?See Schedule of Findings and Questioned Costs for chart/table? CONDITION The Department of Public Instruction 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 three areas: 1. The Department of Public Instruction did not report the subaward information for the Fresh Fruit and Vegetable program (Assistance Listing number 10.582) for the 2021 grant year which runs from October 2020-September 2021. After an analysis of grant awards for that grant year, it was discovered that 14 subawards should have been reported to FFATA, totaling $1,593,654. ?See Schedule of Findings and Questioned Costs for chart/table? 2. The Department of Public Instruction did not report the subaward information timely for the Fresh Fruit and Vegetable program (Assistance Listing number 10.582) for the 2022 grant year awards (October 2021-September 2022) awarded in October 2021. After an analysis of grant awards awarded in October 2021, we tested 5 of 13 awards and found all 5 were not submitted timely to FFATA. Four (4) of the tested awards should have been reported to FFATA by 1/31/2022. The fifth award should have been reported to FFATA by 2/28/2022. They were all reported to FFATA on 7/28/2022. Those grant awards totaled $623,000. ?See Schedule of Findings and Questioned Costs for chart/table? 3. FFATA isn't being submitted for the following Assistance Listing numbers: 10.553, 10.555, 10.556 and 10.559. Because these Assistance Listing numbers are all included in one grant award, therefore, one FAIN number, they would all be reported in one FFATA report. The Department of Public Instruction did not report the subaward information for FAIN 223ND309N1099. After an analysis of these grant awards, 206 sponsors receiving total Federal grant payments over $30,000 should have been reported. Those grant payments totaled $168,897,721. The $169 million is based on payments made from 7/1/2020 - 6/30/2022. ?See Schedule of Findings and Questioned Costs for chart/table? 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. The subaward information is then available to the public on the USA Spending website for transparency. 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 Based on discussion with staff, a lack of understanding of FFATA reporting requirements resulted in the FFATA reporting errors. The Department of Public Instruction is only reporting FFATA for the Fresh Fruit and Vegetable program because the amounts given to sponsors is predetermined and not reimbursement based. For the other programs in the Child Nutrition Cluster, DPI does not report FFATA because they are meal count grants and amounts are not predetermined. There is no waiver or statement in the grant terms and conditions for the meal count grants saying that FFATA doesn?t need to be completed for these programs. The Department also couldn?t find a waiver or any information from their USDA contact saying that FFATA doesn?t need to be completed. Therefore, the FFATA should have been completed for all programs in the Child Nutrition Cluster. Because the awards to sponsors are not predetermined, the auditor is reporting grant payments during the audit period instead of award amounts. 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 There were 539 sponsors receiving Federal grant awards during our audit period totaling $174,653,181. Of those 539 sponsors, 233 (43%) were over the $30,000 threshold and should have been reported to FFATA, for a total of $172,004,887 (98%). Of the 233 sponsors over the $30,000 threshold, only 13 sponsors (6%) were reported to FFATA, totaling $1,513,512 (1%). This results in 220 sponsors receiving Federal grant awards (94%) not reported to FFATA, totaling $170,491,375 (99%). Where sampling was performed, the audit used a non-statistical sampling method. IDENTIFICATION AS A REPEAT FINDING Not a repeat finding. RECOMMENDATION We recommend the Department of Public Instruction ensures timely and accurate submission of FFATA reports in accordance with Federal regulations and retain further instructions or waiver from the Federal agency. DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE We agree with the finding. See ?Management?s Response and Corrective Action? section of this report.
?See Schedule of Findings and Questioned Costs for chart/table? CONDITION The Department of Public Instruction 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 three areas: 1. The Department of Public Instruction did not report the subaward information for the Fresh Fruit and Vegetable program (Assistance Listing number 10.582) for the 2021 grant year which runs from October 2020-September 2021. After an analysis of grant awards for that grant year, it was discovered that 14 subawards should have been reported to FFATA, totaling $1,593,654. ?See Schedule of Findings and Questioned Costs for chart/table? 2. The Department of Public Instruction did not report the subaward information timely for the Fresh Fruit and Vegetable program (Assistance Listing number 10.582) for the 2022 grant year awards (October 2021-September 2022) awarded in October 2021. After an analysis of grant awards awarded in October 2021, we tested 5 of 13 awards and found all 5 were not submitted timely to FFATA. Four (4) of the tested awards should have been reported to FFATA by 1/31/2022. The fifth award should have been reported to FFATA by 2/28/2022. They were all reported to FFATA on 7/28/2022. Those grant awards totaled $623,000. ?See Schedule of Findings and Questioned Costs for chart/table? 3. FFATA isn't being submitted for the following Assistance Listing numbers: 10.553, 10.555, 10.556 and 10.559. Because these Assistance Listing numbers are all included in one grant award, therefore, one FAIN number, they would all be reported in one FFATA report. The Department of Public Instruction did not report the subaward information for FAIN 223ND309N1099. After an analysis of these grant awards, 206 sponsors receiving total Federal grant payments over $30,000 should have been reported. Those grant payments totaled $168,897,721. The $169 million is based on payments made from 7/1/2020 - 6/30/2022. ?See Schedule of Findings and Questioned Costs for chart/table? 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. The subaward information is then available to the public on the USA Spending website for transparency. 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 Based on discussion with staff, a lack of understanding of FFATA reporting requirements resulted in the FFATA reporting errors. The Department of Public Instruction is only reporting FFATA for the Fresh Fruit and Vegetable program because the amounts given to sponsors is predetermined and not reimbursement based. For the other programs in the Child Nutrition Cluster, DPI does not report FFATA because they are meal count grants and amounts are not predetermined. There is no waiver or statement in the grant terms and conditions for the meal count grants saying that FFATA doesn?t need to be completed for these programs. The Department also couldn?t find a waiver or any information from their USDA contact saying that FFATA doesn?t need to be completed. Therefore, the FFATA should have been completed for all programs in the Child Nutrition Cluster. Because the awards to sponsors are not predetermined, the auditor is reporting grant payments during the audit period instead of award amounts. 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 There were 539 sponsors receiving Federal grant awards during our audit period totaling $174,653,181. Of those 539 sponsors, 233 (43%) were over the $30,000 threshold and should have been reported to FFATA, for a total of $172,004,887 (98%). Of the 233 sponsors over the $30,000 threshold, only 13 sponsors (6%) were reported to FFATA, totaling $1,513,512 (1%). This results in 220 sponsors receiving Federal grant awards (94%) not reported to FFATA, totaling $170,491,375 (99%). Where sampling was performed, the audit used a non-statistical sampling method. IDENTIFICATION AS A REPEAT FINDING Not a repeat finding. RECOMMENDATION We recommend the Department of Public Instruction ensures timely and accurate submission of FFATA reports in accordance with Federal regulations and retain further instructions or waiver from the Federal agency. DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE We agree with the finding. See ?Management?s Response and Corrective Action? section of this report.
?See Schedule of Findings and Questioned Costs for chart/table? CONDITION The Department of Public Instruction 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 three areas: 1. The Department of Public Instruction did not report the subaward information for the Fresh Fruit and Vegetable program (Assistance Listing number 10.582) for the 2021 grant year which runs from October 2020-September 2021. After an analysis of grant awards for that grant year, it was discovered that 14 subawards should have been reported to FFATA, totaling $1,593,654. ?See Schedule of Findings and Questioned Costs for chart/table? 2. The Department of Public Instruction did not report the subaward information timely for the Fresh Fruit and Vegetable program (Assistance Listing number 10.582) for the 2022 grant year awards (October 2021-September 2022) awarded in October 2021. After an analysis of grant awards awarded in October 2021, we tested 5 of 13 awards and found all 5 were not submitted timely to FFATA. Four (4) of the tested awards should have been reported to FFATA by 1/31/2022. The fifth award should have been reported to FFATA by 2/28/2022. They were all reported to FFATA on 7/28/2022. Those grant awards totaled $623,000. ?See Schedule of Findings and Questioned Costs for chart/table? 3. FFATA isn't being submitted for the following Assistance Listing numbers: 10.553, 10.555, 10.556 and 10.559. Because these Assistance Listing numbers are all included in one grant award, therefore, one FAIN number, they would all be reported in one FFATA report. The Department of Public Instruction did not report the subaward information for FAIN 223ND309N1099. After an analysis of these grant awards, 206 sponsors receiving total Federal grant payments over $30,000 should have been reported. Those grant payments totaled $168,897,721. The $169 million is based on payments made from 7/1/2020 - 6/30/2022. ?See Schedule of Findings and Questioned Costs for chart/table? 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. The subaward information is then available to the public on the USA Spending website for transparency. 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 Based on discussion with staff, a lack of understanding of FFATA reporting requirements resulted in the FFATA reporting errors. The Department of Public Instruction is only reporting FFATA for the Fresh Fruit and Vegetable program because the amounts given to sponsors is predetermined and not reimbursement based. For the other programs in the Child Nutrition Cluster, DPI does not report FFATA because they are meal count grants and amounts are not predetermined. There is no waiver or statement in the grant terms and conditions for the meal count grants saying that FFATA doesn?t need to be completed for these programs. The Department also couldn?t find a waiver or any information from their USDA contact saying that FFATA doesn?t need to be completed. Therefore, the FFATA should have been completed for all programs in the Child Nutrition Cluster. Because the awards to sponsors are not predetermined, the auditor is reporting grant payments during the audit period instead of award amounts. 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 There were 539 sponsors receiving Federal grant awards during our audit period totaling $174,653,181. Of those 539 sponsors, 233 (43%) were over the $30,000 threshold and should have been reported to FFATA, for a total of $172,004,887 (98%). Of the 233 sponsors over the $30,000 threshold, only 13 sponsors (6%) were reported to FFATA, totaling $1,513,512 (1%). This results in 220 sponsors receiving Federal grant awards (94%) not reported to FFATA, totaling $170,491,375 (99%). Where sampling was performed, the audit used a non-statistical sampling method. IDENTIFICATION AS A REPEAT FINDING Not a repeat finding. RECOMMENDATION We recommend the Department of Public Instruction ensures timely and accurate submission of FFATA reports in accordance with Federal regulations and retain further instructions or waiver from the Federal agency. DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE We agree with the finding. See ?Management?s Response and Corrective Action? section of this report.
?See Schedule of Findings and Questioned Costs for chart/table? CONDITION The Department of Public Instruction 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 three areas: 1. The Department of Public Instruction did not report the subaward information for the Fresh Fruit and Vegetable program (Assistance Listing number 10.582) for the 2021 grant year which runs from October 2020-September 2021. After an analysis of grant awards for that grant year, it was discovered that 14 subawards should have been reported to FFATA, totaling $1,593,654. ?See Schedule of Findings and Questioned Costs for chart/table? 2. The Department of Public Instruction did not report the subaward information timely for the Fresh Fruit and Vegetable program (Assistance Listing number 10.582) for the 2022 grant year awards (October 2021-September 2022) awarded in October 2021. After an analysis of grant awards awarded in October 2021, we tested 5 of 13 awards and found all 5 were not submitted timely to FFATA. Four (4) of the tested awards should have been reported to FFATA by 1/31/2022. The fifth award should have been reported to FFATA by 2/28/2022. They were all reported to FFATA on 7/28/2022. Those grant awards totaled $623,000. ?See Schedule of Findings and Questioned Costs for chart/table? 3. FFATA isn't being submitted for the following Assistance Listing numbers: 10.553, 10.555, 10.556 and 10.559. Because these Assistance Listing numbers are all included in one grant award, therefore, one FAIN number, they would all be reported in one FFATA report. The Department of Public Instruction did not report the subaward information for FAIN 223ND309N1099. After an analysis of these grant awards, 206 sponsors receiving total Federal grant payments over $30,000 should have been reported. Those grant payments totaled $168,897,721. The $169 million is based on payments made from 7/1/2020 - 6/30/2022. ?See Schedule of Findings and Questioned Costs for chart/table? 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. The subaward information is then available to the public on the USA Spending website for transparency. 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 Based on discussion with staff, a lack of understanding of FFATA reporting requirements resulted in the FFATA reporting errors. The Department of Public Instruction is only reporting FFATA for the Fresh Fruit and Vegetable program because the amounts given to sponsors is predetermined and not reimbursement based. For the other programs in the Child Nutrition Cluster, DPI does not report FFATA because they are meal count grants and amounts are not predetermined. There is no waiver or statement in the grant terms and conditions for the meal count grants saying that FFATA doesn?t need to be completed for these programs. The Department also couldn?t find a waiver or any information from their USDA contact saying that FFATA doesn?t need to be completed. Therefore, the FFATA should have been completed for all programs in the Child Nutrition Cluster. Because the awards to sponsors are not predetermined, the auditor is reporting grant payments during the audit period instead of award amounts. 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 There were 539 sponsors receiving Federal grant awards during our audit period totaling $174,653,181. Of those 539 sponsors, 233 (43%) were over the $30,000 threshold and should have been reported to FFATA, for a total of $172,004,887 (98%). Of the 233 sponsors over the $30,000 threshold, only 13 sponsors (6%) were reported to FFATA, totaling $1,513,512 (1%). This results in 220 sponsors receiving Federal grant awards (94%) not reported to FFATA, totaling $170,491,375 (99%). Where sampling was performed, the audit used a non-statistical sampling method. IDENTIFICATION AS A REPEAT FINDING Not a repeat finding. RECOMMENDATION We recommend the Department of Public Instruction ensures timely and accurate submission of FFATA reports in accordance with Federal regulations and retain further instructions or waiver from the Federal agency. DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE We agree with the finding. See ?Management?s Response and Corrective Action? section of this report.
?See Schedule of Findings and Questioned Costs for chart/table? CONDITION The Department of Public Instruction 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 three areas: 1. The Department of Public Instruction did not report the subaward information for the Fresh Fruit and Vegetable program (Assistance Listing number 10.582) for the 2021 grant year which runs from October 2020-September 2021. After an analysis of grant awards for that grant year, it was discovered that 14 subawards should have been reported to FFATA, totaling $1,593,654. ?See Schedule of Findings and Questioned Costs for chart/table? 2. The Department of Public Instruction did not report the subaward information timely for the Fresh Fruit and Vegetable program (Assistance Listing number 10.582) for the 2022 grant year awards (October 2021-September 2022) awarded in October 2021. After an analysis of grant awards awarded in October 2021, we tested 5 of 13 awards and found all 5 were not submitted timely to FFATA. Four (4) of the tested awards should have been reported to FFATA by 1/31/2022. The fifth award should have been reported to FFATA by 2/28/2022. They were all reported to FFATA on 7/28/2022. Those grant awards totaled $623,000. ?See Schedule of Findings and Questioned Costs for chart/table? 3. FFATA isn't being submitted for the following Assistance Listing numbers: 10.553, 10.555, 10.556 and 10.559. Because these Assistance Listing numbers are all included in one grant award, therefore, one FAIN number, they would all be reported in one FFATA report. The Department of Public Instruction did not report the subaward information for FAIN 223ND309N1099. After an analysis of these grant awards, 206 sponsors receiving total Federal grant payments over $30,000 should have been reported. Those grant payments totaled $168,897,721. The $169 million is based on payments made from 7/1/2020 - 6/30/2022. ?See Schedule of Findings and Questioned Costs for chart/table? 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. The subaward information is then available to the public on the USA Spending website for transparency. 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 Based on discussion with staff, a lack of understanding of FFATA reporting requirements resulted in the FFATA reporting errors. The Department of Public Instruction is only reporting FFATA for the Fresh Fruit and Vegetable program because the amounts given to sponsors is predetermined and not reimbursement based. For the other programs in the Child Nutrition Cluster, DPI does not report FFATA because they are meal count grants and amounts are not predetermined. There is no waiver or statement in the grant terms and conditions for the meal count grants saying that FFATA doesn?t need to be completed for these programs. The Department also couldn?t find a waiver or any information from their USDA contact saying that FFATA doesn?t need to be completed. Therefore, the FFATA should have been completed for all programs in the Child Nutrition Cluster. Because the awards to sponsors are not predetermined, the auditor is reporting grant payments during the audit period instead of award amounts. 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 There were 539 sponsors receiving Federal grant awards during our audit period totaling $174,653,181. Of those 539 sponsors, 233 (43%) were over the $30,000 threshold and should have been reported to FFATA, for a total of $172,004,887 (98%). Of the 233 sponsors over the $30,000 threshold, only 13 sponsors (6%) were reported to FFATA, totaling $1,513,512 (1%). This results in 220 sponsors receiving Federal grant awards (94%) not reported to FFATA, totaling $170,491,375 (99%). Where sampling was performed, the audit used a non-statistical sampling method. IDENTIFICATION AS A REPEAT FINDING Not a repeat finding. RECOMMENDATION We recommend the Department of Public Instruction ensures timely and accurate submission of FFATA reports in accordance with Federal regulations and retain further instructions or waiver from the Federal agency. DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE We agree with the finding. See ?Management?s Response and Corrective Action? section of this report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Various Agencies Finding 2022 ? 014: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 ? Child Nutrition Cluster (including COVID-19) ALN 10.557 ? WIC Special Supplemental Nutrition Program for Women, Infants, and Children (including COVID-19) ALN 10.558 ? Child and Adult Care Food Program (including COVID-19) ALN 15.252 ? Abandoned Mine Land Reclamation ALN 21.023 ? COVID-19 ? Emergency Rental Assistance Program ALN 84.010 ? Title I Grants to Local Educational Agencies ALN 84.027 and 84.173 ? ? Special Education Cluster (IDEA) (including COVID-19) ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER ALN 84.425W ? COVID 19 ? Education Stabilization Fund - ARP ESSER HCY ALN 93.558 ? Temporary Assistance for Needy Families (including COVID-19) ALN 93.563 ? Child Support Enforcement ALN 93.575 and 93.596 ? Child Care and Development Fund (CCDF) Cluster (including COVID-19) ALN 93.658 ? Foster Care ? Title IV-E (including COVID-19) ALN 93.659 ? Adoption Assistance (including COVID-19) ALN 93.775, 93.777, and 93.778 ? Medicaid Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth?s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2021-015) Federal Grant Number(s) and Year(s): 1PA300365 (1/01/2022 ? 9/30/2023), 1PA310305 (10/01/2021 ? 9/30/2022), 1PA310305 (10/01/2020 ? 9/30/2021), 1PA300305 (10/01/2021 ? 9/30/2022), 1PA300305 (10/01/2020 ? 9/30/2021), 1PA320305 (12/27/2020 ? 9/30/2021), Y22174 (10/01/2021 ? 9/30/2024), Y13194 (10/01/2020 ? 9/30/2023), Y03194 (10/01/2019 ? 9/30/2023), Y03191 (10/01/2019 ? 9/30/2020), Y22173 (10/01/2021 ? 9/30/2022), Y22172 (10/01/2021 ? 9/30/2022, Y13191 (10/01/2020 ? 9/30/2021), Y13061 (10/01/2020 ? 9/30/2021), S22AF00017 (1/01/2022 ? 12/31/2024), S21AF10050 (6/01/2021 ? 5/31/2024), S21AF10015 (1/01/2021 ? 12/31/2023), S20AF20092 (10/01/2020 ? 9/30/2023), S20AF20006 (1/01/2020 ? 12/31/2022), S19AF20006 (1/01/2019 ? 12/31/2021), S19AF20004 (12/01/2018 ? 11/30/2023), S18AF20004 (11/01/2017 ? 10/31/2023), ERAE0131 (1/19/2021 ? 12/29/2022), ERAE0333 (5/11/2021 ? 12/30/2025), S010A210038 (7/01/2021 ? 9/30/2022), S010A200038 (7/01/2020 ? 9/30/2021), H027A210093 (7/01/2021 ? 9/30/2022), H027A200093 (7/01/2020 ? 9/30/2021), S425D200028 (3/13/2020 ? 9/30/2022), S425D210028 (3/13/2020 ? 9/30/2022), 2201PATANF (10/01/2021 ? 9/30/2022), 2101PATANF (10/01/2020 ? 9/30/2021), 2001PATANF (10/01/2019 ? 9/30/2020), 2201PACSES (10/01/2021 ? 9/30/2022), 2101PACSES (10/01/2020 ? 9/30/2021), G2201PACCDF (10/01/2021 ? 9/30/2022), G2101PACCDF (10/01/2020 ? 9/30/2021), 2201PAFOST (10/01/2021 ? 9/30/2022), 2101PAFOST (10/01/2020 ? 9/30/2021), 2001PAFOST (10/01/2019 ? 9/30/2020), 2201PAADPT (10/01/2021 ? 9/30/2022), 2101PAADPT (10/01/2020 ? 9/30/2021), 2205PA5MAP (10/01/2021 ? 9/30/2022), 2105PA5MAP (10/01/2020 ? 9/30/2021) Finding 2022 ? 014: (continued) Type of Finding: Significant Deficiency, Noncompliance for Medicaid Cluster Material Weakness, Material Noncompliance for Other Programs Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget?s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse?s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2022 audit of the Commonwealth?s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth?s fiscal year ended June 30, 2021 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2022. We also evaluated the Commonwealth?s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies? tracking lists during the fiscal year ended June 30, 2022 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies? review of subrecipient audit reports: ? Department of Education (PDE): The time period for making a management decision on findings was approximately 6.5 to over 13 months after the FAC MDL start date for 14 out of 25 audit reports with findings. Three of the 14 audit reports were improperly classified on PDE?s audit tracking list as not having federal award findings. ? Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 16.2 months after the FAC MDL start date for one out of three audit reports with findings. In addition, our review disclosed that DEP subgranted federal funds totaling $10,338,570 to one subrecipient during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended due to the COVID-19 pandemic in accordance with the Office of Management and Budget?s (OMB) Memorandum M-21-20, Appendix 3. ? Department of Health (DOH): Our review disclosed that DOH subgranted federal funds totaling $8,103,407 to one subrecipient during the fiscal year ended September 30, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 12.5 months after the December 31, 2021 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. ? Department of Human Services (DHS): The time period for making a management decision on findings ranged from approximately 6.6 months to over 19.6 months after the FAC MDL start date for 12 out of 14 subrecipient audit reports with findings. There was also a delay in DHS?s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Finding 2022 ? 014: (continued) As a follow-up to the prior year finding, we noted that the Commonwealth subgranted federal funds totaling $327,988,063 to the City of Philadelphia during the fiscal year ended June 30, 2021, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 3.5 months after the September 30, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. Our testing disclosed that DHS?s subgrants to the City of Philadelphia were material for five of the 16 major programs/clusters with material subgranted funds. Our follow-up on the prior year finding also disclosed that the Commonwealth subgranted federal funds totaling $28,725,212 to Bucks County during the fiscal year ended December 31, 2020, for which a Single Audit was not submitted to the FAC as of our January 2023 testing date. This was over 9.5 months after the March 31, 2022 due date, which had been extended in accordance with OMB?s Memorandum M-21-20, Appendix 3. DHS was the lead agency for the City of Philadelphia and Bucks County audits. Criteria: 2 CFR ?200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient?s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in ?200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR ?200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Finding 2022 ? 014: (continued) 2 CFR ?200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR ?200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in ?200.339 [Remedies for noncompliance]. 2 CFR ?200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in ?200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended ? Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program? (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: Finding 2022 ? 014: (continued) (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth?s reliance on an acceptable audit and prompt resolution as evidence of the recipient?s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended ? Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (1) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (6) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR ?200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. The late management decision at DEP appeared to be the result of a subrecipient being treated as a contractor as described in current year Single Audit Finding #2022-005, despite having a subrecipient Single Audit requirement clause in its contract with DEP. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.8 in order to ensure compliance with federal audit submission requirements. Finding 2022 ? 014: (continued) Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. DOH Response: DOH agrees with the finding. DHS Response: While DHS agrees with this finding, we believe we are in compliance with 2 CFR ?200.339 and Commonwealth Management Directive 325.08 related to outstanding audits. We continue to work with counties and their independent auditors to obtain any late Single Audit reports, and albeit late, we do receive them which is the ultimate goal. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
?See Schedule of Findings and Questioned Costs for chart/table? CONDITION The Department of Public Instruction 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 three areas: 1. The Department of Public Instruction did not report the subaward information for the Fresh Fruit and Vegetable program (Assistance Listing number 10.582) for the 2021 grant year which runs from October 2020-September 2021. After an analysis of grant awards for that grant year, it was discovered that 14 subawards should have been reported to FFATA, totaling $1,593,654. ?See Schedule of Findings and Questioned Costs for chart/table? 2. The Department of Public Instruction did not report the subaward information timely for the Fresh Fruit and Vegetable program (Assistance Listing number 10.582) for the 2022 grant year awards (October 2021-September 2022) awarded in October 2021. After an analysis of grant awards awarded in October 2021, we tested 5 of 13 awards and found all 5 were not submitted timely to FFATA. Four (4) of the tested awards should have been reported to FFATA by 1/31/2022. The fifth award should have been reported to FFATA by 2/28/2022. They were all reported to FFATA on 7/28/2022. Those grant awards totaled $623,000. ?See Schedule of Findings and Questioned Costs for chart/table? 3. FFATA isn't being submitted for the following Assistance Listing numbers: 10.553, 10.555, 10.556 and 10.559. Because these Assistance Listing numbers are all included in one grant award, therefore, one FAIN number, they would all be reported in one FFATA report. The Department of Public Instruction did not report the subaward information for FAIN 223ND309N1099. After an analysis of these grant awards, 206 sponsors receiving total Federal grant payments over $30,000 should have been reported. Those grant payments totaled $168,897,721. The $169 million is based on payments made from 7/1/2020 - 6/30/2022. ?See Schedule of Findings and Questioned Costs for chart/table? 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. The subaward information is then available to the public on the USA Spending website for transparency. 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 Based on discussion with staff, a lack of understanding of FFATA reporting requirements resulted in the FFATA reporting errors. The Department of Public Instruction is only reporting FFATA for the Fresh Fruit and Vegetable program because the amounts given to sponsors is predetermined and not reimbursement based. For the other programs in the Child Nutrition Cluster, DPI does not report FFATA because they are meal count grants and amounts are not predetermined. There is no waiver or statement in the grant terms and conditions for the meal count grants saying that FFATA doesn?t need to be completed for these programs. The Department also couldn?t find a waiver or any information from their USDA contact saying that FFATA doesn?t need to be completed. Therefore, the FFATA should have been completed for all programs in the Child Nutrition Cluster. Because the awards to sponsors are not predetermined, the auditor is reporting grant payments during the audit period instead of award amounts. 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 There were 539 sponsors receiving Federal grant awards during our audit period totaling $174,653,181. Of those 539 sponsors, 233 (43%) were over the $30,000 threshold and should have been reported to FFATA, for a total of $172,004,887 (98%). Of the 233 sponsors over the $30,000 threshold, only 13 sponsors (6%) were reported to FFATA, totaling $1,513,512 (1%). This results in 220 sponsors receiving Federal grant awards (94%) not reported to FFATA, totaling $170,491,375 (99%). Where sampling was performed, the audit used a non-statistical sampling method. IDENTIFICATION AS A REPEAT FINDING Not a repeat finding. RECOMMENDATION We recommend the Department of Public Instruction ensures timely and accurate submission of FFATA reports in accordance with Federal regulations and retain further instructions or waiver from the Federal agency. DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE We agree with the finding. See ?Management?s Response and Corrective Action? section of this report.
Finding 2022-004 ? Significant Deficiency Assistance Listing: 21.027 ? Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) Federal Grantor: Department of the Treasury Compliance Requirement: Procurement and Suspension and Debarment Condition: The District used a sole source authorization for the procurement of a Type-1 Fire Engine but a competitive bid process should have been used to comply with Uniform Guidance. Criteria: Non-state entities under the program, must 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. Specifically, procurements in excess of $250,000 be conducted using a competitive procurement method such as bids or proposals. Further, the District?s Purchasing Policy Sec 2112.13 requires staff obtain competitive bids for the purchase of supplies, equipment or service that are $15,000 or greater. Interagency or cooperative purchasing agreements may be leveraged, but they must comply with the Unform Standards, and 2 CFR section 200.320(c) states noncompetitive procurement can only be awarded if one or more of the following circumstances apply: 1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); 2) The item is available only from a single source; 3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; 4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or 5) After solicitation of a number of sources, competition is determined inadequate. Cause: The District?s Purchasing Policy allows for a sole source vendor with the approval of the Chief Administrative Officer. In addition, the Policy allows the District to purchase through a purchasing alliance, such as a cooperative agreement. The sole source vendor has a cooperative purchasing agreement through National Purchasing Partners (NPP) cooperative, contract number PS20240. The District?s justification for sole source vendor was uniformity of vendors across safety equipment which fosters ease of operator training and emergency scene efficiency. The approval indicated standardization also supports ongoing maintenance of the fleet. While permitted by internal policy, this justification does not appear to meet any of the noncompetitive procurement exceptions allowed by the Uniform Standards outlined above. The District was also unable to provide documentation that the vendor purchasing agreement through NPP complies with the Uniform Standards for procurement. Effect: Treasury 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.R. ? 200.339. Recommendation: We recommend the District work with FEMA to obtain written approval for the sole source procurement, which is one of the exceptions to noncompetitive procurements. Views of Responsible Officials and Planned Corrective Actions: Management?s response and planned corrective action is included in the Corrective Action Plan included at the end of the report.
?See Schedule of Findings and Questioned Costs for chart/table? CONDITION The Department of Public Instruction 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 three areas: 1. The Department of Public Instruction did not report the subaward information for the Fresh Fruit and Vegetable program (Assistance Listing number 10.582) for the 2021 grant year which runs from October 2020-September 2021. After an analysis of grant awards for that grant year, it was discovered that 14 subawards should have been reported to FFATA, totaling $1,593,654. ?See Schedule of Findings and Questioned Costs for chart/table? 2. The Department of Public Instruction did not report the subaward information timely for the Fresh Fruit and Vegetable program (Assistance Listing number 10.582) for the 2022 grant year awards (October 2021-September 2022) awarded in October 2021. After an analysis of grant awards awarded in October 2021, we tested 5 of 13 awards and found all 5 were not submitted timely to FFATA. Four (4) of the tested awards should have been reported to FFATA by 1/31/2022. The fifth award should have been reported to FFATA by 2/28/2022. They were all reported to FFATA on 7/28/2022. Those grant awards totaled $623,000. ?See Schedule of Findings and Questioned Costs for chart/table? 3. FFATA isn't being submitted for the following Assistance Listing numbers: 10.553, 10.555, 10.556 and 10.559. Because these Assistance Listing numbers are all included in one grant award, therefore, one FAIN number, they would all be reported in one FFATA report. The Department of Public Instruction did not report the subaward information for FAIN 223ND309N1099. After an analysis of these grant awards, 206 sponsors receiving total Federal grant payments over $30,000 should have been reported. Those grant payments totaled $168,897,721. The $169 million is based on payments made from 7/1/2020 - 6/30/2022. ?See Schedule of Findings and Questioned Costs for chart/table? 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. The subaward information is then available to the public on the USA Spending website for transparency. 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 Based on discussion with staff, a lack of understanding of FFATA reporting requirements resulted in the FFATA reporting errors. The Department of Public Instruction is only reporting FFATA for the Fresh Fruit and Vegetable program because the amounts given to sponsors is predetermined and not reimbursement based. For the other programs in the Child Nutrition Cluster, DPI does not report FFATA because they are meal count grants and amounts are not predetermined. There is no waiver or statement in the grant terms and conditions for the meal count grants saying that FFATA doesn?t need to be completed for these programs. The Department also couldn?t find a waiver or any information from their USDA contact saying that FFATA doesn?t need to be completed. Therefore, the FFATA should have been completed for all programs in the Child Nutrition Cluster. Because the awards to sponsors are not predetermined, the auditor is reporting grant payments during the audit period instead of award amounts. 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 There were 539 sponsors receiving Federal grant awards during our audit period totaling $174,653,181. Of those 539 sponsors, 233 (43%) were over the $30,000 threshold and should have been reported to FFATA, for a total of $172,004,887 (98%). Of the 233 sponsors over the $30,000 threshold, only 13 sponsors (6%) were reported to FFATA, totaling $1,513,512 (1%). This results in 220 sponsors receiving Federal grant awards (94%) not reported to FFATA, totaling $170,491,375 (99%). Where sampling was performed, the audit used a non-statistical sampling method. IDENTIFICATION AS A REPEAT FINDING Not a repeat finding. RECOMMENDATION We recommend the Department of Public Instruction ensures timely and accurate submission of FFATA reports in accordance with Federal regulations and retain further instructions or waiver from the Federal agency. DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE We agree with the finding. See ?Management?s Response and Corrective Action? section of this report.
?See Schedule of Findings and Questioned Costs for chart/table? CONDITION The Department of Public Instruction 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 three areas: 1. The Department of Public Instruction did not report the subaward information for the Fresh Fruit and Vegetable program (Assistance Listing number 10.582) for the 2021 grant year which runs from October 2020-September 2021. After an analysis of grant awards for that grant year, it was discovered that 14 subawards should have been reported to FFATA, totaling $1,593,654. ?See Schedule of Findings and Questioned Costs for chart/table? 2. The Department of Public Instruction did not report the subaward information timely for the Fresh Fruit and Vegetable program (Assistance Listing number 10.582) for the 2022 grant year awards (October 2021-September 2022) awarded in October 2021. After an analysis of grant awards awarded in October 2021, we tested 5 of 13 awards and found all 5 were not submitted timely to FFATA. Four (4) of the tested awards should have been reported to FFATA by 1/31/2022. The fifth award should have been reported to FFATA by 2/28/2022. They were all reported to FFATA on 7/28/2022. Those grant awards totaled $623,000. ?See Schedule of Findings and Questioned Costs for chart/table? 3. FFATA isn't being submitted for the following Assistance Listing numbers: 10.553, 10.555, 10.556 and 10.559. Because these Assistance Listing numbers are all included in one grant award, therefore, one FAIN number, they would all be reported in one FFATA report. The Department of Public Instruction did not report the subaward information for FAIN 223ND309N1099. After an analysis of these grant awards, 206 sponsors receiving total Federal grant payments over $30,000 should have been reported. Those grant payments totaled $168,897,721. The $169 million is based on payments made from 7/1/2020 - 6/30/2022. ?See Schedule of Findings and Questioned Costs for chart/table? 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. The subaward information is then available to the public on the USA Spending website for transparency. 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 Based on discussion with staff, a lack of understanding of FFATA reporting requirements resulted in the FFATA reporting errors. The Department of Public Instruction is only reporting FFATA for the Fresh Fruit and Vegetable program because the amounts given to sponsors is predetermined and not reimbursement based. For the other programs in the Child Nutrition Cluster, DPI does not report FFATA because they are meal count grants and amounts are not predetermined. There is no waiver or statement in the grant terms and conditions for the meal count grants saying that FFATA doesn?t need to be completed for these programs. The Department also couldn?t find a waiver or any information from their USDA contact saying that FFATA doesn?t need to be completed. Therefore, the FFATA should have been completed for all programs in the Child Nutrition Cluster. Because the awards to sponsors are not predetermined, the auditor is reporting grant payments during the audit period instead of award amounts. 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 There were 539 sponsors receiving Federal grant awards during our audit period totaling $174,653,181. Of those 539 sponsors, 233 (43%) were over the $30,000 threshold and should have been reported to FFATA, for a total of $172,004,887 (98%). Of the 233 sponsors over the $30,000 threshold, only 13 sponsors (6%) were reported to FFATA, totaling $1,513,512 (1%). This results in 220 sponsors receiving Federal grant awards (94%) not reported to FFATA, totaling $170,491,375 (99%). Where sampling was performed, the audit used a non-statistical sampling method. IDENTIFICATION AS A REPEAT FINDING Not a repeat finding. RECOMMENDATION We recommend the Department of Public Instruction ensures timely and accurate submission of FFATA reports in accordance with Federal regulations and retain further instructions or waiver from the Federal agency. DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE We agree with the finding. See ?Management?s Response and Corrective Action? section of this report.