulations and the terms and conditions of the Federal award; 3. Any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the Federal awarding agency including identification of any required financial and performance reports. 4. (i) An approved federally recognized indirect cost rate negotiated between the subrecipient and the Federal Government. If no approved rate exists, the passthrough entity must determine the appropriate rate in collaboration with the subrecipient, which is either: 1. The negotiated indirect cost rate between the pass-through entity and the subrecipient; 2. The de minimis indirect cost rate (ii) The pass-through entity must not require use of a de minimis indirect cost rate if the subrecipient has a Federally approved rate. (iii) 5. A requirement that the subrecipient permit the pass-through entity and auditors to have access to the subrecipient’s records and financial statements as necessary for the pass-through entity to meet the requirements of this part; and 6. Appropriate terms and conditions concerning closeout of the subaward. b. Evaluate each subrecipient’s risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring. c. Consider imposing specific subaward conditions upon a subrecipient if appropriate as described in § 200.208. d. Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: 1. Reviewing financial and performance reports required by the pass-through entity. 2. Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. 3. Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521. 4. The pass-through entity is responsible for resolving audit findings specifically related to the subaward and not responsible for resolving crosscutting findings. If a subrecipient has a current Single Audit report posted in the Federal Audit Clearinghouse and has not otherwise been excluded from receipt of Federal funding (e.g., has been debarred or suspended), the pass-through entity may rely on the subrecipient's cognizant audit agency or cognizant oversight agency to perform audit follow-up and make management decisions related to cross-cutting findings in accordance with section § 200.513(a)(3)(vii). Such reliance does not eliminate the responsibility of the passthrough entity to issue subawards that conform to agency and award-specific requirements, to manage risk through ongoing subaward monitoring, and to monitor the status of the findings that are specifically related to the subaward. e. Depending upon the pass-through entity's assessment of risk posed by the subrecipient, the following monitoring tools may be useful for the pass-through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals: 1. Providing subrecipients with training and technical assistance on program-related matters; and 2. Performing on-site reviews of the subrecipient's program operations; 3. Arranging for agreed-upon-procedures engagements as described in § 200.425. f. Verify that every subrecipient is audited as required by Subpart F of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501. g. Consider whether the results of the subrecipient's audits, on-site reviews, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity's own records. h. Consider taking enforcement action against noncompliant subrecipients as described in § 200.339 of this part and in program regulations. Cause: The Organization’s management was not aware of the subrecipient monitoring and management requirements. Effect: The Organization was not in compliance with any of the subrecipient monitoring and management requirements, resulting in a material noncompliance and a material weakness in internal controls over compliance. Recommendation: We recommend the Organization implement systems and procedures to ensure compliance with the subrecipient monitoring and management compliance requirements. View of Responsible Officials: Management agrees with the finding and has committed to a corrective action plan.
Criteria or Specific Requirement: United States Code of Federal Regulation 2 CFR 200.339 requires the grantee to monitor the activities of the subrecipient to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the pass-through entity. (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies (3) Issuing a management decision for applicable audit findings (4) The pass-through entity is responsible for resolving audit findings specifically related to the subaward and not responsible for resolving crosscutting findings. Condition: The City did not monitor subrecipients during the grant enforcement period as required and as stated to be normal practice by the City in the CAPER (Consolidated Annual Performance and Evaluation Report). Context: No proof of subrecipient monitoring was provided by the City upon requests by the auditor. Cause: The City does not have active subrecipient monitoring procedures. Effect or Potential Effect: The City is noncompliant with the subrecipient monitoring requirements of 2 CFR 200.339. The lack of monitoring increases the risk of the misuse of funds by the subrecipient. Questioned Costs: None. Recommendation: The City must create and adhere to formal subrecipient monitoring processes in accordance with the guidelines set forth in 2 CFR 200.339. Views of Responsible Officials of the Auditee: The City will devise subrecipient monitoring procedures.
Finding Number: 2023-007 Repeat Finding: Yes Type of Finding: Material Weakness in Internal Control and Material Noncompliance Description: Subrecipient Monitoring and Management Major Program: AL#93.772 - Tribal Public Health Capacity Building and Quality Improvement Umbrella Cooperative Agreement – Direct Award (DHHS) – Award numbers: 1 NU38TO000023-01-00, 6 NU38TO000023- 01-01, 6 NU38OT000257-05-03 and 6 NU38OT000257C3 Questioned Costs: None How the questioned costs were computed: N/A Compliance Requirement: Subrecipient Monitoring Condition: The Organization did not comply with any of the subrecipient monitoring and management requirements in accordance with 2 CFR Part 200.332. Criteria: The subrecipient monitoring and management requirements that are codified in 2 CFR Part 200.332 requires the pass-through entity must: a. Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes: 1. Federal award identification; 2. All requirements imposed by the pass-through entity on the subrecipient so that the Federal award is used in accordance with Federal statutes, regulations and the terms and conditions of the Federal award; 3. Any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the Federal awarding agency including identification of any required financial and performance reports. 4. (i) An approved federally recognized indirect cost rate negotiated between the subrecipient and the Federal Government. If no approved rate exists, the passthrough entity must determine the appropriate rate in collaboration with the subrecipient, which is either: 1. The negotiated indirect cost rate between the pass-through entity and the subrecipient; 2. The de minimis indirect cost rate (ii) The pass-through entity must not require use of a de minimis indirect cost rate if the subrecipient has a Federally approved rate. (iii) 5. A requirement that the subrecipient permit the pass-through entity and auditors to have access to the subrecipient’s records and financial statements as necessary for the pass-through entity to meet the requirements of this part; and 6. Appropriate terms and conditions concerning closeout of the subaward. b. Evaluate each subrecipient’s risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring. c. Consider imposing specific subaward conditions upon a subrecipient if appropriate as described in § 200.208. d. Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: 1. Reviewing financial and performance reports required by the pass-through entity. 2. Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. 3. Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521. 4. The pass-through entity is responsible for resolving audit findings specifically related to the subaward and not responsible for resolving crosscutting findings. If a subrecipient has a current Single Audit report posted in the Federal Audit Clearinghouse and has not otherwise been excluded from receipt of Federal funding (e.g., has been debarred or suspended), the pass-through entity may rely on the subrecipient's cognizant audit agency or cognizant oversight agency to perform audit follow-up and make management decisions related to cross-cutting findings in accordance with section § 200.513(a)(3)(vii). Such reliance does not eliminate the responsibility of the passthrough entity to issue subawards that conform to agency and award-specific requirements, to manage risk through ongoing subaward monitoring, and to monitor the status of the findings that are specifically related to the subaward. e. Depending upon the pass-through entity's assessment of risk posed by the subrecipient, the following monitoring tools may be useful for the pass-through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals: 1. Providing subrecipients with training and technical assistance on program-related matters; and 2. Performing on-site reviews of the subrecipient's program operations; 3. Arranging for agreed-upon-procedures engagements as described in § 200.425. f. Verify that every subrecipient is audited as required by Subpart F of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501. g. Consider whether the results of the subrecipient's audits, on-site reviews, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity's own records. h. Consider taking enforcement action against noncompliant subrecipients as described in § 200.339 of this part and in program regulations. Cause: The Organization’s management was not aware of the subrecipient monitoring and management requirements. Effect: The Organization was not in compliance with any of the subrecipient monitoring and management requirements, resulting in a material noncompliance and a material weakness in internal controls over compliance. Recommendation: We recommend the Organization implement systems and procedures to ensure compliance with the subrecipient monitoring and management compliance requirements. View of Responsible Officials: Management agrees with the finding and has committed to a corrective action plan.
Finding Number: 2023-007 Repeat Finding: Yes Type of Finding: Material Weakness in Internal Control and Material Noncompliance Description: Subrecipient Monitoring and Management Major Program: AL#93.772 - Tribal Public Health Capacity Building and Quality Improvement Umbrella Cooperative Agreement – Direct Award (DHHS) – Award numbers: 1 NU38TO000023-01-00, 6 NU38TO000023- 01-01, 6 NU38OT000257-05-03 and 6 NU38OT000257C3 Questioned Costs: None How the questioned costs were computed: N/A Compliance Requirement: Subrecipient Monitoring Condition: The Organization did not comply with any of the subrecipient monitoring and management requirements in accordance with 2 CFR Part 200.332. Criteria: The subrecipient monitoring and management requirements that are codified in 2 CFR Part 200.332 requires the pass-through entity must: a. Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes: 1. Federal award identification; 2. All requirements imposed by the pass-through entity on the subrecipient so that the Federal award is used in accordance with Federal statutes, regulations and the terms and conditions of the Federal award; 3. Any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the Federal awarding agency including identification of any required financial and performance reports. 4. (i) An approved federally recognized indirect cost rate negotiated between the subrecipient and the Federal Government. If no approved rate exists, the passthrough entity must determine the appropriate rate in collaboration with the subrecipient, which is either: 1. The negotiated indirect cost rate between the pass-through entity and the subrecipient; 2. The de minimis indirect cost rate (ii) The pass-through entity must not require use of a de minimis indirect cost rate if the subrecipient has a Federally approved rate. (iii) 5. A requirement that the subrecipient permit the pass-through entity and auditors to have access to the subrecipient’s records and financial statements as necessary for the pass-through entity to meet the requirements of this part; and 6. Appropriate terms and conditions concerning closeout of the subaward. b. Evaluate each subrecipient’s risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring. c. Consider imposing specific subaward conditions upon a subrecipient if appropriate as described in § 200.208. d. Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: 1. Reviewing financial and performance reports required by the pass-through entity. 2. Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. 3. Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521. 4. The pass-through entity is responsible for resolving audit findings specifically related to the subaward and not responsible for resolving crosscutting findings. If a subrecipient has a current Single Audit report posted in the Federal Audit Clearinghouse and has not otherwise been excluded from receipt of Federal funding (e.g., has been debarred or suspended), the pass-through entity may rely on the subrecipient's cognizant audit agency or cognizant oversight agency to perform audit follow-up and make management decisions related to cross-cutting findings in accordance with section § 200.513(a)(3)(vii). Such reliance does not eliminate the responsibility of the passthrough entity to issue subawards that conform to agency and award-specific requirements, to manage risk through ongoing subaward monitoring, and to monitor the status of the findings that are specifically related to the subaward. e. Depending upon the pass-through entity's assessment of risk posed by the subrecipient, the following monitoring tools may be useful for the pass-through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals: 1. Providing subrecipients with training and technical assistance on program-related matters; and 2. Performing on-site reviews of the subrecipient's program operations; 3. Arranging for agreed-upon-procedures engagements as described in § 200.425. f. Verify that every subrecipient is audited as required by Subpart F of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501. g. Consider whether the results of the subrecipient's audits, on-site reviews, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity's own records. h. Consider taking enforcement action against noncompliant subrecipients as described in § 200.339 of this part and in program regulations. Cause: The Organization’s management was not aware of the subrecipient monitoring and management requirements. Effect: The Organization was not in compliance with any of the subrecipient monitoring and management requirements, resulting in a material noncompliance and a material weakness in internal controls over compliance. Recommendation: We recommend the Organization implement systems and procedures to ensure compliance with the subrecipient monitoring and management compliance requirements. View of Responsible Officials: Management agrees with the finding and has committed to a corrective action plan.
CONDITION: The City of McKeesport inadvertently charged as eligible expenditures two (2) purchases totaling $144,000 on the third quarter financial report required to be filed with the Department of Treasury that had already been claimed as eligible expenditures in the second quarter financial report. CRITERIA: Section 2 CFR 200.1 of the Uniform Guidance defines a disallowed cost as a charge to a Federal Award that is determined to be unallowable under the Award’s terms, which would include duplicate payments. Section 2 CFR 200.339 of the Uniform Guidance gives the federal agency the authority to disallow costs if the recipient fails to comply with the aforementioned Award terms and conditions. CAUSE: The City inadvertently claimed two vendor payments on both the second and third quarter financial reports required to be submitted to the Department of Treasury which were not detected as part of the oversight process. EFFECT: The City of McKeesport did not comply with the requirements of Sections 2 CFR 200.1 and 200.339 of the Uniform Guidance by inadvertently claiming two vendor payments twice as eligible program costs during calendar year 2023.QUESTIONED COST: Soundthinking, Inc. $99,000 and Butler Township Volunteer Fire Company $45,000. Total - $144,000. RECOMMENDATION: I am recommending that City management reallocate the duplicate payments for other allowable expenditures and update its financial reporting to the Department of Treasury to reflect this reallocation. VIEWS OF RESPONSIBLE OFFICIALS: The City concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
2023-002 Subrecipient Monitoring Public Health Training Centers Program – Assistance Listing No. 93.516 Award Number: 1 T29HP46735‐01‐00 – Award Period: September 15, 2022 through September 14, 2025 Centers for Disease Control and Prevention Collaboration with Academia to Strengthen Public Health – Assistance Listing No. 93.967 Award Number: G2513_AG-1146 Amendment #1 – Award Period: February 1, 2023 through November 30, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Condition: During our testing of subrecipients, we noted documentation was not maintained demonstrating the Organization checked for suspension and debarment prior to contracting with subrecipients, subrecipient vs contractor determinations, evaluation of each subrecipient’s risk of noncompliance for purposes of determining the appropriate subrecipient monitoring, or obtaining/reviewing the most recent single audit reports for subrecipients to address findings related to a particular subaward. Criteria: According to 2 CFR 200.331, pass-through entities must make case-by-case determinations whether each agreement it makes for the disbursement of Federal program funds casts the party receiving the funds in the role of a subrecipient or a contractor. 2 CFR 200.332 requires every subaward agreement include certain information including the subrecipient’s unique entity identifier (see paragraph (a) for a list of all required data elements); additionally, all pass-through entities must: (b) Evaluate each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring described in paragraphs (d) and (e) of this section, which may include consideration of such factors as: (1) The subrecipient's prior experience with the same or similar subawards; (2) The results of previous audits including whether or not the subrecipient receives a Single Audit in accordance with Subpart F of this part, and the extent to which the same or similar subaward has been audited as a major program; (3) Whether the subrecipient has new personnel or new or substantially changed systems; and (4) The extent and results of Federal awarding agency monitoring (e.g., if the subrecipient also receives Federal awards directly from a Federal awarding agency). (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the pass-through entity. (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521. (4) The pass-through entity is responsible for resolving audit findings specifically related to the subaward and not responsible for resolving crosscutting findings. If a subrecipient has a current Single Audit report posted in the Federal Audit Clearinghouse and has not otherwise been excluded from receipt of Federal funding (e.g., has been debarred or suspended), the pass-through entity may rely on the subrecipient's cognizant audit agency or cognizant oversight agency to perform audit follow-up and make management decisions related to cross-cutting findings in accordance with section § 200.513(a)(3)(vii). Such reliance does not eliminate the responsibility of the pass-through entity to issue subawards that conform to agency and award-specific requirements, to manage risk through ongoing subaward monitoring, and to monitor the status of the findings that are specifically related to the subaward. (e) Depending upon the pass-through entity's assessment of risk posed by the subrecipient (as described in paragraph (b) of this section), the following monitoring tools may be useful for the pass-through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals: (1) Providing subrecipients with training and technical assistance on program-related matters; and (2) Performing on-site reviews of the subrecipient's program operations; (3) Arranging for agreed-upon-procedures engagements as described in § 200.425. (f) Verify that every subrecipient is audited as required by Subpart F of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501. (g) Consider whether the results of the subrecipient's audits, on-site reviews, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity's own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in § 200.339 of this part and in program regulations. 2 CFR 180.22 requires that contract awards not be made to parties listed on the government wide exclusions in the system for Award Management, which contains the names of parties debarred, suspended or otherwise excluded by agencies as well as parties declared ineligible under statutory or regulatory authority. Questioned Costs: None. Cause: The Organization did not have a process in place to ensure all required elements of subrecipient monitoring were documented and retained in their records. Effect: Inadequate monitoring procedures and records may not detect subrecipient noncompliance on a timely basis. This could result in the Organization entering into subrecipient agreements with organizations who are ineligible to receive federal funds or might otherwise not comply with federal laws and regulations. Recommendation: We recommend that management implement procedures to ensure that future subrecipient agreements are compared against all requirements in 2 CFR 200.331, 2 CFR 200.332, and 2 CFR 180.22 and that formal documentation of such considerations be maintained. Views of Responsible Officials and Planned Corrective Actions: Management agrees. See separately issued Corrective Action Plan.
Finding 2023-002: Material Weakness - Lack of Documentation on Sole Source Contracts and Verification of Vendors Federal grantor: Department of Commerce Condition: The Chamber contract with a vendor on a sole-source basis and did not document justification for the use of a sole source vendor. In addition, the Chamber did not verify that the vendor was not on the list of vendors suspended or debarred from federal contracting before contracting with the vendor. Criteria: Entities are required to follow the procurement standards in 2 CFR sections 200.318 through 200.327, including ensuring that the procurement method used for the contracts are appropriate based on the dollar amount and conditions specified in 2 CFR section 200.320 and noncompetitive procurements. Entities also must comply with 2 CFR Part 1326 that prohibits entities that have been debarred, suspended or voluntarily excluded from participating in Federal procurement. Cause: The Chamber’s Procurement Policy allows for a sole source vendor but requires staff to document sole source procurements prior to initial purchase. It appears staff did not follow its policy. The Policy also contains a requirement to verify or receive vendor certification that they are not debarred, suspended, ineligible or voluntarily excluded from Federal procurements, but this procedure was not followed. Effect: The Department of Commerce may impose additional conditions on the receipt of a subsequent tranche of future award funds, if any, or take other available remedies as set forth in 2 C.F.C. section 200.339. Recommendation: We recommend the Chamber review policies with staff to ensure procurement requirements are followed, and that staff are familiar with federal procurement requirements. Views of Responsible Officials and Planned Corrective Actions: The Chamber agrees with this finding and is in the process of implementing changes to their procurement process.
Criteria: Per 2 CFR Appendix A to Part 170, recipients (i.e. direct recipients) of grants or cooperative agreements are required to report first-tier sub-awards $30,000 or more to the Federal Funding Accountability and Transparency Act (FFATA) Sub-Award Reporting System (FSRS). The non-Federal entity must report each obligating action no later than the end of the month following the month in which the obligation was made. Condition/context: During testing, it was determined the Department did not submit the required reports to the FSRS following the obligation of federal funds, as required under the FFATA. Cause: The Department did not have adequate controls in place to verify the necessary reports were being properly submitted within the required time period under FFATA. Effect: Per 2 CFR 200.339, if a non-Federal entity fails to comply with Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 Specific conditions. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the Federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances: (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. Questioned costs: None. Identification as a repeat finding: No. Recommendation: We recommend the Department review its internal controls surrounding FFATA reporting and train all program managers responsible for federal funds on the processes in place to ensure all individuals responsible for completing and submitting the reports are properly trained to do so. Views of responsible officials: Management concurs with the finding. See Exhibit I for corrective action plan.
Criteria: Per 2 CFR Appendix A to Part 170, recipients (i.e. direct recipients) of grants or cooperative agreements are required to report first-tier sub-awards $30,000 or more to the Federal Funding Accountability and Transparency Act (FFATA) Sub-Award Reporting System (FSRS). The non-Federal entity must report each obligating action no later than the end of the month following the month in which the obligation was made. Condition/context: During testing, it was determined the Department did not submit the required reports to the FSRS following the obligation of federal funds, as required under the FFATA. Cause: The Department did not have adequate controls in place to verify the necessary reports were being properly submitted within the required time period under FFATA. Effect: Per 2 CFR 200.339, if a non-Federal entity fails to comply with Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 Specific conditions. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the Federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances: (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. Questioned costs: None. Identification as a repeat finding: No. Recommendation: We recommend the Department review its internal controls surrounding FFATA reporting and train all program managers responsible for federal funds on the processes in place to ensure all individuals responsible for completing and submitting the reports are properly trained to do so. Views of responsible officials: Management concurs with the finding. See Exhibit I for corrective action plan.
Criteria: Per 2 CFR Appendix A to Part 170, recipients (i.e. direct recipients) of grants or cooperative agreements are required to report first-tier sub-awards $30,000 or more to the Federal Funding Accountability and Transparency Act (FFATA) Sub-Award Reporting System (FSRS). The non-Federal entity must report each obligating action no later than the end of the month following the month in which the obligation was made. Condition/context: During testing, it was determined the Department did not submit the required reports to the FSRS following the obligation of federal funds, as required under the FFATA. Cause: The Department did not have adequate controls in place to verify the necessary reports were being properly submitted within the required time period under FFATA. Effect: Per 2 CFR 200.339, if a non-Federal entity fails to comply with Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 Specific conditions. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the Federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances: (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. Questioned costs: None. Identification as a repeat finding: No. Recommendation: We recommend the Department review its internal controls surrounding FFATA reporting and train all program managers responsible for federal funds on the processes in place to ensure all individuals responsible for completing and submitting the reports are properly trained to do so. Views of responsible officials: Management concurs with the finding. See Exhibit I for corrective action plan.
Criteria: Per 2 CFR Appendix A to Part 170, recipients (i.e. direct recipients) of grants or cooperative agreements are required to report first-tier sub-awards $30,000 or more to the Federal Funding Accountability and Transparency Act (FFATA) Sub-Award Reporting System (FSRS). The non-Federal entity must report each obligating action no later than the end of the month following the month in which the obligation was made. Condition/context: During testing, it was determined the Department did not submit the required reports to the FSRS following the obligation of federal funds, as required under the FFATA. Cause: The Department did not have adequate controls in place to verify the necessary reports were being properly submitted within the required time period under FFATA. Effect: Per 2 CFR 200.339, if a non-Federal entity fails to comply with Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 Specific conditions. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the Federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances: (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. Questioned costs: None. Identification as a repeat finding: No. Recommendation: We recommend the Department review its internal controls surrounding FFATA reporting and train all program managers responsible for federal funds on the processes in place to ensure all individuals responsible for completing and submitting the reports are properly trained to do so. Views of responsible officials: Management concurs with the finding. See Exhibit I for corrective action plan.
Criteria: Per 2 CFR 200.318(i), 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: the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Condition/context: Of the four procurement transactions subjected to testing, there were two professional service contracts that the District did not have documentation supporting the sole source procurement method. Cause: The District did not maintain proper sole source documentation for these vendors due to the unique services provided. Effect: Per 2 CFR 200.339, if a non-Federal entity fails to comply with Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 Specific conditions. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the Federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances: (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. Questioned costs: None. Identification as a repeat finding: No. Recommendation: We recommend the Procurement policy be modified to more clearly state that documentation will be maintained to identify the determination for sole-sourcing as described in 2 CFR 200.318 for all professional service contracts over $2,500 (those requiring some kind of documentation to be maintained). Furthermore, we recommend that contracting personnel be familiar with the specifics of the procurement policies of the District. Views of responsible officials: Management concurs with the finding. See Exhibit I for corrective action plan.
Criteria: Per 2 CFR 200.318(i), 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: the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Condition/context: Of the four procurement transactions subjected to testing, there were two professional service contracts that the District did not have documentation supporting the sole source procurement method. Cause: The District did not maintain proper sole source documentation for these vendors due to the unique services provided. Effect: Per 2 CFR 200.339, if a non-Federal entity fails to comply with Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 Specific conditions. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the Federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances: (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. Questioned costs: None. Identification as a repeat finding: No. Recommendation: We recommend the Procurement policy be modified to more clearly state that documentation will be maintained to identify the determination for sole-sourcing as described in 2 CFR 200.318 for all professional service contracts over $2,500 (those requiring some kind of documentation to be maintained). Furthermore, we recommend that contracting personnel be familiar with the specifics of the procurement policies of the District. Views of responsible officials: Management concurs with the finding. See Exhibit I for corrective action plan.
Criteria: Per 2 CFR 200.318(i), 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: the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Condition/context: Of the four procurement transactions subjected to testing, there were two professional service contracts that the District did not have documentation supporting the sole source procurement method. Cause: The District did not maintain proper sole source documentation for these vendors due to the unique services provided. Effect: Per 2 CFR 200.339, if a non-Federal entity fails to comply with Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 Specific conditions. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the Federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances: (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. Questioned costs: None. Identification as a repeat finding: No. Recommendation: We recommend the Procurement policy be modified to more clearly state that documentation will be maintained to identify the determination for sole-sourcing as described in 2 CFR 200.318 for all professional service contracts over $2,500 (those requiring some kind of documentation to be maintained). Furthermore, we recommend that contracting personnel be familiar with the specifics of the procurement policies of the District. Views of responsible officials: Management concurs with the finding. See Exhibit I for corrective action plan.
Criteria: Per 2 CFR 200.318(i), 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: the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Condition/context: Of the four procurement transactions subjected to testing, there were two professional service contracts that the District did not have documentation supporting the sole source procurement method. Cause: The District did not maintain proper sole source documentation for these vendors due to the unique services provided. Effect: Per 2 CFR 200.339, if a non-Federal entity fails to comply with Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 Specific conditions. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the Federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances: (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. Questioned costs: None. Identification as a repeat finding: No. Recommendation: We recommend the Procurement policy be modified to more clearly state that documentation will be maintained to identify the determination for sole-sourcing as described in 2 CFR 200.318 for all professional service contracts over $2,500 (those requiring some kind of documentation to be maintained). Furthermore, we recommend that contracting personnel be familiar with the specifics of the procurement policies of the District. Views of responsible officials: Management concurs with the finding. See Exhibit I for corrective action plan.
Criteria: Per 2 CFR 200.318(i), 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: the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Condition/context: Of the four procurement transactions subjected to testing, there were two professional service contracts that the District did not have documentation supporting the sole source procurement method. Cause: The District did not maintain proper sole source documentation for these vendors due to the unique services provided. Effect: Per 2 CFR 200.339, if a non-Federal entity fails to comply with Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 Specific conditions. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the Federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances: (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. Questioned costs: None. Identification as a repeat finding: No. Recommendation: We recommend the Procurement policy be modified to more clearly state that documentation will be maintained to identify the determination for sole-sourcing as described in 2 CFR 200.318 for all professional service contracts over $2,500 (those requiring some kind of documentation to be maintained). Furthermore, we recommend that contracting personnel be familiar with the specifics of the procurement policies of the District. Views of responsible officials: Management concurs with the finding. See Exhibit I for corrective action plan.
FINDING 2023-002 Subject: COVID-19 - Education Stabilization Fund - Subrecipient Monitoring Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425U Federal Award Number and Year (or Other Identifying Number): S425U210013 Compliance Requirement: Subrecipient Monitoring Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, material noncompliance related to the COVID-19 - Education Stabilization Fund (ESF) funds passed through to subrecipients. The School Corporation received and passed through to subrecipients $420,500 of ESF funds. The School Corporation is to clearly identify the award and applicable requirements to the subrecipients, evaluate the risk of noncompliance related to the subrecipients to determine appropriate monitoring of the subaward, and monitor the activities of the subrecipients to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals. The School Corporation did not enter into an agreement with the subrecipients. As such there is no agreement between the School Corporation and the subrecipients that clearly identifies the award as a subaward or includes all the required data elements. In addition, the School Corporation did not have any policies or procedures in place to evaluate the subrecipients' risk of noncompliance or to monitor the activity of the subrecipients. Per inquiry of the School Corporation, it was determined an evaluation of the risk of noncompliance for the subrecipients was not completed, nor did the subrecipients' files support any such evaluation. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.332 states: "All pass-through entities must: INDIANA STATE BOARD OF ACCOUNTS 18 WEST LAFAYETTE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and include the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward notification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes: (1) Federal award identification. (i) Subrecipient name (which must match the name associated with its unique entity identifier); (ii) Subrecipient's unique entity identifier; (iii) Federal Award Identification Number (FAIN); (iv) Federal Award Date (see the definition of Federal award date in § 200.1 of this part) of award to the recipient by the Federal agency; (v) Subaward Period of Performance Start and End Date; (vi) Subaward Budget Period Start and End Date; (vii) Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; (viii) Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity including the current financial obligation; (ix) Total Amount of the Federal Award committed to the subrecipient by the passthrough entity; (x) Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA); (xi) Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity; (xii) Assistance Listings number and Title; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of disbursement; (xiii) Identification of whether the award is R&D; and (xiv) Indirect cost rate for the Federal award (including if the de minimis rate is charged) per § 200.414. (2) All requirements imposed by the pass-through entity on the subrecipient so that the Federal award is used in accordance with Federal statutes, regulations and the terms and conditions of the Federal award; INDIANA STATE BOARD OF ACCOUNTS 19 WEST LAFAYETTE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (3) Any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the Federal awarding agency including identification of any required financial and performance reports; (4) (i) An approved federally recognized indirect cost rate negotiated between the subrecipient and the Federal Government. If no approved rate exists, the pass-through entity must determine the appropriate rate in collaboration with the subrecipient, which is either: (A) The negotiated indirect cost rate between the pass-through entity and the subrecipient; which can be based on a prior negotiated rate between a different PTE and the same subrecipient. If basing the rate on a previously negotiated rate, the passthrough entity is not required to collect information justifying this rate, but may elect to do so; (B) The de minimis indirect cost rate. (ii) The pass-through entity must not require use of a de minimis indirect cost rate if the subrecipient has a Federally approved rate. Subrecipients can elect to use the cost allocation method to account for indirect costs in accordance with § 200.405(d). (5) A requirement that the subrecipient permit the pass-through entity and auditors to have access to the subrecipient's records and financial statements as necessary for the pass-through entity to meet the requirements of this part; and (6) Appropriate terms and conditions concerning closeout of the subaward. . . . (b) Evaluate each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring described in paragraphs (d) and (e) of this section, which may include consideration of such factors as: (1) The subrecipient's prior experience with the same or similar subawards; (2) The results of previous audits including whether or not the subrecipient receives a Single Audit in accordance with Subpart F of this part, and the extent to which the same or similar subaward has been audited as a major program; (3) Whether the subrecipient has new personnel or new or substantially changed systems; and (4) The extent and results of Federal awarding agency monitoring (e.g., if the subrecipient also receives Federal awards directly from a Federal awarding agency). (c) Consider imposing specific subaward conditions upon a subrecipient if appropriate as described in § 200.208. INDIANA STATE BOARD OF ACCOUNTS 20 WEST LAFAYETTE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the pass-through entity. (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521. (4) The pass-through entity is responsible for resolving audit findings specifically related to the subaward and not responsible for resolving crosscutting findings. If a subrecipient has a current Single Audit report posted in the Federal Audit Clearinghouse and has not otherwise been excluded from receipt of Federal funding (e.g., has been debarred or suspended), the pass-through entity may rely on the subrecipient's cognizant audit agency or cognizant oversight agency to perform audit follow-up and make management decisions related to cross-cutting findings in accordance with section § 200.513(a)(3)(vii). Such reliance does not eliminate the responsibility of the pass-through entity to issue subawards that conform to agency and award-specific requirements, to manage risk through ongoing subaward monitoring, and to monitor the status of the findings that are specifically related to the subaward. (e) Depending upon the pass-through entity's assessment of risk posed by the subrecipient (as described in paragraph (b) of this section), the following monitoring tools may be useful for the pass-through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals: (1) Providing subrecipients with training and technical assistance on programrelated matters; and (2) Performing on-site reviews of the subrecipient's program operations; (3) Arranging for agreed-upon-procedures engagements as described in § 200.425. (f) Verify that every subrecipient is audited as required by Subpart F of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501. (g) Consider whether the results of the subrecipient's audits, on-site reviews, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity's own records. INDIANA STATE BOARD OF ACCOUNTS 21 WEST LAFAYETTE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (h) Consider taking enforcement action against noncompliant subrecipients as described in § 200.339 of this part and in program regulations." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, the School Corporation did not properly evaluate the subrecipients risk of noncompliance or adequately monitor the subrecipients. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls, including segregation of duties, to evaluate the subrecipients risk of noncompliance and adequately monitor the subrecipients. Additionally, policies and procedures should be implemented to ensure appropriate reviews, approvals, and oversight are taking place, as needed, to evaluate and monitor its subrecipients. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Various Agencies Finding 2023 – 024: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 – Child Nutrition Cluster (including COVID-19) ALN 10.565, 10.568, and 10.569 – Food Distribution Cluster ALN 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children ALN 10.558 – Child and Adult Care Food Program ALN 84.010 – Title I Grants to Local Educational Agencies ALN 84.027 and 84.173¬ – Special Education Cluster (IDEA) (including COVID-19) ALN 84.367 – Supporting Effective Instruction State Grants ALN 84.425C – COVID-19 – Education Stabilization Fund - GEER Fund ALN 84.425D – COVID-19 – Education Stabilization Fund - ESSER Fund ALN 84.425R – COVID-19 – Education Stabilization Fund - CRRSA EANS ALN 84.425U – COVID-19 – Education Stabilization Fund - ARP ESSER ALN 84.425V – COVID-19 – Education Stabilization Fund - ARP EANS ALN 93.044, 93.045, and 93.053 – Aging Cluster (including COVID-19) ALN 93.323 – Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2022-014) Federal Grant Number(s) and Year(s): 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC5 (12/27/2020 – 9/30/2023), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAOACM (10/01/2020 – 9/30/2023), 2101PAOAHD (10/01/2020 – 9/30/2023), 2101PAOANS (10/01/2020 – 9/30/2023), 2101PAOASS (10/01/2020 – 9/30/2023), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2101PAVAC5 (4/01/2021 – 9/30/2023), 2201PAOACM (10/01/2021 – 9/30/2023), 2201PAOAHD (10/01/2021 – 9/30/2023), 2201PAOANS (10/01/2021 – 9/30/2023), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD 10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA365N8903 (1/01/2022 – 9/30/2023), 231PA365N8903 (10/01/2022 – 9/30/2024), 231PA305L1603 (10/01/2022 – 9/30/2023), 221PA305L1603 (10/01/2021 – 9/30/2022), 221PA825Y8005 (10/01/2021 – 9/30/2022), 231PA825Y8005 (10/01/2022 – 9/30/2023), 221PA825Y8105 (10/01/2021 – 9/30/2022), 231PA825Y8105 (10/01/2022 – 9/30/2023), 201PA715W5003 (10/01/2019 – 9/30/2023), 211PA715W5003 (10/01/2020 – 9/30/2024), 221PA705W1003 (10/01/2021 – 9/30/2022), 221PA705W1006 (10/01/2021 – 9/30/2022), 221PA715W5003 (10/01/2021 – 9/30/2024), 231PA705W1003 (10/01/2022 – 9/30/2023), 231PA705W1006 (10/01/2022 – 9/30/2023), 231PA715W5003 (10/01/2022 – 9/30/2025), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA315N1050 (10/01/2021 – 9/30/2023), 231PA315N1050 (10/01/2022 – 9/30/2024), 221PA305N2020 (10/01/2021 – 9/30/2022), 231PA305N2020 (10/01/2022 – 9/30/2023), S010A190038 (7/01/2019 – 9/30/2022), S010A200038 (7/01/2020 – 9/30/2022), S010A210038 (7/01/2021 – 9/30/2022), S010A220038 (7/01/2022 – 9/30/2024), S367A150051 (7/01/2015 – 9/30/2017), S367A190051 (7/01/2019 – 9/30/2021), S367A200051 (7/01/2020 – 9/30/2022), S367A210051 (7/01/2021 – 9/30/2023), S367A220051 (7/01/2022 – 9 /30/2024), H027A200093 (7/01/2020 – 9/30/2022), H027A210093 (7/01/2021 – 9/30/2023), H027A220093 (7/01/2022 – 9/30/2024), H027X210093 (7/01/2021 – 9/30/2023), H173A200090 (7/01/2020 – 9/30/2022), H173A210090 (7/01/2021 – 9/30/2023), H173A220090 (7/01/2022 – 9/30/2024), H173X210090 (7/01/2021 – 9/30/2023), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021 – 9/30/2023), S425D210028 (1/05/2021 – 9/30/2023), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2023), S425V210037 (11/16/2021 – 9/30/2023), S425C210013 (3/13/2020 – 9/30/2023), S425D200028 (3/13/2020 – 9/30/2022), NU50CK000527 (8/01/2019 – 7/31/2024) Finding 2023 – 024: (continued) Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2023 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2022 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2023. We also evaluated the Commonwealth’s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2023 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 10.5 months after the FAC MDL start date for the one audit report with findings. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 12 months to over 18 months after the FAC MDL start date for three out of three audit reports with findings. There was also a delay in PDA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Our testing disclosed one audit report submitted to the FAC over nine months late that included $19.4 million in subrecipient expenditures passed through PDA. In addition, our testing disclosed that PDA subgranted federal funds totaling approximately $4.8 million to five subrecipients during the fiscal year ended June 30, 2022, for which Single Audits were not submitted to the FAC as of our January 2024 testing date. This was over 16 or 10 months after the respective, September 30, 2022 or March 31, 2023 due dates. • Department of Education (PDE): The time period for making a management decision on findings was approximately 9.3 to over 16.9 months after the FAC MDL start date for 14 out of 22 audit reports with findings. One of the 14 audit reports was improperly classified on PDE’s audit tracking list as not having federal award findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Health (DOH): The time period for making a management decision on findings was over 11 months after the FAC MDL start date for two out of two audit reports with findings. One audit report with the late management decision on findings was excluded from DOH’s tracking list. Finding 2023 – 024: (continued) Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR Section 200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR Section 200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR Section 200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. Finding 2023 – 024: (continued) 2 CFR Section 200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. Finding 2023 – 024: (continued) (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08 in order to ensure compliance with federal audit submission requirements. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Finding 2023 – 024: (continued) Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08. DOH Response: DOH agrees with the finding. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding and will be hiring a complement position to ensure compliance in the future. PDE Response: PDE agrees with the finding. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2023 – 024: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 – Child Nutrition Cluster (including COVID-19) ALN 10.565, 10.568, and 10.569 – Food Distribution Cluster ALN 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children ALN 10.558 – Child and Adult Care Food Program ALN 84.010 – Title I Grants to Local Educational Agencies ALN 84.027 and 84.173¬ – Special Education Cluster (IDEA) (including COVID-19) ALN 84.367 – Supporting Effective Instruction State Grants ALN 84.425C – COVID-19 – Education Stabilization Fund - GEER Fund ALN 84.425D – COVID-19 – Education Stabilization Fund - ESSER Fund ALN 84.425R – COVID-19 – Education Stabilization Fund - CRRSA EANS ALN 84.425U – COVID-19 – Education Stabilization Fund - ARP ESSER ALN 84.425V – COVID-19 – Education Stabilization Fund - ARP EANS ALN 93.044, 93.045, and 93.053 – Aging Cluster (including COVID-19) ALN 93.323 – Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2022-014) Federal Grant Number(s) and Year(s): 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC5 (12/27/2020 – 9/30/2023), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAOACM (10/01/2020 – 9/30/2023), 2101PAOAHD (10/01/2020 – 9/30/2023), 2101PAOANS (10/01/2020 – 9/30/2023), 2101PAOASS (10/01/2020 – 9/30/2023), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2101PAVAC5 (4/01/2021 – 9/30/2023), 2201PAOACM (10/01/2021 – 9/30/2023), 2201PAOAHD (10/01/2021 – 9/30/2023), 2201PAOANS (10/01/2021 – 9/30/2023), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD 10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA365N8903 (1/01/2022 – 9/30/2023), 231PA365N8903 (10/01/2022 – 9/30/2024), 231PA305L1603 (10/01/2022 – 9/30/2023), 221PA305L1603 (10/01/2021 – 9/30/2022), 221PA825Y8005 (10/01/2021 – 9/30/2022), 231PA825Y8005 (10/01/2022 – 9/30/2023), 221PA825Y8105 (10/01/2021 – 9/30/2022), 231PA825Y8105 (10/01/2022 – 9/30/2023), 201PA715W5003 (10/01/2019 – 9/30/2023), 211PA715W5003 (10/01/2020 – 9/30/2024), 221PA705W1003 (10/01/2021 – 9/30/2022), 221PA705W1006 (10/01/2021 – 9/30/2022), 221PA715W5003 (10/01/2021 – 9/30/2024), 231PA705W1003 (10/01/2022 – 9/30/2023), 231PA705W1006 (10/01/2022 – 9/30/2023), 231PA715W5003 (10/01/2022 – 9/30/2025), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA315N1050 (10/01/2021 – 9/30/2023), 231PA315N1050 (10/01/2022 – 9/30/2024), 221PA305N2020 (10/01/2021 – 9/30/2022), 231PA305N2020 (10/01/2022 – 9/30/2023), S010A190038 (7/01/2019 – 9/30/2022), S010A200038 (7/01/2020 – 9/30/2022), S010A210038 (7/01/2021 – 9/30/2022), S010A220038 (7/01/2022 – 9/30/2024), S367A150051 (7/01/2015 – 9/30/2017), S367A190051 (7/01/2019 – 9/30/2021), S367A200051 (7/01/2020 – 9/30/2022), S367A210051 (7/01/2021 – 9/30/2023), S367A220051 (7/01/2022 – 9 /30/2024), H027A200093 (7/01/2020 – 9/30/2022), H027A210093 (7/01/2021 – 9/30/2023), H027A220093 (7/01/2022 – 9/30/2024), H027X210093 (7/01/2021 – 9/30/2023), H173A200090 (7/01/2020 – 9/30/2022), H173A210090 (7/01/2021 – 9/30/2023), H173A220090 (7/01/2022 – 9/30/2024), H173X210090 (7/01/2021 – 9/30/2023), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021 – 9/30/2023), S425D210028 (1/05/2021 – 9/30/2023), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2023), S425V210037 (11/16/2021 – 9/30/2023), S425C210013 (3/13/2020 – 9/30/2023), S425D200028 (3/13/2020 – 9/30/2022), NU50CK000527 (8/01/2019 – 7/31/2024) Finding 2023 – 024: (continued) Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2023 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2022 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2023. We also evaluated the Commonwealth’s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2023 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 10.5 months after the FAC MDL start date for the one audit report with findings. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 12 months to over 18 months after the FAC MDL start date for three out of three audit reports with findings. There was also a delay in PDA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Our testing disclosed one audit report submitted to the FAC over nine months late that included $19.4 million in subrecipient expenditures passed through PDA. In addition, our testing disclosed that PDA subgranted federal funds totaling approximately $4.8 million to five subrecipients during the fiscal year ended June 30, 2022, for which Single Audits were not submitted to the FAC as of our January 2024 testing date. This was over 16 or 10 months after the respective, September 30, 2022 or March 31, 2023 due dates. • Department of Education (PDE): The time period for making a management decision on findings was approximately 9.3 to over 16.9 months after the FAC MDL start date for 14 out of 22 audit reports with findings. One of the 14 audit reports was improperly classified on PDE’s audit tracking list as not having federal award findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Health (DOH): The time period for making a management decision on findings was over 11 months after the FAC MDL start date for two out of two audit reports with findings. One audit report with the late management decision on findings was excluded from DOH’s tracking list. Finding 2023 – 024: (continued) Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR Section 200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR Section 200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR Section 200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. Finding 2023 – 024: (continued) 2 CFR Section 200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. Finding 2023 – 024: (continued) (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08 in order to ensure compliance with federal audit submission requirements. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Finding 2023 – 024: (continued) Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08. DOH Response: DOH agrees with the finding. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding and will be hiring a complement position to ensure compliance in the future. PDE Response: PDE agrees with the finding. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2023 – 024: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 – Child Nutrition Cluster (including COVID-19) ALN 10.565, 10.568, and 10.569 – Food Distribution Cluster ALN 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children ALN 10.558 – Child and Adult Care Food Program ALN 84.010 – Title I Grants to Local Educational Agencies ALN 84.027 and 84.173¬ – Special Education Cluster (IDEA) (including COVID-19) ALN 84.367 – Supporting Effective Instruction State Grants ALN 84.425C – COVID-19 – Education Stabilization Fund - GEER Fund ALN 84.425D – COVID-19 – Education Stabilization Fund - ESSER Fund ALN 84.425R – COVID-19 – Education Stabilization Fund - CRRSA EANS ALN 84.425U – COVID-19 – Education Stabilization Fund - ARP ESSER ALN 84.425V – COVID-19 – Education Stabilization Fund - ARP EANS ALN 93.044, 93.045, and 93.053 – Aging Cluster (including COVID-19) ALN 93.323 – Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2022-014) Federal Grant Number(s) and Year(s): 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC5 (12/27/2020 – 9/30/2023), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAOACM (10/01/2020 – 9/30/2023), 2101PAOAHD (10/01/2020 – 9/30/2023), 2101PAOANS (10/01/2020 – 9/30/2023), 2101PAOASS (10/01/2020 – 9/30/2023), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2101PAVAC5 (4/01/2021 – 9/30/2023), 2201PAOACM (10/01/2021 – 9/30/2023), 2201PAOAHD (10/01/2021 – 9/30/2023), 2201PAOANS (10/01/2021 – 9/30/2023), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD 10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA365N8903 (1/01/2022 – 9/30/2023), 231PA365N8903 (10/01/2022 – 9/30/2024), 231PA305L1603 (10/01/2022 – 9/30/2023), 221PA305L1603 (10/01/2021 – 9/30/2022), 221PA825Y8005 (10/01/2021 – 9/30/2022), 231PA825Y8005 (10/01/2022 – 9/30/2023), 221PA825Y8105 (10/01/2021 – 9/30/2022), 231PA825Y8105 (10/01/2022 – 9/30/2023), 201PA715W5003 (10/01/2019 – 9/30/2023), 211PA715W5003 (10/01/2020 – 9/30/2024), 221PA705W1003 (10/01/2021 – 9/30/2022), 221PA705W1006 (10/01/2021 – 9/30/2022), 221PA715W5003 (10/01/2021 – 9/30/2024), 231PA705W1003 (10/01/2022 – 9/30/2023), 231PA705W1006 (10/01/2022 – 9/30/2023), 231PA715W5003 (10/01/2022 – 9/30/2025), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA315N1050 (10/01/2021 – 9/30/2023), 231PA315N1050 (10/01/2022 – 9/30/2024), 221PA305N2020 (10/01/2021 – 9/30/2022), 231PA305N2020 (10/01/2022 – 9/30/2023), S010A190038 (7/01/2019 – 9/30/2022), S010A200038 (7/01/2020 – 9/30/2022), S010A210038 (7/01/2021 – 9/30/2022), S010A220038 (7/01/2022 – 9/30/2024), S367A150051 (7/01/2015 – 9/30/2017), S367A190051 (7/01/2019 – 9/30/2021), S367A200051 (7/01/2020 – 9/30/2022), S367A210051 (7/01/2021 – 9/30/2023), S367A220051 (7/01/2022 – 9 /30/2024), H027A200093 (7/01/2020 – 9/30/2022), H027A210093 (7/01/2021 – 9/30/2023), H027A220093 (7/01/2022 – 9/30/2024), H027X210093 (7/01/2021 – 9/30/2023), H173A200090 (7/01/2020 – 9/30/2022), H173A210090 (7/01/2021 – 9/30/2023), H173A220090 (7/01/2022 – 9/30/2024), H173X210090 (7/01/2021 – 9/30/2023), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021 – 9/30/2023), S425D210028 (1/05/2021 – 9/30/2023), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2023), S425V210037 (11/16/2021 – 9/30/2023), S425C210013 (3/13/2020 – 9/30/2023), S425D200028 (3/13/2020 – 9/30/2022), NU50CK000527 (8/01/2019 – 7/31/2024) Finding 2023 – 024: (continued) Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2023 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2022 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2023. We also evaluated the Commonwealth’s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2023 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 10.5 months after the FAC MDL start date for the one audit report with findings. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 12 months to over 18 months after the FAC MDL start date for three out of three audit reports with findings. There was also a delay in PDA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Our testing disclosed one audit report submitted to the FAC over nine months late that included $19.4 million in subrecipient expenditures passed through PDA. In addition, our testing disclosed that PDA subgranted federal funds totaling approximately $4.8 million to five subrecipients during the fiscal year ended June 30, 2022, for which Single Audits were not submitted to the FAC as of our January 2024 testing date. This was over 16 or 10 months after the respective, September 30, 2022 or March 31, 2023 due dates. • Department of Education (PDE): The time period for making a management decision on findings was approximately 9.3 to over 16.9 months after the FAC MDL start date for 14 out of 22 audit reports with findings. One of the 14 audit reports was improperly classified on PDE’s audit tracking list as not having federal award findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Health (DOH): The time period for making a management decision on findings was over 11 months after the FAC MDL start date for two out of two audit reports with findings. One audit report with the late management decision on findings was excluded from DOH’s tracking list. Finding 2023 – 024: (continued) Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR Section 200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR Section 200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR Section 200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. Finding 2023 – 024: (continued) 2 CFR Section 200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. Finding 2023 – 024: (continued) (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08 in order to ensure compliance with federal audit submission requirements. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Finding 2023 – 024: (continued) Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08. DOH Response: DOH agrees with the finding. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding and will be hiring a complement position to ensure compliance in the future. PDE Response: PDE agrees with the finding. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2023 – 024: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 – Child Nutrition Cluster (including COVID-19) ALN 10.565, 10.568, and 10.569 – Food Distribution Cluster ALN 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children ALN 10.558 – Child and Adult Care Food Program ALN 84.010 – Title I Grants to Local Educational Agencies ALN 84.027 and 84.173¬ – Special Education Cluster (IDEA) (including COVID-19) ALN 84.367 – Supporting Effective Instruction State Grants ALN 84.425C – COVID-19 – Education Stabilization Fund - GEER Fund ALN 84.425D – COVID-19 – Education Stabilization Fund - ESSER Fund ALN 84.425R – COVID-19 – Education Stabilization Fund - CRRSA EANS ALN 84.425U – COVID-19 – Education Stabilization Fund - ARP ESSER ALN 84.425V – COVID-19 – Education Stabilization Fund - ARP EANS ALN 93.044, 93.045, and 93.053 – Aging Cluster (including COVID-19) ALN 93.323 – Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2022-014) Federal Grant Number(s) and Year(s): 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC5 (12/27/2020 – 9/30/2023), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAOACM (10/01/2020 – 9/30/2023), 2101PAOAHD (10/01/2020 – 9/30/2023), 2101PAOANS (10/01/2020 – 9/30/2023), 2101PAOASS (10/01/2020 – 9/30/2023), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2101PAVAC5 (4/01/2021 – 9/30/2023), 2201PAOACM (10/01/2021 – 9/30/2023), 2201PAOAHD (10/01/2021 – 9/30/2023), 2201PAOANS (10/01/2021 – 9/30/2023), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD 10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA365N8903 (1/01/2022 – 9/30/2023), 231PA365N8903 (10/01/2022 – 9/30/2024), 231PA305L1603 (10/01/2022 – 9/30/2023), 221PA305L1603 (10/01/2021 – 9/30/2022), 221PA825Y8005 (10/01/2021 – 9/30/2022), 231PA825Y8005 (10/01/2022 – 9/30/2023), 221PA825Y8105 (10/01/2021 – 9/30/2022), 231PA825Y8105 (10/01/2022 – 9/30/2023), 201PA715W5003 (10/01/2019 – 9/30/2023), 211PA715W5003 (10/01/2020 – 9/30/2024), 221PA705W1003 (10/01/2021 – 9/30/2022), 221PA705W1006 (10/01/2021 – 9/30/2022), 221PA715W5003 (10/01/2021 – 9/30/2024), 231PA705W1003 (10/01/2022 – 9/30/2023), 231PA705W1006 (10/01/2022 – 9/30/2023), 231PA715W5003 (10/01/2022 – 9/30/2025), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA315N1050 (10/01/2021 – 9/30/2023), 231PA315N1050 (10/01/2022 – 9/30/2024), 221PA305N2020 (10/01/2021 – 9/30/2022), 231PA305N2020 (10/01/2022 – 9/30/2023), S010A190038 (7/01/2019 – 9/30/2022), S010A200038 (7/01/2020 – 9/30/2022), S010A210038 (7/01/2021 – 9/30/2022), S010A220038 (7/01/2022 – 9/30/2024), S367A150051 (7/01/2015 – 9/30/2017), S367A190051 (7/01/2019 – 9/30/2021), S367A200051 (7/01/2020 – 9/30/2022), S367A210051 (7/01/2021 – 9/30/2023), S367A220051 (7/01/2022 – 9 /30/2024), H027A200093 (7/01/2020 – 9/30/2022), H027A210093 (7/01/2021 – 9/30/2023), H027A220093 (7/01/2022 – 9/30/2024), H027X210093 (7/01/2021 – 9/30/2023), H173A200090 (7/01/2020 – 9/30/2022), H173A210090 (7/01/2021 – 9/30/2023), H173A220090 (7/01/2022 – 9/30/2024), H173X210090 (7/01/2021 – 9/30/2023), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021 – 9/30/2023), S425D210028 (1/05/2021 – 9/30/2023), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2023), S425V210037 (11/16/2021 – 9/30/2023), S425C210013 (3/13/2020 – 9/30/2023), S425D200028 (3/13/2020 – 9/30/2022), NU50CK000527 (8/01/2019 – 7/31/2024) Finding 2023 – 024: (continued) Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2023 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2022 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2023. We also evaluated the Commonwealth’s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2023 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 10.5 months after the FAC MDL start date for the one audit report with findings. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 12 months to over 18 months after the FAC MDL start date for three out of three audit reports with findings. There was also a delay in PDA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Our testing disclosed one audit report submitted to the FAC over nine months late that included $19.4 million in subrecipient expenditures passed through PDA. In addition, our testing disclosed that PDA subgranted federal funds totaling approximately $4.8 million to five subrecipients during the fiscal year ended June 30, 2022, for which Single Audits were not submitted to the FAC as of our January 2024 testing date. This was over 16 or 10 months after the respective, September 30, 2022 or March 31, 2023 due dates. • Department of Education (PDE): The time period for making a management decision on findings was approximately 9.3 to over 16.9 months after the FAC MDL start date for 14 out of 22 audit reports with findings. One of the 14 audit reports was improperly classified on PDE’s audit tracking list as not having federal award findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Health (DOH): The time period for making a management decision on findings was over 11 months after the FAC MDL start date for two out of two audit reports with findings. One audit report with the late management decision on findings was excluded from DOH’s tracking list. Finding 2023 – 024: (continued) Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR Section 200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR Section 200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR Section 200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. Finding 2023 – 024: (continued) 2 CFR Section 200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. Finding 2023 – 024: (continued) (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08 in order to ensure compliance with federal audit submission requirements. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Finding 2023 – 024: (continued) Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08. DOH Response: DOH agrees with the finding. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding and will be hiring a complement position to ensure compliance in the future. PDE Response: PDE agrees with the finding. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2023 – 024: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 – Child Nutrition Cluster (including COVID-19) ALN 10.565, 10.568, and 10.569 – Food Distribution Cluster ALN 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children ALN 10.558 – Child and Adult Care Food Program ALN 84.010 – Title I Grants to Local Educational Agencies ALN 84.027 and 84.173¬ – Special Education Cluster (IDEA) (including COVID-19) ALN 84.367 – Supporting Effective Instruction State Grants ALN 84.425C – COVID-19 – Education Stabilization Fund - GEER Fund ALN 84.425D – COVID-19 – Education Stabilization Fund - ESSER Fund ALN 84.425R – COVID-19 – Education Stabilization Fund - CRRSA EANS ALN 84.425U – COVID-19 – Education Stabilization Fund - ARP ESSER ALN 84.425V – COVID-19 – Education Stabilization Fund - ARP EANS ALN 93.044, 93.045, and 93.053 – Aging Cluster (including COVID-19) ALN 93.323 – Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2022-014) Federal Grant Number(s) and Year(s): 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC5 (12/27/2020 – 9/30/2023), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAOACM (10/01/2020 – 9/30/2023), 2101PAOAHD (10/01/2020 – 9/30/2023), 2101PAOANS (10/01/2020 – 9/30/2023), 2101PAOASS (10/01/2020 – 9/30/2023), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2101PAVAC5 (4/01/2021 – 9/30/2023), 2201PAOACM (10/01/2021 – 9/30/2023), 2201PAOAHD (10/01/2021 – 9/30/2023), 2201PAOANS (10/01/2021 – 9/30/2023), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD 10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA365N8903 (1/01/2022 – 9/30/2023), 231PA365N8903 (10/01/2022 – 9/30/2024), 231PA305L1603 (10/01/2022 – 9/30/2023), 221PA305L1603 (10/01/2021 – 9/30/2022), 221PA825Y8005 (10/01/2021 – 9/30/2022), 231PA825Y8005 (10/01/2022 – 9/30/2023), 221PA825Y8105 (10/01/2021 – 9/30/2022), 231PA825Y8105 (10/01/2022 – 9/30/2023), 201PA715W5003 (10/01/2019 – 9/30/2023), 211PA715W5003 (10/01/2020 – 9/30/2024), 221PA705W1003 (10/01/2021 – 9/30/2022), 221PA705W1006 (10/01/2021 – 9/30/2022), 221PA715W5003 (10/01/2021 – 9/30/2024), 231PA705W1003 (10/01/2022 – 9/30/2023), 231PA705W1006 (10/01/2022 – 9/30/2023), 231PA715W5003 (10/01/2022 – 9/30/2025), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA315N1050 (10/01/2021 – 9/30/2023), 231PA315N1050 (10/01/2022 – 9/30/2024), 221PA305N2020 (10/01/2021 – 9/30/2022), 231PA305N2020 (10/01/2022 – 9/30/2023), S010A190038 (7/01/2019 – 9/30/2022), S010A200038 (7/01/2020 – 9/30/2022), S010A210038 (7/01/2021 – 9/30/2022), S010A220038 (7/01/2022 – 9/30/2024), S367A150051 (7/01/2015 – 9/30/2017), S367A190051 (7/01/2019 – 9/30/2021), S367A200051 (7/01/2020 – 9/30/2022), S367A210051 (7/01/2021 – 9/30/2023), S367A220051 (7/01/2022 – 9 /30/2024), H027A200093 (7/01/2020 – 9/30/2022), H027A210093 (7/01/2021 – 9/30/2023), H027A220093 (7/01/2022 – 9/30/2024), H027X210093 (7/01/2021 – 9/30/2023), H173A200090 (7/01/2020 – 9/30/2022), H173A210090 (7/01/2021 – 9/30/2023), H173A220090 (7/01/2022 – 9/30/2024), H173X210090 (7/01/2021 – 9/30/2023), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021 – 9/30/2023), S425D210028 (1/05/2021 – 9/30/2023), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2023), S425V210037 (11/16/2021 – 9/30/2023), S425C210013 (3/13/2020 – 9/30/2023), S425D200028 (3/13/2020 – 9/30/2022), NU50CK000527 (8/01/2019 – 7/31/2024) Finding 2023 – 024: (continued) Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2023 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2022 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2023. We also evaluated the Commonwealth’s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2023 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 10.5 months after the FAC MDL start date for the one audit report with findings. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 12 months to over 18 months after the FAC MDL start date for three out of three audit reports with findings. There was also a delay in PDA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Our testing disclosed one audit report submitted to the FAC over nine months late that included $19.4 million in subrecipient expenditures passed through PDA. In addition, our testing disclosed that PDA subgranted federal funds totaling approximately $4.8 million to five subrecipients during the fiscal year ended June 30, 2022, for which Single Audits were not submitted to the FAC as of our January 2024 testing date. This was over 16 or 10 months after the respective, September 30, 2022 or March 31, 2023 due dates. • Department of Education (PDE): The time period for making a management decision on findings was approximately 9.3 to over 16.9 months after the FAC MDL start date for 14 out of 22 audit reports with findings. One of the 14 audit reports was improperly classified on PDE’s audit tracking list as not having federal award findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Health (DOH): The time period for making a management decision on findings was over 11 months after the FAC MDL start date for two out of two audit reports with findings. One audit report with the late management decision on findings was excluded from DOH’s tracking list. Finding 2023 – 024: (continued) Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR Section 200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR Section 200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR Section 200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. Finding 2023 – 024: (continued) 2 CFR Section 200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. Finding 2023 – 024: (continued) (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08 in order to ensure compliance with federal audit submission requirements. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Finding 2023 – 024: (continued) Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08. DOH Response: DOH agrees with the finding. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding and will be hiring a complement position to ensure compliance in the future. PDE Response: PDE agrees with the finding. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2023 – 024: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 – Child Nutrition Cluster (including COVID-19) ALN 10.565, 10.568, and 10.569 – Food Distribution Cluster ALN 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children ALN 10.558 – Child and Adult Care Food Program ALN 84.010 – Title I Grants to Local Educational Agencies ALN 84.027 and 84.173¬ – Special Education Cluster (IDEA) (including COVID-19) ALN 84.367 – Supporting Effective Instruction State Grants ALN 84.425C – COVID-19 – Education Stabilization Fund - GEER Fund ALN 84.425D – COVID-19 – Education Stabilization Fund - ESSER Fund ALN 84.425R – COVID-19 – Education Stabilization Fund - CRRSA EANS ALN 84.425U – COVID-19 – Education Stabilization Fund - ARP ESSER ALN 84.425V – COVID-19 – Education Stabilization Fund - ARP EANS ALN 93.044, 93.045, and 93.053 – Aging Cluster (including COVID-19) ALN 93.323 – Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2022-014) Federal Grant Number(s) and Year(s): 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC5 (12/27/2020 – 9/30/2023), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAOACM (10/01/2020 – 9/30/2023), 2101PAOAHD (10/01/2020 – 9/30/2023), 2101PAOANS (10/01/2020 – 9/30/2023), 2101PAOASS (10/01/2020 – 9/30/2023), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2101PAVAC5 (4/01/2021 – 9/30/2023), 2201PAOACM (10/01/2021 – 9/30/2023), 2201PAOAHD (10/01/2021 – 9/30/2023), 2201PAOANS (10/01/2021 – 9/30/2023), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD 10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA365N8903 (1/01/2022 – 9/30/2023), 231PA365N8903 (10/01/2022 – 9/30/2024), 231PA305L1603 (10/01/2022 – 9/30/2023), 221PA305L1603 (10/01/2021 – 9/30/2022), 221PA825Y8005 (10/01/2021 – 9/30/2022), 231PA825Y8005 (10/01/2022 – 9/30/2023), 221PA825Y8105 (10/01/2021 – 9/30/2022), 231PA825Y8105 (10/01/2022 – 9/30/2023), 201PA715W5003 (10/01/2019 – 9/30/2023), 211PA715W5003 (10/01/2020 – 9/30/2024), 221PA705W1003 (10/01/2021 – 9/30/2022), 221PA705W1006 (10/01/2021 – 9/30/2022), 221PA715W5003 (10/01/2021 – 9/30/2024), 231PA705W1003 (10/01/2022 – 9/30/2023), 231PA705W1006 (10/01/2022 – 9/30/2023), 231PA715W5003 (10/01/2022 – 9/30/2025), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA315N1050 (10/01/2021 – 9/30/2023), 231PA315N1050 (10/01/2022 – 9/30/2024), 221PA305N2020 (10/01/2021 – 9/30/2022), 231PA305N2020 (10/01/2022 – 9/30/2023), S010A190038 (7/01/2019 – 9/30/2022), S010A200038 (7/01/2020 – 9/30/2022), S010A210038 (7/01/2021 – 9/30/2022), S010A220038 (7/01/2022 – 9/30/2024), S367A150051 (7/01/2015 – 9/30/2017), S367A190051 (7/01/2019 – 9/30/2021), S367A200051 (7/01/2020 – 9/30/2022), S367A210051 (7/01/2021 – 9/30/2023), S367A220051 (7/01/2022 – 9 /30/2024), H027A200093 (7/01/2020 – 9/30/2022), H027A210093 (7/01/2021 – 9/30/2023), H027A220093 (7/01/2022 – 9/30/2024), H027X210093 (7/01/2021 – 9/30/2023), H173A200090 (7/01/2020 – 9/30/2022), H173A210090 (7/01/2021 – 9/30/2023), H173A220090 (7/01/2022 – 9/30/2024), H173X210090 (7/01/2021 – 9/30/2023), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021 – 9/30/2023), S425D210028 (1/05/2021 – 9/30/2023), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2023), S425V210037 (11/16/2021 – 9/30/2023), S425C210013 (3/13/2020 – 9/30/2023), S425D200028 (3/13/2020 – 9/30/2022), NU50CK000527 (8/01/2019 – 7/31/2024) Finding 2023 – 024: (continued) Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2023 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2022 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2023. We also evaluated the Commonwealth’s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2023 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 10.5 months after the FAC MDL start date for the one audit report with findings. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 12 months to over 18 months after the FAC MDL start date for three out of three audit reports with findings. There was also a delay in PDA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Our testing disclosed one audit report submitted to the FAC over nine months late that included $19.4 million in subrecipient expenditures passed through PDA. In addition, our testing disclosed that PDA subgranted federal funds totaling approximately $4.8 million to five subrecipients during the fiscal year ended June 30, 2022, for which Single Audits were not submitted to the FAC as of our January 2024 testing date. This was over 16 or 10 months after the respective, September 30, 2022 or March 31, 2023 due dates. • Department of Education (PDE): The time period for making a management decision on findings was approximately 9.3 to over 16.9 months after the FAC MDL start date for 14 out of 22 audit reports with findings. One of the 14 audit reports was improperly classified on PDE’s audit tracking list as not having federal award findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Health (DOH): The time period for making a management decision on findings was over 11 months after the FAC MDL start date for two out of two audit reports with findings. One audit report with the late management decision on findings was excluded from DOH’s tracking list. Finding 2023 – 024: (continued) Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR Section 200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR Section 200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR Section 200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. Finding 2023 – 024: (continued) 2 CFR Section 200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. Finding 2023 – 024: (continued) (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08 in order to ensure compliance with federal audit submission requirements. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Finding 2023 – 024: (continued) Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08. DOH Response: DOH agrees with the finding. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding and will be hiring a complement position to ensure compliance in the future. PDE Response: PDE agrees with the finding. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2023 – 024: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 – Child Nutrition Cluster (including COVID-19) ALN 10.565, 10.568, and 10.569 – Food Distribution Cluster ALN 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children ALN 10.558 – Child and Adult Care Food Program ALN 84.010 – Title I Grants to Local Educational Agencies ALN 84.027 and 84.173¬ – Special Education Cluster (IDEA) (including COVID-19) ALN 84.367 – Supporting Effective Instruction State Grants ALN 84.425C – COVID-19 – Education Stabilization Fund - GEER Fund ALN 84.425D – COVID-19 – Education Stabilization Fund - ESSER Fund ALN 84.425R – COVID-19 – Education Stabilization Fund - CRRSA EANS ALN 84.425U – COVID-19 – Education Stabilization Fund - ARP ESSER ALN 84.425V – COVID-19 – Education Stabilization Fund - ARP EANS ALN 93.044, 93.045, and 93.053 – Aging Cluster (including COVID-19) ALN 93.323 – Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2022-014) Federal Grant Number(s) and Year(s): 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC5 (12/27/2020 – 9/30/2023), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAOACM (10/01/2020 – 9/30/2023), 2101PAOAHD (10/01/2020 – 9/30/2023), 2101PAOANS (10/01/2020 – 9/30/2023), 2101PAOASS (10/01/2020 – 9/30/2023), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2101PAVAC5 (4/01/2021 – 9/30/2023), 2201PAOACM (10/01/2021 – 9/30/2023), 2201PAOAHD (10/01/2021 – 9/30/2023), 2201PAOANS (10/01/2021 – 9/30/2023), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD 10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA365N8903 (1/01/2022 – 9/30/2023), 231PA365N8903 (10/01/2022 – 9/30/2024), 231PA305L1603 (10/01/2022 – 9/30/2023), 221PA305L1603 (10/01/2021 – 9/30/2022), 221PA825Y8005 (10/01/2021 – 9/30/2022), 231PA825Y8005 (10/01/2022 – 9/30/2023), 221PA825Y8105 (10/01/2021 – 9/30/2022), 231PA825Y8105 (10/01/2022 – 9/30/2023), 201PA715W5003 (10/01/2019 – 9/30/2023), 211PA715W5003 (10/01/2020 – 9/30/2024), 221PA705W1003 (10/01/2021 – 9/30/2022), 221PA705W1006 (10/01/2021 – 9/30/2022), 221PA715W5003 (10/01/2021 – 9/30/2024), 231PA705W1003 (10/01/2022 – 9/30/2023), 231PA705W1006 (10/01/2022 – 9/30/2023), 231PA715W5003 (10/01/2022 – 9/30/2025), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA315N1050 (10/01/2021 – 9/30/2023), 231PA315N1050 (10/01/2022 – 9/30/2024), 221PA305N2020 (10/01/2021 – 9/30/2022), 231PA305N2020 (10/01/2022 – 9/30/2023), S010A190038 (7/01/2019 – 9/30/2022), S010A200038 (7/01/2020 – 9/30/2022), S010A210038 (7/01/2021 – 9/30/2022), S010A220038 (7/01/2022 – 9/30/2024), S367A150051 (7/01/2015 – 9/30/2017), S367A190051 (7/01/2019 – 9/30/2021), S367A200051 (7/01/2020 – 9/30/2022), S367A210051 (7/01/2021 – 9/30/2023), S367A220051 (7/01/2022 – 9 /30/2024), H027A200093 (7/01/2020 – 9/30/2022), H027A210093 (7/01/2021 – 9/30/2023), H027A220093 (7/01/2022 – 9/30/2024), H027X210093 (7/01/2021 – 9/30/2023), H173A200090 (7/01/2020 – 9/30/2022), H173A210090 (7/01/2021 – 9/30/2023), H173A220090 (7/01/2022 – 9/30/2024), H173X210090 (7/01/2021 – 9/30/2023), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021 – 9/30/2023), S425D210028 (1/05/2021 – 9/30/2023), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2023), S425V210037 (11/16/2021 – 9/30/2023), S425C210013 (3/13/2020 – 9/30/2023), S425D200028 (3/13/2020 – 9/30/2022), NU50CK000527 (8/01/2019 – 7/31/2024) Finding 2023 – 024: (continued) Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2023 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2022 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2023. We also evaluated the Commonwealth’s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2023 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 10.5 months after the FAC MDL start date for the one audit report with findings. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 12 months to over 18 months after the FAC MDL start date for three out of three audit reports with findings. There was also a delay in PDA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Our testing disclosed one audit report submitted to the FAC over nine months late that included $19.4 million in subrecipient expenditures passed through PDA. In addition, our testing disclosed that PDA subgranted federal funds totaling approximately $4.8 million to five subrecipients during the fiscal year ended June 30, 2022, for which Single Audits were not submitted to the FAC as of our January 2024 testing date. This was over 16 or 10 months after the respective, September 30, 2022 or March 31, 2023 due dates. • Department of Education (PDE): The time period for making a management decision on findings was approximately 9.3 to over 16.9 months after the FAC MDL start date for 14 out of 22 audit reports with findings. One of the 14 audit reports was improperly classified on PDE’s audit tracking list as not having federal award findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Health (DOH): The time period for making a management decision on findings was over 11 months after the FAC MDL start date for two out of two audit reports with findings. One audit report with the late management decision on findings was excluded from DOH’s tracking list. Finding 2023 – 024: (continued) Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR Section 200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR Section 200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR Section 200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. Finding 2023 – 024: (continued) 2 CFR Section 200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. Finding 2023 – 024: (continued) (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08 in order to ensure compliance with federal audit submission requirements. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Finding 2023 – 024: (continued) Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08. DOH Response: DOH agrees with the finding. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding and will be hiring a complement position to ensure compliance in the future. PDE Response: PDE agrees with the finding. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2023 – 024: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 – Child Nutrition Cluster (including COVID-19) ALN 10.565, 10.568, and 10.569 – Food Distribution Cluster ALN 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children ALN 10.558 – Child and Adult Care Food Program ALN 84.010 – Title I Grants to Local Educational Agencies ALN 84.027 and 84.173¬ – Special Education Cluster (IDEA) (including COVID-19) ALN 84.367 – Supporting Effective Instruction State Grants ALN 84.425C – COVID-19 – Education Stabilization Fund - GEER Fund ALN 84.425D – COVID-19 – Education Stabilization Fund - ESSER Fund ALN 84.425R – COVID-19 – Education Stabilization Fund - CRRSA EANS ALN 84.425U – COVID-19 – Education Stabilization Fund - ARP ESSER ALN 84.425V – COVID-19 – Education Stabilization Fund - ARP EANS ALN 93.044, 93.045, and 93.053 – Aging Cluster (including COVID-19) ALN 93.323 – Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2022-014) Federal Grant Number(s) and Year(s): 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC5 (12/27/2020 – 9/30/2023), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAOACM (10/01/2020 – 9/30/2023), 2101PAOAHD (10/01/2020 – 9/30/2023), 2101PAOANS (10/01/2020 – 9/30/2023), 2101PAOASS (10/01/2020 – 9/30/2023), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2101PAVAC5 (4/01/2021 – 9/30/2023), 2201PAOACM (10/01/2021 – 9/30/2023), 2201PAOAHD (10/01/2021 – 9/30/2023), 2201PAOANS (10/01/2021 – 9/30/2023), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD 10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA365N8903 (1/01/2022 – 9/30/2023), 231PA365N8903 (10/01/2022 – 9/30/2024), 231PA305L1603 (10/01/2022 – 9/30/2023), 221PA305L1603 (10/01/2021 – 9/30/2022), 221PA825Y8005 (10/01/2021 – 9/30/2022), 231PA825Y8005 (10/01/2022 – 9/30/2023), 221PA825Y8105 (10/01/2021 – 9/30/2022), 231PA825Y8105 (10/01/2022 – 9/30/2023), 201PA715W5003 (10/01/2019 – 9/30/2023), 211PA715W5003 (10/01/2020 – 9/30/2024), 221PA705W1003 (10/01/2021 – 9/30/2022), 221PA705W1006 (10/01/2021 – 9/30/2022), 221PA715W5003 (10/01/2021 – 9/30/2024), 231PA705W1003 (10/01/2022 – 9/30/2023), 231PA705W1006 (10/01/2022 – 9/30/2023), 231PA715W5003 (10/01/2022 – 9/30/2025), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA315N1050 (10/01/2021 – 9/30/2023), 231PA315N1050 (10/01/2022 – 9/30/2024), 221PA305N2020 (10/01/2021 – 9/30/2022), 231PA305N2020 (10/01/2022 – 9/30/2023), S010A190038 (7/01/2019 – 9/30/2022), S010A200038 (7/01/2020 – 9/30/2022), S010A210038 (7/01/2021 – 9/30/2022), S010A220038 (7/01/2022 – 9/30/2024), S367A150051 (7/01/2015 – 9/30/2017), S367A190051 (7/01/2019 – 9/30/2021), S367A200051 (7/01/2020 – 9/30/2022), S367A210051 (7/01/2021 – 9/30/2023), S367A220051 (7/01/2022 – 9 /30/2024), H027A200093 (7/01/2020 – 9/30/2022), H027A210093 (7/01/2021 – 9/30/2023), H027A220093 (7/01/2022 – 9/30/2024), H027X210093 (7/01/2021 – 9/30/2023), H173A200090 (7/01/2020 – 9/30/2022), H173A210090 (7/01/2021 – 9/30/2023), H173A220090 (7/01/2022 – 9/30/2024), H173X210090 (7/01/2021 – 9/30/2023), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021 – 9/30/2023), S425D210028 (1/05/2021 – 9/30/2023), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2023), S425V210037 (11/16/2021 – 9/30/2023), S425C210013 (3/13/2020 – 9/30/2023), S425D200028 (3/13/2020 – 9/30/2022), NU50CK000527 (8/01/2019 – 7/31/2024) Finding 2023 – 024: (continued) Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2023 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2022 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2023. We also evaluated the Commonwealth’s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2023 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 10.5 months after the FAC MDL start date for the one audit report with findings. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 12 months to over 18 months after the FAC MDL start date for three out of three audit reports with findings. There was also a delay in PDA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Our testing disclosed one audit report submitted to the FAC over nine months late that included $19.4 million in subrecipient expenditures passed through PDA. In addition, our testing disclosed that PDA subgranted federal funds totaling approximately $4.8 million to five subrecipients during the fiscal year ended June 30, 2022, for which Single Audits were not submitted to the FAC as of our January 2024 testing date. This was over 16 or 10 months after the respective, September 30, 2022 or March 31, 2023 due dates. • Department of Education (PDE): The time period for making a management decision on findings was approximately 9.3 to over 16.9 months after the FAC MDL start date for 14 out of 22 audit reports with findings. One of the 14 audit reports was improperly classified on PDE’s audit tracking list as not having federal award findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Health (DOH): The time period for making a management decision on findings was over 11 months after the FAC MDL start date for two out of two audit reports with findings. One audit report with the late management decision on findings was excluded from DOH’s tracking list. Finding 2023 – 024: (continued) Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR Section 200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR Section 200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR Section 200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. Finding 2023 – 024: (continued) 2 CFR Section 200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. Finding 2023 – 024: (continued) (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08 in order to ensure compliance with federal audit submission requirements. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Finding 2023 – 024: (continued) Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08. DOH Response: DOH agrees with the finding. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding and will be hiring a complement position to ensure compliance in the future. PDE Response: PDE agrees with the finding. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2023 – 024: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 – Child Nutrition Cluster (including COVID-19) ALN 10.565, 10.568, and 10.569 – Food Distribution Cluster ALN 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children ALN 10.558 – Child and Adult Care Food Program ALN 84.010 – Title I Grants to Local Educational Agencies ALN 84.027 and 84.173¬ – Special Education Cluster (IDEA) (including COVID-19) ALN 84.367 – Supporting Effective Instruction State Grants ALN 84.425C – COVID-19 – Education Stabilization Fund - GEER Fund ALN 84.425D – COVID-19 – Education Stabilization Fund - ESSER Fund ALN 84.425R – COVID-19 – Education Stabilization Fund - CRRSA EANS ALN 84.425U – COVID-19 – Education Stabilization Fund - ARP ESSER ALN 84.425V – COVID-19 – Education Stabilization Fund - ARP EANS ALN 93.044, 93.045, and 93.053 – Aging Cluster (including COVID-19) ALN 93.323 – Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2022-014) Federal Grant Number(s) and Year(s): 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC5 (12/27/2020 – 9/30/2023), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAOACM (10/01/2020 – 9/30/2023), 2101PAOAHD (10/01/2020 – 9/30/2023), 2101PAOANS (10/01/2020 – 9/30/2023), 2101PAOASS (10/01/2020 – 9/30/2023), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2101PAVAC5 (4/01/2021 – 9/30/2023), 2201PAOACM (10/01/2021 – 9/30/2023), 2201PAOAHD (10/01/2021 – 9/30/2023), 2201PAOANS (10/01/2021 – 9/30/2023), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD 10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA365N8903 (1/01/2022 – 9/30/2023), 231PA365N8903 (10/01/2022 – 9/30/2024), 231PA305L1603 (10/01/2022 – 9/30/2023), 221PA305L1603 (10/01/2021 – 9/30/2022), 221PA825Y8005 (10/01/2021 – 9/30/2022), 231PA825Y8005 (10/01/2022 – 9/30/2023), 221PA825Y8105 (10/01/2021 – 9/30/2022), 231PA825Y8105 (10/01/2022 – 9/30/2023), 201PA715W5003 (10/01/2019 – 9/30/2023), 211PA715W5003 (10/01/2020 – 9/30/2024), 221PA705W1003 (10/01/2021 – 9/30/2022), 221PA705W1006 (10/01/2021 – 9/30/2022), 221PA715W5003 (10/01/2021 – 9/30/2024), 231PA705W1003 (10/01/2022 – 9/30/2023), 231PA705W1006 (10/01/2022 – 9/30/2023), 231PA715W5003 (10/01/2022 – 9/30/2025), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA315N1050 (10/01/2021 – 9/30/2023), 231PA315N1050 (10/01/2022 – 9/30/2024), 221PA305N2020 (10/01/2021 – 9/30/2022), 231PA305N2020 (10/01/2022 – 9/30/2023), S010A190038 (7/01/2019 – 9/30/2022), S010A200038 (7/01/2020 – 9/30/2022), S010A210038 (7/01/2021 – 9/30/2022), S010A220038 (7/01/2022 – 9/30/2024), S367A150051 (7/01/2015 – 9/30/2017), S367A190051 (7/01/2019 – 9/30/2021), S367A200051 (7/01/2020 – 9/30/2022), S367A210051 (7/01/2021 – 9/30/2023), S367A220051 (7/01/2022 – 9 /30/2024), H027A200093 (7/01/2020 – 9/30/2022), H027A210093 (7/01/2021 – 9/30/2023), H027A220093 (7/01/2022 – 9/30/2024), H027X210093 (7/01/2021 – 9/30/2023), H173A200090 (7/01/2020 – 9/30/2022), H173A210090 (7/01/2021 – 9/30/2023), H173A220090 (7/01/2022 – 9/30/2024), H173X210090 (7/01/2021 – 9/30/2023), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021 – 9/30/2023), S425D210028 (1/05/2021 – 9/30/2023), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2023), S425V210037 (11/16/2021 – 9/30/2023), S425C210013 (3/13/2020 – 9/30/2023), S425D200028 (3/13/2020 – 9/30/2022), NU50CK000527 (8/01/2019 – 7/31/2024) Finding 2023 – 024: (continued) Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2023 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2022 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2023. We also evaluated the Commonwealth’s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2023 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 10.5 months after the FAC MDL start date for the one audit report with findings. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 12 months to over 18 months after the FAC MDL start date for three out of three audit reports with findings. There was also a delay in PDA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Our testing disclosed one audit report submitted to the FAC over nine months late that included $19.4 million in subrecipient expenditures passed through PDA. In addition, our testing disclosed that PDA subgranted federal funds totaling approximately $4.8 million to five subrecipients during the fiscal year ended June 30, 2022, for which Single Audits were not submitted to the FAC as of our January 2024 testing date. This was over 16 or 10 months after the respective, September 30, 2022 or March 31, 2023 due dates. • Department of Education (PDE): The time period for making a management decision on findings was approximately 9.3 to over 16.9 months after the FAC MDL start date for 14 out of 22 audit reports with findings. One of the 14 audit reports was improperly classified on PDE’s audit tracking list as not having federal award findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Health (DOH): The time period for making a management decision on findings was over 11 months after the FAC MDL start date for two out of two audit reports with findings. One audit report with the late management decision on findings was excluded from DOH’s tracking list. Finding 2023 – 024: (continued) Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR Section 200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR Section 200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR Section 200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. Finding 2023 – 024: (continued) 2 CFR Section 200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. Finding 2023 – 024: (continued) (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08 in order to ensure compliance with federal audit submission requirements. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Finding 2023 – 024: (continued) Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08. DOH Response: DOH agrees with the finding. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding and will be hiring a complement position to ensure compliance in the future. PDE Response: PDE agrees with the finding. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2023 – 024: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 – Child Nutrition Cluster (including COVID-19) ALN 10.565, 10.568, and 10.569 – Food Distribution Cluster ALN 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children ALN 10.558 – Child and Adult Care Food Program ALN 84.010 – Title I Grants to Local Educational Agencies ALN 84.027 and 84.173¬ – Special Education Cluster (IDEA) (including COVID-19) ALN 84.367 – Supporting Effective Instruction State Grants ALN 84.425C – COVID-19 – Education Stabilization Fund - GEER Fund ALN 84.425D – COVID-19 – Education Stabilization Fund - ESSER Fund ALN 84.425R – COVID-19 – Education Stabilization Fund - CRRSA EANS ALN 84.425U – COVID-19 – Education Stabilization Fund - ARP ESSER ALN 84.425V – COVID-19 – Education Stabilization Fund - ARP EANS ALN 93.044, 93.045, and 93.053 – Aging Cluster (including COVID-19) ALN 93.323 – Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2022-014) Federal Grant Number(s) and Year(s): 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC5 (12/27/2020 – 9/30/2023), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAOACM (10/01/2020 – 9/30/2023), 2101PAOAHD (10/01/2020 – 9/30/2023), 2101PAOANS (10/01/2020 – 9/30/2023), 2101PAOASS (10/01/2020 – 9/30/2023), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2101PAVAC5 (4/01/2021 – 9/30/2023), 2201PAOACM (10/01/2021 – 9/30/2023), 2201PAOAHD (10/01/2021 – 9/30/2023), 2201PAOANS (10/01/2021 – 9/30/2023), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD 10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA365N8903 (1/01/2022 – 9/30/2023), 231PA365N8903 (10/01/2022 – 9/30/2024), 231PA305L1603 (10/01/2022 – 9/30/2023), 221PA305L1603 (10/01/2021 – 9/30/2022), 221PA825Y8005 (10/01/2021 – 9/30/2022), 231PA825Y8005 (10/01/2022 – 9/30/2023), 221PA825Y8105 (10/01/2021 – 9/30/2022), 231PA825Y8105 (10/01/2022 – 9/30/2023), 201PA715W5003 (10/01/2019 – 9/30/2023), 211PA715W5003 (10/01/2020 – 9/30/2024), 221PA705W1003 (10/01/2021 – 9/30/2022), 221PA705W1006 (10/01/2021 – 9/30/2022), 221PA715W5003 (10/01/2021 – 9/30/2024), 231PA705W1003 (10/01/2022 – 9/30/2023), 231PA705W1006 (10/01/2022 – 9/30/2023), 231PA715W5003 (10/01/2022 – 9/30/2025), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA315N1050 (10/01/2021 – 9/30/2023), 231PA315N1050 (10/01/2022 – 9/30/2024), 221PA305N2020 (10/01/2021 – 9/30/2022), 231PA305N2020 (10/01/2022 – 9/30/2023), S010A190038 (7/01/2019 – 9/30/2022), S010A200038 (7/01/2020 – 9/30/2022), S010A210038 (7/01/2021 – 9/30/2022), S010A220038 (7/01/2022 – 9/30/2024), S367A150051 (7/01/2015 – 9/30/2017), S367A190051 (7/01/2019 – 9/30/2021), S367A200051 (7/01/2020 – 9/30/2022), S367A210051 (7/01/2021 – 9/30/2023), S367A220051 (7/01/2022 – 9 /30/2024), H027A200093 (7/01/2020 – 9/30/2022), H027A210093 (7/01/2021 – 9/30/2023), H027A220093 (7/01/2022 – 9/30/2024), H027X210093 (7/01/2021 – 9/30/2023), H173A200090 (7/01/2020 – 9/30/2022), H173A210090 (7/01/2021 – 9/30/2023), H173A220090 (7/01/2022 – 9/30/2024), H173X210090 (7/01/2021 – 9/30/2023), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021 – 9/30/2023), S425D210028 (1/05/2021 – 9/30/2023), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2023), S425V210037 (11/16/2021 – 9/30/2023), S425C210013 (3/13/2020 – 9/30/2023), S425D200028 (3/13/2020 – 9/30/2022), NU50CK000527 (8/01/2019 – 7/31/2024) Finding 2023 – 024: (continued) Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2023 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2022 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2023. We also evaluated the Commonwealth’s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2023 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 10.5 months after the FAC MDL start date for the one audit report with findings. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 12 months to over 18 months after the FAC MDL start date for three out of three audit reports with findings. There was also a delay in PDA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Our testing disclosed one audit report submitted to the FAC over nine months late that included $19.4 million in subrecipient expenditures passed through PDA. In addition, our testing disclosed that PDA subgranted federal funds totaling approximately $4.8 million to five subrecipients during the fiscal year ended June 30, 2022, for which Single Audits were not submitted to the FAC as of our January 2024 testing date. This was over 16 or 10 months after the respective, September 30, 2022 or March 31, 2023 due dates. • Department of Education (PDE): The time period for making a management decision on findings was approximately 9.3 to over 16.9 months after the FAC MDL start date for 14 out of 22 audit reports with findings. One of the 14 audit reports was improperly classified on PDE’s audit tracking list as not having federal award findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Health (DOH): The time period for making a management decision on findings was over 11 months after the FAC MDL start date for two out of two audit reports with findings. One audit report with the late management decision on findings was excluded from DOH’s tracking list. Finding 2023 – 024: (continued) Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR Section 200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR Section 200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR Section 200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. Finding 2023 – 024: (continued) 2 CFR Section 200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. Finding 2023 – 024: (continued) (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08 in order to ensure compliance with federal audit submission requirements. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Finding 2023 – 024: (continued) Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08. DOH Response: DOH agrees with the finding. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding and will be hiring a complement position to ensure compliance in the future. PDE Response: PDE agrees with the finding. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2023 – 024: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 – Child Nutrition Cluster (including COVID-19) ALN 10.565, 10.568, and 10.569 – Food Distribution Cluster ALN 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children ALN 10.558 – Child and Adult Care Food Program ALN 84.010 – Title I Grants to Local Educational Agencies ALN 84.027 and 84.173¬ – Special Education Cluster (IDEA) (including COVID-19) ALN 84.367 – Supporting Effective Instruction State Grants ALN 84.425C – COVID-19 – Education Stabilization Fund - GEER Fund ALN 84.425D – COVID-19 – Education Stabilization Fund - ESSER Fund ALN 84.425R – COVID-19 – Education Stabilization Fund - CRRSA EANS ALN 84.425U – COVID-19 – Education Stabilization Fund - ARP ESSER ALN 84.425V – COVID-19 – Education Stabilization Fund - ARP EANS ALN 93.044, 93.045, and 93.053 – Aging Cluster (including COVID-19) ALN 93.323 – Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2022-014) Federal Grant Number(s) and Year(s): 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC5 (12/27/2020 – 9/30/2023), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAOACM (10/01/2020 – 9/30/2023), 2101PAOAHD (10/01/2020 – 9/30/2023), 2101PAOANS (10/01/2020 – 9/30/2023), 2101PAOASS (10/01/2020 – 9/30/2023), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2101PAVAC5 (4/01/2021 – 9/30/2023), 2201PAOACM (10/01/2021 – 9/30/2023), 2201PAOAHD (10/01/2021 – 9/30/2023), 2201PAOANS (10/01/2021 – 9/30/2023), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD 10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA365N8903 (1/01/2022 – 9/30/2023), 231PA365N8903 (10/01/2022 – 9/30/2024), 231PA305L1603 (10/01/2022 – 9/30/2023), 221PA305L1603 (10/01/2021 – 9/30/2022), 221PA825Y8005 (10/01/2021 – 9/30/2022), 231PA825Y8005 (10/01/2022 – 9/30/2023), 221PA825Y8105 (10/01/2021 – 9/30/2022), 231PA825Y8105 (10/01/2022 – 9/30/2023), 201PA715W5003 (10/01/2019 – 9/30/2023), 211PA715W5003 (10/01/2020 – 9/30/2024), 221PA705W1003 (10/01/2021 – 9/30/2022), 221PA705W1006 (10/01/2021 – 9/30/2022), 221PA715W5003 (10/01/2021 – 9/30/2024), 231PA705W1003 (10/01/2022 – 9/30/2023), 231PA705W1006 (10/01/2022 – 9/30/2023), 231PA715W5003 (10/01/2022 – 9/30/2025), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA315N1050 (10/01/2021 – 9/30/2023), 231PA315N1050 (10/01/2022 – 9/30/2024), 221PA305N2020 (10/01/2021 – 9/30/2022), 231PA305N2020 (10/01/2022 – 9/30/2023), S010A190038 (7/01/2019 – 9/30/2022), S010A200038 (7/01/2020 – 9/30/2022), S010A210038 (7/01/2021 – 9/30/2022), S010A220038 (7/01/2022 – 9/30/2024), S367A150051 (7/01/2015 – 9/30/2017), S367A190051 (7/01/2019 – 9/30/2021), S367A200051 (7/01/2020 – 9/30/2022), S367A210051 (7/01/2021 – 9/30/2023), S367A220051 (7/01/2022 – 9 /30/2024), H027A200093 (7/01/2020 – 9/30/2022), H027A210093 (7/01/2021 – 9/30/2023), H027A220093 (7/01/2022 – 9/30/2024), H027X210093 (7/01/2021 – 9/30/2023), H173A200090 (7/01/2020 – 9/30/2022), H173A210090 (7/01/2021 – 9/30/2023), H173A220090 (7/01/2022 – 9/30/2024), H173X210090 (7/01/2021 – 9/30/2023), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021 – 9/30/2023), S425D210028 (1/05/2021 – 9/30/2023), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2023), S425V210037 (11/16/2021 – 9/30/2023), S425C210013 (3/13/2020 – 9/30/2023), S425D200028 (3/13/2020 – 9/30/2022), NU50CK000527 (8/01/2019 – 7/31/2024) Finding 2023 – 024: (continued) Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2023 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2022 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2023. We also evaluated the Commonwealth’s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2023 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 10.5 months after the FAC MDL start date for the one audit report with findings. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 12 months to over 18 months after the FAC MDL start date for three out of three audit reports with findings. There was also a delay in PDA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Our testing disclosed one audit report submitted to the FAC over nine months late that included $19.4 million in subrecipient expenditures passed through PDA. In addition, our testing disclosed that PDA subgranted federal funds totaling approximately $4.8 million to five subrecipients during the fiscal year ended June 30, 2022, for which Single Audits were not submitted to the FAC as of our January 2024 testing date. This was over 16 or 10 months after the respective, September 30, 2022 or March 31, 2023 due dates. • Department of Education (PDE): The time period for making a management decision on findings was approximately 9.3 to over 16.9 months after the FAC MDL start date for 14 out of 22 audit reports with findings. One of the 14 audit reports was improperly classified on PDE’s audit tracking list as not having federal award findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Health (DOH): The time period for making a management decision on findings was over 11 months after the FAC MDL start date for two out of two audit reports with findings. One audit report with the late management decision on findings was excluded from DOH’s tracking list. Finding 2023 – 024: (continued) Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR Section 200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR Section 200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR Section 200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. Finding 2023 – 024: (continued) 2 CFR Section 200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. Finding 2023 – 024: (continued) (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08 in order to ensure compliance with federal audit submission requirements. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Finding 2023 – 024: (continued) Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08. DOH Response: DOH agrees with the finding. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding and will be hiring a complement position to ensure compliance in the future. PDE Response: PDE agrees with the finding. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2023 – 024: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 – Child Nutrition Cluster (including COVID-19) ALN 10.565, 10.568, and 10.569 – Food Distribution Cluster ALN 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children ALN 10.558 – Child and Adult Care Food Program ALN 84.010 – Title I Grants to Local Educational Agencies ALN 84.027 and 84.173¬ – Special Education Cluster (IDEA) (including COVID-19) ALN 84.367 – Supporting Effective Instruction State Grants ALN 84.425C – COVID-19 – Education Stabilization Fund - GEER Fund ALN 84.425D – COVID-19 – Education Stabilization Fund - ESSER Fund ALN 84.425R – COVID-19 – Education Stabilization Fund - CRRSA EANS ALN 84.425U – COVID-19 – Education Stabilization Fund - ARP ESSER ALN 84.425V – COVID-19 – Education Stabilization Fund - ARP EANS ALN 93.044, 93.045, and 93.053 – Aging Cluster (including COVID-19) ALN 93.323 – Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2022-014) Federal Grant Number(s) and Year(s): 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC5 (12/27/2020 – 9/30/2023), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAOACM (10/01/2020 – 9/30/2023), 2101PAOAHD (10/01/2020 – 9/30/2023), 2101PAOANS (10/01/2020 – 9/30/2023), 2101PAOASS (10/01/2020 – 9/30/2023), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2101PAVAC5 (4/01/2021 – 9/30/2023), 2201PAOACM (10/01/2021 – 9/30/2023), 2201PAOAHD (10/01/2021 – 9/30/2023), 2201PAOANS (10/01/2021 – 9/30/2023), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD 10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA365N8903 (1/01/2022 – 9/30/2023), 231PA365N8903 (10/01/2022 – 9/30/2024), 231PA305L1603 (10/01/2022 – 9/30/2023), 221PA305L1603 (10/01/2021 – 9/30/2022), 221PA825Y8005 (10/01/2021 – 9/30/2022), 231PA825Y8005 (10/01/2022 – 9/30/2023), 221PA825Y8105 (10/01/2021 – 9/30/2022), 231PA825Y8105 (10/01/2022 – 9/30/2023), 201PA715W5003 (10/01/2019 – 9/30/2023), 211PA715W5003 (10/01/2020 – 9/30/2024), 221PA705W1003 (10/01/2021 – 9/30/2022), 221PA705W1006 (10/01/2021 – 9/30/2022), 221PA715W5003 (10/01/2021 – 9/30/2024), 231PA705W1003 (10/01/2022 – 9/30/2023), 231PA705W1006 (10/01/2022 – 9/30/2023), 231PA715W5003 (10/01/2022 – 9/30/2025), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA315N1050 (10/01/2021 – 9/30/2023), 231PA315N1050 (10/01/2022 – 9/30/2024), 221PA305N2020 (10/01/2021 – 9/30/2022), 231PA305N2020 (10/01/2022 – 9/30/2023), S010A190038 (7/01/2019 – 9/30/2022), S010A200038 (7/01/2020 – 9/30/2022), S010A210038 (7/01/2021 – 9/30/2022), S010A220038 (7/01/2022 – 9/30/2024), S367A150051 (7/01/2015 – 9/30/2017), S367A190051 (7/01/2019 – 9/30/2021), S367A200051 (7/01/2020 – 9/30/2022), S367A210051 (7/01/2021 – 9/30/2023), S367A220051 (7/01/2022 – 9 /30/2024), H027A200093 (7/01/2020 – 9/30/2022), H027A210093 (7/01/2021 – 9/30/2023), H027A220093 (7/01/2022 – 9/30/2024), H027X210093 (7/01/2021 – 9/30/2023), H173A200090 (7/01/2020 – 9/30/2022), H173A210090 (7/01/2021 – 9/30/2023), H173A220090 (7/01/2022 – 9/30/2024), H173X210090 (7/01/2021 – 9/30/2023), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021 – 9/30/2023), S425D210028 (1/05/2021 – 9/30/2023), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2023), S425V210037 (11/16/2021 – 9/30/2023), S425C210013 (3/13/2020 – 9/30/2023), S425D200028 (3/13/2020 – 9/30/2022), NU50CK000527 (8/01/2019 – 7/31/2024) Finding 2023 – 024: (continued) Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2023 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2022 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2023. We also evaluated the Commonwealth’s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2023 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 10.5 months after the FAC MDL start date for the one audit report with findings. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 12 months to over 18 months after the FAC MDL start date for three out of three audit reports with findings. There was also a delay in PDA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Our testing disclosed one audit report submitted to the FAC over nine months late that included $19.4 million in subrecipient expenditures passed through PDA. In addition, our testing disclosed that PDA subgranted federal funds totaling approximately $4.8 million to five subrecipients during the fiscal year ended June 30, 2022, for which Single Audits were not submitted to the FAC as of our January 2024 testing date. This was over 16 or 10 months after the respective, September 30, 2022 or March 31, 2023 due dates. • Department of Education (PDE): The time period for making a management decision on findings was approximately 9.3 to over 16.9 months after the FAC MDL start date for 14 out of 22 audit reports with findings. One of the 14 audit reports was improperly classified on PDE’s audit tracking list as not having federal award findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Health (DOH): The time period for making a management decision on findings was over 11 months after the FAC MDL start date for two out of two audit reports with findings. One audit report with the late management decision on findings was excluded from DOH’s tracking list. Finding 2023 – 024: (continued) Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR Section 200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR Section 200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR Section 200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. Finding 2023 – 024: (continued) 2 CFR Section 200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. Finding 2023 – 024: (continued) (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08 in order to ensure compliance with federal audit submission requirements. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Finding 2023 – 024: (continued) Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08. DOH Response: DOH agrees with the finding. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding and will be hiring a complement position to ensure compliance in the future. PDE Response: PDE agrees with the finding. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2023 – 024: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 – Child Nutrition Cluster (including COVID-19) ALN 10.565, 10.568, and 10.569 – Food Distribution Cluster ALN 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children ALN 10.558 – Child and Adult Care Food Program ALN 84.010 – Title I Grants to Local Educational Agencies ALN 84.027 and 84.173¬ – Special Education Cluster (IDEA) (including COVID-19) ALN 84.367 – Supporting Effective Instruction State Grants ALN 84.425C – COVID-19 – Education Stabilization Fund - GEER Fund ALN 84.425D – COVID-19 – Education Stabilization Fund - ESSER Fund ALN 84.425R – COVID-19 – Education Stabilization Fund - CRRSA EANS ALN 84.425U – COVID-19 – Education Stabilization Fund - ARP ESSER ALN 84.425V – COVID-19 – Education Stabilization Fund - ARP EANS ALN 93.044, 93.045, and 93.053 – Aging Cluster (including COVID-19) ALN 93.323 – Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2022-014) Federal Grant Number(s) and Year(s): 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC5 (12/27/2020 – 9/30/2023), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAOACM (10/01/2020 – 9/30/2023), 2101PAOAHD (10/01/2020 – 9/30/2023), 2101PAOANS (10/01/2020 – 9/30/2023), 2101PAOASS (10/01/2020 – 9/30/2023), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2101PAVAC5 (4/01/2021 – 9/30/2023), 2201PAOACM (10/01/2021 – 9/30/2023), 2201PAOAHD (10/01/2021 – 9/30/2023), 2201PAOANS (10/01/2021 – 9/30/2023), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD 10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA365N8903 (1/01/2022 – 9/30/2023), 231PA365N8903 (10/01/2022 – 9/30/2024), 231PA305L1603 (10/01/2022 – 9/30/2023), 221PA305L1603 (10/01/2021 – 9/30/2022), 221PA825Y8005 (10/01/2021 – 9/30/2022), 231PA825Y8005 (10/01/2022 – 9/30/2023), 221PA825Y8105 (10/01/2021 – 9/30/2022), 231PA825Y8105 (10/01/2022 – 9/30/2023), 201PA715W5003 (10/01/2019 – 9/30/2023), 211PA715W5003 (10/01/2020 – 9/30/2024), 221PA705W1003 (10/01/2021 – 9/30/2022), 221PA705W1006 (10/01/2021 – 9/30/2022), 221PA715W5003 (10/01/2021 – 9/30/2024), 231PA705W1003 (10/01/2022 – 9/30/2023), 231PA705W1006 (10/01/2022 – 9/30/2023), 231PA715W5003 (10/01/2022 – 9/30/2025), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA315N1050 (10/01/2021 – 9/30/2023), 231PA315N1050 (10/01/2022 – 9/30/2024), 221PA305N2020 (10/01/2021 – 9/30/2022), 231PA305N2020 (10/01/2022 – 9/30/2023), S010A190038 (7/01/2019 – 9/30/2022), S010A200038 (7/01/2020 – 9/30/2022), S010A210038 (7/01/2021 – 9/30/2022), S010A220038 (7/01/2022 – 9/30/2024), S367A150051 (7/01/2015 – 9/30/2017), S367A190051 (7/01/2019 – 9/30/2021), S367A200051 (7/01/2020 – 9/30/2022), S367A210051 (7/01/2021 – 9/30/2023), S367A220051 (7/01/2022 – 9 /30/2024), H027A200093 (7/01/2020 – 9/30/2022), H027A210093 (7/01/2021 – 9/30/2023), H027A220093 (7/01/2022 – 9/30/2024), H027X210093 (7/01/2021 – 9/30/2023), H173A200090 (7/01/2020 – 9/30/2022), H173A210090 (7/01/2021 – 9/30/2023), H173A220090 (7/01/2022 – 9/30/2024), H173X210090 (7/01/2021 – 9/30/2023), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021 – 9/30/2023), S425D210028 (1/05/2021 – 9/30/2023), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2023), S425V210037 (11/16/2021 – 9/30/2023), S425C210013 (3/13/2020 – 9/30/2023), S425D200028 (3/13/2020 – 9/30/2022), NU50CK000527 (8/01/2019 – 7/31/2024) Finding 2023 – 024: (continued) Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2023 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2022 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2023. We also evaluated the Commonwealth’s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2023 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 10.5 months after the FAC MDL start date for the one audit report with findings. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 12 months to over 18 months after the FAC MDL start date for three out of three audit reports with findings. There was also a delay in PDA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Our testing disclosed one audit report submitted to the FAC over nine months late that included $19.4 million in subrecipient expenditures passed through PDA. In addition, our testing disclosed that PDA subgranted federal funds totaling approximately $4.8 million to five subrecipients during the fiscal year ended June 30, 2022, for which Single Audits were not submitted to the FAC as of our January 2024 testing date. This was over 16 or 10 months after the respective, September 30, 2022 or March 31, 2023 due dates. • Department of Education (PDE): The time period for making a management decision on findings was approximately 9.3 to over 16.9 months after the FAC MDL start date for 14 out of 22 audit reports with findings. One of the 14 audit reports was improperly classified on PDE’s audit tracking list as not having federal award findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Health (DOH): The time period for making a management decision on findings was over 11 months after the FAC MDL start date for two out of two audit reports with findings. One audit report with the late management decision on findings was excluded from DOH’s tracking list. Finding 2023 – 024: (continued) Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR Section 200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR Section 200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR Section 200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. Finding 2023 – 024: (continued) 2 CFR Section 200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. Finding 2023 – 024: (continued) (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08 in order to ensure compliance with federal audit submission requirements. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Finding 2023 – 024: (continued) Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08. DOH Response: DOH agrees with the finding. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding and will be hiring a complement position to ensure compliance in the future. PDE Response: PDE agrees with the finding. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2023 – 024: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 – Child Nutrition Cluster (including COVID-19) ALN 10.565, 10.568, and 10.569 – Food Distribution Cluster ALN 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children ALN 10.558 – Child and Adult Care Food Program ALN 84.010 – Title I Grants to Local Educational Agencies ALN 84.027 and 84.173¬ – Special Education Cluster (IDEA) (including COVID-19) ALN 84.367 – Supporting Effective Instruction State Grants ALN 84.425C – COVID-19 – Education Stabilization Fund - GEER Fund ALN 84.425D – COVID-19 – Education Stabilization Fund - ESSER Fund ALN 84.425R – COVID-19 – Education Stabilization Fund - CRRSA EANS ALN 84.425U – COVID-19 – Education Stabilization Fund - ARP ESSER ALN 84.425V – COVID-19 – Education Stabilization Fund - ARP EANS ALN 93.044, 93.045, and 93.053 – Aging Cluster (including COVID-19) ALN 93.323 – Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2022-014) Federal Grant Number(s) and Year(s): 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC5 (12/27/2020 – 9/30/2023), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAOACM (10/01/2020 – 9/30/2023), 2101PAOAHD (10/01/2020 – 9/30/2023), 2101PAOANS (10/01/2020 – 9/30/2023), 2101PAOASS (10/01/2020 – 9/30/2023), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2101PAVAC5 (4/01/2021 – 9/30/2023), 2201PAOACM (10/01/2021 – 9/30/2023), 2201PAOAHD (10/01/2021 – 9/30/2023), 2201PAOANS (10/01/2021 – 9/30/2023), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD 10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA365N8903 (1/01/2022 – 9/30/2023), 231PA365N8903 (10/01/2022 – 9/30/2024), 231PA305L1603 (10/01/2022 – 9/30/2023), 221PA305L1603 (10/01/2021 – 9/30/2022), 221PA825Y8005 (10/01/2021 – 9/30/2022), 231PA825Y8005 (10/01/2022 – 9/30/2023), 221PA825Y8105 (10/01/2021 – 9/30/2022), 231PA825Y8105 (10/01/2022 – 9/30/2023), 201PA715W5003 (10/01/2019 – 9/30/2023), 211PA715W5003 (10/01/2020 – 9/30/2024), 221PA705W1003 (10/01/2021 – 9/30/2022), 221PA705W1006 (10/01/2021 – 9/30/2022), 221PA715W5003 (10/01/2021 – 9/30/2024), 231PA705W1003 (10/01/2022 – 9/30/2023), 231PA705W1006 (10/01/2022 – 9/30/2023), 231PA715W5003 (10/01/2022 – 9/30/2025), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA315N1050 (10/01/2021 – 9/30/2023), 231PA315N1050 (10/01/2022 – 9/30/2024), 221PA305N2020 (10/01/2021 – 9/30/2022), 231PA305N2020 (10/01/2022 – 9/30/2023), S010A190038 (7/01/2019 – 9/30/2022), S010A200038 (7/01/2020 – 9/30/2022), S010A210038 (7/01/2021 – 9/30/2022), S010A220038 (7/01/2022 – 9/30/2024), S367A150051 (7/01/2015 – 9/30/2017), S367A190051 (7/01/2019 – 9/30/2021), S367A200051 (7/01/2020 – 9/30/2022), S367A210051 (7/01/2021 – 9/30/2023), S367A220051 (7/01/2022 – 9 /30/2024), H027A200093 (7/01/2020 – 9/30/2022), H027A210093 (7/01/2021 – 9/30/2023), H027A220093 (7/01/2022 – 9/30/2024), H027X210093 (7/01/2021 – 9/30/2023), H173A200090 (7/01/2020 – 9/30/2022), H173A210090 (7/01/2021 – 9/30/2023), H173A220090 (7/01/2022 – 9/30/2024), H173X210090 (7/01/2021 – 9/30/2023), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021 – 9/30/2023), S425D210028 (1/05/2021 – 9/30/2023), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2023), S425V210037 (11/16/2021 – 9/30/2023), S425C210013 (3/13/2020 – 9/30/2023), S425D200028 (3/13/2020 – 9/30/2022), NU50CK000527 (8/01/2019 – 7/31/2024) Finding 2023 – 024: (continued) Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2023 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2022 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2023. We also evaluated the Commonwealth’s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2023 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 10.5 months after the FAC MDL start date for the one audit report with findings. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 12 months to over 18 months after the FAC MDL start date for three out of three audit reports with findings. There was also a delay in PDA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Our testing disclosed one audit report submitted to the FAC over nine months late that included $19.4 million in subrecipient expenditures passed through PDA. In addition, our testing disclosed that PDA subgranted federal funds totaling approximately $4.8 million to five subrecipients during the fiscal year ended June 30, 2022, for which Single Audits were not submitted to the FAC as of our January 2024 testing date. This was over 16 or 10 months after the respective, September 30, 2022 or March 31, 2023 due dates. • Department of Education (PDE): The time period for making a management decision on findings was approximately 9.3 to over 16.9 months after the FAC MDL start date for 14 out of 22 audit reports with findings. One of the 14 audit reports was improperly classified on PDE’s audit tracking list as not having federal award findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Health (DOH): The time period for making a management decision on findings was over 11 months after the FAC MDL start date for two out of two audit reports with findings. One audit report with the late management decision on findings was excluded from DOH’s tracking list. Finding 2023 – 024: (continued) Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR Section 200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR Section 200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR Section 200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. Finding 2023 – 024: (continued) 2 CFR Section 200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. Finding 2023 – 024: (continued) (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08 in order to ensure compliance with federal audit submission requirements. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Finding 2023 – 024: (continued) Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08. DOH Response: DOH agrees with the finding. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding and will be hiring a complement position to ensure compliance in the future. PDE Response: PDE agrees with the finding. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2023 – 024: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 – Child Nutrition Cluster (including COVID-19) ALN 10.565, 10.568, and 10.569 – Food Distribution Cluster ALN 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children ALN 10.558 – Child and Adult Care Food Program ALN 84.010 – Title I Grants to Local Educational Agencies ALN 84.027 and 84.173¬ – Special Education Cluster (IDEA) (including COVID-19) ALN 84.367 – Supporting Effective Instruction State Grants ALN 84.425C – COVID-19 – Education Stabilization Fund - GEER Fund ALN 84.425D – COVID-19 – Education Stabilization Fund - ESSER Fund ALN 84.425R – COVID-19 – Education Stabilization Fund - CRRSA EANS ALN 84.425U – COVID-19 – Education Stabilization Fund - ARP ESSER ALN 84.425V – COVID-19 – Education Stabilization Fund - ARP EANS ALN 93.044, 93.045, and 93.053 – Aging Cluster (including COVID-19) ALN 93.323 – Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2022-014) Federal Grant Number(s) and Year(s): 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC5 (12/27/2020 – 9/30/2023), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAOACM (10/01/2020 – 9/30/2023), 2101PAOAHD (10/01/2020 – 9/30/2023), 2101PAOANS (10/01/2020 – 9/30/2023), 2101PAOASS (10/01/2020 – 9/30/2023), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2101PAVAC5 (4/01/2021 – 9/30/2023), 2201PAOACM (10/01/2021 – 9/30/2023), 2201PAOAHD (10/01/2021 – 9/30/2023), 2201PAOANS (10/01/2021 – 9/30/2023), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD 10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA365N8903 (1/01/2022 – 9/30/2023), 231PA365N8903 (10/01/2022 – 9/30/2024), 231PA305L1603 (10/01/2022 – 9/30/2023), 221PA305L1603 (10/01/2021 – 9/30/2022), 221PA825Y8005 (10/01/2021 – 9/30/2022), 231PA825Y8005 (10/01/2022 – 9/30/2023), 221PA825Y8105 (10/01/2021 – 9/30/2022), 231PA825Y8105 (10/01/2022 – 9/30/2023), 201PA715W5003 (10/01/2019 – 9/30/2023), 211PA715W5003 (10/01/2020 – 9/30/2024), 221PA705W1003 (10/01/2021 – 9/30/2022), 221PA705W1006 (10/01/2021 – 9/30/2022), 221PA715W5003 (10/01/2021 – 9/30/2024), 231PA705W1003 (10/01/2022 – 9/30/2023), 231PA705W1006 (10/01/2022 – 9/30/2023), 231PA715W5003 (10/01/2022 – 9/30/2025), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA315N1050 (10/01/2021 – 9/30/2023), 231PA315N1050 (10/01/2022 – 9/30/2024), 221PA305N2020 (10/01/2021 – 9/30/2022), 231PA305N2020 (10/01/2022 – 9/30/2023), S010A190038 (7/01/2019 – 9/30/2022), S010A200038 (7/01/2020 – 9/30/2022), S010A210038 (7/01/2021 – 9/30/2022), S010A220038 (7/01/2022 – 9/30/2024), S367A150051 (7/01/2015 – 9/30/2017), S367A190051 (7/01/2019 – 9/30/2021), S367A200051 (7/01/2020 – 9/30/2022), S367A210051 (7/01/2021 – 9/30/2023), S367A220051 (7/01/2022 – 9 /30/2024), H027A200093 (7/01/2020 – 9/30/2022), H027A210093 (7/01/2021 – 9/30/2023), H027A220093 (7/01/2022 – 9/30/2024), H027X210093 (7/01/2021 – 9/30/2023), H173A200090 (7/01/2020 – 9/30/2022), H173A210090 (7/01/2021 – 9/30/2023), H173A220090 (7/01/2022 – 9/30/2024), H173X210090 (7/01/2021 – 9/30/2023), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021 – 9/30/2023), S425D210028 (1/05/2021 – 9/30/2023), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2023), S425V210037 (11/16/2021 – 9/30/2023), S425C210013 (3/13/2020 – 9/30/2023), S425D200028 (3/13/2020 – 9/30/2022), NU50CK000527 (8/01/2019 – 7/31/2024) Finding 2023 – 024: (continued) Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2023 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2022 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2023. We also evaluated the Commonwealth’s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2023 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 10.5 months after the FAC MDL start date for the one audit report with findings. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 12 months to over 18 months after the FAC MDL start date for three out of three audit reports with findings. There was also a delay in PDA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Our testing disclosed one audit report submitted to the FAC over nine months late that included $19.4 million in subrecipient expenditures passed through PDA. In addition, our testing disclosed that PDA subgranted federal funds totaling approximately $4.8 million to five subrecipients during the fiscal year ended June 30, 2022, for which Single Audits were not submitted to the FAC as of our January 2024 testing date. This was over 16 or 10 months after the respective, September 30, 2022 or March 31, 2023 due dates. • Department of Education (PDE): The time period for making a management decision on findings was approximately 9.3 to over 16.9 months after the FAC MDL start date for 14 out of 22 audit reports with findings. One of the 14 audit reports was improperly classified on PDE’s audit tracking list as not having federal award findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Health (DOH): The time period for making a management decision on findings was over 11 months after the FAC MDL start date for two out of two audit reports with findings. One audit report with the late management decision on findings was excluded from DOH’s tracking list. Finding 2023 – 024: (continued) Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR Section 200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR Section 200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR Section 200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. Finding 2023 – 024: (continued) 2 CFR Section 200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. Finding 2023 – 024: (continued) (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08 in order to ensure compliance with federal audit submission requirements. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Finding 2023 – 024: (continued) Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08. DOH Response: DOH agrees with the finding. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding and will be hiring a complement position to ensure compliance in the future. PDE Response: PDE agrees with the finding. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2023 – 024: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 – Child Nutrition Cluster (including COVID-19) ALN 10.565, 10.568, and 10.569 – Food Distribution Cluster ALN 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children ALN 10.558 – Child and Adult Care Food Program ALN 84.010 – Title I Grants to Local Educational Agencies ALN 84.027 and 84.173¬ – Special Education Cluster (IDEA) (including COVID-19) ALN 84.367 – Supporting Effective Instruction State Grants ALN 84.425C – COVID-19 – Education Stabilization Fund - GEER Fund ALN 84.425D – COVID-19 – Education Stabilization Fund - ESSER Fund ALN 84.425R – COVID-19 – Education Stabilization Fund - CRRSA EANS ALN 84.425U – COVID-19 – Education Stabilization Fund - ARP ESSER ALN 84.425V – COVID-19 – Education Stabilization Fund - ARP EANS ALN 93.044, 93.045, and 93.053 – Aging Cluster (including COVID-19) ALN 93.323 – Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2022-014) Federal Grant Number(s) and Year(s): 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC5 (12/27/2020 – 9/30/2023), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAOACM (10/01/2020 – 9/30/2023), 2101PAOAHD (10/01/2020 – 9/30/2023), 2101PAOANS (10/01/2020 – 9/30/2023), 2101PAOASS (10/01/2020 – 9/30/2023), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2101PAVAC5 (4/01/2021 – 9/30/2023), 2201PAOACM (10/01/2021 – 9/30/2023), 2201PAOAHD (10/01/2021 – 9/30/2023), 2201PAOANS (10/01/2021 – 9/30/2023), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD 10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA365N8903 (1/01/2022 – 9/30/2023), 231PA365N8903 (10/01/2022 – 9/30/2024), 231PA305L1603 (10/01/2022 – 9/30/2023), 221PA305L1603 (10/01/2021 – 9/30/2022), 221PA825Y8005 (10/01/2021 – 9/30/2022), 231PA825Y8005 (10/01/2022 – 9/30/2023), 221PA825Y8105 (10/01/2021 – 9/30/2022), 231PA825Y8105 (10/01/2022 – 9/30/2023), 201PA715W5003 (10/01/2019 – 9/30/2023), 211PA715W5003 (10/01/2020 – 9/30/2024), 221PA705W1003 (10/01/2021 – 9/30/2022), 221PA705W1006 (10/01/2021 – 9/30/2022), 221PA715W5003 (10/01/2021 – 9/30/2024), 231PA705W1003 (10/01/2022 – 9/30/2023), 231PA705W1006 (10/01/2022 – 9/30/2023), 231PA715W5003 (10/01/2022 – 9/30/2025), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA315N1050 (10/01/2021 – 9/30/2023), 231PA315N1050 (10/01/2022 – 9/30/2024), 221PA305N2020 (10/01/2021 – 9/30/2022), 231PA305N2020 (10/01/2022 – 9/30/2023), S010A190038 (7/01/2019 – 9/30/2022), S010A200038 (7/01/2020 – 9/30/2022), S010A210038 (7/01/2021 – 9/30/2022), S010A220038 (7/01/2022 – 9/30/2024), S367A150051 (7/01/2015 – 9/30/2017), S367A190051 (7/01/2019 – 9/30/2021), S367A200051 (7/01/2020 – 9/30/2022), S367A210051 (7/01/2021 – 9/30/2023), S367A220051 (7/01/2022 – 9 /30/2024), H027A200093 (7/01/2020 – 9/30/2022), H027A210093 (7/01/2021 – 9/30/2023), H027A220093 (7/01/2022 – 9/30/2024), H027X210093 (7/01/2021 – 9/30/2023), H173A200090 (7/01/2020 – 9/30/2022), H173A210090 (7/01/2021 – 9/30/2023), H173A220090 (7/01/2022 – 9/30/2024), H173X210090 (7/01/2021 – 9/30/2023), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021 – 9/30/2023), S425D210028 (1/05/2021 – 9/30/2023), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2023), S425V210037 (11/16/2021 – 9/30/2023), S425C210013 (3/13/2020 – 9/30/2023), S425D200028 (3/13/2020 – 9/30/2022), NU50CK000527 (8/01/2019 – 7/31/2024) Finding 2023 – 024: (continued) Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2023 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2022 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2023. We also evaluated the Commonwealth’s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2023 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 10.5 months after the FAC MDL start date for the one audit report with findings. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 12 months to over 18 months after the FAC MDL start date for three out of three audit reports with findings. There was also a delay in PDA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Our testing disclosed one audit report submitted to the FAC over nine months late that included $19.4 million in subrecipient expenditures passed through PDA. In addition, our testing disclosed that PDA subgranted federal funds totaling approximately $4.8 million to five subrecipients during the fiscal year ended June 30, 2022, for which Single Audits were not submitted to the FAC as of our January 2024 testing date. This was over 16 or 10 months after the respective, September 30, 2022 or March 31, 2023 due dates. • Department of Education (PDE): The time period for making a management decision on findings was approximately 9.3 to over 16.9 months after the FAC MDL start date for 14 out of 22 audit reports with findings. One of the 14 audit reports was improperly classified on PDE’s audit tracking list as not having federal award findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Health (DOH): The time period for making a management decision on findings was over 11 months after the FAC MDL start date for two out of two audit reports with findings. One audit report with the late management decision on findings was excluded from DOH’s tracking list. Finding 2023 – 024: (continued) Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR Section 200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR Section 200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR Section 200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. Finding 2023 – 024: (continued) 2 CFR Section 200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. Finding 2023 – 024: (continued) (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08 in order to ensure compliance with federal audit submission requirements. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Finding 2023 – 024: (continued) Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08. DOH Response: DOH agrees with the finding. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding and will be hiring a complement position to ensure compliance in the future. PDE Response: PDE agrees with the finding. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2023 – 024: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 – Child Nutrition Cluster (including COVID-19) ALN 10.565, 10.568, and 10.569 – Food Distribution Cluster ALN 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children ALN 10.558 – Child and Adult Care Food Program ALN 84.010 – Title I Grants to Local Educational Agencies ALN 84.027 and 84.173¬ – Special Education Cluster (IDEA) (including COVID-19) ALN 84.367 – Supporting Effective Instruction State Grants ALN 84.425C – COVID-19 – Education Stabilization Fund - GEER Fund ALN 84.425D – COVID-19 – Education Stabilization Fund - ESSER Fund ALN 84.425R – COVID-19 – Education Stabilization Fund - CRRSA EANS ALN 84.425U – COVID-19 – Education Stabilization Fund - ARP ESSER ALN 84.425V – COVID-19 – Education Stabilization Fund - ARP EANS ALN 93.044, 93.045, and 93.053 – Aging Cluster (including COVID-19) ALN 93.323 – Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2022-014) Federal Grant Number(s) and Year(s): 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC5 (12/27/2020 – 9/30/2023), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAOACM (10/01/2020 – 9/30/2023), 2101PAOAHD (10/01/2020 – 9/30/2023), 2101PAOANS (10/01/2020 – 9/30/2023), 2101PAOASS (10/01/2020 – 9/30/2023), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2101PAVAC5 (4/01/2021 – 9/30/2023), 2201PAOACM (10/01/2021 – 9/30/2023), 2201PAOAHD (10/01/2021 – 9/30/2023), 2201PAOANS (10/01/2021 – 9/30/2023), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD 10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA365N8903 (1/01/2022 – 9/30/2023), 231PA365N8903 (10/01/2022 – 9/30/2024), 231PA305L1603 (10/01/2022 – 9/30/2023), 221PA305L1603 (10/01/2021 – 9/30/2022), 221PA825Y8005 (10/01/2021 – 9/30/2022), 231PA825Y8005 (10/01/2022 – 9/30/2023), 221PA825Y8105 (10/01/2021 – 9/30/2022), 231PA825Y8105 (10/01/2022 – 9/30/2023), 201PA715W5003 (10/01/2019 – 9/30/2023), 211PA715W5003 (10/01/2020 – 9/30/2024), 221PA705W1003 (10/01/2021 – 9/30/2022), 221PA705W1006 (10/01/2021 – 9/30/2022), 221PA715W5003 (10/01/2021 – 9/30/2024), 231PA705W1003 (10/01/2022 – 9/30/2023), 231PA705W1006 (10/01/2022 – 9/30/2023), 231PA715W5003 (10/01/2022 – 9/30/2025), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA315N1050 (10/01/2021 – 9/30/2023), 231PA315N1050 (10/01/2022 – 9/30/2024), 221PA305N2020 (10/01/2021 – 9/30/2022), 231PA305N2020 (10/01/2022 – 9/30/2023), S010A190038 (7/01/2019 – 9/30/2022), S010A200038 (7/01/2020 – 9/30/2022), S010A210038 (7/01/2021 – 9/30/2022), S010A220038 (7/01/2022 – 9/30/2024), S367A150051 (7/01/2015 – 9/30/2017), S367A190051 (7/01/2019 – 9/30/2021), S367A200051 (7/01/2020 – 9/30/2022), S367A210051 (7/01/2021 – 9/30/2023), S367A220051 (7/01/2022 – 9 /30/2024), H027A200093 (7/01/2020 – 9/30/2022), H027A210093 (7/01/2021 – 9/30/2023), H027A220093 (7/01/2022 – 9/30/2024), H027X210093 (7/01/2021 – 9/30/2023), H173A200090 (7/01/2020 – 9/30/2022), H173A210090 (7/01/2021 – 9/30/2023), H173A220090 (7/01/2022 – 9/30/2024), H173X210090 (7/01/2021 – 9/30/2023), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021 – 9/30/2023), S425D210028 (1/05/2021 – 9/30/2023), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2023), S425V210037 (11/16/2021 – 9/30/2023), S425C210013 (3/13/2020 – 9/30/2023), S425D200028 (3/13/2020 – 9/30/2022), NU50CK000527 (8/01/2019 – 7/31/2024) Finding 2023 – 024: (continued) Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2023 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2022 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2023. We also evaluated the Commonwealth’s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2023 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 10.5 months after the FAC MDL start date for the one audit report with findings. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 12 months to over 18 months after the FAC MDL start date for three out of three audit reports with findings. There was also a delay in PDA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Our testing disclosed one audit report submitted to the FAC over nine months late that included $19.4 million in subrecipient expenditures passed through PDA. In addition, our testing disclosed that PDA subgranted federal funds totaling approximately $4.8 million to five subrecipients during the fiscal year ended June 30, 2022, for which Single Audits were not submitted to the FAC as of our January 2024 testing date. This was over 16 or 10 months after the respective, September 30, 2022 or March 31, 2023 due dates. • Department of Education (PDE): The time period for making a management decision on findings was approximately 9.3 to over 16.9 months after the FAC MDL start date for 14 out of 22 audit reports with findings. One of the 14 audit reports was improperly classified on PDE’s audit tracking list as not having federal award findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Health (DOH): The time period for making a management decision on findings was over 11 months after the FAC MDL start date for two out of two audit reports with findings. One audit report with the late management decision on findings was excluded from DOH’s tracking list. Finding 2023 – 024: (continued) Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR Section 200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR Section 200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR Section 200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. Finding 2023 – 024: (continued) 2 CFR Section 200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. Finding 2023 – 024: (continued) (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08 in order to ensure compliance with federal audit submission requirements. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Finding 2023 – 024: (continued) Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08. DOH Response: DOH agrees with the finding. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding and will be hiring a complement position to ensure compliance in the future. PDE Response: PDE agrees with the finding. Questioned Costs: The amount of questioned costs cannot be determined.