(2023-038) Title: Internal control over CNC claim reimbursements needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Type of Finding: Material weakness Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 210.7 and .8; 7 CFR 225.15; Richard B. Russell National School Lunch Act Sec. 19; U.S. Department of Agriculture Fresh Fruit and Vegetable Program Handbook; Policy Memo: COVID-19: Child Nutrition Response #114 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and adequately documented. Claims for reimbursement must be based on lunch counts taken daily at the point of service, which correctly identify the number of free, reduced price, and paid lunches served to eligible children. The Department is required to review each School Food Authority’s (SFA) claim for reimbursement, on a monthly basis, to ensure that monthly claims are limited to the number of lunches served to eligible children. The Department then reimburses the SFA for actual meals served, based on the SFA’s claim for reimbursement utilizing rates that are programmed in the system. In accordance with 7 CFR 225.15, second meals must be served only after all participating children at the site's congregate meal service have been served a meal. Section 19 of the Richard B. Russell National School Lunch Act (NSLA) states that the per-student grant provided to a school under the Fresh Fruit and Vegetable Program (FFVP) shall not be less than $50, nor more than $75. U.S. Department of Agriculture’s (USDA) FFVP Handbook, referenced as guidance in Policy Memo SP 12-2022, states that all nonfood costs must be carefully reviewed and deemed reasonable. Policy Memo: Child Nutrition Response 114 for the Summer Food Service Program (SFSP) states that sponsors may only claim reimbursement for meals served retroactive to the date that a complete and correct application was received at the State agency, including meals that were served prior to their written approval to operate SFSP. This waiver from 7 CFR 225.9 states that all reimbursements shall be in accordance with the terms of this agreement. Reimbursements shall not be paid for meals served at a site before the sponsor has received written notification that the site has been approved for participation in the program. Condition: The Child Nutrition Cluster (CNC) includes the School Breakfast Program, National School Lunch Program (NSLP), Special Milk Program for Children, SFSP and FFVP. The objectives of the programs are to provide nutritious meals to eligible children in schools, residential childcare institutions, and summer food programs; to foster healthy eating habits by providing fresh fruits and vegetables to children attending elementary schools; and to encourage the consumption of nutritious agriculture commodities. The Department of Education (DOE) is responsible for the administration of child nutrition programs for the State. DOE provides benefits to each SFA or sponsor on a reimbursement basis. SFAs and sponsors must submit claims for reimbursement based on actual meals served for the month and permissible fresh fruits and vegetables, utilizing the Child Nutrition Program (CNPWeb) system. The Department is required to review each SFA or sponsor’s claim for reimbursement to ensure that monthly claims are limited to the number of meals served to eligible children and that the cost of the fresh fruits and vegetables are allowable. Once the claims are approved, claims are reimbursed based on the rates that are programmed in the CNPWeb system. The Office of the State Auditor (OSA) tested claims for reimbursement (CFR) for CNC and found instances that did not align with program regulations for NSLP, FFVP, and SFSP, as follows: National School Lunch Program If there are revisions to claims after 60 days which increase the Federal reimbursement, Child Nutrition Services (CNS) is permitted to grant an exception once every 36 months. OSA tested 60 paid CFRs in NSLP and found one SFA’s CFR included two revisions that were more than 60 days after the last day of the claim month. The first revision submitted was not documented as an exception; as a result, the second revision submitted in excess of 60 days was erroneously processed. Fresh Fruit and Vegetable Program USDA guidance included in the FFVP Handbook states that most of a SFA’s FFVP funds must be used for purchasing fresh fruits and vegetables, all nonfood costs must be carefully reviewed and deemed reasonable, and that labor costs must be minimal. FFVP allocations must be determined at the State agency and result in a per-pupil allocation between $50 and $75 for participating SFAs. OSA tested 60 FFVP CFRs and found: • claims from 11 SFAs totaling $51,927 had sites with significant nonfood costs. o Six SFA’s CFRs included costs totaling $12,506; of this amount, fresh fruits and vegetables were less than 50 percent of the entire claim. o One SFA’s CFR included labor costs of $1,599 for two sites where no fresh fruits or vegetables were claimed. • CNS adjusted allocations to two SFAs, but after the adjustment, the SFAs exceeded the $75 maximum per-pupil allocation. OSA tested 20 SFAs that participated in FFVP and found that three exceeded their original allocation: • Two SFAs were provided additional funds as a result of a reallocation by CNS; however, the additional allocation resulted in per-pupil amounts that exceeded the maximum amount of $75. • One SFA overspent by $893 due to a claim system processing error. Summer Food Service Program SFSP allows sponsors to claim a percentage of second meals served after first meals have been served. SFSP reimbursement for second meals is dependent upon a sponsor’s total first meals claimed. In July 2022, USDA issued Child Nutrition Response 114 to waive certain application requirements to accommodate for changes made once the program year had begun. The policy memo states that sponsors may only claim reimbursement for meals served retroactively to the date that a complete and correct application was received by the State agency. Applications from sponsors include individual site sheets that specify mealtimes and operating days as part of the sponsor’s application; revisions to the site sheet affect both the completeness and accuracy of the application. OSA tested 44 SFSP CFRs and found: • one site claimed only second meals; no first meals had been claimed. • seven sponsors had approved site sheet revisions and retroactive adjustments; however, CNS did not document the date the revisions were initiated. The revisions included addition of meal types, new sites and days of operation. CNS did not document the reason for the revisions or the date of receipt. OSA selected non-statistical random samples. Context: CNC processed $69.9 million in CFRs in fiscal year 2023. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Potential questioned costs and disallowances • Noncompliance with Federal regulations Recommendation: We recommend that the Department enhance policies and procedures to ensure: • CFRs revised after 60 days and granted a one-time exception are tracked; • CFRs for all SFAs participating in the FFVP are reviewed to confirm that the amounts claimed for nonfood costs are reasonable and labor costs are minimal; • SFAs that are provided additional FFVP funds are reviewed prior to reallocation to verify that SFAs will not be in excess of the allowed per-pupil limit; and • revisions to SFSP applications, including site sheets, are properly documented. Corrective Action Plan: See F-20 Management’s Response: The Department agrees to the one-time exception and application documentation elements of this finding. We have created new procedures to ensure these areas are corrected. The Department disagrees with the recommendation to increase oversight in the FFVP as it aligns with USDA and Department of Education policies and procedures. CFRs for all SFAs participating in FFVP are reviewed to confirm that the amounts claimed for non-food costs are reasonable and labor costs are minimal. The USDA Fresh Fruit and Vegetable Program (FFVP) is a program that is monitored at the same time as the other Child Nutrition Programs, including NSLP and SBP. The administrative review process is conducted on an approved timeline set by the USDA, who administers all of the Child Nutrition Programs. Reviewing one month's claim for reimbursement (referred to as the "Review Period") follows federal requirements and is the NSLP review teams procedure for each review. This includes verifying meal counts for breakfast, lunch, and snack (if applicable) as well as FFVP expenses, if applicable. FFVP claims are reviewed to ensure that only allowable costs are being claimed. This includes food, labor and other costs, which non-food cost is a part of. There is also an edit check in the CNP web reimbursement system so that schools do not exceed the 10% administrative labor amount per grant award. Child Nutrition staff does not verify the meal counts for every claim for reimbursement that is submitted to us on a monthly basis for over 200 SFA's; therefore, having to do this for FFVP is unreasonable and would create a hardship for staff overseeing this program. The monitoring and edit check systems we have in place for FFVP allow for sufficient oversight of the program, including non-food and labor costs, and align with USDA and Department of Education policies and procedures. SFAs that are provided additional FFVP funds are reviewed prior to reallocation to verify that SFAs will not be in excess of the allowed per-pupil limit. Based on the NSLA Sec. 19, (f) Per-Student Grant- the per student grant provided to a school under this section shall be (2) not less than $50.00, nor more than $75.00; however under (i)Funding (7) Reallocation, (B) Within States- A State that receives a grant under this section may reallocate any amounts made available under the grant that are not obligated or expended by a date determined by the Secretary. Our interpretation is that any amounts can be reallocated after the initial grant award is given. Allocating above the $75.00/student would allow us to maximize use of federal funds and is in line with the language of the NSLA Sec. 19. We have schools each year that spend more than they were awarded and some that underspend their funds. Imposing this restriction would negatively impact schools that are using their funds as they may have to decrease the number of serving days or stop the program altogether prior to the end of the school year, thus negatively impacting students who benefit from this program. Contact: Adriane Ackroyd, Assistant Director Child Nutrition, DOE, 207-592-1722 Auditor’s Concluding Remarks: The USDA FFVP handbook outlines requirements for program oversight. These oversight procedures require states to review FFVP CFRs submitted by participating schools to ensure that expenditures are appropriate prior to providing reimbursement. The review process should ensure that the “majority of funds are used to purchase fresh produce” and “labor costs and all other non-food costs are minimal.” OSA’s testing of FFVP claims for reimbursement identified SFAs that had significant nonfood costs. The SFAs selected for testing submitted and were reimbursed for 31 different sites with nonfood costs ranging from 22 to 100 percent of the CFR. The Department did not provide justification to document the nonfood costs, including the site that claimed 100 percent for nonfood. Furthermore, the Department cites the annual monitoring review process as a mechanism to ensure CFRs for non-food costs are reasonable and labor costs are minimal; however, this process occurs after reimbursement is provided, not prior to reimbursement as required. In addition, OSA audit procedures over subrecipient monitoring reported finding 2023-043 Internal control over CNC subrecipient monitoring procedures needs improvement which identified an exception related to the documentation of FFVP program receipts. Accordingly, OSA recommends that the Department increase oversight over the program to ensure that CFRs are reviewed prior to reimbursement to confirm that the amounts claimed for nonfood costs are reasonable and labor costs are minimal as required by USDA. While NSLA Section 19(i)(7)(b) does outline that the State “may reallocate any amounts made available under the grant that are not obligated or expended by a date determined by the Secretary,” it does not override NSLA Section 19(f)(2) that specifies that the “per-student grant provided to a school under this section shall be not less than $50, nor more than $75.” The use of “under this section” in NSLA Section 19(f)(2) pertains to all of Section 19, including reallocations. As a result, OSA continues to recommend that the Department enhance policies and procedures to ensure SFAs that are provided additional FFVP funds are reviewed prior to reallocation to verify that SFAs will not be in excess of the allowed per-pupil limit. The finding remains as stated. (State Number: 23-1203-04)
(2023-038) Title: Internal control over CNC claim reimbursements needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Type of Finding: Material weakness Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 210.7 and .8; 7 CFR 225.15; Richard B. Russell National School Lunch Act Sec. 19; U.S. Department of Agriculture Fresh Fruit and Vegetable Program Handbook; Policy Memo: COVID-19: Child Nutrition Response #114 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and adequately documented. Claims for reimbursement must be based on lunch counts taken daily at the point of service, which correctly identify the number of free, reduced price, and paid lunches served to eligible children. The Department is required to review each School Food Authority’s (SFA) claim for reimbursement, on a monthly basis, to ensure that monthly claims are limited to the number of lunches served to eligible children. The Department then reimburses the SFA for actual meals served, based on the SFA’s claim for reimbursement utilizing rates that are programmed in the system. In accordance with 7 CFR 225.15, second meals must be served only after all participating children at the site's congregate meal service have been served a meal. Section 19 of the Richard B. Russell National School Lunch Act (NSLA) states that the per-student grant provided to a school under the Fresh Fruit and Vegetable Program (FFVP) shall not be less than $50, nor more than $75. U.S. Department of Agriculture’s (USDA) FFVP Handbook, referenced as guidance in Policy Memo SP 12-2022, states that all nonfood costs must be carefully reviewed and deemed reasonable. Policy Memo: Child Nutrition Response 114 for the Summer Food Service Program (SFSP) states that sponsors may only claim reimbursement for meals served retroactive to the date that a complete and correct application was received at the State agency, including meals that were served prior to their written approval to operate SFSP. This waiver from 7 CFR 225.9 states that all reimbursements shall be in accordance with the terms of this agreement. Reimbursements shall not be paid for meals served at a site before the sponsor has received written notification that the site has been approved for participation in the program. Condition: The Child Nutrition Cluster (CNC) includes the School Breakfast Program, National School Lunch Program (NSLP), Special Milk Program for Children, SFSP and FFVP. The objectives of the programs are to provide nutritious meals to eligible children in schools, residential childcare institutions, and summer food programs; to foster healthy eating habits by providing fresh fruits and vegetables to children attending elementary schools; and to encourage the consumption of nutritious agriculture commodities. The Department of Education (DOE) is responsible for the administration of child nutrition programs for the State. DOE provides benefits to each SFA or sponsor on a reimbursement basis. SFAs and sponsors must submit claims for reimbursement based on actual meals served for the month and permissible fresh fruits and vegetables, utilizing the Child Nutrition Program (CNPWeb) system. The Department is required to review each SFA or sponsor’s claim for reimbursement to ensure that monthly claims are limited to the number of meals served to eligible children and that the cost of the fresh fruits and vegetables are allowable. Once the claims are approved, claims are reimbursed based on the rates that are programmed in the CNPWeb system. The Office of the State Auditor (OSA) tested claims for reimbursement (CFR) for CNC and found instances that did not align with program regulations for NSLP, FFVP, and SFSP, as follows: National School Lunch Program If there are revisions to claims after 60 days which increase the Federal reimbursement, Child Nutrition Services (CNS) is permitted to grant an exception once every 36 months. OSA tested 60 paid CFRs in NSLP and found one SFA’s CFR included two revisions that were more than 60 days after the last day of the claim month. The first revision submitted was not documented as an exception; as a result, the second revision submitted in excess of 60 days was erroneously processed. Fresh Fruit and Vegetable Program USDA guidance included in the FFVP Handbook states that most of a SFA’s FFVP funds must be used for purchasing fresh fruits and vegetables, all nonfood costs must be carefully reviewed and deemed reasonable, and that labor costs must be minimal. FFVP allocations must be determined at the State agency and result in a per-pupil allocation between $50 and $75 for participating SFAs. OSA tested 60 FFVP CFRs and found: • claims from 11 SFAs totaling $51,927 had sites with significant nonfood costs. o Six SFA’s CFRs included costs totaling $12,506; of this amount, fresh fruits and vegetables were less than 50 percent of the entire claim. o One SFA’s CFR included labor costs of $1,599 for two sites where no fresh fruits or vegetables were claimed. • CNS adjusted allocations to two SFAs, but after the adjustment, the SFAs exceeded the $75 maximum per-pupil allocation. OSA tested 20 SFAs that participated in FFVP and found that three exceeded their original allocation: • Two SFAs were provided additional funds as a result of a reallocation by CNS; however, the additional allocation resulted in per-pupil amounts that exceeded the maximum amount of $75. • One SFA overspent by $893 due to a claim system processing error. Summer Food Service Program SFSP allows sponsors to claim a percentage of second meals served after first meals have been served. SFSP reimbursement for second meals is dependent upon a sponsor’s total first meals claimed. In July 2022, USDA issued Child Nutrition Response 114 to waive certain application requirements to accommodate for changes made once the program year had begun. The policy memo states that sponsors may only claim reimbursement for meals served retroactively to the date that a complete and correct application was received by the State agency. Applications from sponsors include individual site sheets that specify mealtimes and operating days as part of the sponsor’s application; revisions to the site sheet affect both the completeness and accuracy of the application. OSA tested 44 SFSP CFRs and found: • one site claimed only second meals; no first meals had been claimed. • seven sponsors had approved site sheet revisions and retroactive adjustments; however, CNS did not document the date the revisions were initiated. The revisions included addition of meal types, new sites and days of operation. CNS did not document the reason for the revisions or the date of receipt. OSA selected non-statistical random samples. Context: CNC processed $69.9 million in CFRs in fiscal year 2023. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Potential questioned costs and disallowances • Noncompliance with Federal regulations Recommendation: We recommend that the Department enhance policies and procedures to ensure: • CFRs revised after 60 days and granted a one-time exception are tracked; • CFRs for all SFAs participating in the FFVP are reviewed to confirm that the amounts claimed for nonfood costs are reasonable and labor costs are minimal; • SFAs that are provided additional FFVP funds are reviewed prior to reallocation to verify that SFAs will not be in excess of the allowed per-pupil limit; and • revisions to SFSP applications, including site sheets, are properly documented. Corrective Action Plan: See F-20 Management’s Response: The Department agrees to the one-time exception and application documentation elements of this finding. We have created new procedures to ensure these areas are corrected. The Department disagrees with the recommendation to increase oversight in the FFVP as it aligns with USDA and Department of Education policies and procedures. CFRs for all SFAs participating in FFVP are reviewed to confirm that the amounts claimed for non-food costs are reasonable and labor costs are minimal. The USDA Fresh Fruit and Vegetable Program (FFVP) is a program that is monitored at the same time as the other Child Nutrition Programs, including NSLP and SBP. The administrative review process is conducted on an approved timeline set by the USDA, who administers all of the Child Nutrition Programs. Reviewing one month's claim for reimbursement (referred to as the "Review Period") follows federal requirements and is the NSLP review teams procedure for each review. This includes verifying meal counts for breakfast, lunch, and snack (if applicable) as well as FFVP expenses, if applicable. FFVP claims are reviewed to ensure that only allowable costs are being claimed. This includes food, labor and other costs, which non-food cost is a part of. There is also an edit check in the CNP web reimbursement system so that schools do not exceed the 10% administrative labor amount per grant award. Child Nutrition staff does not verify the meal counts for every claim for reimbursement that is submitted to us on a monthly basis for over 200 SFA's; therefore, having to do this for FFVP is unreasonable and would create a hardship for staff overseeing this program. The monitoring and edit check systems we have in place for FFVP allow for sufficient oversight of the program, including non-food and labor costs, and align with USDA and Department of Education policies and procedures. SFAs that are provided additional FFVP funds are reviewed prior to reallocation to verify that SFAs will not be in excess of the allowed per-pupil limit. Based on the NSLA Sec. 19, (f) Per-Student Grant- the per student grant provided to a school under this section shall be (2) not less than $50.00, nor more than $75.00; however under (i)Funding (7) Reallocation, (B) Within States- A State that receives a grant under this section may reallocate any amounts made available under the grant that are not obligated or expended by a date determined by the Secretary. Our interpretation is that any amounts can be reallocated after the initial grant award is given. Allocating above the $75.00/student would allow us to maximize use of federal funds and is in line with the language of the NSLA Sec. 19. We have schools each year that spend more than they were awarded and some that underspend their funds. Imposing this restriction would negatively impact schools that are using their funds as they may have to decrease the number of serving days or stop the program altogether prior to the end of the school year, thus negatively impacting students who benefit from this program. Contact: Adriane Ackroyd, Assistant Director Child Nutrition, DOE, 207-592-1722 Auditor’s Concluding Remarks: The USDA FFVP handbook outlines requirements for program oversight. These oversight procedures require states to review FFVP CFRs submitted by participating schools to ensure that expenditures are appropriate prior to providing reimbursement. The review process should ensure that the “majority of funds are used to purchase fresh produce” and “labor costs and all other non-food costs are minimal.” OSA’s testing of FFVP claims for reimbursement identified SFAs that had significant nonfood costs. The SFAs selected for testing submitted and were reimbursed for 31 different sites with nonfood costs ranging from 22 to 100 percent of the CFR. The Department did not provide justification to document the nonfood costs, including the site that claimed 100 percent for nonfood. Furthermore, the Department cites the annual monitoring review process as a mechanism to ensure CFRs for non-food costs are reasonable and labor costs are minimal; however, this process occurs after reimbursement is provided, not prior to reimbursement as required. In addition, OSA audit procedures over subrecipient monitoring reported finding 2023-043 Internal control over CNC subrecipient monitoring procedures needs improvement which identified an exception related to the documentation of FFVP program receipts. Accordingly, OSA recommends that the Department increase oversight over the program to ensure that CFRs are reviewed prior to reimbursement to confirm that the amounts claimed for nonfood costs are reasonable and labor costs are minimal as required by USDA. While NSLA Section 19(i)(7)(b) does outline that the State “may reallocate any amounts made available under the grant that are not obligated or expended by a date determined by the Secretary,” it does not override NSLA Section 19(f)(2) that specifies that the “per-student grant provided to a school under this section shall be not less than $50, nor more than $75.” The use of “under this section” in NSLA Section 19(f)(2) pertains to all of Section 19, including reallocations. As a result, OSA continues to recommend that the Department enhance policies and procedures to ensure SFAs that are provided additional FFVP funds are reviewed prior to reallocation to verify that SFAs will not be in excess of the allowed per-pupil limit. The finding remains as stated. (State Number: 23-1203-04)
(2023-046) Title: Internal control over CACFP eligibility determination and claim reimbursement procedures needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child and Adult Care Food Program (CACFP) Assistance Listing Number: 10.558 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: $19,362 Likely Questioned Costs: Undeterminable; due to the variety of institution types in the test population and varied meal claim counts, the projection of questioned costs utilizing the error rate related to the known exceptions would not provide a reasonable estimate of likely questioned costs. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 226; Child and Adult Care Food Program Memorandum #1-94 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. Day care homes (DCHs) are defined as an organized nonresidential childcare program for children enrolled in a private home, licensed or approved as a family or group DCH and under the auspices of a Sponsoring Organization (SO). Each State agency shall establish procedures for institutions to properly submit claims for reimbursement (CFRs). Such procedures must include State agency edit checks, including but not limited to ensuring that payments are made only for approved meal types and that the number of meals for which reimbursement is provided does not exceed the product of the total enrollment, operating days, and approved meal types. The CFR must report information in accordance with the financial management system established by the State agency, and in sufficient detail to justify the reimbursement claimed. In submitting a CFR, each institution must certify that the claim is correct and that records are available to support that claim. Prior to submitting its consolidated monthly claim to the State agency, each SO must conduct reasonable edit checks on the sponsored centers’ meal claims. Each SO shall accept final administrative and financial responsibility for food service operations in all facilities under its jurisdiction. Reimbursement may not be claimed for meals served to children who are not enrolled, or for meals served at any one time to children in excess of the home’s authorized capacity. Child and Adult Care Food Program (CACFP) Memorandum #1-94 states that CACFP regulations define a DCH as a private residence, and that commercial properties including churches and schools are not private residences and are not eligible to participate in CACFP as a family DCH. Condition: CACFP provides nutritious foods that contribute to the wellness, healthy growth, and development of eligible children and adults receiving care in day care centers, DCHs operating under SOs, and at-risk after school snack programs. Child Nutrition Services (CNS) within the Department of Education administers CACFP. Eligibility Determinations CNS utilizes Federal certifications or State licenses to determine eligibility for participation in the program. The Office of the State Auditor (OSA) tested eligibility determinations for 23 facilities and found: • one SO provided expired Federal certifications to support eligibility applications for two childcare facilities (CCFs). The certifications expired in February of 2022; however, the application was approved in September 2022, and the provider was reimbursed for all claims in fiscal year 2023. OSA verified the facility was certified. • two DCH providers had capacities reduced as a result of Department of Health and Human Services inspections; however, the reduced capacities were not documented on the revised applications. The DCH providers continued to claim at a higher capacity, resulting in questioned costs totaling $1,383. • for 10 providers that were licensed as CCFs, CNS could not provide documentation to verify that providers were operating in a private residence and not a commercial or academic property. OSA verified that 8 of the 10 CCFs were private residences. OSA selected a non-statistical random sample. Claims for Reimbursement Each adult and childcare institution including DCHs, at-risk facilities, and childcare centers must submit a monthly CFR to the State. Independent centers and at-risk centers submit claims directly to CNS. CFRs from DCHs are first submitted to SOs, who are responsible for reviewing and consolidating claims into one comprehensive CFR for submission to CNS. CNS reimburses the SOs and centers for meals served based on information documented in the CFR. CNS utilizes the Child Nutrition Program (CNPWeb) system to process monthly claims. Providers enter information such as operating days, meal types, enrollment, attendance, and licensure into the system. This information is processed through system edit checks to ensure CFRs are allowable. CNS relies on the system edits; however, the edits were not properly implemented and operating as intended during fiscal year 2023. OSA tested meals claimed on 60 CFRs submitted by sponsors or SOs and found: • 23 CFRs included meals claimed which exceeded allowable licensed capacity for the facility. CNS approved and paid the claims without requesting documentation to support the allowability of the meals claimed. Of the 23 CFRs: o 21 providers indicated shift feeding. Shift feeding allows providers to serve meals over licensed capacity if children are not all in care at the same time. The submitted claims did not include documentation to support that capacity was not exceeded at any one time. o three providers did not indicate shift feeding; however, the average daily meals and attendance exceeded capacity. o 15 CFRs included nine providers that were allowed to claim in excess of licensed capacity; CNS erroneously allowed the providers’ children in determination of allowable capacity. Questioned costs related to undocumented shift feeding or meals claimed in excess of licensed capacity totaled $16,421 in fiscal year 2023. • one CFR had meals claimed that exceeded the maximum number of meals per child in attendance, resulting in questioned costs of $8. • two CFRs had meals claimed where attendance exceeded enrollment, resulting in questioned costs totaling $534. • 11 CFRs included claims for evening snacks served; however, application records indicate the facility was closed, resulting in questioned costs totaling $1,016. OSA selected consolidated CFRs submitted by one SO for all 12 months; a risk-based approach was used to select DCH claims from those consolidated CFRs. OSA selected a non-statistical random sample of all other CFRs. Context: In fiscal year 2023, CACFP expenditures totaled $9.8 million, of which $9.7 million in CACFP funds was provided to 104 sponsors. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Known questioned costs • Potential future questioned costs and disallowances • Noncompliance with Federal regulations • CCFs currently eligible to operate as DCHs may not be eligible to continue participating as DCHs if it is determined that the properties are commercial properties. Recommendation: We recommend that the Department enhance policies and procedures to require: • a review of licensing status, property type and capacity for all providers during each fiscal year; • documentation to support claims made in excess of licensed capacity or enrollment; and • a secondary review of monthly CFRs for accuracy prior to approval. We further recommend that the Department follow up with sponsors and SOs to identify unallowable costs and recoup costs if warranted. Corrective Action Plan: See F-23 Management’s Response: The Department partially agrees with this finding. The Department disagrees with the finding in relation to the property type, according to Federal Guidelines, submitted to OSA directly from the USDA, the State Agency is in compliance with Small Facility Approvals. Due to the state interpretation, we will develop a property form for new small facilities to confirm their residential status prior to approval for participation into the CACFP Program. The Department will update procedures to support claims made in excess of licensed capacity or enrollment and will require a secondary review of CFRs. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 Auditor’s Concluding Remarks: CACFP Memorandum #1-94 provided by the U.S. Department of Agriculture specifically states that CACFP regulations define a DCH as a private residence, and that commercial properties, including churches and schools, are not private residences and are not eligible to participate in CACFP as a family DCH. CNS could not provide verification that providers were operating in a private residence and not a commercial or academic property. The finding remains as stated. (State Number: 23-1115-02)
(2023-038) Title: Internal control over CNC claim reimbursements needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Type of Finding: Material weakness Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 210.7 and .8; 7 CFR 225.15; Richard B. Russell National School Lunch Act Sec. 19; U.S. Department of Agriculture Fresh Fruit and Vegetable Program Handbook; Policy Memo: COVID-19: Child Nutrition Response #114 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and adequately documented. Claims for reimbursement must be based on lunch counts taken daily at the point of service, which correctly identify the number of free, reduced price, and paid lunches served to eligible children. The Department is required to review each School Food Authority’s (SFA) claim for reimbursement, on a monthly basis, to ensure that monthly claims are limited to the number of lunches served to eligible children. The Department then reimburses the SFA for actual meals served, based on the SFA’s claim for reimbursement utilizing rates that are programmed in the system. In accordance with 7 CFR 225.15, second meals must be served only after all participating children at the site's congregate meal service have been served a meal. Section 19 of the Richard B. Russell National School Lunch Act (NSLA) states that the per-student grant provided to a school under the Fresh Fruit and Vegetable Program (FFVP) shall not be less than $50, nor more than $75. U.S. Department of Agriculture’s (USDA) FFVP Handbook, referenced as guidance in Policy Memo SP 12-2022, states that all nonfood costs must be carefully reviewed and deemed reasonable. Policy Memo: Child Nutrition Response 114 for the Summer Food Service Program (SFSP) states that sponsors may only claim reimbursement for meals served retroactive to the date that a complete and correct application was received at the State agency, including meals that were served prior to their written approval to operate SFSP. This waiver from 7 CFR 225.9 states that all reimbursements shall be in accordance with the terms of this agreement. Reimbursements shall not be paid for meals served at a site before the sponsor has received written notification that the site has been approved for participation in the program. Condition: The Child Nutrition Cluster (CNC) includes the School Breakfast Program, National School Lunch Program (NSLP), Special Milk Program for Children, SFSP and FFVP. The objectives of the programs are to provide nutritious meals to eligible children in schools, residential childcare institutions, and summer food programs; to foster healthy eating habits by providing fresh fruits and vegetables to children attending elementary schools; and to encourage the consumption of nutritious agriculture commodities. The Department of Education (DOE) is responsible for the administration of child nutrition programs for the State. DOE provides benefits to each SFA or sponsor on a reimbursement basis. SFAs and sponsors must submit claims for reimbursement based on actual meals served for the month and permissible fresh fruits and vegetables, utilizing the Child Nutrition Program (CNPWeb) system. The Department is required to review each SFA or sponsor’s claim for reimbursement to ensure that monthly claims are limited to the number of meals served to eligible children and that the cost of the fresh fruits and vegetables are allowable. Once the claims are approved, claims are reimbursed based on the rates that are programmed in the CNPWeb system. The Office of the State Auditor (OSA) tested claims for reimbursement (CFR) for CNC and found instances that did not align with program regulations for NSLP, FFVP, and SFSP, as follows: National School Lunch Program If there are revisions to claims after 60 days which increase the Federal reimbursement, Child Nutrition Services (CNS) is permitted to grant an exception once every 36 months. OSA tested 60 paid CFRs in NSLP and found one SFA’s CFR included two revisions that were more than 60 days after the last day of the claim month. The first revision submitted was not documented as an exception; as a result, the second revision submitted in excess of 60 days was erroneously processed. Fresh Fruit and Vegetable Program USDA guidance included in the FFVP Handbook states that most of a SFA’s FFVP funds must be used for purchasing fresh fruits and vegetables, all nonfood costs must be carefully reviewed and deemed reasonable, and that labor costs must be minimal. FFVP allocations must be determined at the State agency and result in a per-pupil allocation between $50 and $75 for participating SFAs. OSA tested 60 FFVP CFRs and found: • claims from 11 SFAs totaling $51,927 had sites with significant nonfood costs. o Six SFA’s CFRs included costs totaling $12,506; of this amount, fresh fruits and vegetables were less than 50 percent of the entire claim. o One SFA’s CFR included labor costs of $1,599 for two sites where no fresh fruits or vegetables were claimed. • CNS adjusted allocations to two SFAs, but after the adjustment, the SFAs exceeded the $75 maximum per-pupil allocation. OSA tested 20 SFAs that participated in FFVP and found that three exceeded their original allocation: • Two SFAs were provided additional funds as a result of a reallocation by CNS; however, the additional allocation resulted in per-pupil amounts that exceeded the maximum amount of $75. • One SFA overspent by $893 due to a claim system processing error. Summer Food Service Program SFSP allows sponsors to claim a percentage of second meals served after first meals have been served. SFSP reimbursement for second meals is dependent upon a sponsor’s total first meals claimed. In July 2022, USDA issued Child Nutrition Response 114 to waive certain application requirements to accommodate for changes made once the program year had begun. The policy memo states that sponsors may only claim reimbursement for meals served retroactively to the date that a complete and correct application was received by the State agency. Applications from sponsors include individual site sheets that specify mealtimes and operating days as part of the sponsor’s application; revisions to the site sheet affect both the completeness and accuracy of the application. OSA tested 44 SFSP CFRs and found: • one site claimed only second meals; no first meals had been claimed. • seven sponsors had approved site sheet revisions and retroactive adjustments; however, CNS did not document the date the revisions were initiated. The revisions included addition of meal types, new sites and days of operation. CNS did not document the reason for the revisions or the date of receipt. OSA selected non-statistical random samples. Context: CNC processed $69.9 million in CFRs in fiscal year 2023. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Potential questioned costs and disallowances • Noncompliance with Federal regulations Recommendation: We recommend that the Department enhance policies and procedures to ensure: • CFRs revised after 60 days and granted a one-time exception are tracked; • CFRs for all SFAs participating in the FFVP are reviewed to confirm that the amounts claimed for nonfood costs are reasonable and labor costs are minimal; • SFAs that are provided additional FFVP funds are reviewed prior to reallocation to verify that SFAs will not be in excess of the allowed per-pupil limit; and • revisions to SFSP applications, including site sheets, are properly documented. Corrective Action Plan: See F-20 Management’s Response: The Department agrees to the one-time exception and application documentation elements of this finding. We have created new procedures to ensure these areas are corrected. The Department disagrees with the recommendation to increase oversight in the FFVP as it aligns with USDA and Department of Education policies and procedures. CFRs for all SFAs participating in FFVP are reviewed to confirm that the amounts claimed for non-food costs are reasonable and labor costs are minimal. The USDA Fresh Fruit and Vegetable Program (FFVP) is a program that is monitored at the same time as the other Child Nutrition Programs, including NSLP and SBP. The administrative review process is conducted on an approved timeline set by the USDA, who administers all of the Child Nutrition Programs. Reviewing one month's claim for reimbursement (referred to as the "Review Period") follows federal requirements and is the NSLP review teams procedure for each review. This includes verifying meal counts for breakfast, lunch, and snack (if applicable) as well as FFVP expenses, if applicable. FFVP claims are reviewed to ensure that only allowable costs are being claimed. This includes food, labor and other costs, which non-food cost is a part of. There is also an edit check in the CNP web reimbursement system so that schools do not exceed the 10% administrative labor amount per grant award. Child Nutrition staff does not verify the meal counts for every claim for reimbursement that is submitted to us on a monthly basis for over 200 SFA's; therefore, having to do this for FFVP is unreasonable and would create a hardship for staff overseeing this program. The monitoring and edit check systems we have in place for FFVP allow for sufficient oversight of the program, including non-food and labor costs, and align with USDA and Department of Education policies and procedures. SFAs that are provided additional FFVP funds are reviewed prior to reallocation to verify that SFAs will not be in excess of the allowed per-pupil limit. Based on the NSLA Sec. 19, (f) Per-Student Grant- the per student grant provided to a school under this section shall be (2) not less than $50.00, nor more than $75.00; however under (i)Funding (7) Reallocation, (B) Within States- A State that receives a grant under this section may reallocate any amounts made available under the grant that are not obligated or expended by a date determined by the Secretary. Our interpretation is that any amounts can be reallocated after the initial grant award is given. Allocating above the $75.00/student would allow us to maximize use of federal funds and is in line with the language of the NSLA Sec. 19. We have schools each year that spend more than they were awarded and some that underspend their funds. Imposing this restriction would negatively impact schools that are using their funds as they may have to decrease the number of serving days or stop the program altogether prior to the end of the school year, thus negatively impacting students who benefit from this program. Contact: Adriane Ackroyd, Assistant Director Child Nutrition, DOE, 207-592-1722 Auditor’s Concluding Remarks: The USDA FFVP handbook outlines requirements for program oversight. These oversight procedures require states to review FFVP CFRs submitted by participating schools to ensure that expenditures are appropriate prior to providing reimbursement. The review process should ensure that the “majority of funds are used to purchase fresh produce” and “labor costs and all other non-food costs are minimal.” OSA’s testing of FFVP claims for reimbursement identified SFAs that had significant nonfood costs. The SFAs selected for testing submitted and were reimbursed for 31 different sites with nonfood costs ranging from 22 to 100 percent of the CFR. The Department did not provide justification to document the nonfood costs, including the site that claimed 100 percent for nonfood. Furthermore, the Department cites the annual monitoring review process as a mechanism to ensure CFRs for non-food costs are reasonable and labor costs are minimal; however, this process occurs after reimbursement is provided, not prior to reimbursement as required. In addition, OSA audit procedures over subrecipient monitoring reported finding 2023-043 Internal control over CNC subrecipient monitoring procedures needs improvement which identified an exception related to the documentation of FFVP program receipts. Accordingly, OSA recommends that the Department increase oversight over the program to ensure that CFRs are reviewed prior to reimbursement to confirm that the amounts claimed for nonfood costs are reasonable and labor costs are minimal as required by USDA. While NSLA Section 19(i)(7)(b) does outline that the State “may reallocate any amounts made available under the grant that are not obligated or expended by a date determined by the Secretary,” it does not override NSLA Section 19(f)(2) that specifies that the “per-student grant provided to a school under this section shall be not less than $50, nor more than $75.” The use of “under this section” in NSLA Section 19(f)(2) pertains to all of Section 19, including reallocations. As a result, OSA continues to recommend that the Department enhance policies and procedures to ensure SFAs that are provided additional FFVP funds are reviewed prior to reallocation to verify that SFAs will not be in excess of the allowed per-pupil limit. The finding remains as stated. (State Number: 23-1203-04)
(2023-031) Title: Internal control over SNAP eligibility determinations and benefit calculations needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster (COVID-19) Assistance Listing Number: 10.551, 10.561 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Eligibility Special tests and provisions Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: $7,491 Likely Questioned Costs: Undeterminable; incorrectly calculated Supplemental Nutrition Assistance Program (SNAP) benefits may result in overpayments or underpayments to clients. Since there are known overpayments and underpayments in our sample, a projection of questioned costs cannot be reasonably estimated. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 272.10; 7 CFR 273.1 and .10; Families First Coronavirus Response Act (Public Law 116-127), Section 2302 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. All State agencies must sufficiently automate their SNAP operations and computerize their systems for obtaining, maintaining, utilizing and transmitting information concerning SNAP. Individuals or a group of individuals paying a reasonable amount for meals or meals and lodging must be considered boarders and are not eligible to participate in SNAP independently of the household providing the board. State agencies must calculate a household’s expenses based on the expenses the household expects to be billed for during the certification period (12 months). The Families First Coronavirus Response Act (FFCRA) established emergency allotments for households participating in SNAP to provide temporary food needs at the applicable maximum allotment for the household size. Condition: SNAP is administered by the Office for Family Independence (OFI) and provides monthly benefits to eligible households to purchase nutritious foods. OFI is required by Federal program regulations to utilize an automated information system for SNAP. The information system must maintain all casefile information necessary to properly process eligibility determinations and benefit calculations. The Automated Client Eligibility System (ACES) is the information system used by OFI to automate SNAP operations. ACES relies on the maintenance of a complex framework of system rules to make eligibility determinations and related benefit calculations. The Office of the State Auditor (OSA) tested 60 household monthly benefit payments to verify the accuracy of SNAP operations utilizing ACES, and identified the following: • Three underpayments of monthly SNAP benefits totaling $1,242 due to errors by Department personnel while processing manual ACES case file modifications to income information • Four overpayments of monthly SNAP benefits, including: o one benefit overpayment totaling $918 due to income information not updated by the Department in the ACES case file in a timely manner o two benefit overpayments totaling $2,974; an income data exchange with ACES appropriately adjusted income information to the correct prior date in each case file; however, previously issued monthly benefit payments were not recalculated and recovered from households accordingly. o one benefit overpayment totaling $3,599; the client should have been classified as a “boarder” within the household, and therefore, ineligible to participate in SNAP independently of the household providing the board. • One case was identified where household expenses from which benefit amounts were calculated had not been updated since 2018. The Department did not calculate the household’s benefit allotment based on expected annual expenses, in line with the 12-month redetermination period required by SNAP program regulations. The client was paid an accurate total monthly benefit due to the emergency allotment from FFCRA, which provided the maximum benefit amount for this case. OSA selected a non-statistical random sample. The Department does not have adequate policies and procedures in place to ensure that ACES case file modifications, whether manual or system interfaced, that result in adjustments to previously issued monthly SNAP benefits are appropriately processed. This includes a recalculation of previously issued benefits when case file modifications are processed, establishment of corresponding overpayments or underpayments, and related follow-up actions with households. Context: In fiscal year 2023, the State provided approximately 127,000 SNAP clients with $484.8 million in Federal benefits. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Known questioned costs • Potential future questioned costs and disallowances • Benefits may be incorrectly calculated, resulting in households being underpaid and/or overpaid. • Noncompliance with Federal regulations Recommendation: We recommend that the Department implement additional policies and procedures to ensure that: • case information entered into ACES is accurate; • automated eligibility determinations and benefit calculations are processed in accordance with Federal regulations; and • recalculations of previously issued benefits and related follow-up actions occur when case file modifications are retroactive. Corrective Action Plan: See F-19 Management’s Response: The Department partially agrees with the exceptions noted; however, the Office for Family Independence has policies in place to ensure that information that is entered into ACES is accurate, that automated client eligibility determinations are processed in accordance with federal law and that recalculations of file modifications are retroactive, as applicable. The Department will continue to review its operating procedures to identify opportunities for improvement. Regarding the one case identified where household expenses had not been updated since 2018: The Head of Household (HH) has been receiving the full standard (FSUA) which means the expense deduction has been changing. The client & Department have been updating the medical expense deduction with timely verifications from the client. On the signed Review, the client checked that the above listed expenses were correct and checked the HH had no other shelter expenses other than the ones listed above. These actions are in compliance with 7 CFR 273.10(d)(4). The Department asserts that adequate safeguards are in place. The cost of implementing the recommendations would exceed the benefit realized in achieving 100 percent accuracy in determining eligibility. Contact: Ian Yaffe, Director, Office for Family Independence, DHHS, 207-592-1481 Auditor’s Concluding Remarks: Regarding the one case noted in Management’s Response, the ACES case file does note changes in household medical expenses and Full Standard Utility Allowance (FSUA) values, including confirmation that the expenses were accurate during the household’s most recent annual recertification; however, the household’s monthly rent expense has been documented as “anticipated” and has not changed since 2018. The expenses have never been verified. 7 CFR 273.10 requires anticipated expenses to be based on the most recent month’s bills. At the time of audit testing, the expense information remained unchanged and unverified for approximately five years. For the seven exceptions identified which were not addressed in Management’s Response, existing policies and procedures resulted in inaccurate benefit payments. OSA recognizes that achieving 100 percent accuracy in determining eligibility and calculating benefit payments would likely not be feasible; however, a sample payment error rate of approximately 12 percent indicates that a review of operating procedures and implementation of improvements is necessary. The finding remains as stated. (State Number: 23-1108-02)
(2023-032) Title: Internal control over Medicaid and SNAP deceased client cases needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture U.S. Department of Health and Human Services Assistance Listing Title: SNAP Cluster (COVID-19) Medicaid Cluster (COVID-19) Assistance Listing Number: 10.551, 10.561; 93.775, 93.777, 93.778 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: $8,329 (ALN 10.551) Likely Questioned Costs: Undeterminable; the Office of the State Auditor (OSA) tested a sample of cases where Supplemental Nutrition Assistance Program (SNAP) benefits were issued after the client’s date of death (DOD). Issuance of benefits to a deceased client does not necessarily result in unallowable program costs, as the issued benefits may not be expended; therefore, an error rate cannot be applied to the population and a projection of questioned costs cannot be reasonably estimated. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 272.8 and .14 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. State agency action on information items about recipient households shall include review of information and comparison of it to case record information. State agencies must initiate and pursue actions on recipient households within 45 days of the receipt of the information items. States shall establish a system to verify and ensure that benefits are not issued to individuals who are deceased. States shall use the Social Security Administration’s (SSA) Death Master File, obtained through the State Verification and Exchange System. Condition: The Office for Family Independence (OFI) manages the Automated Client Eligibility System (ACES) that is used to determine eligibility for Federal assistance programs, including Medicaid and SNAP. Information maintained in ACES is relied upon by OFI for determining monthly SNAP benefits issued to client Electronic Benefit Transaction (EBT) cards, and by the Office of MaineCare Services for processing Medicaid claims. OFI relies on numerous data sources for identifying and providing client DOD information for input into ACES, including monthly data exchanges with the Maine Center for Disease Control & Prevention (MeCDC) Vital Records and weekly data reports from the SSA’s Death Master File. Federal program regulations require OFI to act on client cases within 45 days of receipt of DOD information. This includes review and comparison of DOD information to ACES case file information, and suspension of program participation and related benefits as warranted. OFI policies for SNAP require deactivation of the client’s EBT card as well as expungement of authorized benefits from the EBT card. If activity occurred on the client’s EBT card subsequent to the DOD, the case must be reported as potential fraud and referred for investigation. The Office of the State Auditor (OSA) obtained DOD information from MeCDC Vital Records and compared it to clients who received Medicaid and SNAP benefits during fiscal year 2023. OSA identified 95 Medicaid claims with service dates after DOD in fiscal year 2023 and reviewed 30 clients with the largest paid claim amounts. Because certain Medicaid claims with service dates after DOD are considered allowable, claims paid on behalf of the deceased clients noted below are not reported as questioned costs: • Two clients had a DOD recorded in ACES that did not agree to the DOD provided by MeCDC Vital Records. • Two clients did not have a DOD recorded in ACES but were reported as deceased by MeCDC Vital Records. Furthermore, four Medicaid clients with an incorrect DOD identified by OSA during the fiscal year 2022 audit were still not corrected in ACES. OSA identified 671 cases where SNAP benefits were issued more than 52 days following the client’s DOD; this benchmark was applied to denote the 45-day Federal program regulation related to weekly receipt of DOD information. OSA tested 60 of these SNAP cases and identified the following: • 18 single member household clients had EBT card purchase activity after DOD. Of these 18 clients: o 14 clients had transaction activity after DOD that occurred in fiscal year 2023, resulting in unallowable costs totaling $8,329, as follows: • For 13 of the 14 clients, unauthorized transaction activity totaling $7,297 occurred between the actual DOD and the Department’s receipt and processing of the DOD information in ACES. • One of the 14 clients did not have a DOD recorded in their ACES case file at the time of audit testing but was reported as deceased by MeCDC Vital Records; this resulted in $1,032 of unauthorized transaction activity. o Four clients’ DOD occurred in fiscal year 2023 and benefits continued to be authorized and issued; however, the unallowable purchase activity began subsequent to fiscal year 2023. o Four clients were not identified as potential fraud in the ACES case file. As a result, they were not referred for investigation as required by OFI policies. • Five clients had a DOD recorded in ACES that did not agree to the DOD provided by MeCDC Vital Records. This resulted from the Department’s practice of entering DODs as the last day of the month or an alternative date from public information sources in order to suspend benefits in cases where DOD information is not immediately available; however, the Department had MeCDC Vital Records information at the time of DOD input for all five clients and should have entered DODs based on those records. • One client did not have a DOD recorded in their ACES case file but was reported as deceased by MeCDC Vital Records; benefits were authorized during fiscal year 2023, but no unauthorized transaction activity occurred. • 10 clients’ benefits were not expunged upon receipt of DOD information as required by OFI policies; benefits were only expunged by the system-automated process based on inactivity after 274 days. For 2 of the 10 clients, the EBT card was never deactivated; therefore, benefits remained open and available for use 274 days after DOD. • One client’s case remained open two months after OFI was notified of the client’s DOD, resulting in two months of unauthorized SNAP benefit issuances. • Two clients’ ACES case file information partially matched DOD information from MeCDC Vital Records, including names and dates of birth; however, the client social security numbers did not match. The Department did not review the cases to determine appropriate follow-up action. OSA selected a non-statistical random sample. Context: In fiscal year 2023, the State provided approximately: • 575,000 Medicaid clients with $2.5 billion in Federal benefits. Of the 575,000 Medicaid clients, 9,826 had a DOD in fiscal year 2023. • 127,000 SNAP clients with $484.8 million in Federal benefits. Of the 127,000 SNAP clients, 2,021 had a DOD in fiscal year 2023. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Medicaid claims paid on behalf of deceased clients may go undetected. • SNAP benefits issued to deceased clients may result in unauthorized EBT card purchase activity. • Known questioned costs for SNAP • Potential future questioned costs and disallowances • Noncompliance with Federal regulations Recommendation: We recommend that the Department enhance policies and procedures to ensure that DOD information is received, reviewed, and updated in ACES on a more frequent basis to prevent unallowable Medicaid claim payments, and unauthorized SNAP benefit issuances and EBT card purchase activity. In addition, we recommend that the Department review all client cases noted in the Condition of this finding to ensure that: • ACES case file DOD information is accurate; • SNAP benefits are expunged and EBT cards are deactivated in accordance with existing policies; • cases are identified as potential fraud and referred for investigation as warranted; and • unallowable costs are identified and reported to Federal oversight agencies, and required recoupment activities are pursued. Corrective Action Plan: See F-19 Management’s Response: The Department agrees with this finding and will review the current SOP governing DOD procedures and will implement enhancements to ensure DOD is updated and that related required actions are taken within allowable timeframes. Contact: Ian Yaffe, Director, Office for Family Independence, DHHS, 207-592-1481 (State Number: 23-1108-04)
(2023-033) Title: Internal control over automated SNAP eligibility certification periods needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster (COVID-19) Assistance Listing Number: 10.551, 10.561 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Eligibility Special tests and provisions Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: $18,090 Likely Questioned Costs: Undeterminable; incorrectly suspending Supplemental Nutrition Assistance Program (SNAP) benefits may result in overpayments or underpayments to households. Since there are known overpayments and underpayments in our sample, a projection of questioned costs cannot be reasonably estimated. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 272.10; 7 CFR 273.10 and .12 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. All State agencies must sufficiently automate their SNAP operations and computerize their systems for obtaining, maintaining, utilizing and transmitting information concerning SNAP, which includes automatic cutoff of participation for households which have not been recertified at the end of their certification period. SNAP households must be assigned eligibility certification periods of at least six months unless the household is classified as exempt based on program regulations. The State agency must have at least one contact with each SNAP household every 12 months. Submission of periodic eligibility reports is required by non-exempt households. Non-exempt households that are certified for longer than six months must file a periodic report between four months and six months, as required by the State agency. In addition, the State agency must not require the submission of periodic reports by households certified for 12 months or less in which all adult members are elderly or have a disability and no earned income. Condition: SNAP is administered by the Office for Family Independence (OFI) and provides monthly benefits to eligible households to purchase nutritious foods. OFI is required by Federal program regulations to utilize an automated information system for SNAP. The information system must maintain all case file information necessary to properly process eligibility determinations and benefit computations. The Automated Client Eligibility System (ACES) is the information system used by OFI to automate SNAP operations. ACES relies on the maintenance of a complex framework of system rules to make eligibility determinations, including notification letters to clients when 6-month reports and 12-month redeterminations of eligibility are required. All SNAP households, except for elderly and disabled cases with no earned income, are required to submit 6-month reports. In addition, all SNAP households must undergo an annual redetermination of eligibility. Each household’s recertification requirements are indicated by date fields in the ACES case file. If a required report or redetermination is not completed by the date indicated in the applicable field, the case’s monthly SNAP benefit is automatically suspended by the system. The Office of the State Auditor (OSA) tested a sample of 60 cases automatically suspended for failure to complete a required review in fiscal year 2023 to verify the accuracy of automated SNAP operations utilizing ACES. In 23 of the 60 cases tested, OSA identified that ACES incorrectly suspended benefits, as follows: • 20 cases were suspended due to inaccurate information in the applicable ACES date field. The Department identified the issue within ACES and implemented a system reconfiguration to correct review dates; however, the reconfiguration did not account for SNAP 6-month report and annual redetermination requirements. Of the 20 suspensions: o seven cases continued to receive SNAP benefits after a failure to complete required 6-month reports. This resulted in the following benefit overpayments, none of which were identified by the Department: • Two cases were suspended three months after the 6-month reporting requirement, resulting in known overpayments of $959 and $2,410. • Two cases were suspended four months after the 6-month reporting requirement, resulting in known overpayments of $1,597 and $525. • Three cases were suspended five months after the 6-month reporting requirement, resulting in known overpayments of $2,941, $2,376, and $1,818. o six cases were underpaid SNAP benefits totaling $5,941 because of incorrect benefit suspensions, ranging from one to five months prior to the applicable 6-month reporting requirement. o five cases were underpaid SNAP benefits totaling $2,194 because of incorrect benefit suspensions, ranging from 2 to 11 months prior to the annual redetermination requirement. o two cases were never required to submit 6-month reports or annual redeterminations since commencement of SNAP benefits in May 2021 and August 2021. This resulted in overpayments for the entirety of fiscal year 2023 totaling $2,539 and $2,925, respectively. • Three cases were suspended due to inaccurate information in the ACES case file indicating that required reviews were not completed. One case never received an automated ACES notification letter alerting them to complete the required 6-month report because of the system reconfiguration previously noted, and as a result, benefits were suspended. Two cases required annual redetermination information, which was submitted to the Department prior to the benefit suspension date, but benefits ended or lapsed due to untimely or incomplete review by the Department. OSA selected a non-statistical random sample. Context: In fiscal year 2023, the State provided approximately 127,000 SNAP clients with $484.8 million in Federal benefits. 469 clients were automatically suspended by ACES during fiscal year 2023 due to recertification or redetermination requirements. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight • Automated SNAP eligibility system recertification and suspension criteria was not configured in accordance with Federal regulations. Effect: • Known questioned costs • Potential future questioned costs and disallowances • Noncompliance with Federal regulations • Benefits may be incorrectly suspended, resulting in households being underpaid or overpaid. Recommendation: We recommend that the Department enhance policies and procedures to ensure that automated SNAP eligibility certification periods and related ACES case file fields are properly configured to process benefits in accordance with Federal regulations. In addition, we recommend that the Department identify underpayments and/or overpayments resulting from recertification period errors and take action as warranted. Corrective Action Plan: See F-19 Management’s Response: The Department agrees with the exceptions as noted and has previously taken the necessary steps to eliminate these issues. Contact: Ian Yaffe, Director, Office for Family Independence, DHHS, 207-592-1481 (State Number: 23-1108-03)
(2023-038) Title: Internal control over CNC claim reimbursements needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Type of Finding: Material weakness Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 210.7 and .8; 7 CFR 225.15; Richard B. Russell National School Lunch Act Sec. 19; U.S. Department of Agriculture Fresh Fruit and Vegetable Program Handbook; Policy Memo: COVID-19: Child Nutrition Response #114 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and adequately documented. Claims for reimbursement must be based on lunch counts taken daily at the point of service, which correctly identify the number of free, reduced price, and paid lunches served to eligible children. The Department is required to review each School Food Authority’s (SFA) claim for reimbursement, on a monthly basis, to ensure that monthly claims are limited to the number of lunches served to eligible children. The Department then reimburses the SFA for actual meals served, based on the SFA’s claim for reimbursement utilizing rates that are programmed in the system. In accordance with 7 CFR 225.15, second meals must be served only after all participating children at the site's congregate meal service have been served a meal. Section 19 of the Richard B. Russell National School Lunch Act (NSLA) states that the per-student grant provided to a school under the Fresh Fruit and Vegetable Program (FFVP) shall not be less than $50, nor more than $75. U.S. Department of Agriculture’s (USDA) FFVP Handbook, referenced as guidance in Policy Memo SP 12-2022, states that all nonfood costs must be carefully reviewed and deemed reasonable. Policy Memo: Child Nutrition Response 114 for the Summer Food Service Program (SFSP) states that sponsors may only claim reimbursement for meals served retroactive to the date that a complete and correct application was received at the State agency, including meals that were served prior to their written approval to operate SFSP. This waiver from 7 CFR 225.9 states that all reimbursements shall be in accordance with the terms of this agreement. Reimbursements shall not be paid for meals served at a site before the sponsor has received written notification that the site has been approved for participation in the program. Condition: The Child Nutrition Cluster (CNC) includes the School Breakfast Program, National School Lunch Program (NSLP), Special Milk Program for Children, SFSP and FFVP. The objectives of the programs are to provide nutritious meals to eligible children in schools, residential childcare institutions, and summer food programs; to foster healthy eating habits by providing fresh fruits and vegetables to children attending elementary schools; and to encourage the consumption of nutritious agriculture commodities. The Department of Education (DOE) is responsible for the administration of child nutrition programs for the State. DOE provides benefits to each SFA or sponsor on a reimbursement basis. SFAs and sponsors must submit claims for reimbursement based on actual meals served for the month and permissible fresh fruits and vegetables, utilizing the Child Nutrition Program (CNPWeb) system. The Department is required to review each SFA or sponsor’s claim for reimbursement to ensure that monthly claims are limited to the number of meals served to eligible children and that the cost of the fresh fruits and vegetables are allowable. Once the claims are approved, claims are reimbursed based on the rates that are programmed in the CNPWeb system. The Office of the State Auditor (OSA) tested claims for reimbursement (CFR) for CNC and found instances that did not align with program regulations for NSLP, FFVP, and SFSP, as follows: National School Lunch Program If there are revisions to claims after 60 days which increase the Federal reimbursement, Child Nutrition Services (CNS) is permitted to grant an exception once every 36 months. OSA tested 60 paid CFRs in NSLP and found one SFA’s CFR included two revisions that were more than 60 days after the last day of the claim month. The first revision submitted was not documented as an exception; as a result, the second revision submitted in excess of 60 days was erroneously processed. Fresh Fruit and Vegetable Program USDA guidance included in the FFVP Handbook states that most of a SFA’s FFVP funds must be used for purchasing fresh fruits and vegetables, all nonfood costs must be carefully reviewed and deemed reasonable, and that labor costs must be minimal. FFVP allocations must be determined at the State agency and result in a per-pupil allocation between $50 and $75 for participating SFAs. OSA tested 60 FFVP CFRs and found: • claims from 11 SFAs totaling $51,927 had sites with significant nonfood costs. o Six SFA’s CFRs included costs totaling $12,506; of this amount, fresh fruits and vegetables were less than 50 percent of the entire claim. o One SFA’s CFR included labor costs of $1,599 for two sites where no fresh fruits or vegetables were claimed. • CNS adjusted allocations to two SFAs, but after the adjustment, the SFAs exceeded the $75 maximum per-pupil allocation. OSA tested 20 SFAs that participated in FFVP and found that three exceeded their original allocation: • Two SFAs were provided additional funds as a result of a reallocation by CNS; however, the additional allocation resulted in per-pupil amounts that exceeded the maximum amount of $75. • One SFA overspent by $893 due to a claim system processing error. Summer Food Service Program SFSP allows sponsors to claim a percentage of second meals served after first meals have been served. SFSP reimbursement for second meals is dependent upon a sponsor’s total first meals claimed. In July 2022, USDA issued Child Nutrition Response 114 to waive certain application requirements to accommodate for changes made once the program year had begun. The policy memo states that sponsors may only claim reimbursement for meals served retroactively to the date that a complete and correct application was received by the State agency. Applications from sponsors include individual site sheets that specify mealtimes and operating days as part of the sponsor’s application; revisions to the site sheet affect both the completeness and accuracy of the application. OSA tested 44 SFSP CFRs and found: • one site claimed only second meals; no first meals had been claimed. • seven sponsors had approved site sheet revisions and retroactive adjustments; however, CNS did not document the date the revisions were initiated. The revisions included addition of meal types, new sites and days of operation. CNS did not document the reason for the revisions or the date of receipt. OSA selected non-statistical random samples. Context: CNC processed $69.9 million in CFRs in fiscal year 2023. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Potential questioned costs and disallowances • Noncompliance with Federal regulations Recommendation: We recommend that the Department enhance policies and procedures to ensure: • CFRs revised after 60 days and granted a one-time exception are tracked; • CFRs for all SFAs participating in the FFVP are reviewed to confirm that the amounts claimed for nonfood costs are reasonable and labor costs are minimal; • SFAs that are provided additional FFVP funds are reviewed prior to reallocation to verify that SFAs will not be in excess of the allowed per-pupil limit; and • revisions to SFSP applications, including site sheets, are properly documented. Corrective Action Plan: See F-20 Management’s Response: The Department agrees to the one-time exception and application documentation elements of this finding. We have created new procedures to ensure these areas are corrected. The Department disagrees with the recommendation to increase oversight in the FFVP as it aligns with USDA and Department of Education policies and procedures. CFRs for all SFAs participating in FFVP are reviewed to confirm that the amounts claimed for non-food costs are reasonable and labor costs are minimal. The USDA Fresh Fruit and Vegetable Program (FFVP) is a program that is monitored at the same time as the other Child Nutrition Programs, including NSLP and SBP. The administrative review process is conducted on an approved timeline set by the USDA, who administers all of the Child Nutrition Programs. Reviewing one month's claim for reimbursement (referred to as the "Review Period") follows federal requirements and is the NSLP review teams procedure for each review. This includes verifying meal counts for breakfast, lunch, and snack (if applicable) as well as FFVP expenses, if applicable. FFVP claims are reviewed to ensure that only allowable costs are being claimed. This includes food, labor and other costs, which non-food cost is a part of. There is also an edit check in the CNP web reimbursement system so that schools do not exceed the 10% administrative labor amount per grant award. Child Nutrition staff does not verify the meal counts for every claim for reimbursement that is submitted to us on a monthly basis for over 200 SFA's; therefore, having to do this for FFVP is unreasonable and would create a hardship for staff overseeing this program. The monitoring and edit check systems we have in place for FFVP allow for sufficient oversight of the program, including non-food and labor costs, and align with USDA and Department of Education policies and procedures. SFAs that are provided additional FFVP funds are reviewed prior to reallocation to verify that SFAs will not be in excess of the allowed per-pupil limit. Based on the NSLA Sec. 19, (f) Per-Student Grant- the per student grant provided to a school under this section shall be (2) not less than $50.00, nor more than $75.00; however under (i)Funding (7) Reallocation, (B) Within States- A State that receives a grant under this section may reallocate any amounts made available under the grant that are not obligated or expended by a date determined by the Secretary. Our interpretation is that any amounts can be reallocated after the initial grant award is given. Allocating above the $75.00/student would allow us to maximize use of federal funds and is in line with the language of the NSLA Sec. 19. We have schools each year that spend more than they were awarded and some that underspend their funds. Imposing this restriction would negatively impact schools that are using their funds as they may have to decrease the number of serving days or stop the program altogether prior to the end of the school year, thus negatively impacting students who benefit from this program. Contact: Adriane Ackroyd, Assistant Director Child Nutrition, DOE, 207-592-1722 Auditor’s Concluding Remarks: The USDA FFVP handbook outlines requirements for program oversight. These oversight procedures require states to review FFVP CFRs submitted by participating schools to ensure that expenditures are appropriate prior to providing reimbursement. The review process should ensure that the “majority of funds are used to purchase fresh produce” and “labor costs and all other non-food costs are minimal.” OSA’s testing of FFVP claims for reimbursement identified SFAs that had significant nonfood costs. The SFAs selected for testing submitted and were reimbursed for 31 different sites with nonfood costs ranging from 22 to 100 percent of the CFR. The Department did not provide justification to document the nonfood costs, including the site that claimed 100 percent for nonfood. Furthermore, the Department cites the annual monitoring review process as a mechanism to ensure CFRs for non-food costs are reasonable and labor costs are minimal; however, this process occurs after reimbursement is provided, not prior to reimbursement as required. In addition, OSA audit procedures over subrecipient monitoring reported finding 2023-043 Internal control over CNC subrecipient monitoring procedures needs improvement which identified an exception related to the documentation of FFVP program receipts. Accordingly, OSA recommends that the Department increase oversight over the program to ensure that CFRs are reviewed prior to reimbursement to confirm that the amounts claimed for nonfood costs are reasonable and labor costs are minimal as required by USDA. While NSLA Section 19(i)(7)(b) does outline that the State “may reallocate any amounts made available under the grant that are not obligated or expended by a date determined by the Secretary,” it does not override NSLA Section 19(f)(2) that specifies that the “per-student grant provided to a school under this section shall be not less than $50, nor more than $75.” The use of “under this section” in NSLA Section 19(f)(2) pertains to all of Section 19, including reallocations. As a result, OSA continues to recommend that the Department enhance policies and procedures to ensure SFAs that are provided additional FFVP funds are reviewed prior to reallocation to verify that SFAs will not be in excess of the allowed per-pupil limit. The finding remains as stated. (State Number: 23-1203-04)
(2023-048) Confidential finding, see below for more information Title: Internal control over UI claim payments needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Labor State Bureau: Unemployment Compensation Federal Agency: U.S. Department of Labor Assistance Listing Title: Unemployment Insurance (UI) (COVID-19) Assistance Listing Number: 17.225 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403; 20 CFR 615.8; Middle Class Tax Relief and Job Creation Act of 2012; Social Security Act Title III, Section 303; Unemployment Insurance Program Letter No. 5-13; 26 MRSA 1190 through 1199 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. A State administering Unemployment Insurance (UI) must have State laws and policies in place that are consistent with Federal provisions and required by 20 CFR 615.8; the Middle Class Tax Relief and Job Creation Act of 2012; Social Security Act Title III, Section 303; and Unemployment Insurance Program Letter No. 5-13, as follows: • Standards for claim filing and processing including appeals and reviews, communication with claimants and employers, eligibility standards and disqualifications, and Interstate Benefit Payments and agreements • Standards for reasonable work search criteria and policies requiring performance of internal audits of work search activity • Standards for program integrity outlining procedures for identification and recovery of overpayments and penalties, including recovery through offset of future benefit payments The State of Maine’s statutory requirements for UI program benefits are outlined in 26 MRSA 1190 through 1199. Condition: Pursuant to paragraph 6.63 of the U.S. Government Accountability Office’s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Department controls The Department has complementary controls in place over claimant eligibility, including: • performance of internal work search audits by MDOL personnel for one percent of weekly claims, and • establishment of a Benefits Quality Control Unit tasked with investigating a prescribed number of UI paid claims and denied claims each week. Audit testing results As part of the continuing eligibility determination process, State UI law requires a weekly claim to be filed and work search activities to be reported. In OSA’s test of 60 regular UI claimants’ continuing eligibility, one claimant did not report work search activities for the weeks claimed. Despite not meeting continuing eligibility requirements, the claimant was issued State UI benefits totaling $220. OSA selected a non-statistical random sample. Data analytics Data analytic procedures surrounding continuing eligibility requirements for weekly claim submission and work search activity entered by claimants identified that: • 18 claimants reported repetitive work search activities indicative of program abuse for consecutive benefit weeks and throughout the majority of their claims; • one claimant reported new return to work dates in 19 consecutive weekly claim submissions, which generated new temporary unemployment waivers that allowed the claimant to file all 19 weekly claims without reporting work search activities; • one claimant was granted a waiver with no end date, allowing the claimant to file 24 weekly claims without reporting work search activities; and • five claimants filed a total of eight claims with no work search activities reported. Context: The UI program provided $96.8 million in State UI benefits and $1.3 million in Federal UI benefits during fiscal year 2023. Cause: • Lack of adequate policies and procedures over initial and continuing claimant eligibility determinations • Lack of adequate supervisory oversight of information system application controls Effect: • Claimants may be incorrectly determined eligible for UI benefits without meeting Federal program requirements, which may result in unallowable issuances of benefit payments that could remain undetected. • Potential questioned costs and disallowances Recommendation: We recommend that the Department enhance policies and procedures to require: • that eligibility requirements are met and adequately supported prior to issuance of benefit payments. • implementation of additional information system application controls. • incorporation of data analytics and data cross-matching procedures to prevent or detect payments to ineligible claimants. This will provide assurance that payments to ineligible claimants are prevented, or detected and corrected, in a timely manner. Corrective Action Plan: See F-24 Management’s Response: In a general sense the state has added significant controls around benefit eligibility, especially in the vital statistics area and work search. We continue to monitor all eligibility controls and work collaboratively with the state and federal government to enhance controls and strengthen program integrity. Specific to the findings: The agency agrees with the 18 claimants who provided repetitive work search efforts on their weekly claims. This subset of claimants used CareerCenter activities as their work search for numerous subsequent weeks. Per the Commission Rules, Chapter 10, subsection B (1) and (2), certain CareerCenter activities may count as a work search for the week claimed. However, due to recent OSA audits, additional controls were defined and implemented to avoid this exact scenario. The change was implemented with our 06/28/2023 build. As of that time in cases where a claimant reports a CareerCenter related activity on more than two weekly benefit claims, the claimant will be scheduled for a fact-finding to discuss their work search efforts. We anticipate seeing a significant improvement in this area for SFY 24. We agree with the finding on the single claimant who was granted consecutive work search waivers by reporting they were scheduled to start new employment within the next two weeks on their weekly claim. Additional controls in this area will be formulated and a change request filed to address this finding. We agree with the remaining six claimants’ control findings which were due to a variety of staff training issues. Some of these are in process of being addressed through refresher training, some of which had already been detected prior to OSA’s finding. One case will require additional review but was possibly due to a staff data entry error. We are encouraged by the continued collaboration with OSA, which has resulted in meaningful change and added controls in this area. We appreciate the opportunity provided and look forward to continued improvement. Contact: Laura Boyett, Director, Bureau of Unemployment Compensation, DOL, 207-621-5156 (State Number: 23-1302-01)
(2023-048) Confidential finding, see below for more information Title: Internal control over UI claim payments needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Labor State Bureau: Unemployment Compensation Federal Agency: U.S. Department of Labor Assistance Listing Title: Unemployment Insurance (UI) (COVID-19) Assistance Listing Number: 17.225 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403; 20 CFR 615.8; Middle Class Tax Relief and Job Creation Act of 2012; Social Security Act Title III, Section 303; Unemployment Insurance Program Letter No. 5-13; 26 MRSA 1190 through 1199 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. A State administering Unemployment Insurance (UI) must have State laws and policies in place that are consistent with Federal provisions and required by 20 CFR 615.8; the Middle Class Tax Relief and Job Creation Act of 2012; Social Security Act Title III, Section 303; and Unemployment Insurance Program Letter No. 5-13, as follows: • Standards for claim filing and processing including appeals and reviews, communication with claimants and employers, eligibility standards and disqualifications, and Interstate Benefit Payments and agreements • Standards for reasonable work search criteria and policies requiring performance of internal audits of work search activity • Standards for program integrity outlining procedures for identification and recovery of overpayments and penalties, including recovery through offset of future benefit payments The State of Maine’s statutory requirements for UI program benefits are outlined in 26 MRSA 1190 through 1199. Condition: Pursuant to paragraph 6.63 of the U.S. Government Accountability Office’s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Department controls The Department has complementary controls in place over claimant eligibility, including: • performance of internal work search audits by MDOL personnel for one percent of weekly claims, and • establishment of a Benefits Quality Control Unit tasked with investigating a prescribed number of UI paid claims and denied claims each week. Audit testing results As part of the continuing eligibility determination process, State UI law requires a weekly claim to be filed and work search activities to be reported. In OSA’s test of 60 regular UI claimants’ continuing eligibility, one claimant did not report work search activities for the weeks claimed. Despite not meeting continuing eligibility requirements, the claimant was issued State UI benefits totaling $220. OSA selected a non-statistical random sample. Data analytics Data analytic procedures surrounding continuing eligibility requirements for weekly claim submission and work search activity entered by claimants identified that: • 18 claimants reported repetitive work search activities indicative of program abuse for consecutive benefit weeks and throughout the majority of their claims; • one claimant reported new return to work dates in 19 consecutive weekly claim submissions, which generated new temporary unemployment waivers that allowed the claimant to file all 19 weekly claims without reporting work search activities; • one claimant was granted a waiver with no end date, allowing the claimant to file 24 weekly claims without reporting work search activities; and • five claimants filed a total of eight claims with no work search activities reported. Context: The UI program provided $96.8 million in State UI benefits and $1.3 million in Federal UI benefits during fiscal year 2023. Cause: • Lack of adequate policies and procedures over initial and continuing claimant eligibility determinations • Lack of adequate supervisory oversight of information system application controls Effect: • Claimants may be incorrectly determined eligible for UI benefits without meeting Federal program requirements, which may result in unallowable issuances of benefit payments that could remain undetected. • Potential questioned costs and disallowances Recommendation: We recommend that the Department enhance policies and procedures to require: • that eligibility requirements are met and adequately supported prior to issuance of benefit payments. • implementation of additional information system application controls. • incorporation of data analytics and data cross-matching procedures to prevent or detect payments to ineligible claimants. This will provide assurance that payments to ineligible claimants are prevented, or detected and corrected, in a timely manner. Corrective Action Plan: See F-24 Management’s Response: In a general sense the state has added significant controls around benefit eligibility, especially in the vital statistics area and work search. We continue to monitor all eligibility controls and work collaboratively with the state and federal government to enhance controls and strengthen program integrity. Specific to the findings: The agency agrees with the 18 claimants who provided repetitive work search efforts on their weekly claims. This subset of claimants used CareerCenter activities as their work search for numerous subsequent weeks. Per the Commission Rules, Chapter 10, subsection B (1) and (2), certain CareerCenter activities may count as a work search for the week claimed. However, due to recent OSA audits, additional controls were defined and implemented to avoid this exact scenario. The change was implemented with our 06/28/2023 build. As of that time in cases where a claimant reports a CareerCenter related activity on more than two weekly benefit claims, the claimant will be scheduled for a fact-finding to discuss their work search efforts. We anticipate seeing a significant improvement in this area for SFY 24. We agree with the finding on the single claimant who was granted consecutive work search waivers by reporting they were scheduled to start new employment within the next two weeks on their weekly claim. Additional controls in this area will be formulated and a change request filed to address this finding. We agree with the remaining six claimants’ control findings which were due to a variety of staff training issues. Some of these are in process of being addressed through refresher training, some of which had already been detected prior to OSA’s finding. One case will require additional review but was possibly due to a staff data entry error. We are encouraged by the continued collaboration with OSA, which has resulted in meaningful change and added controls in this area. We appreciate the opportunity provided and look forward to continued improvement. Contact: Laura Boyett, Director, Bureau of Unemployment Compensation, DOL, 207-621-5156 (State Number: 23-1302-01)
(2023-058) Title: Internal control over CSLFRF expenditures needs improvement Prior Year Findings: None State Department: Economic and Community Development State Bureau: Commissioner’s Office Federal Agency: U.S. Department of the Treasury Assistance Listing Title: Coronavirus State and Local Fiscal Recovery Funds (COVID-19) Assistance Listing Number: 21.027 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Activities allowed or unallowed Allowable costs/cost principles Type of Finding: Significant deficiency Questioned costs Known Questioned Costs: $591,845 Likely Questioned Costs: $591,845 Criteria: 2 CFR 200.303; 2 CFR 200.302; 2 CFR 200.403; Coronavirus State and Local Fiscal Recovery Fund 2022 Final Rule The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Costs must be adequately documented. The State’s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to determine that such funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. Coronavirus State and Local Fiscal Recovery Fund (CSLFRF) recipients may use funds “to respond to the public health emergency with respect to COVID-19 or its negative economic impacts, including assistance to households, small businesses, and nonprofits, or aid to impacted industries such as tourism, travel, and hospitality.” The CSLFRF 2022 Final Rule states (U.S.) Treasury is maintaining the interim final rule definition of “small business,” which used the Small Business Administration’s (SBA) definition of fewer than 500 employees, or per the standard for that industry, as defined by SBA. Condition: As part of the American Rescue Plan Act, the State was advanced $997 million in Federal CSLFRF to support its response to and recovery from the COVID-19 public health emergency. In response, Public Law 2022, Chapter 168, L.D. 2010 authorized funding to establish an energy rebate program for certain electricity customers. The law required the Department of Economic and Community Development (DECD) to make payments to utility companies for energy rebate credits to the accounts of eligible customers. To support the allowability of energy rebates to small businesses, DECD prepared the “Energy Rate Relief for Small Organizations” business case. In the business case, DECD stated its intent to use CSLFRF funding to provide direct credits to qualifying Maine small businesses to help defray increased electricity costs. DECD noted the project would provide direct relief utilizing the framework established in LD 2010, Resolve, To Help Certain Businesses with Energy Costs. The Maine Jobs and Recovery Review Committee reviewed and approved the business case on behalf of the State under the assumption that energy rebates would be provided to small businesses. DECD relied on utility companies to identify customers eligible for the energy rebate based on energy usage. Utility companies provided detailed lists of the customers which they deemed eligible to receive the rebate, and DECD reviewed and approved the invoices for payment. The Office of the State Auditor (OSA) reviewed the invoices and related payments to utility companies and identified credits were issued to several commercial entities ineligible under the CSLFRF 2022 Final Rule definition of “small business.” The entities listed included large businesses, government entities, and school systems. In total, OSA identified 234 entities credited a total of $591,845 that were not approved as supported by the business case. Context: Energy Rate Relief payments totaled $7.1 million of the $207.8 million in CSLFRF expenditures during fiscal year 2023. Cause: Lack of supervisory oversight Effect: • Known questioned costs • Potential future questioned costs and disallowances • Noncompliance with Federal regulations Recommendation: We recommend that the Department review expenditures charged to CSLFRF, including the above-noted expenditures, to ensure that costs are allowable and align with the approved business case and Federal regulations. Corrective Action Plan: See F-26 Management’s Response: The Department agrees with this finding. Approved business cases are established under a single US Treasury expenditure category. Consistent with legislative direction, the scope of this business case was expanded during the original implementation to include additional allowable expenditure categories; however, the Department did not divide the original business case into multiple business cases to reflect the additional expenditure categories as required. The Department intends on dividing the approved business case into multiple business cases to align with the applicable US Treasury expenditure categories. Contact: Denise Garland, Deputy Commissioner, DECD, 207-624-7496 (State Number: 23-1699-01)
(2023-062) Title: Internal control over Special Education period of performance needs improvement Prior Year Findings: None State Department: Education Administrative and Financial Services State Bureau: Special Services & Inclusive Education General Government Service Center Federal Agency: U.S. Department of Education Assistance Listing Title: Special Education Cluster (IDEA) (COVID-19) Assistance Listing Number: 84.027, 84.173 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Period of performance Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: $2,446,391 Likely Questioned Costs: Undeterminable; the exceptions noted in our sample represent nonroutine transactions; therefore, the projection of questioned costs utilizing the error rate related to known exceptions and amounts tested would not produce a reasonable estimate of likely questioned costs. Criteria: 2 CFR 200.303; 2 CFR 200.344; 2 CFR 200.403; 34 CFR 76.703 and .709 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Unless the Federal awarding agency authorizes an extension, the Department must liquidate all financial obligations incurred under the Federal award no later than 120 calendar days after the end date of the period of performance as specified in the terms and conditions of the Federal award. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. The Department must obligate Federal award funds during the 27-month period of performance, extending from July 1 of the fiscal year for which the funds were appropriated through September 30 of the second following fiscal year. Condition: The Department of Education’s (DOE) Office of Special Services & Inclusive Education, in conjunction with the Department of Administrative and Financial Services’ General Government Service Center (GGSC), administers Federal funding received through the Special Education Cluster (SEC) program. The SEC program provides grants to states, and through them to Local Education Agencies (LEAs), to assist in providing special education and related services to eligible children. DOE and GGSC review and approve requests for reimbursement from LEAs and invoices for other costs including payroll, administrative expenditures, and awards to subrecipients of State-level activities. This review includes a determination of whether the costs are obligated within the applicable Federal award’s period of performance through a comparison of billing dates and billing periods to grant award terms. Period of performance compliance requirements applicable to the SEC program in fiscal year 2023 relate to the Federal fiscal year 2021 grant award. The award’s obligation period ended September 30, 2022, and the liquidation period ended 120 calendar days following, on January 28, 2023. The Office of the State Auditor (OSA) tested 43 expenditure transactions that occurred during the Federal fiscal year 2021 grant award’s liquidation period to ensure that the expenditures were obligated and liquidated in accordance with Federal regulations, and identified the following: • Six transactions related to an obligation that occurred after the end of the period of performance. Upon further review, OSA determined that the full obligation included 20 transactions totaling $1.7 million. • Three obligations totaling $742,668 were liquidated after expiration of the liquidation period. The above-noted transactions did not meet the Federal fiscal year 2021 grant award’s period of performance requirements and are not allowable under the terms of the award. As a result, OSA identified questioned costs totaling $2.4 million. OSA selected a non-statistical random sample. Context: In fiscal year 2023, the Department expended $71.6 million in SEC program funds. Of this total, $5.1 million of Federal fiscal year 2021 grant funds was expended during the award’s liquidation period which occurred during fiscal year 2023. The identified questioned costs of $2.4 million represent approximately 47 percent of the award funds expended during the liquidation period. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Known questioned costs • Potential future questioned costs and disallowances • Noncompliance with Federal regulations Recommendation: We recommend that the Department enhance policies and procedures to ensure that obligation and liquidation of grant funds are made within period of performance requirements established in the terms and conditions of Federal grant awards. Corrective Action Plan: See F-27 Management’s Response: The Department agrees with this finding. The Department will review and implement stronger internal controls to ensure obligations and final payments are made within the period of performance requirements. Regarding the 20 transactions totaling $1.7 million, all expenditures reimbursed were within the period of performance, however there was a lengthy delay in determining the final payment mechanism. Due to this delay, the final obligation date in Advantage was outside of the grant's date of obligation. Contact: Nicole Denis, Director of Finance, DOE, 207-530-2161 (State Number: 23-1201-02)
(2023-062) Title: Internal control over Special Education period of performance needs improvement Prior Year Findings: None State Department: Education Administrative and Financial Services State Bureau: Special Services & Inclusive Education General Government Service Center Federal Agency: U.S. Department of Education Assistance Listing Title: Special Education Cluster (IDEA) (COVID-19) Assistance Listing Number: 84.027, 84.173 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Period of performance Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: $2,446,391 Likely Questioned Costs: Undeterminable; the exceptions noted in our sample represent nonroutine transactions; therefore, the projection of questioned costs utilizing the error rate related to known exceptions and amounts tested would not produce a reasonable estimate of likely questioned costs. Criteria: 2 CFR 200.303; 2 CFR 200.344; 2 CFR 200.403; 34 CFR 76.703 and .709 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Unless the Federal awarding agency authorizes an extension, the Department must liquidate all financial obligations incurred under the Federal award no later than 120 calendar days after the end date of the period of performance as specified in the terms and conditions of the Federal award. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. The Department must obligate Federal award funds during the 27-month period of performance, extending from July 1 of the fiscal year for which the funds were appropriated through September 30 of the second following fiscal year. Condition: The Department of Education’s (DOE) Office of Special Services & Inclusive Education, in conjunction with the Department of Administrative and Financial Services’ General Government Service Center (GGSC), administers Federal funding received through the Special Education Cluster (SEC) program. The SEC program provides grants to states, and through them to Local Education Agencies (LEAs), to assist in providing special education and related services to eligible children. DOE and GGSC review and approve requests for reimbursement from LEAs and invoices for other costs including payroll, administrative expenditures, and awards to subrecipients of State-level activities. This review includes a determination of whether the costs are obligated within the applicable Federal award’s period of performance through a comparison of billing dates and billing periods to grant award terms. Period of performance compliance requirements applicable to the SEC program in fiscal year 2023 relate to the Federal fiscal year 2021 grant award. The award’s obligation period ended September 30, 2022, and the liquidation period ended 120 calendar days following, on January 28, 2023. The Office of the State Auditor (OSA) tested 43 expenditure transactions that occurred during the Federal fiscal year 2021 grant award’s liquidation period to ensure that the expenditures were obligated and liquidated in accordance with Federal regulations, and identified the following: • Six transactions related to an obligation that occurred after the end of the period of performance. Upon further review, OSA determined that the full obligation included 20 transactions totaling $1.7 million. • Three obligations totaling $742,668 were liquidated after expiration of the liquidation period. The above-noted transactions did not meet the Federal fiscal year 2021 grant award’s period of performance requirements and are not allowable under the terms of the award. As a result, OSA identified questioned costs totaling $2.4 million. OSA selected a non-statistical random sample. Context: In fiscal year 2023, the Department expended $71.6 million in SEC program funds. Of this total, $5.1 million of Federal fiscal year 2021 grant funds was expended during the award’s liquidation period which occurred during fiscal year 2023. The identified questioned costs of $2.4 million represent approximately 47 percent of the award funds expended during the liquidation period. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Known questioned costs • Potential future questioned costs and disallowances • Noncompliance with Federal regulations Recommendation: We recommend that the Department enhance policies and procedures to ensure that obligation and liquidation of grant funds are made within period of performance requirements established in the terms and conditions of Federal grant awards. Corrective Action Plan: See F-27 Management’s Response: The Department agrees with this finding. The Department will review and implement stronger internal controls to ensure obligations and final payments are made within the period of performance requirements. Regarding the 20 transactions totaling $1.7 million, all expenditures reimbursed were within the period of performance, however there was a lengthy delay in determining the final payment mechanism. Due to this delay, the final obligation date in Advantage was outside of the grant's date of obligation. Contact: Nicole Denis, Director of Finance, DOE, 207-530-2161 (State Number: 23-1201-02)
(2023-062) Title: Internal control over Special Education period of performance needs improvement Prior Year Findings: None State Department: Education Administrative and Financial Services State Bureau: Special Services & Inclusive Education General Government Service Center Federal Agency: U.S. Department of Education Assistance Listing Title: Special Education Cluster (IDEA) (COVID-19) Assistance Listing Number: 84.027, 84.173 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Period of performance Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: $2,446,391 Likely Questioned Costs: Undeterminable; the exceptions noted in our sample represent nonroutine transactions; therefore, the projection of questioned costs utilizing the error rate related to known exceptions and amounts tested would not produce a reasonable estimate of likely questioned costs. Criteria: 2 CFR 200.303; 2 CFR 200.344; 2 CFR 200.403; 34 CFR 76.703 and .709 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Unless the Federal awarding agency authorizes an extension, the Department must liquidate all financial obligations incurred under the Federal award no later than 120 calendar days after the end date of the period of performance as specified in the terms and conditions of the Federal award. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. The Department must obligate Federal award funds during the 27-month period of performance, extending from July 1 of the fiscal year for which the funds were appropriated through September 30 of the second following fiscal year. Condition: The Department of Education’s (DOE) Office of Special Services & Inclusive Education, in conjunction with the Department of Administrative and Financial Services’ General Government Service Center (GGSC), administers Federal funding received through the Special Education Cluster (SEC) program. The SEC program provides grants to states, and through them to Local Education Agencies (LEAs), to assist in providing special education and related services to eligible children. DOE and GGSC review and approve requests for reimbursement from LEAs and invoices for other costs including payroll, administrative expenditures, and awards to subrecipients of State-level activities. This review includes a determination of whether the costs are obligated within the applicable Federal award’s period of performance through a comparison of billing dates and billing periods to grant award terms. Period of performance compliance requirements applicable to the SEC program in fiscal year 2023 relate to the Federal fiscal year 2021 grant award. The award’s obligation period ended September 30, 2022, and the liquidation period ended 120 calendar days following, on January 28, 2023. The Office of the State Auditor (OSA) tested 43 expenditure transactions that occurred during the Federal fiscal year 2021 grant award’s liquidation period to ensure that the expenditures were obligated and liquidated in accordance with Federal regulations, and identified the following: • Six transactions related to an obligation that occurred after the end of the period of performance. Upon further review, OSA determined that the full obligation included 20 transactions totaling $1.7 million. • Three obligations totaling $742,668 were liquidated after expiration of the liquidation period. The above-noted transactions did not meet the Federal fiscal year 2021 grant award’s period of performance requirements and are not allowable under the terms of the award. As a result, OSA identified questioned costs totaling $2.4 million. OSA selected a non-statistical random sample. Context: In fiscal year 2023, the Department expended $71.6 million in SEC program funds. Of this total, $5.1 million of Federal fiscal year 2021 grant funds was expended during the award’s liquidation period which occurred during fiscal year 2023. The identified questioned costs of $2.4 million represent approximately 47 percent of the award funds expended during the liquidation period. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Known questioned costs • Potential future questioned costs and disallowances • Noncompliance with Federal regulations Recommendation: We recommend that the Department enhance policies and procedures to ensure that obligation and liquidation of grant funds are made within period of performance requirements established in the terms and conditions of Federal grant awards. Corrective Action Plan: See F-27 Management’s Response: The Department agrees with this finding. The Department will review and implement stronger internal controls to ensure obligations and final payments are made within the period of performance requirements. Regarding the 20 transactions totaling $1.7 million, all expenditures reimbursed were within the period of performance, however there was a lengthy delay in determining the final payment mechanism. Due to this delay, the final obligation date in Advantage was outside of the grant's date of obligation. Contact: Nicole Denis, Director of Finance, DOE, 207-530-2161 (State Number: 23-1201-02)
(2023-062) Title: Internal control over Special Education period of performance needs improvement Prior Year Findings: None State Department: Education Administrative and Financial Services State Bureau: Special Services & Inclusive Education General Government Service Center Federal Agency: U.S. Department of Education Assistance Listing Title: Special Education Cluster (IDEA) (COVID-19) Assistance Listing Number: 84.027, 84.173 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Period of performance Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: $2,446,391 Likely Questioned Costs: Undeterminable; the exceptions noted in our sample represent nonroutine transactions; therefore, the projection of questioned costs utilizing the error rate related to known exceptions and amounts tested would not produce a reasonable estimate of likely questioned costs. Criteria: 2 CFR 200.303; 2 CFR 200.344; 2 CFR 200.403; 34 CFR 76.703 and .709 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Unless the Federal awarding agency authorizes an extension, the Department must liquidate all financial obligations incurred under the Federal award no later than 120 calendar days after the end date of the period of performance as specified in the terms and conditions of the Federal award. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. The Department must obligate Federal award funds during the 27-month period of performance, extending from July 1 of the fiscal year for which the funds were appropriated through September 30 of the second following fiscal year. Condition: The Department of Education’s (DOE) Office of Special Services & Inclusive Education, in conjunction with the Department of Administrative and Financial Services’ General Government Service Center (GGSC), administers Federal funding received through the Special Education Cluster (SEC) program. The SEC program provides grants to states, and through them to Local Education Agencies (LEAs), to assist in providing special education and related services to eligible children. DOE and GGSC review and approve requests for reimbursement from LEAs and invoices for other costs including payroll, administrative expenditures, and awards to subrecipients of State-level activities. This review includes a determination of whether the costs are obligated within the applicable Federal award’s period of performance through a comparison of billing dates and billing periods to grant award terms. Period of performance compliance requirements applicable to the SEC program in fiscal year 2023 relate to the Federal fiscal year 2021 grant award. The award’s obligation period ended September 30, 2022, and the liquidation period ended 120 calendar days following, on January 28, 2023. The Office of the State Auditor (OSA) tested 43 expenditure transactions that occurred during the Federal fiscal year 2021 grant award’s liquidation period to ensure that the expenditures were obligated and liquidated in accordance with Federal regulations, and identified the following: • Six transactions related to an obligation that occurred after the end of the period of performance. Upon further review, OSA determined that the full obligation included 20 transactions totaling $1.7 million. • Three obligations totaling $742,668 were liquidated after expiration of the liquidation period. The above-noted transactions did not meet the Federal fiscal year 2021 grant award’s period of performance requirements and are not allowable under the terms of the award. As a result, OSA identified questioned costs totaling $2.4 million. OSA selected a non-statistical random sample. Context: In fiscal year 2023, the Department expended $71.6 million in SEC program funds. Of this total, $5.1 million of Federal fiscal year 2021 grant funds was expended during the award’s liquidation period which occurred during fiscal year 2023. The identified questioned costs of $2.4 million represent approximately 47 percent of the award funds expended during the liquidation period. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Known questioned costs • Potential future questioned costs and disallowances • Noncompliance with Federal regulations Recommendation: We recommend that the Department enhance policies and procedures to ensure that obligation and liquidation of grant funds are made within period of performance requirements established in the terms and conditions of Federal grant awards. Corrective Action Plan: See F-27 Management’s Response: The Department agrees with this finding. The Department will review and implement stronger internal controls to ensure obligations and final payments are made within the period of performance requirements. Regarding the 20 transactions totaling $1.7 million, all expenditures reimbursed were within the period of performance, however there was a lengthy delay in determining the final payment mechanism. Due to this delay, the final obligation date in Advantage was outside of the grant's date of obligation. Contact: Nicole Denis, Director of Finance, DOE, 207-530-2161 (State Number: 23-1201-02)
(2023-064) Title: Internal control over ESF expenditures needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Education State Bureau: Office of Federal Emergency Relief Programs Federal Agency: U.S. Department of Education Assistance Listing Title: Education Stabilization Fund (ESF) (COVID-19) Assistance Listing Number: 84.425D, 84.425U Federal Award Identification Number: See E-93 to E-94 Compliance Area: Activities allowed or unallowed Allowable costs/cost principles Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: $161,468 Likely Questioned Costs: $7,308,277; likely questioned costs were projected by dividing the known questioned costs in our sample by total expenditures tested to establish an error rate, then applying that error rate to total expenditures paid in fiscal year 2023. Criteria: 2 CFR 200.303; 2 CFR 200.403; Coronavirus Aid, Relief, and Economic Security Act, Public Law No. 116-136; Coronavirus Response and Relief Supplemental Appropriations Act, Public Law No. 116-260; American Rescue Plan Act, Public Law No. 117-2 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. The Coronavirus Aid, Relief, and Economic Security Act; Coronavirus Response and Relief Supplemental Appropriations Act; and American Rescue Plan (ARP) Act authorized the creation of the Education Stabilization Fund and its subprograms. Governors and State Education Agencies (SEAs) must demonstrate that costs incurred by governors, SEAs, and subrecipients are allowable under the relevant statutory and regulatory provisions, assurances, and certification and agreement, and consistent with the purpose of the Education Stabilization Fund, which is to prevent, prepare for, and respond to COVID-19. Condition: Education Stabilization Funds (ESF) were authorized by Federal legislation for use by school administrative units (SAUs) within the State to prevent, prepare for, and respond to the COVID-19 pandemic. SAUs were required to submit applications to the Office of Federal Emergency Relief Programs (OFERP) under the Department of Education outlining identified uses for ESF including planned projects. Applications included detail on costs and the necessity of costs as a result of the COVID-19 pandemic. Program coordinators within OFERP were responsible for reviewing and approving applications submitted by SAUs. Once there was an approved application on file, SAUs could submit reimbursement requests to the Department for expenditures identified and approved in the application. The Office of the State Auditor (OSA) tested 60 SAU reimbursement requests for ESF and identified the following: • One ARP Elementary and Secondary School Emergency Relief (ESSER) subprogram reimbursement request included an invoice for a tractor purchase totaling approximately $91,000. The SAU’s approved application stated that the purpose of the tractor purchase was to help with lawn mowing, snow removal, and outdoor maintenance so that the school could safely engage in more outdoor learning. • One ARP ESSER subprogram reimbursement request included an invoice for a paving project totaling $47,500. The paving project was included in the SAU’s approved application. The reimbursement request outlined that the “paving improvements in [the] bus area [were] to help facilitate with disinfecting and cleaning of buses.” • Supporting documentation for OFERP’s review prior to approval of one ESSER II subprogram reimbursement request totaling $22,896 was not maintained. OSA was able to verify the allowability of the costs based on documentation provided by OFERP during audit testing. • One ARP ESSER subprogram reimbursement request included oil and electricity utility bills totaling $14,710. • One ESSER II subprogram reimbursement request included oil and electricity utility bills totaling $8,258. All subrecipients had an approved application on file with OFERP. The applications and the invoices were approved for reimbursement by OFERP. The purpose of ESF is to prevent, prepare for, and respond to COVID-19. The project descriptions and supporting documentation for the tractor purchase and paving project provided by the SAU and maintained by the Department do not demonstrate that these reimbursements are a reasonable use of funds consistent with the purpose of ESF. In addition, utility bills such as oil and electricity are routine costs that are supported by a SAU’s annual operating budget, and these reimbursements are not consistent with the purpose of ESF. OSA selected a non-statistical random sample. Context: In fiscal year 2023, ESF expenditures totaled $178.2 million, of which $167.8 million was paid to subrecipient SAUs. Cause: • Lack of established policies and procedures to ensure that only necessary expenditures are charged to the Federal program • Misinterpretation of Federal regulations Effect: • Noncompliance with Federal regulations • Known questioned costs • Potential future questioned costs and disallowances Recommendation: We recommend that the Department review all expenditures reimbursed using ESF to ensure that only allowable costs are charged to the Federal program. Expenditures that do not meet ESF criteria for allowability should be transferred out of ESF. Corrective Action Plan: See F-28 Management’s Response: The Maine Department of Education (MDOE) disagrees with the identified questioned costs. The FERP utilized guidance provided by the U.S. Department of Education (grantor) and conferred in writing with Maine’s assigned U.S. Department of Education program officer throughout the Education Stabilization Fund application review process. The Maine Department of Education’s FERP provided the auditor with the grantor’s guidance which clearly states that the questioned costs were allowable, reasonable, and necessary to prepare, prevent, and respond to the COVID-19 pandemic. Throughout the application review process, FERP utilized ESF federal statutory language and the grantor’s published guidance to determine allowability. Once funding applications were approved, SAUs requested reimbursement from the FERP for the approved costs outlined in the school administrative unit (SAU) application. The FERP reviewed SAU reimbursement requests and provided payment for approved expenses. The ESF costs outlined in this finding were allowable, reasonable, and necessary to prepare, prevent, and respond to the COVID-19 pandemic. Contact: Shelly Chasse-Johndro, Director of OFERP, DOE, 207-458-3180 Auditor’s Concluding Remarks: Documentation provided by the Department for the reimbursements totaling $161,468 did not provide adequate evidence that the expenditures were reasonable, necessary, and in line with the allowability criteria of ESF, as outlined below: • A $91,000 tractor purchase is not a reasonable or necessary use of funds in response to a need directly arising from the public health emergency. While outdoor learning space may have been expanded in response to COVID-19, lawn mowing, snow removal, and outdoor maintenance are routine costs of the SAU. • A $47,500 paving project is not a reasonable or necessary use of funds in response to a need directly arising from the public health emergency. There is no direct correlation between paving improvements and disinfecting and cleaning of buses. • $22,968 in oil and electricity bill reimbursements are not reasonable or necessary uses of funds in response to needs directly arising from the public health emergency. Utility bills are routine costs that are supported by a SAU’s annual operating budget. Federal guidance for the ESF program does not clearly state that the expenditures noted as questioned costs are allowable, reasonable, and necessary to prevent, prepare for, and respond to COVID-19. Furthermore, the Department did not provide grantor guidance to OSA as stated in Management’s Response. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. Without documentation and evidence to substantiate that the expenditures are necessary and reasonable in response to needs directly arising from the public health emergency, OSA cannot determine that the reimbursements were consistent with the purpose of ESF; therefore, OSA continues to question the allowability of these costs. The finding remains as stated. (State Number: 23-1235-03)
(2023-064) Title: Internal control over ESF expenditures needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Education State Bureau: Office of Federal Emergency Relief Programs Federal Agency: U.S. Department of Education Assistance Listing Title: Education Stabilization Fund (ESF) (COVID-19) Assistance Listing Number: 84.425D, 84.425U Federal Award Identification Number: See E-93 to E-94 Compliance Area: Activities allowed or unallowed Allowable costs/cost principles Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: $161,468 Likely Questioned Costs: $7,308,277; likely questioned costs were projected by dividing the known questioned costs in our sample by total expenditures tested to establish an error rate, then applying that error rate to total expenditures paid in fiscal year 2023. Criteria: 2 CFR 200.303; 2 CFR 200.403; Coronavirus Aid, Relief, and Economic Security Act, Public Law No. 116-136; Coronavirus Response and Relief Supplemental Appropriations Act, Public Law No. 116-260; American Rescue Plan Act, Public Law No. 117-2 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. The Coronavirus Aid, Relief, and Economic Security Act; Coronavirus Response and Relief Supplemental Appropriations Act; and American Rescue Plan (ARP) Act authorized the creation of the Education Stabilization Fund and its subprograms. Governors and State Education Agencies (SEAs) must demonstrate that costs incurred by governors, SEAs, and subrecipients are allowable under the relevant statutory and regulatory provisions, assurances, and certification and agreement, and consistent with the purpose of the Education Stabilization Fund, which is to prevent, prepare for, and respond to COVID-19. Condition: Education Stabilization Funds (ESF) were authorized by Federal legislation for use by school administrative units (SAUs) within the State to prevent, prepare for, and respond to the COVID-19 pandemic. SAUs were required to submit applications to the Office of Federal Emergency Relief Programs (OFERP) under the Department of Education outlining identified uses for ESF including planned projects. Applications included detail on costs and the necessity of costs as a result of the COVID-19 pandemic. Program coordinators within OFERP were responsible for reviewing and approving applications submitted by SAUs. Once there was an approved application on file, SAUs could submit reimbursement requests to the Department for expenditures identified and approved in the application. The Office of the State Auditor (OSA) tested 60 SAU reimbursement requests for ESF and identified the following: • One ARP Elementary and Secondary School Emergency Relief (ESSER) subprogram reimbursement request included an invoice for a tractor purchase totaling approximately $91,000. The SAU’s approved application stated that the purpose of the tractor purchase was to help with lawn mowing, snow removal, and outdoor maintenance so that the school could safely engage in more outdoor learning. • One ARP ESSER subprogram reimbursement request included an invoice for a paving project totaling $47,500. The paving project was included in the SAU’s approved application. The reimbursement request outlined that the “paving improvements in [the] bus area [were] to help facilitate with disinfecting and cleaning of buses.” • Supporting documentation for OFERP’s review prior to approval of one ESSER II subprogram reimbursement request totaling $22,896 was not maintained. OSA was able to verify the allowability of the costs based on documentation provided by OFERP during audit testing. • One ARP ESSER subprogram reimbursement request included oil and electricity utility bills totaling $14,710. • One ESSER II subprogram reimbursement request included oil and electricity utility bills totaling $8,258. All subrecipients had an approved application on file with OFERP. The applications and the invoices were approved for reimbursement by OFERP. The purpose of ESF is to prevent, prepare for, and respond to COVID-19. The project descriptions and supporting documentation for the tractor purchase and paving project provided by the SAU and maintained by the Department do not demonstrate that these reimbursements are a reasonable use of funds consistent with the purpose of ESF. In addition, utility bills such as oil and electricity are routine costs that are supported by a SAU’s annual operating budget, and these reimbursements are not consistent with the purpose of ESF. OSA selected a non-statistical random sample. Context: In fiscal year 2023, ESF expenditures totaled $178.2 million, of which $167.8 million was paid to subrecipient SAUs. Cause: • Lack of established policies and procedures to ensure that only necessary expenditures are charged to the Federal program • Misinterpretation of Federal regulations Effect: • Noncompliance with Federal regulations • Known questioned costs • Potential future questioned costs and disallowances Recommendation: We recommend that the Department review all expenditures reimbursed using ESF to ensure that only allowable costs are charged to the Federal program. Expenditures that do not meet ESF criteria for allowability should be transferred out of ESF. Corrective Action Plan: See F-28 Management’s Response: The Maine Department of Education (MDOE) disagrees with the identified questioned costs. The FERP utilized guidance provided by the U.S. Department of Education (grantor) and conferred in writing with Maine’s assigned U.S. Department of Education program officer throughout the Education Stabilization Fund application review process. The Maine Department of Education’s FERP provided the auditor with the grantor’s guidance which clearly states that the questioned costs were allowable, reasonable, and necessary to prepare, prevent, and respond to the COVID-19 pandemic. Throughout the application review process, FERP utilized ESF federal statutory language and the grantor’s published guidance to determine allowability. Once funding applications were approved, SAUs requested reimbursement from the FERP for the approved costs outlined in the school administrative unit (SAU) application. The FERP reviewed SAU reimbursement requests and provided payment for approved expenses. The ESF costs outlined in this finding were allowable, reasonable, and necessary to prepare, prevent, and respond to the COVID-19 pandemic. Contact: Shelly Chasse-Johndro, Director of OFERP, DOE, 207-458-3180 Auditor’s Concluding Remarks: Documentation provided by the Department for the reimbursements totaling $161,468 did not provide adequate evidence that the expenditures were reasonable, necessary, and in line with the allowability criteria of ESF, as outlined below: • A $91,000 tractor purchase is not a reasonable or necessary use of funds in response to a need directly arising from the public health emergency. While outdoor learning space may have been expanded in response to COVID-19, lawn mowing, snow removal, and outdoor maintenance are routine costs of the SAU. • A $47,500 paving project is not a reasonable or necessary use of funds in response to a need directly arising from the public health emergency. There is no direct correlation between paving improvements and disinfecting and cleaning of buses. • $22,968 in oil and electricity bill reimbursements are not reasonable or necessary uses of funds in response to needs directly arising from the public health emergency. Utility bills are routine costs that are supported by a SAU’s annual operating budget. Federal guidance for the ESF program does not clearly state that the expenditures noted as questioned costs are allowable, reasonable, and necessary to prevent, prepare for, and respond to COVID-19. Furthermore, the Department did not provide grantor guidance to OSA as stated in Management’s Response. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. Without documentation and evidence to substantiate that the expenditures are necessary and reasonable in response to needs directly arising from the public health emergency, OSA cannot determine that the reimbursements were consistent with the purpose of ESF; therefore, OSA continues to question the allowability of these costs. The finding remains as stated. (State Number: 23-1235-03)
(2023-087) Title: Internal control over DHHS allocated costs needs improvement Prior Year Findings: None State Department: Administrative and Financial Services Health and Human Services State Bureau: Health and Human Services Service Center Office of Child and Family Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Title IV-E Prevention Program Foster Care – Title IV-E (COVID-19) Assistance Listing Number: 93.472; 93.658 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403; Department of Health and Human Services’ Cost Allocation Plan The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. Some accounts include costs that benefit multiple programs (cost pool accounts). A Random Moment Time Study (RMTS) allocation method is used to allocate certain Office of Child and Family Services cost pool accounts. RMTS is used to identify time spent on Title IV-E programs and time reimbursable for child welfare system operational costs. Condition: A Cost Allocation Plan (CAP) is used when a cost cannot be identified to a particular cost objective (direct expensed). The Department of Health and Human Services’ (DHHS) CAP is a written summary that documents how DHHS allocates cost pool accounts across multiple programs, including approved allocation methods by cost pool account, and is approved by the Federal government. The Office of the State Auditor (OSA) identified that the Foster Care – Title IV-E program’s allocated costs decreased by 31 percent in fiscal year 2023. In response to OSA’s inquiry, the Department acknowledged that the program was overcharged by $2.7 million due to incorrect RMTS statistic information that was provided beginning in October 2021 through April 2023. These costs should have been charged to ALN 93.472 Title IV-E Prevention Program. During the last quarter of fiscal year 2023, the Department initiated corrective action and appropriately transferred the unallowable costs that were incurred during fiscal year 2023 from the Foster Care – Title IV-E program to the Title IV-E Prevention Program. Context: Of the $80.2 million in costs allocated through the DHHS CAP, $11.9 million was correctly charged to the Foster Care – Title IV-E program and $4.9 million was correctly charged to the Title IV-E Prevention Program during fiscal year 2023. Cause: • Lack of adequate procedures to prevent, or detect and correct, errors timely • Lack of supervisory oversight Effect: • Potential questioned costs and disallowances if unallowable costs are charged to the wrong Federal program and not detected timely • Noncompliance with Federal requirements Recommendation: We recommend that the Department implement additional procedures to validate the accuracy of changes to the DHHS CAP before implementation and to enhance monitoring procedures over allocated costs. This will ensure that Federal programs are appropriately charged through the DHHS CAP in accordance with Federal regulations. Corrective Action Plan: See F-36 Management’s Response: The DHHS and DHHS Financial Service Center agree with this finding. The DHHS Financial Service Center and the Office of Child and Family Services will implement additional procedures to validate the accuracy of OCFS applicable changes to the DHHS CAP by December 31, 2024. Contact: Sarah Gove, Director, DHHS Service Center, DAFS, 207-458-6626 (State Number: 23-1103-01)
(2023-075) Title: Internal control over payments made to and on behalf of TANF clients needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Temporary Assistance for Needy Families (TANF) Assistance Listing Number: 93.558 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Activities allowed or unallowed Allowable costs/cost principles Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: $4,721 Likely Questioned Costs: $279,992; likely questioned costs were projected by dividing the identified known overpayment in our sample by total payments tested to establish an error rate, then applying that error rate to total payments to Temporary Assistance for Needy Families (TANF) clients for services and payments to providers on behalf of TANF clients in fiscal year 2023. Criteria: 2 CFR 200.303; 2 CFR 200.403; 45 CFR 263.11 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. The Department must use Federal TANF funds for expenditures that are reasonably calculated to accomplish the purposes of TANF. Use of funds in violation of this is considered misuse of funds. Condition: The Department issues TANF payments directly to a TANF client for various items and services. The Department also issues TANF payments directly to providers on behalf of TANF clients for services rendered such as child care and transportation. The Office of the State Auditor (OSA) tested 60 payments and found that: • one payment issued in September 2022 underpaid a provider by $1 for Transitional Child Care (TCC). Upon further review, OSA found an additional $666 overpaid to the childcare provider during fiscal year 2023, thus OSA is questioning costs totaling $665. Both the underpayment and overpayment were identified by OSA during audit testing. • one payment issued in November 2022 correctly paid a provider $154 for TCC. Upon further review, OSA found that the Department received income documentation for the client after the payment was made which would decrease future weekly TCC payments. The Department did not recalculate the TCC payment as required, and as a result, an additional $1,020 was overpaid to the childcare provider during fiscal year 2023, thus OSA is questioning costs totaling $1,020. The overpayment was identified by OSA during audit testing. • one payment issued in November 2022 overpaid a provider by $7 for TCC. Upon further review, OSA found an additional $210 overpaid to the childcare provider during fiscal year 2023, thus OSA is questioning costs totaling $217. The overpayment was identified by OSA during testing. • one payment issued in January 2023 overpaid a TANF client a total of $247 for clothing. An advance allowance of $300 was issued to the TANF client, and the TANF client submitted receipts substantiating purchases of $53. The Department sent a letter to the client requesting receipts for the unsubstantiated amount but did not establish an overpayment. OSA is questioning costs totaling $247. The overpayment was identified by OSA during testing. • one payment issued in March 2023 correctly paid a provider $13 for TCC. Upon further review, OSA found that the Department received income documentation for the client after the payment was made which would decrease future weekly TCC payments. The Department did not recalculate the TCC payment as required and as a result, an additional $156 was overpaid to the childcare provider during fiscal year 2023, thus OSA is questioning costs totaling $156. The overpayment was identified by OSA during audit testing. • one payment issued in April 2023 correctly paid a provider $138 for TCC. Upon further review, OSA found that the Department received income documentation for the client after the payment was made which would decrease future weekly TCC payments. The Department did not recalculate the TCC payment as required and as a result, an additional $88 was overpaid to the childcare provider during fiscal year 2023, thus OSA is questioning costs totaling $88. The overpayment was identified by OSA during audit testing. In addition, Department controls identified the following overpayments. Because these payments were not in accordance with Federal regulations and the Department has not recouped the funds, OSA is questioning the costs: • one payment issued in September 2022 overpaid a TANF client by $150 for clothing. An advance allowance of $150 was issued to the TANF client; however, the TANF client did not submit a receipt substantiating the purchase as required. The Department identified the overpayment in March 2023, thus OSA is questioning costs totaling $150. • one payment issued in September 2022 overpaid a provider by $104 for TCC. Upon further review, OSA found an additional $2,074 overpaid to the childcare provider during fiscal year 2023, thus OSA is questioning costs totaling $2,178. The Department identified the overpayment in October 2022. OSA selected a non-statistical random sample. Context: In fiscal year 2023, payments to TANF clients for services other than direct cash benefits and payments to providers on behalf of TANF clients totaled $8.3 million. Cause: • Lack of adequate procedures • Lack of supervisory oversight Effect: • Known questioned costs • Potential future questioned costs and disallowances • Noncompliance with Federal regulations Recommendation: We recommend that the Department: • implement additional procedures to ensure that payments made to TANF clients and providers are accurate, allowable, and adequately documented; • increase monitoring procedures over these payments; and • establish recoupments of overpayments in instances where they have not yet been established. Corrective Action Plan: See F-31 Management’s Response: OFI disagrees with this finding. OSA’s interpretation of federal regulation regarding the recoupment of overpaid funds is incorrect, and benefit overpayments are identified and processed by OFI in compliance with federal regulation and policy. Overpayments are required to be recouped in the shortest timeframe possible, but the recoupment amount cannot exceed the standards as set by policy. Neither state policy nor federal regulation requires an overpayment to be recouped within the same state fiscal year it is identified, so it was not appropriate for OSA to include as questioned costs on that basis the two cases where recoupment did not occur in the same fiscal year that the overpayment was established. Further, OFI disputes how OSA calculated the questioned costs. Three of the payments tested by OSA were found to be correct at the time of issuance. OSA then reviewed all payments during the state fiscal year for the three cases and stated that parent fees should have been adjusted based on documentation in DocuWare. Transitional Child Care does not require changes in income to be reported during the certification period unless the gross income exceeds 250% of the federal poverty level (MPAM, Ch. V, A, (6)), and adjustment of the parent fees were not required for these cases. They should not be included in the list of exceptions. While OSA cites MPAM, Ch. V, A (6), “TCC payments remain constant until a redetermination is completed, or until the recipient or child care provider reports a change that affects the amount of TCC benefits (emphasis added)” the reported change did not affect the amount of TCC benefits. Contact: Ian Yaffe, Director, Office for Family Independence, DHHS, 207-592-1481 Auditor’s Concluding Remarks: The Office for Family Independence (OFI) has misconstrued the finding. OSA does not expect the Department to recoup funds within the year they are identified. OSA does expect that when the Department identifies overpayments, recoupments are established for those overpayments. While OSA agrees that the Department identified two of the eight overpayments as noted in the finding, OFI did not take action and appropriately establish a related recoupment to ensure that funds would be recovered. Had appropriate action been taken by OFI, OSA would not have questioned the costs. Regarding the three cases “found to be correct at the time of issuance” in relation to the calculation of questioned costs: • OSA understands TCC payments do not require changes in income to be reported during the certification period unless the gross income exceeds 250 percent of the Federal poverty level; however, this is the reporting responsibility of the client, not the State. • Management’s Response cites Ch. V, A, (6) of the Department’s Maine Public Assistance Manual (MPAM) which states TCC payments remain constant until a redetermination is completed, or until the recipient or childcare provider reports a change that affects the amount of TCC benefits. For the three cases, the recipient self-reported a change in income. The Department did not recalculate the TCC payment, resulting in the childcare provider being overpaid during fiscal year 2023. The finding remains as stated. (State Number: 23-1111-03)
(2023-083) Title: Internal control over CCDF provider payments needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office of Child and Family Services Federal Agency: U. S. Department of Health and Human Services Assistance Listing Title: CCDF Cluster (COVID-19) Assistance Listing Number: 93.489, 93.575, 93.596 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned costs Known Questioned Costs: $3,101 Likely Questioned Costs: $32,099; likely questioned costs were projected by dividing the known questioned costs in our sample by total provider payments tested to establish an error rate, then applying that error rate to total provider payments in fiscal year 2023. Criteria: 2 CFR 200.303; 2 CFR 200.403; 45 CFR 98.68 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. In the Child Care and Development Fund (CCDF) State Plan, Lead Agencies are required to describe effective internal controls that are in place to ensure program integrity and accountability while maintaining continuity of services. Condition: The CCDF program provides funds to increase the availability, affordability, and quality of childcare services in the State. The Department provides biweekly payments to childcare providers for services rendered. Provider payment amounts are based on current childcare market rates and the approved childcare subsidy awarded on behalf of the child receiving care. Once the subsidy is awarded, the Department accepts electronic invoices from the provider through a portal. Invoices are reviewed and approved by the Department prior to payment processing. The Office of the State Auditor (OSA) tested 60 provider payments to verify that the payments were accurate and in line with program guidelines and identified one provider’s biweekly invoice was overpaid by $151 due to an inaccurate childcare subsidy determination. This error was not identified by the Department during the review and approval process and persisted for 10 months of fiscal year 2023, resulting in a total overpayment of $3,101. OSA selected a non-statistical random sample. Context: In fiscal year 2023, the Department provided $40.1 million to 1,056 providers in the CCDF program. Cause: Lack of adequate supervisory oversight Effect: • Inaccurate childcare subsidy determinations will result in overpayments or underpayments to providers. • Known questioned costs • Potential future questioned costs and disallowances • Noncompliance with Federal regulations Recommendation: We recommend that the Department enhance oversight policies and procedures to ensure that childcare subsidy determinations and resulting provider payments are accurate. Corrective Action Plan: See F-35 Management’s Response: The Department agrees with this finding. The Department will enhance oversight policies and procedures to ensure that childcare subsidy determinations and resulting provider payments are accurate. The Program will seek to maintain a below 10% threshold of improper payments as required by CCDF Rule. Contact: John Feeney, Chief Operating Officer, OCFS, DHHS, 207-626-8614 (State Number: 23-1114-02)
(2023-083) Title: Internal control over CCDF provider payments needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office of Child and Family Services Federal Agency: U. S. Department of Health and Human Services Assistance Listing Title: CCDF Cluster (COVID-19) Assistance Listing Number: 93.489, 93.575, 93.596 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned costs Known Questioned Costs: $3,101 Likely Questioned Costs: $32,099; likely questioned costs were projected by dividing the known questioned costs in our sample by total provider payments tested to establish an error rate, then applying that error rate to total provider payments in fiscal year 2023. Criteria: 2 CFR 200.303; 2 CFR 200.403; 45 CFR 98.68 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. In the Child Care and Development Fund (CCDF) State Plan, Lead Agencies are required to describe effective internal controls that are in place to ensure program integrity and accountability while maintaining continuity of services. Condition: The CCDF program provides funds to increase the availability, affordability, and quality of childcare services in the State. The Department provides biweekly payments to childcare providers for services rendered. Provider payment amounts are based on current childcare market rates and the approved childcare subsidy awarded on behalf of the child receiving care. Once the subsidy is awarded, the Department accepts electronic invoices from the provider through a portal. Invoices are reviewed and approved by the Department prior to payment processing. The Office of the State Auditor (OSA) tested 60 provider payments to verify that the payments were accurate and in line with program guidelines and identified one provider’s biweekly invoice was overpaid by $151 due to an inaccurate childcare subsidy determination. This error was not identified by the Department during the review and approval process and persisted for 10 months of fiscal year 2023, resulting in a total overpayment of $3,101. OSA selected a non-statistical random sample. Context: In fiscal year 2023, the Department provided $40.1 million to 1,056 providers in the CCDF program. Cause: Lack of adequate supervisory oversight Effect: • Inaccurate childcare subsidy determinations will result in overpayments or underpayments to providers. • Known questioned costs • Potential future questioned costs and disallowances • Noncompliance with Federal regulations Recommendation: We recommend that the Department enhance oversight policies and procedures to ensure that childcare subsidy determinations and resulting provider payments are accurate. Corrective Action Plan: See F-35 Management’s Response: The Department agrees with this finding. The Department will enhance oversight policies and procedures to ensure that childcare subsidy determinations and resulting provider payments are accurate. The Program will seek to maintain a below 10% threshold of improper payments as required by CCDF Rule. Contact: John Feeney, Chief Operating Officer, OCFS, DHHS, 207-626-8614 (State Number: 23-1114-02)
(2023-083) Title: Internal control over CCDF provider payments needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office of Child and Family Services Federal Agency: U. S. Department of Health and Human Services Assistance Listing Title: CCDF Cluster (COVID-19) Assistance Listing Number: 93.489, 93.575, 93.596 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned costs Known Questioned Costs: $3,101 Likely Questioned Costs: $32,099; likely questioned costs were projected by dividing the known questioned costs in our sample by total provider payments tested to establish an error rate, then applying that error rate to total provider payments in fiscal year 2023. Criteria: 2 CFR 200.303; 2 CFR 200.403; 45 CFR 98.68 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. In the Child Care and Development Fund (CCDF) State Plan, Lead Agencies are required to describe effective internal controls that are in place to ensure program integrity and accountability while maintaining continuity of services. Condition: The CCDF program provides funds to increase the availability, affordability, and quality of childcare services in the State. The Department provides biweekly payments to childcare providers for services rendered. Provider payment amounts are based on current childcare market rates and the approved childcare subsidy awarded on behalf of the child receiving care. Once the subsidy is awarded, the Department accepts electronic invoices from the provider through a portal. Invoices are reviewed and approved by the Department prior to payment processing. The Office of the State Auditor (OSA) tested 60 provider payments to verify that the payments were accurate and in line with program guidelines and identified one provider’s biweekly invoice was overpaid by $151 due to an inaccurate childcare subsidy determination. This error was not identified by the Department during the review and approval process and persisted for 10 months of fiscal year 2023, resulting in a total overpayment of $3,101. OSA selected a non-statistical random sample. Context: In fiscal year 2023, the Department provided $40.1 million to 1,056 providers in the CCDF program. Cause: Lack of adequate supervisory oversight Effect: • Inaccurate childcare subsidy determinations will result in overpayments or underpayments to providers. • Known questioned costs • Potential future questioned costs and disallowances • Noncompliance with Federal regulations Recommendation: We recommend that the Department enhance oversight policies and procedures to ensure that childcare subsidy determinations and resulting provider payments are accurate. Corrective Action Plan: See F-35 Management’s Response: The Department agrees with this finding. The Department will enhance oversight policies and procedures to ensure that childcare subsidy determinations and resulting provider payments are accurate. The Program will seek to maintain a below 10% threshold of improper payments as required by CCDF Rule. Contact: John Feeney, Chief Operating Officer, OCFS, DHHS, 207-626-8614 (State Number: 23-1114-02)
(2023-086) Title: Internal control over the Foster Care – Title IV-E eligibility and benefit determination process needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office of Child and Family Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Foster Care – Title IV-E (COVID-19) Assistance Listing Number: 93.658 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: $8,006 Likely Questioned Costs: $220,373; likely questioned costs were projected by dividing the identified known overpayment in our sample by total payments tested to establish an error rate, then applying that error rate to total payments made on behalf of Foster Care – Title IV-E clients in fiscal year 2023. Criteria: 2 CFR 200.303; 2 CFR 200.403; 45 CFR 1356.21 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. Funds may be expended for foster care maintenance payments on behalf of eligible children, in accordance with the Title IV-E agency’s foster care maintenance payment rate schedule, to individuals serving as foster family homes, to childcare institutions, or to public or private child-placement or child-care agencies. Condition: The Foster Care – Title IV-E program is designed to help states provide safe and stable out-of-home care for children under its jurisdiction until the children are returned home safely, placed with adoptive families, or placed in other planned arrangements for permanency. The Office of Child and Family Services (OCFS) administers the Foster Care – Title IV-E program for the State of Maine. A financial resources specialist (FRS) determines program eligibility and initiates benefits through completion of a determination checklist. The FRS reviews program eligibility factors, gathers required supporting documentation, and documents the certification decision on the checklist. The FRS enters the information into the child welfare information system for processing. Once the client is determined eligible in the child welfare information system, a level of benefits is assigned. OCFS relies on this information and the related system coding to ensure that benefits are accurately provided to eligible clients. The Office of the State Auditor (OSA) tested 60 clients and 60 benefit payments and found: • 10 determination checklists that did not include a certification decision; and • one benefit payment for an ineligible client. The client was erroneously paid a total of $8,006 for six months during fiscal year 2023. OSA selected non-statistical random samples. Context: In fiscal year 2023, the State provided approximately 900 Foster Care – Title IV-E clients with $5.3 million in Federal benefits. Cause: Lack of adequate policies and procedures and supervisory oversight over the child welfare information system. The system was implemented in fiscal year 2023 and policies and procedures were not designed to properly test system coding for all eligibility change circumstances that could occur. Effect: • Known questioned costs • Potential future questioned costs and disallowances • Noncompliance with Federal regulations Recommendation: We recommend that the Department enhance policies and procedures to ensure that eligibility determination checklists include certification decisions by a FRS and benefits are paid only to eligible clients. Corrective Action Plan: See F-35 Management’s Response: The Department agrees with this finding. The Financial Resources Specialist (FRS) role is to accurately determine Title IV-E Eligibility Foster care for the State of Maine DHHS OCFS. One of the items utilized in their determination of program eligibility is to document all of their findings in the “Title IV-E Initial Determination” document. This is included in every case file in front of the corresponding paperwork that confirms each element of that eligibility determination. Contact: Manisha Donahue, Title IV-E Program Manager, OCFS, DHHS, 207-592-1268 (State Number: 23-1109-01)
(2023-086) Title: Internal control over the Foster Care – Title IV-E eligibility and benefit determination process needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office of Child and Family Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Foster Care – Title IV-E (COVID-19) Assistance Listing Number: 93.658 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: $8,006 Likely Questioned Costs: $220,373; likely questioned costs were projected by dividing the identified known overpayment in our sample by total payments tested to establish an error rate, then applying that error rate to total payments made on behalf of Foster Care – Title IV-E clients in fiscal year 2023. Criteria: 2 CFR 200.303; 2 CFR 200.403; 45 CFR 1356.21 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. Funds may be expended for foster care maintenance payments on behalf of eligible children, in accordance with the Title IV-E agency’s foster care maintenance payment rate schedule, to individuals serving as foster family homes, to childcare institutions, or to public or private child-placement or child-care agencies. Condition: The Foster Care – Title IV-E program is designed to help states provide safe and stable out-of-home care for children under its jurisdiction until the children are returned home safely, placed with adoptive families, or placed in other planned arrangements for permanency. The Office of Child and Family Services (OCFS) administers the Foster Care – Title IV-E program for the State of Maine. A financial resources specialist (FRS) determines program eligibility and initiates benefits through completion of a determination checklist. The FRS reviews program eligibility factors, gathers required supporting documentation, and documents the certification decision on the checklist. The FRS enters the information into the child welfare information system for processing. Once the client is determined eligible in the child welfare information system, a level of benefits is assigned. OCFS relies on this information and the related system coding to ensure that benefits are accurately provided to eligible clients. The Office of the State Auditor (OSA) tested 60 clients and 60 benefit payments and found: • 10 determination checklists that did not include a certification decision; and • one benefit payment for an ineligible client. The client was erroneously paid a total of $8,006 for six months during fiscal year 2023. OSA selected non-statistical random samples. Context: In fiscal year 2023, the State provided approximately 900 Foster Care – Title IV-E clients with $5.3 million in Federal benefits. Cause: Lack of adequate policies and procedures and supervisory oversight over the child welfare information system. The system was implemented in fiscal year 2023 and policies and procedures were not designed to properly test system coding for all eligibility change circumstances that could occur. Effect: • Known questioned costs • Potential future questioned costs and disallowances • Noncompliance with Federal regulations Recommendation: We recommend that the Department enhance policies and procedures to ensure that eligibility determination checklists include certification decisions by a FRS and benefits are paid only to eligible clients. Corrective Action Plan: See F-35 Management’s Response: The Department agrees with this finding. The Financial Resources Specialist (FRS) role is to accurately determine Title IV-E Eligibility Foster care for the State of Maine DHHS OCFS. One of the items utilized in their determination of program eligibility is to document all of their findings in the “Title IV-E Initial Determination” document. This is included in every case file in front of the corresponding paperwork that confirms each element of that eligibility determination. Contact: Manisha Donahue, Title IV-E Program Manager, OCFS, DHHS, 207-592-1268 (State Number: 23-1109-01)
(2023-087) Title: Internal control over DHHS allocated costs needs improvement Prior Year Findings: None State Department: Administrative and Financial Services Health and Human Services State Bureau: Health and Human Services Service Center Office of Child and Family Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Title IV-E Prevention Program Foster Care – Title IV-E (COVID-19) Assistance Listing Number: 93.472; 93.658 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403; Department of Health and Human Services’ Cost Allocation Plan The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. Some accounts include costs that benefit multiple programs (cost pool accounts). A Random Moment Time Study (RMTS) allocation method is used to allocate certain Office of Child and Family Services cost pool accounts. RMTS is used to identify time spent on Title IV-E programs and time reimbursable for child welfare system operational costs. Condition: A Cost Allocation Plan (CAP) is used when a cost cannot be identified to a particular cost objective (direct expensed). The Department of Health and Human Services’ (DHHS) CAP is a written summary that documents how DHHS allocates cost pool accounts across multiple programs, including approved allocation methods by cost pool account, and is approved by the Federal government. The Office of the State Auditor (OSA) identified that the Foster Care – Title IV-E program’s allocated costs decreased by 31 percent in fiscal year 2023. In response to OSA’s inquiry, the Department acknowledged that the program was overcharged by $2.7 million due to incorrect RMTS statistic information that was provided beginning in October 2021 through April 2023. These costs should have been charged to ALN 93.472 Title IV-E Prevention Program. During the last quarter of fiscal year 2023, the Department initiated corrective action and appropriately transferred the unallowable costs that were incurred during fiscal year 2023 from the Foster Care – Title IV-E program to the Title IV-E Prevention Program. Context: Of the $80.2 million in costs allocated through the DHHS CAP, $11.9 million was correctly charged to the Foster Care – Title IV-E program and $4.9 million was correctly charged to the Title IV-E Prevention Program during fiscal year 2023. Cause: • Lack of adequate procedures to prevent, or detect and correct, errors timely • Lack of supervisory oversight Effect: • Potential questioned costs and disallowances if unallowable costs are charged to the wrong Federal program and not detected timely • Noncompliance with Federal requirements Recommendation: We recommend that the Department implement additional procedures to validate the accuracy of changes to the DHHS CAP before implementation and to enhance monitoring procedures over allocated costs. This will ensure that Federal programs are appropriately charged through the DHHS CAP in accordance with Federal regulations. Corrective Action Plan: See F-36 Management’s Response: The DHHS and DHHS Financial Service Center agree with this finding. The DHHS Financial Service Center and the Office of Child and Family Services will implement additional procedures to validate the accuracy of OCFS applicable changes to the DHHS CAP by December 31, 2024. Contact: Sarah Gove, Director, DHHS Service Center, DAFS, 207-458-6626 (State Number: 23-1103-01)
(2023-087) Title: Internal control over DHHS allocated costs needs improvement Prior Year Findings: None State Department: Administrative and Financial Services Health and Human Services State Bureau: Health and Human Services Service Center Office of Child and Family Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Title IV-E Prevention Program Foster Care – Title IV-E (COVID-19) Assistance Listing Number: 93.472; 93.658 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403; Department of Health and Human Services’ Cost Allocation Plan The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. Some accounts include costs that benefit multiple programs (cost pool accounts). A Random Moment Time Study (RMTS) allocation method is used to allocate certain Office of Child and Family Services cost pool accounts. RMTS is used to identify time spent on Title IV-E programs and time reimbursable for child welfare system operational costs. Condition: A Cost Allocation Plan (CAP) is used when a cost cannot be identified to a particular cost objective (direct expensed). The Department of Health and Human Services’ (DHHS) CAP is a written summary that documents how DHHS allocates cost pool accounts across multiple programs, including approved allocation methods by cost pool account, and is approved by the Federal government. The Office of the State Auditor (OSA) identified that the Foster Care – Title IV-E program’s allocated costs decreased by 31 percent in fiscal year 2023. In response to OSA’s inquiry, the Department acknowledged that the program was overcharged by $2.7 million due to incorrect RMTS statistic information that was provided beginning in October 2021 through April 2023. These costs should have been charged to ALN 93.472 Title IV-E Prevention Program. During the last quarter of fiscal year 2023, the Department initiated corrective action and appropriately transferred the unallowable costs that were incurred during fiscal year 2023 from the Foster Care – Title IV-E program to the Title IV-E Prevention Program. Context: Of the $80.2 million in costs allocated through the DHHS CAP, $11.9 million was correctly charged to the Foster Care – Title IV-E program and $4.9 million was correctly charged to the Title IV-E Prevention Program during fiscal year 2023. Cause: • Lack of adequate procedures to prevent, or detect and correct, errors timely • Lack of supervisory oversight Effect: • Potential questioned costs and disallowances if unallowable costs are charged to the wrong Federal program and not detected timely • Noncompliance with Federal requirements Recommendation: We recommend that the Department implement additional procedures to validate the accuracy of changes to the DHHS CAP before implementation and to enhance monitoring procedures over allocated costs. This will ensure that Federal programs are appropriately charged through the DHHS CAP in accordance with Federal regulations. Corrective Action Plan: See F-36 Management’s Response: The DHHS and DHHS Financial Service Center agree with this finding. The DHHS Financial Service Center and the Office of Child and Family Services will implement additional procedures to validate the accuracy of OCFS applicable changes to the DHHS CAP by December 31, 2024. Contact: Sarah Gove, Director, DHHS Service Center, DAFS, 207-458-6626 (State Number: 23-1103-01)
(2023-088) Title: Internal control over the Adoption Assistance – Title IV-E eligibility and benefit determination process needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office of Child and Family Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Adoption Assistance – Title IV-E (COVID-19) Assistance Listing Number: 93.659 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403; 45 CFR 1356.40 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. The State is allowed to pay a portion of the Federal Adoption Assistance maintenance payments and claim Federal financial participation for Title IV-E eligible clients. Condition: The Adoption Assistance – Title IV-E Program provides Federal funds to states to facilitate the timely placement of children, whose special needs or circumstances would otherwise make them difficult to place, with adoptive families. Funds are available for a one-time payment to assist with the costs of adopting a child as well as for subsidies to adoptive families to assist with the care of the eligible child on an ongoing basis. The Office of Child and Family Services (OCFS) administers the Adoption Assistance – Title IV-E program for the State. A financial resources specialist (FRS) determines program eligibility and initiates benefits through completion of an adoption assistance checklist. The FRS reviews program eligibility factors, gathers required supporting documentation, documents the certification decision on the checklist, and obtains supervisory approval. The FRS enters the information into the child welfare information system for processing. The Office of the State Auditor (OSA) tested 60 eligibility determinations and found: • one checklist did not have supervisory approval; • one checklist did not have a FRS signature or supervisory approval; • one checklist was not included in the case file; and • one checklist was signed by a FRS and included supervisory approval; however, information indicating that the required steps were taken to determine benefit eligibility was excluded. Once the client is determined eligible in the child welfare information system, a daily rate is negotiated by OCFS and the adoptive parents. OCFS relies on the information entered in the system and related system coding for the assignment of the appropriate revenue source to charge the assigned benefits. OSA tested 60 client benefit payments and identified that benefits for one client paid with State funds should have been charged to Federal funds. Through discussions with OCFS, OSA was informed that the error was caused by an issue with the newly implemented child welfare information system, which affected 421 clients. $1.6 million of State funds were utilized to pay benefits that should have been charged to Federal funds. OSA selected non-statistical random samples. Context: In fiscal year 2023, the State provided approximately 4,000 Adoption Assistance – Title IV-E clients with $24.6 million in Federal benefits. Cause: Lack of adequate policies and procedures and supervisory oversight over: • the documentation of eligibility determinations • the child welfare information system. The system was implemented in fiscal year 2023 and policies and procedures were not designed to properly test system coding to ensure that benefits were paid utilizing the appropriate funding source. Effect: • Individuals not eligible for services could be deemed eligible or eligible individuals could be deemed ineligible. • Potential questioned costs and disallowances • Noncompliance with Federal regulations Recommendation: We recommend that OCFS enhance policies and procedures to ensure that eligibility determination checklists include certification decisions and are documented consistently for all case files. We understand that OCFS is completing a retroactive review to correct the issue and charge the appropriate funding source for previously paid benefits. We recommend that OCFS continue this process and implement policies and procedures which require monitoring of the system to ensure benefits are accurately paid to eligible clients. Corrective Action Plan: See F-36 Management’s Response: The Department agrees with this finding. Completion of the Adoption Assistance Checklist has not been universally understood to be used as the internal control for documentation of certification decisions, but as a guide for staff to use in preparing and organizing the Application for Adoption Assistance Packets. We agree that this is an effective tool to ensure certification decisions regarding IVE, and consistent documentation in case files. OCFS staff will be trained in the importance of these internal control procedures. The Adoption Policy is currently in revision and the policy will be enhanced to reflect these changes. Contact: Karen Benson, Adoption Program Manager, DHHS, 207-561-4208 (State Number: 23-1110-01)
(2023-088) Title: Internal control over the Adoption Assistance – Title IV-E eligibility and benefit determination process needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office of Child and Family Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Adoption Assistance – Title IV-E (COVID-19) Assistance Listing Number: 93.659 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403; 45 CFR 1356.40 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. The State is allowed to pay a portion of the Federal Adoption Assistance maintenance payments and claim Federal financial participation for Title IV-E eligible clients. Condition: The Adoption Assistance – Title IV-E Program provides Federal funds to states to facilitate the timely placement of children, whose special needs or circumstances would otherwise make them difficult to place, with adoptive families. Funds are available for a one-time payment to assist with the costs of adopting a child as well as for subsidies to adoptive families to assist with the care of the eligible child on an ongoing basis. The Office of Child and Family Services (OCFS) administers the Adoption Assistance – Title IV-E program for the State. A financial resources specialist (FRS) determines program eligibility and initiates benefits through completion of an adoption assistance checklist. The FRS reviews program eligibility factors, gathers required supporting documentation, documents the certification decision on the checklist, and obtains supervisory approval. The FRS enters the information into the child welfare information system for processing. The Office of the State Auditor (OSA) tested 60 eligibility determinations and found: • one checklist did not have supervisory approval; • one checklist did not have a FRS signature or supervisory approval; • one checklist was not included in the case file; and • one checklist was signed by a FRS and included supervisory approval; however, information indicating that the required steps were taken to determine benefit eligibility was excluded. Once the client is determined eligible in the child welfare information system, a daily rate is negotiated by OCFS and the adoptive parents. OCFS relies on the information entered in the system and related system coding for the assignment of the appropriate revenue source to charge the assigned benefits. OSA tested 60 client benefit payments and identified that benefits for one client paid with State funds should have been charged to Federal funds. Through discussions with OCFS, OSA was informed that the error was caused by an issue with the newly implemented child welfare information system, which affected 421 clients. $1.6 million of State funds were utilized to pay benefits that should have been charged to Federal funds. OSA selected non-statistical random samples. Context: In fiscal year 2023, the State provided approximately 4,000 Adoption Assistance – Title IV-E clients with $24.6 million in Federal benefits. Cause: Lack of adequate policies and procedures and supervisory oversight over: • the documentation of eligibility determinations • the child welfare information system. The system was implemented in fiscal year 2023 and policies and procedures were not designed to properly test system coding to ensure that benefits were paid utilizing the appropriate funding source. Effect: • Individuals not eligible for services could be deemed eligible or eligible individuals could be deemed ineligible. • Potential questioned costs and disallowances • Noncompliance with Federal regulations Recommendation: We recommend that OCFS enhance policies and procedures to ensure that eligibility determination checklists include certification decisions and are documented consistently for all case files. We understand that OCFS is completing a retroactive review to correct the issue and charge the appropriate funding source for previously paid benefits. We recommend that OCFS continue this process and implement policies and procedures which require monitoring of the system to ensure benefits are accurately paid to eligible clients. Corrective Action Plan: See F-36 Management’s Response: The Department agrees with this finding. Completion of the Adoption Assistance Checklist has not been universally understood to be used as the internal control for documentation of certification decisions, but as a guide for staff to use in preparing and organizing the Application for Adoption Assistance Packets. We agree that this is an effective tool to ensure certification decisions regarding IVE, and consistent documentation in case files. OCFS staff will be trained in the importance of these internal control procedures. The Adoption Policy is currently in revision and the policy will be enhanced to reflect these changes. Contact: Karen Benson, Adoption Program Manager, DHHS, 207-561-4208 (State Number: 23-1110-01)
(2023-032) Title: Internal control over Medicaid and SNAP deceased client cases needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture U.S. Department of Health and Human Services Assistance Listing Title: SNAP Cluster (COVID-19) Medicaid Cluster (COVID-19) Assistance Listing Number: 10.551, 10.561; 93.775, 93.777, 93.778 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: $8,329 (ALN 10.551) Likely Questioned Costs: Undeterminable; the Office of the State Auditor (OSA) tested a sample of cases where Supplemental Nutrition Assistance Program (SNAP) benefits were issued after the client’s date of death (DOD). Issuance of benefits to a deceased client does not necessarily result in unallowable program costs, as the issued benefits may not be expended; therefore, an error rate cannot be applied to the population and a projection of questioned costs cannot be reasonably estimated. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 272.8 and .14 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. State agency action on information items about recipient households shall include review of information and comparison of it to case record information. State agencies must initiate and pursue actions on recipient households within 45 days of the receipt of the information items. States shall establish a system to verify and ensure that benefits are not issued to individuals who are deceased. States shall use the Social Security Administration’s (SSA) Death Master File, obtained through the State Verification and Exchange System. Condition: The Office for Family Independence (OFI) manages the Automated Client Eligibility System (ACES) that is used to determine eligibility for Federal assistance programs, including Medicaid and SNAP. Information maintained in ACES is relied upon by OFI for determining monthly SNAP benefits issued to client Electronic Benefit Transaction (EBT) cards, and by the Office of MaineCare Services for processing Medicaid claims. OFI relies on numerous data sources for identifying and providing client DOD information for input into ACES, including monthly data exchanges with the Maine Center for Disease Control & Prevention (MeCDC) Vital Records and weekly data reports from the SSA’s Death Master File. Federal program regulations require OFI to act on client cases within 45 days of receipt of DOD information. This includes review and comparison of DOD information to ACES case file information, and suspension of program participation and related benefits as warranted. OFI policies for SNAP require deactivation of the client’s EBT card as well as expungement of authorized benefits from the EBT card. If activity occurred on the client’s EBT card subsequent to the DOD, the case must be reported as potential fraud and referred for investigation. The Office of the State Auditor (OSA) obtained DOD information from MeCDC Vital Records and compared it to clients who received Medicaid and SNAP benefits during fiscal year 2023. OSA identified 95 Medicaid claims with service dates after DOD in fiscal year 2023 and reviewed 30 clients with the largest paid claim amounts. Because certain Medicaid claims with service dates after DOD are considered allowable, claims paid on behalf of the deceased clients noted below are not reported as questioned costs: • Two clients had a DOD recorded in ACES that did not agree to the DOD provided by MeCDC Vital Records. • Two clients did not have a DOD recorded in ACES but were reported as deceased by MeCDC Vital Records. Furthermore, four Medicaid clients with an incorrect DOD identified by OSA during the fiscal year 2022 audit were still not corrected in ACES. OSA identified 671 cases where SNAP benefits were issued more than 52 days following the client’s DOD; this benchmark was applied to denote the 45-day Federal program regulation related to weekly receipt of DOD information. OSA tested 60 of these SNAP cases and identified the following: • 18 single member household clients had EBT card purchase activity after DOD. Of these 18 clients: o 14 clients had transaction activity after DOD that occurred in fiscal year 2023, resulting in unallowable costs totaling $8,329, as follows: • For 13 of the 14 clients, unauthorized transaction activity totaling $7,297 occurred between the actual DOD and the Department’s receipt and processing of the DOD information in ACES. • One of the 14 clients did not have a DOD recorded in their ACES case file at the time of audit testing but was reported as deceased by MeCDC Vital Records; this resulted in $1,032 of unauthorized transaction activity. o Four clients’ DOD occurred in fiscal year 2023 and benefits continued to be authorized and issued; however, the unallowable purchase activity began subsequent to fiscal year 2023. o Four clients were not identified as potential fraud in the ACES case file. As a result, they were not referred for investigation as required by OFI policies. • Five clients had a DOD recorded in ACES that did not agree to the DOD provided by MeCDC Vital Records. This resulted from the Department’s practice of entering DODs as the last day of the month or an alternative date from public information sources in order to suspend benefits in cases where DOD information is not immediately available; however, the Department had MeCDC Vital Records information at the time of DOD input for all five clients and should have entered DODs based on those records. • One client did not have a DOD recorded in their ACES case file but was reported as deceased by MeCDC Vital Records; benefits were authorized during fiscal year 2023, but no unauthorized transaction activity occurred. • 10 clients’ benefits were not expunged upon receipt of DOD information as required by OFI policies; benefits were only expunged by the system-automated process based on inactivity after 274 days. For 2 of the 10 clients, the EBT card was never deactivated; therefore, benefits remained open and available for use 274 days after DOD. • One client’s case remained open two months after OFI was notified of the client’s DOD, resulting in two months of unauthorized SNAP benefit issuances. • Two clients’ ACES case file information partially matched DOD information from MeCDC Vital Records, including names and dates of birth; however, the client social security numbers did not match. The Department did not review the cases to determine appropriate follow-up action. OSA selected a non-statistical random sample. Context: In fiscal year 2023, the State provided approximately: • 575,000 Medicaid clients with $2.5 billion in Federal benefits. Of the 575,000 Medicaid clients, 9,826 had a DOD in fiscal year 2023. • 127,000 SNAP clients with $484.8 million in Federal benefits. Of the 127,000 SNAP clients, 2,021 had a DOD in fiscal year 2023. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Medicaid claims paid on behalf of deceased clients may go undetected. • SNAP benefits issued to deceased clients may result in unauthorized EBT card purchase activity. • Known questioned costs for SNAP • Potential future questioned costs and disallowances • Noncompliance with Federal regulations Recommendation: We recommend that the Department enhance policies and procedures to ensure that DOD information is received, reviewed, and updated in ACES on a more frequent basis to prevent unallowable Medicaid claim payments, and unauthorized SNAP benefit issuances and EBT card purchase activity. In addition, we recommend that the Department review all client cases noted in the Condition of this finding to ensure that: • ACES case file DOD information is accurate; • SNAP benefits are expunged and EBT cards are deactivated in accordance with existing policies; • cases are identified as potential fraud and referred for investigation as warranted; and • unallowable costs are identified and reported to Federal oversight agencies, and required recoupment activities are pursued. Corrective Action Plan: See F-19 Management’s Response: The Department agrees with this finding and will review the current SOP governing DOD procedures and will implement enhancements to ensure DOD is updated and that related required actions are taken within allowable timeframes. Contact: Ian Yaffe, Director, Office for Family Independence, DHHS, 207-592-1481 (State Number: 23-1108-04)
(2023-093) Title: Internal control over Medicaid cost of care deductions needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office of MaineCare Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403; 42 CFR 435.725 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. The Department must reduce its payment to an institution for services provided to an individual by the amount that remains after deducting certain amounts from the member’s total income. This remaining amount is the member’s maximum share of the cost, known as cost of care (COC). Condition: A COC assessment represents the required contribution that a MaineCare recipient must pay toward care in a Long Term Care Facility (LTCF). The Office for Family Independence (OFI) is responsible for COC assessments for all Medicaid members in the State. COC assessments are either calculated by the Automated Client Eligibility System or calculated manually by eligibility specialists. System-generated COC assessments are not subject to secondary review. A COC deduction represents the amount of assessment that was deducted from a paid claim. Members may have an assessment calculated but may never have a claim with a deduction utilizing that assessment. The Office of MaineCare Services (OMS) is responsible for applying assessments to submitted claims prior to payment. The Office of the State Auditor (OSA) tested 60 COC assessments and related deductions from paid claims. OSA identified one COC deduction that was not updated after the claim was adjusted. As a result, the Department underpaid the provider by $263 for the month of September 2022. Seven additional claims that utilized this member’s COC were paid during fiscal year 2023 resulting in a total underpayment of $2,039. The monthly COC exception report generated by the system did not identify this error. OSA selected a non-statistical random sample. Context: In fiscal year 2023, approximately: • 26,000 COC assessments were calculated by OFI; • 9,400 members had COC assessments; and • $430 million was paid to nursing facilities and residential care facilities. Cause: Lack of adequate procedures to ensure system exception reports are complete and accurate Effect: • Potential questioned costs and disallowances • Inaccurate COC deductions and retroactive changes may result in overpayments or underpayments for members or the State. Recommendation: We recommend that OMS collaborate with OFI to ensure that system exception reports capture all COC-related claims which require adjustments. Corrective Action Plan: See F-38 Management’s Response: The Department agrees with this finding. OMS acknowledges a discrepancy in the report of identified claims for adjustments needed to claims as a result of changes to a member's cost of care. OFI generates the report for reporting COC changes from the ACES system, but the report provided only captures manual changes made to the member's cost of care. This report does not capture all cost of care changes. Example: NF COC, person has a level of care change and now needs APRC. They needed APRC starting in November and OFI doesn't know about it until January. They cannot have the system “run” that change because it is a change in the assistance group type that occurred in the past. OFI has to manually make that adjustment. It will populate as a change on the manually adjusted COC report. The report used by the OMS Adjustment Unit is generated by our vendor and sent by the second Wednesday of the month, capturing changes made to cost of care for an identified period of time. The cost of care adjustments are intended to be completed within the same month. Based on the discrepancy in the claims identified for adjustment, OMS is in agreement that collaboration between OFI and OMS should occur to assure accurate claims data is reviewed for those member's having changes to their cost of care within that month. Contact: Michelle Probert, Director, Office of MaineCare Services, DHHS, 207-287-2093 (State Number: 23-1106-04)
(2023-032) Title: Internal control over Medicaid and SNAP deceased client cases needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture U.S. Department of Health and Human Services Assistance Listing Title: SNAP Cluster (COVID-19) Medicaid Cluster (COVID-19) Assistance Listing Number: 10.551, 10.561; 93.775, 93.777, 93.778 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: $8,329 (ALN 10.551) Likely Questioned Costs: Undeterminable; the Office of the State Auditor (OSA) tested a sample of cases where Supplemental Nutrition Assistance Program (SNAP) benefits were issued after the client’s date of death (DOD). Issuance of benefits to a deceased client does not necessarily result in unallowable program costs, as the issued benefits may not be expended; therefore, an error rate cannot be applied to the population and a projection of questioned costs cannot be reasonably estimated. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 272.8 and .14 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. State agency action on information items about recipient households shall include review of information and comparison of it to case record information. State agencies must initiate and pursue actions on recipient households within 45 days of the receipt of the information items. States shall establish a system to verify and ensure that benefits are not issued to individuals who are deceased. States shall use the Social Security Administration’s (SSA) Death Master File, obtained through the State Verification and Exchange System. Condition: The Office for Family Independence (OFI) manages the Automated Client Eligibility System (ACES) that is used to determine eligibility for Federal assistance programs, including Medicaid and SNAP. Information maintained in ACES is relied upon by OFI for determining monthly SNAP benefits issued to client Electronic Benefit Transaction (EBT) cards, and by the Office of MaineCare Services for processing Medicaid claims. OFI relies on numerous data sources for identifying and providing client DOD information for input into ACES, including monthly data exchanges with the Maine Center for Disease Control & Prevention (MeCDC) Vital Records and weekly data reports from the SSA’s Death Master File. Federal program regulations require OFI to act on client cases within 45 days of receipt of DOD information. This includes review and comparison of DOD information to ACES case file information, and suspension of program participation and related benefits as warranted. OFI policies for SNAP require deactivation of the client’s EBT card as well as expungement of authorized benefits from the EBT card. If activity occurred on the client’s EBT card subsequent to the DOD, the case must be reported as potential fraud and referred for investigation. The Office of the State Auditor (OSA) obtained DOD information from MeCDC Vital Records and compared it to clients who received Medicaid and SNAP benefits during fiscal year 2023. OSA identified 95 Medicaid claims with service dates after DOD in fiscal year 2023 and reviewed 30 clients with the largest paid claim amounts. Because certain Medicaid claims with service dates after DOD are considered allowable, claims paid on behalf of the deceased clients noted below are not reported as questioned costs: • Two clients had a DOD recorded in ACES that did not agree to the DOD provided by MeCDC Vital Records. • Two clients did not have a DOD recorded in ACES but were reported as deceased by MeCDC Vital Records. Furthermore, four Medicaid clients with an incorrect DOD identified by OSA during the fiscal year 2022 audit were still not corrected in ACES. OSA identified 671 cases where SNAP benefits were issued more than 52 days following the client’s DOD; this benchmark was applied to denote the 45-day Federal program regulation related to weekly receipt of DOD information. OSA tested 60 of these SNAP cases and identified the following: • 18 single member household clients had EBT card purchase activity after DOD. Of these 18 clients: o 14 clients had transaction activity after DOD that occurred in fiscal year 2023, resulting in unallowable costs totaling $8,329, as follows: • For 13 of the 14 clients, unauthorized transaction activity totaling $7,297 occurred between the actual DOD and the Department’s receipt and processing of the DOD information in ACES. • One of the 14 clients did not have a DOD recorded in their ACES case file at the time of audit testing but was reported as deceased by MeCDC Vital Records; this resulted in $1,032 of unauthorized transaction activity. o Four clients’ DOD occurred in fiscal year 2023 and benefits continued to be authorized and issued; however, the unallowable purchase activity began subsequent to fiscal year 2023. o Four clients were not identified as potential fraud in the ACES case file. As a result, they were not referred for investigation as required by OFI policies. • Five clients had a DOD recorded in ACES that did not agree to the DOD provided by MeCDC Vital Records. This resulted from the Department’s practice of entering DODs as the last day of the month or an alternative date from public information sources in order to suspend benefits in cases where DOD information is not immediately available; however, the Department had MeCDC Vital Records information at the time of DOD input for all five clients and should have entered DODs based on those records. • One client did not have a DOD recorded in their ACES case file but was reported as deceased by MeCDC Vital Records; benefits were authorized during fiscal year 2023, but no unauthorized transaction activity occurred. • 10 clients’ benefits were not expunged upon receipt of DOD information as required by OFI policies; benefits were only expunged by the system-automated process based on inactivity after 274 days. For 2 of the 10 clients, the EBT card was never deactivated; therefore, benefits remained open and available for use 274 days after DOD. • One client’s case remained open two months after OFI was notified of the client’s DOD, resulting in two months of unauthorized SNAP benefit issuances. • Two clients’ ACES case file information partially matched DOD information from MeCDC Vital Records, including names and dates of birth; however, the client social security numbers did not match. The Department did not review the cases to determine appropriate follow-up action. OSA selected a non-statistical random sample. Context: In fiscal year 2023, the State provided approximately: • 575,000 Medicaid clients with $2.5 billion in Federal benefits. Of the 575,000 Medicaid clients, 9,826 had a DOD in fiscal year 2023. • 127,000 SNAP clients with $484.8 million in Federal benefits. Of the 127,000 SNAP clients, 2,021 had a DOD in fiscal year 2023. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Medicaid claims paid on behalf of deceased clients may go undetected. • SNAP benefits issued to deceased clients may result in unauthorized EBT card purchase activity. • Known questioned costs for SNAP • Potential future questioned costs and disallowances • Noncompliance with Federal regulations Recommendation: We recommend that the Department enhance policies and procedures to ensure that DOD information is received, reviewed, and updated in ACES on a more frequent basis to prevent unallowable Medicaid claim payments, and unauthorized SNAP benefit issuances and EBT card purchase activity. In addition, we recommend that the Department review all client cases noted in the Condition of this finding to ensure that: • ACES case file DOD information is accurate; • SNAP benefits are expunged and EBT cards are deactivated in accordance with existing policies; • cases are identified as potential fraud and referred for investigation as warranted; and • unallowable costs are identified and reported to Federal oversight agencies, and required recoupment activities are pursued. Corrective Action Plan: See F-19 Management’s Response: The Department agrees with this finding and will review the current SOP governing DOD procedures and will implement enhancements to ensure DOD is updated and that related required actions are taken within allowable timeframes. Contact: Ian Yaffe, Director, Office for Family Independence, DHHS, 207-592-1481 (State Number: 23-1108-04)
(2023-093) Title: Internal control over Medicaid cost of care deductions needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office of MaineCare Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403; 42 CFR 435.725 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. The Department must reduce its payment to an institution for services provided to an individual by the amount that remains after deducting certain amounts from the member’s total income. This remaining amount is the member’s maximum share of the cost, known as cost of care (COC). Condition: A COC assessment represents the required contribution that a MaineCare recipient must pay toward care in a Long Term Care Facility (LTCF). The Office for Family Independence (OFI) is responsible for COC assessments for all Medicaid members in the State. COC assessments are either calculated by the Automated Client Eligibility System or calculated manually by eligibility specialists. System-generated COC assessments are not subject to secondary review. A COC deduction represents the amount of assessment that was deducted from a paid claim. Members may have an assessment calculated but may never have a claim with a deduction utilizing that assessment. The Office of MaineCare Services (OMS) is responsible for applying assessments to submitted claims prior to payment. The Office of the State Auditor (OSA) tested 60 COC assessments and related deductions from paid claims. OSA identified one COC deduction that was not updated after the claim was adjusted. As a result, the Department underpaid the provider by $263 for the month of September 2022. Seven additional claims that utilized this member’s COC were paid during fiscal year 2023 resulting in a total underpayment of $2,039. The monthly COC exception report generated by the system did not identify this error. OSA selected a non-statistical random sample. Context: In fiscal year 2023, approximately: • 26,000 COC assessments were calculated by OFI; • 9,400 members had COC assessments; and • $430 million was paid to nursing facilities and residential care facilities. Cause: Lack of adequate procedures to ensure system exception reports are complete and accurate Effect: • Potential questioned costs and disallowances • Inaccurate COC deductions and retroactive changes may result in overpayments or underpayments for members or the State. Recommendation: We recommend that OMS collaborate with OFI to ensure that system exception reports capture all COC-related claims which require adjustments. Corrective Action Plan: See F-38 Management’s Response: The Department agrees with this finding. OMS acknowledges a discrepancy in the report of identified claims for adjustments needed to claims as a result of changes to a member's cost of care. OFI generates the report for reporting COC changes from the ACES system, but the report provided only captures manual changes made to the member's cost of care. This report does not capture all cost of care changes. Example: NF COC, person has a level of care change and now needs APRC. They needed APRC starting in November and OFI doesn't know about it until January. They cannot have the system “run” that change because it is a change in the assistance group type that occurred in the past. OFI has to manually make that adjustment. It will populate as a change on the manually adjusted COC report. The report used by the OMS Adjustment Unit is generated by our vendor and sent by the second Wednesday of the month, capturing changes made to cost of care for an identified period of time. The cost of care adjustments are intended to be completed within the same month. Based on the discrepancy in the claims identified for adjustment, OMS is in agreement that collaboration between OFI and OMS should occur to assure accurate claims data is reviewed for those member's having changes to their cost of care within that month. Contact: Michelle Probert, Director, Office of MaineCare Services, DHHS, 207-287-2093 (State Number: 23-1106-04)
(2023-032) Title: Internal control over Medicaid and SNAP deceased client cases needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture U.S. Department of Health and Human Services Assistance Listing Title: SNAP Cluster (COVID-19) Medicaid Cluster (COVID-19) Assistance Listing Number: 10.551, 10.561; 93.775, 93.777, 93.778 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: $8,329 (ALN 10.551) Likely Questioned Costs: Undeterminable; the Office of the State Auditor (OSA) tested a sample of cases where Supplemental Nutrition Assistance Program (SNAP) benefits were issued after the client’s date of death (DOD). Issuance of benefits to a deceased client does not necessarily result in unallowable program costs, as the issued benefits may not be expended; therefore, an error rate cannot be applied to the population and a projection of questioned costs cannot be reasonably estimated. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 272.8 and .14 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. State agency action on information items about recipient households shall include review of information and comparison of it to case record information. State agencies must initiate and pursue actions on recipient households within 45 days of the receipt of the information items. States shall establish a system to verify and ensure that benefits are not issued to individuals who are deceased. States shall use the Social Security Administration’s (SSA) Death Master File, obtained through the State Verification and Exchange System. Condition: The Office for Family Independence (OFI) manages the Automated Client Eligibility System (ACES) that is used to determine eligibility for Federal assistance programs, including Medicaid and SNAP. Information maintained in ACES is relied upon by OFI for determining monthly SNAP benefits issued to client Electronic Benefit Transaction (EBT) cards, and by the Office of MaineCare Services for processing Medicaid claims. OFI relies on numerous data sources for identifying and providing client DOD information for input into ACES, including monthly data exchanges with the Maine Center for Disease Control & Prevention (MeCDC) Vital Records and weekly data reports from the SSA’s Death Master File. Federal program regulations require OFI to act on client cases within 45 days of receipt of DOD information. This includes review and comparison of DOD information to ACES case file information, and suspension of program participation and related benefits as warranted. OFI policies for SNAP require deactivation of the client’s EBT card as well as expungement of authorized benefits from the EBT card. If activity occurred on the client’s EBT card subsequent to the DOD, the case must be reported as potential fraud and referred for investigation. The Office of the State Auditor (OSA) obtained DOD information from MeCDC Vital Records and compared it to clients who received Medicaid and SNAP benefits during fiscal year 2023. OSA identified 95 Medicaid claims with service dates after DOD in fiscal year 2023 and reviewed 30 clients with the largest paid claim amounts. Because certain Medicaid claims with service dates after DOD are considered allowable, claims paid on behalf of the deceased clients noted below are not reported as questioned costs: • Two clients had a DOD recorded in ACES that did not agree to the DOD provided by MeCDC Vital Records. • Two clients did not have a DOD recorded in ACES but were reported as deceased by MeCDC Vital Records. Furthermore, four Medicaid clients with an incorrect DOD identified by OSA during the fiscal year 2022 audit were still not corrected in ACES. OSA identified 671 cases where SNAP benefits were issued more than 52 days following the client’s DOD; this benchmark was applied to denote the 45-day Federal program regulation related to weekly receipt of DOD information. OSA tested 60 of these SNAP cases and identified the following: • 18 single member household clients had EBT card purchase activity after DOD. Of these 18 clients: o 14 clients had transaction activity after DOD that occurred in fiscal year 2023, resulting in unallowable costs totaling $8,329, as follows: • For 13 of the 14 clients, unauthorized transaction activity totaling $7,297 occurred between the actual DOD and the Department’s receipt and processing of the DOD information in ACES. • One of the 14 clients did not have a DOD recorded in their ACES case file at the time of audit testing but was reported as deceased by MeCDC Vital Records; this resulted in $1,032 of unauthorized transaction activity. o Four clients’ DOD occurred in fiscal year 2023 and benefits continued to be authorized and issued; however, the unallowable purchase activity began subsequent to fiscal year 2023. o Four clients were not identified as potential fraud in the ACES case file. As a result, they were not referred for investigation as required by OFI policies. • Five clients had a DOD recorded in ACES that did not agree to the DOD provided by MeCDC Vital Records. This resulted from the Department’s practice of entering DODs as the last day of the month or an alternative date from public information sources in order to suspend benefits in cases where DOD information is not immediately available; however, the Department had MeCDC Vital Records information at the time of DOD input for all five clients and should have entered DODs based on those records. • One client did not have a DOD recorded in their ACES case file but was reported as deceased by MeCDC Vital Records; benefits were authorized during fiscal year 2023, but no unauthorized transaction activity occurred. • 10 clients’ benefits were not expunged upon receipt of DOD information as required by OFI policies; benefits were only expunged by the system-automated process based on inactivity after 274 days. For 2 of the 10 clients, the EBT card was never deactivated; therefore, benefits remained open and available for use 274 days after DOD. • One client’s case remained open two months after OFI was notified of the client’s DOD, resulting in two months of unauthorized SNAP benefit issuances. • Two clients’ ACES case file information partially matched DOD information from MeCDC Vital Records, including names and dates of birth; however, the client social security numbers did not match. The Department did not review the cases to determine appropriate follow-up action. OSA selected a non-statistical random sample. Context: In fiscal year 2023, the State provided approximately: • 575,000 Medicaid clients with $2.5 billion in Federal benefits. Of the 575,000 Medicaid clients, 9,826 had a DOD in fiscal year 2023. • 127,000 SNAP clients with $484.8 million in Federal benefits. Of the 127,000 SNAP clients, 2,021 had a DOD in fiscal year 2023. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Medicaid claims paid on behalf of deceased clients may go undetected. • SNAP benefits issued to deceased clients may result in unauthorized EBT card purchase activity. • Known questioned costs for SNAP • Potential future questioned costs and disallowances • Noncompliance with Federal regulations Recommendation: We recommend that the Department enhance policies and procedures to ensure that DOD information is received, reviewed, and updated in ACES on a more frequent basis to prevent unallowable Medicaid claim payments, and unauthorized SNAP benefit issuances and EBT card purchase activity. In addition, we recommend that the Department review all client cases noted in the Condition of this finding to ensure that: • ACES case file DOD information is accurate; • SNAP benefits are expunged and EBT cards are deactivated in accordance with existing policies; • cases are identified as potential fraud and referred for investigation as warranted; and • unallowable costs are identified and reported to Federal oversight agencies, and required recoupment activities are pursued. Corrective Action Plan: See F-19 Management’s Response: The Department agrees with this finding and will review the current SOP governing DOD procedures and will implement enhancements to ensure DOD is updated and that related required actions are taken within allowable timeframes. Contact: Ian Yaffe, Director, Office for Family Independence, DHHS, 207-592-1481 (State Number: 23-1108-04)
(2023-032) Title: Internal control over Medicaid and SNAP deceased client cases needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture U.S. Department of Health and Human Services Assistance Listing Title: SNAP Cluster (COVID-19) Medicaid Cluster (COVID-19) Assistance Listing Number: 10.551, 10.561; 93.775, 93.777, 93.778 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: $8,329 (ALN 10.551) Likely Questioned Costs: Undeterminable; the Office of the State Auditor (OSA) tested a sample of cases where Supplemental Nutrition Assistance Program (SNAP) benefits were issued after the client’s date of death (DOD). Issuance of benefits to a deceased client does not necessarily result in unallowable program costs, as the issued benefits may not be expended; therefore, an error rate cannot be applied to the population and a projection of questioned costs cannot be reasonably estimated. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 272.8 and .14 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. State agency action on information items about recipient households shall include review of information and comparison of it to case record information. State agencies must initiate and pursue actions on recipient households within 45 days of the receipt of the information items. States shall establish a system to verify and ensure that benefits are not issued to individuals who are deceased. States shall use the Social Security Administration’s (SSA) Death Master File, obtained through the State Verification and Exchange System. Condition: The Office for Family Independence (OFI) manages the Automated Client Eligibility System (ACES) that is used to determine eligibility for Federal assistance programs, including Medicaid and SNAP. Information maintained in ACES is relied upon by OFI for determining monthly SNAP benefits issued to client Electronic Benefit Transaction (EBT) cards, and by the Office of MaineCare Services for processing Medicaid claims. OFI relies on numerous data sources for identifying and providing client DOD information for input into ACES, including monthly data exchanges with the Maine Center for Disease Control & Prevention (MeCDC) Vital Records and weekly data reports from the SSA’s Death Master File. Federal program regulations require OFI to act on client cases within 45 days of receipt of DOD information. This includes review and comparison of DOD information to ACES case file information, and suspension of program participation and related benefits as warranted. OFI policies for SNAP require deactivation of the client’s EBT card as well as expungement of authorized benefits from the EBT card. If activity occurred on the client’s EBT card subsequent to the DOD, the case must be reported as potential fraud and referred for investigation. The Office of the State Auditor (OSA) obtained DOD information from MeCDC Vital Records and compared it to clients who received Medicaid and SNAP benefits during fiscal year 2023. OSA identified 95 Medicaid claims with service dates after DOD in fiscal year 2023 and reviewed 30 clients with the largest paid claim amounts. Because certain Medicaid claims with service dates after DOD are considered allowable, claims paid on behalf of the deceased clients noted below are not reported as questioned costs: • Two clients had a DOD recorded in ACES that did not agree to the DOD provided by MeCDC Vital Records. • Two clients did not have a DOD recorded in ACES but were reported as deceased by MeCDC Vital Records. Furthermore, four Medicaid clients with an incorrect DOD identified by OSA during the fiscal year 2022 audit were still not corrected in ACES. OSA identified 671 cases where SNAP benefits were issued more than 52 days following the client’s DOD; this benchmark was applied to denote the 45-day Federal program regulation related to weekly receipt of DOD information. OSA tested 60 of these SNAP cases and identified the following: • 18 single member household clients had EBT card purchase activity after DOD. Of these 18 clients: o 14 clients had transaction activity after DOD that occurred in fiscal year 2023, resulting in unallowable costs totaling $8,329, as follows: • For 13 of the 14 clients, unauthorized transaction activity totaling $7,297 occurred between the actual DOD and the Department’s receipt and processing of the DOD information in ACES. • One of the 14 clients did not have a DOD recorded in their ACES case file at the time of audit testing but was reported as deceased by MeCDC Vital Records; this resulted in $1,032 of unauthorized transaction activity. o Four clients’ DOD occurred in fiscal year 2023 and benefits continued to be authorized and issued; however, the unallowable purchase activity began subsequent to fiscal year 2023. o Four clients were not identified as potential fraud in the ACES case file. As a result, they were not referred for investigation as required by OFI policies. • Five clients had a DOD recorded in ACES that did not agree to the DOD provided by MeCDC Vital Records. This resulted from the Department’s practice of entering DODs as the last day of the month or an alternative date from public information sources in order to suspend benefits in cases where DOD information is not immediately available; however, the Department had MeCDC Vital Records information at the time of DOD input for all five clients and should have entered DODs based on those records. • One client did not have a DOD recorded in their ACES case file but was reported as deceased by MeCDC Vital Records; benefits were authorized during fiscal year 2023, but no unauthorized transaction activity occurred. • 10 clients’ benefits were not expunged upon receipt of DOD information as required by OFI policies; benefits were only expunged by the system-automated process based on inactivity after 274 days. For 2 of the 10 clients, the EBT card was never deactivated; therefore, benefits remained open and available for use 274 days after DOD. • One client’s case remained open two months after OFI was notified of the client’s DOD, resulting in two months of unauthorized SNAP benefit issuances. • Two clients’ ACES case file information partially matched DOD information from MeCDC Vital Records, including names and dates of birth; however, the client social security numbers did not match. The Department did not review the cases to determine appropriate follow-up action. OSA selected a non-statistical random sample. Context: In fiscal year 2023, the State provided approximately: • 575,000 Medicaid clients with $2.5 billion in Federal benefits. Of the 575,000 Medicaid clients, 9,826 had a DOD in fiscal year 2023. • 127,000 SNAP clients with $484.8 million in Federal benefits. Of the 127,000 SNAP clients, 2,021 had a DOD in fiscal year 2023. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Medicaid claims paid on behalf of deceased clients may go undetected. • SNAP benefits issued to deceased clients may result in unauthorized EBT card purchase activity. • Known questioned costs for SNAP • Potential future questioned costs and disallowances • Noncompliance with Federal regulations Recommendation: We recommend that the Department enhance policies and procedures to ensure that DOD information is received, reviewed, and updated in ACES on a more frequent basis to prevent unallowable Medicaid claim payments, and unauthorized SNAP benefit issuances and EBT card purchase activity. In addition, we recommend that the Department review all client cases noted in the Condition of this finding to ensure that: • ACES case file DOD information is accurate; • SNAP benefits are expunged and EBT cards are deactivated in accordance with existing policies; • cases are identified as potential fraud and referred for investigation as warranted; and • unallowable costs are identified and reported to Federal oversight agencies, and required recoupment activities are pursued. Corrective Action Plan: See F-19 Management’s Response: The Department agrees with this finding and will review the current SOP governing DOD procedures and will implement enhancements to ensure DOD is updated and that related required actions are taken within allowable timeframes. Contact: Ian Yaffe, Director, Office for Family Independence, DHHS, 207-592-1481 (State Number: 23-1108-04)
(2023-093) Title: Internal control over Medicaid cost of care deductions needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office of MaineCare Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403; 42 CFR 435.725 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. The Department must reduce its payment to an institution for services provided to an individual by the amount that remains after deducting certain amounts from the member’s total income. This remaining amount is the member’s maximum share of the cost, known as cost of care (COC). Condition: A COC assessment represents the required contribution that a MaineCare recipient must pay toward care in a Long Term Care Facility (LTCF). The Office for Family Independence (OFI) is responsible for COC assessments for all Medicaid members in the State. COC assessments are either calculated by the Automated Client Eligibility System or calculated manually by eligibility specialists. System-generated COC assessments are not subject to secondary review. A COC deduction represents the amount of assessment that was deducted from a paid claim. Members may have an assessment calculated but may never have a claim with a deduction utilizing that assessment. The Office of MaineCare Services (OMS) is responsible for applying assessments to submitted claims prior to payment. The Office of the State Auditor (OSA) tested 60 COC assessments and related deductions from paid claims. OSA identified one COC deduction that was not updated after the claim was adjusted. As a result, the Department underpaid the provider by $263 for the month of September 2022. Seven additional claims that utilized this member’s COC were paid during fiscal year 2023 resulting in a total underpayment of $2,039. The monthly COC exception report generated by the system did not identify this error. OSA selected a non-statistical random sample. Context: In fiscal year 2023, approximately: • 26,000 COC assessments were calculated by OFI; • 9,400 members had COC assessments; and • $430 million was paid to nursing facilities and residential care facilities. Cause: Lack of adequate procedures to ensure system exception reports are complete and accurate Effect: • Potential questioned costs and disallowances • Inaccurate COC deductions and retroactive changes may result in overpayments or underpayments for members or the State. Recommendation: We recommend that OMS collaborate with OFI to ensure that system exception reports capture all COC-related claims which require adjustments. Corrective Action Plan: See F-38 Management’s Response: The Department agrees with this finding. OMS acknowledges a discrepancy in the report of identified claims for adjustments needed to claims as a result of changes to a member's cost of care. OFI generates the report for reporting COC changes from the ACES system, but the report provided only captures manual changes made to the member's cost of care. This report does not capture all cost of care changes. Example: NF COC, person has a level of care change and now needs APRC. They needed APRC starting in November and OFI doesn't know about it until January. They cannot have the system “run” that change because it is a change in the assistance group type that occurred in the past. OFI has to manually make that adjustment. It will populate as a change on the manually adjusted COC report. The report used by the OMS Adjustment Unit is generated by our vendor and sent by the second Wednesday of the month, capturing changes made to cost of care for an identified period of time. The cost of care adjustments are intended to be completed within the same month. Based on the discrepancy in the claims identified for adjustment, OMS is in agreement that collaboration between OFI and OMS should occur to assure accurate claims data is reviewed for those member's having changes to their cost of care within that month. Contact: Michelle Probert, Director, Office of MaineCare Services, DHHS, 207-287-2093 (State Number: 23-1106-04)
(2023-093) Title: Internal control over Medicaid cost of care deductions needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office of MaineCare Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403; 42 CFR 435.725 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. The Department must reduce its payment to an institution for services provided to an individual by the amount that remains after deducting certain amounts from the member’s total income. This remaining amount is the member’s maximum share of the cost, known as cost of care (COC). Condition: A COC assessment represents the required contribution that a MaineCare recipient must pay toward care in a Long Term Care Facility (LTCF). The Office for Family Independence (OFI) is responsible for COC assessments for all Medicaid members in the State. COC assessments are either calculated by the Automated Client Eligibility System or calculated manually by eligibility specialists. System-generated COC assessments are not subject to secondary review. A COC deduction represents the amount of assessment that was deducted from a paid claim. Members may have an assessment calculated but may never have a claim with a deduction utilizing that assessment. The Office of MaineCare Services (OMS) is responsible for applying assessments to submitted claims prior to payment. The Office of the State Auditor (OSA) tested 60 COC assessments and related deductions from paid claims. OSA identified one COC deduction that was not updated after the claim was adjusted. As a result, the Department underpaid the provider by $263 for the month of September 2022. Seven additional claims that utilized this member’s COC were paid during fiscal year 2023 resulting in a total underpayment of $2,039. The monthly COC exception report generated by the system did not identify this error. OSA selected a non-statistical random sample. Context: In fiscal year 2023, approximately: • 26,000 COC assessments were calculated by OFI; • 9,400 members had COC assessments; and • $430 million was paid to nursing facilities and residential care facilities. Cause: Lack of adequate procedures to ensure system exception reports are complete and accurate Effect: • Potential questioned costs and disallowances • Inaccurate COC deductions and retroactive changes may result in overpayments or underpayments for members or the State. Recommendation: We recommend that OMS collaborate with OFI to ensure that system exception reports capture all COC-related claims which require adjustments. Corrective Action Plan: See F-38 Management’s Response: The Department agrees with this finding. OMS acknowledges a discrepancy in the report of identified claims for adjustments needed to claims as a result of changes to a member's cost of care. OFI generates the report for reporting COC changes from the ACES system, but the report provided only captures manual changes made to the member's cost of care. This report does not capture all cost of care changes. Example: NF COC, person has a level of care change and now needs APRC. They needed APRC starting in November and OFI doesn't know about it until January. They cannot have the system “run” that change because it is a change in the assistance group type that occurred in the past. OFI has to manually make that adjustment. It will populate as a change on the manually adjusted COC report. The report used by the OMS Adjustment Unit is generated by our vendor and sent by the second Wednesday of the month, capturing changes made to cost of care for an identified period of time. The cost of care adjustments are intended to be completed within the same month. Based on the discrepancy in the claims identified for adjustment, OMS is in agreement that collaboration between OFI and OMS should occur to assure accurate claims data is reviewed for those member's having changes to their cost of care within that month. Contact: Michelle Probert, Director, Office of MaineCare Services, DHHS, 207-287-2093 (State Number: 23-1106-04)
FINDING 2023-005 Information on the federal program: Federal Agency: Department of Labor Pass-Through Entity: Indiana Department of Workforce Development Federal Program: WIOA Assistance Listing Number: 17.258, 17.259, 17.278 Compliance Requirement: Activities Allowed or Unallowed Audit Findings: Material Weakness, Qualified Opinion Criteria: 2 CFR 200.403 establishes principles and standards for determining costs for federal awards carried out through grants, cost reimbursement contracts, and other agreements with state and local governments. To be allowable, under federal awards, cost must meet certain criteria: a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period. g) Be adequately documented. h) Cost must be incurred during the approved budget period. Additionally, 2 CFR 200.303 indicates that non-Federal Entities receiving Federal awards 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 terms and conditions of the Federal award. Condition: For 15 of the 60 samples selected, EmployIndy was unable to provide adequate support for the selection amounts. As a result, we were unable to determine the allowability of these sample selections under the WIOA grant. Cause: The condition was caused by a lack of internal controls over WIOA subrecipient/service provider claims for accrued expenditures and indirect costs. Effect: As a result of these matters, expenditures could be inaccurately charged to the federal grant. Questioned costs: There are $45,619 of known questioned costs as this is the amount of the WIOA expenditures tested that could not be reconciled to source documents. Context: During our testing procedures over WIOA disbursements for the activities allowed or unallowed compliance requirement, the following were identified: • For two of our 60 non-payroll selections management was unable to provide adequate supporting documentation for the expenditure. These selections pertained to the subrecipient, Eckerd Connects. Questioned costs of $7,303 were noted. • For four of our 60 non-payroll selections, management was able to provide a summary listing of charges by category (AER report), however, supporting invoices or other documents for the summary of charges was not provided. Questioned costs of $20,501 were noted. • For two of our 60 non-payroll selections in which expenditures related to personnel and fringe expenses, we noted the expenses allocated to WIOA Youth, Adult, and Dislocated Worker grants based on a set percentage rather than time actually spent working on grant related projects. Both instances pertain to charges incurred by the subrecipient, Eckerd Connects. No questioned costs were noted. • For six of our 60 non-payroll selections, we noted indirect costs charged by subrecipients that did not have proper support for the indirect cost rate for the period under audit. Five of the selections were Eckerd Connects and one related to Telamon Corporation. Per inquiry of management, Eckerd and Telamon have a federally approved indirect cost rate. Management provided a signed contract with Eckerd that covers the period January 1, 2020 to June 30, 2021 that lists the federally approved rate. The Telamon contract/application provided covers the period of July 1, 2021 to June 30, 2022. Management was unable to provide support stating the federally approved rate for Eckerd and Telamon for the period under audit. No questioned costs were noted. • One of our 60 non-payroll selections was for EmployIndy indirect costs of $17,815. Management provided a calculation of the indirect costs, from which we selected specific charges from the cost pool that the indirect cost was calculated from. Management was unable to provide support for any of the selected charges. Questioned costs of $17,815 were noted. Identification as a repeat finding, if applicable: This is a repeat finding. Appeared as finding 2022-005 in the prior report. Recommendation: We recommend that management implement a consistent multi-stage review process for expenditures that are to be allocated to the WIOA cluster and that management clearly organize and retain records of purchase to support amounts being listed as expenditures on their SEFA. Views of responsible officials and planned corrective actions: Management acknowledges the finding. See management’s corrective action plan attached to this audit report.
FINDING 2023-005 Information on the federal program: Federal Agency: Department of Labor Pass-Through Entity: Indiana Department of Workforce Development Federal Program: WIOA Assistance Listing Number: 17.258, 17.259, 17.278 Compliance Requirement: Activities Allowed or Unallowed Audit Findings: Material Weakness, Qualified Opinion Criteria: 2 CFR 200.403 establishes principles and standards for determining costs for federal awards carried out through grants, cost reimbursement contracts, and other agreements with state and local governments. To be allowable, under federal awards, cost must meet certain criteria: a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period. g) Be adequately documented. h) Cost must be incurred during the approved budget period. Additionally, 2 CFR 200.303 indicates that non-Federal Entities receiving Federal awards 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 terms and conditions of the Federal award. Condition: For 15 of the 60 samples selected, EmployIndy was unable to provide adequate support for the selection amounts. As a result, we were unable to determine the allowability of these sample selections under the WIOA grant. Cause: The condition was caused by a lack of internal controls over WIOA subrecipient/service provider claims for accrued expenditures and indirect costs. Effect: As a result of these matters, expenditures could be inaccurately charged to the federal grant. Questioned costs: There are $45,619 of known questioned costs as this is the amount of the WIOA expenditures tested that could not be reconciled to source documents. Context: During our testing procedures over WIOA disbursements for the activities allowed or unallowed compliance requirement, the following were identified: • For two of our 60 non-payroll selections management was unable to provide adequate supporting documentation for the expenditure. These selections pertained to the subrecipient, Eckerd Connects. Questioned costs of $7,303 were noted. • For four of our 60 non-payroll selections, management was able to provide a summary listing of charges by category (AER report), however, supporting invoices or other documents for the summary of charges was not provided. Questioned costs of $20,501 were noted. • For two of our 60 non-payroll selections in which expenditures related to personnel and fringe expenses, we noted the expenses allocated to WIOA Youth, Adult, and Dislocated Worker grants based on a set percentage rather than time actually spent working on grant related projects. Both instances pertain to charges incurred by the subrecipient, Eckerd Connects. No questioned costs were noted. • For six of our 60 non-payroll selections, we noted indirect costs charged by subrecipients that did not have proper support for the indirect cost rate for the period under audit. Five of the selections were Eckerd Connects and one related to Telamon Corporation. Per inquiry of management, Eckerd and Telamon have a federally approved indirect cost rate. Management provided a signed contract with Eckerd that covers the period January 1, 2020 to June 30, 2021 that lists the federally approved rate. The Telamon contract/application provided covers the period of July 1, 2021 to June 30, 2022. Management was unable to provide support stating the federally approved rate for Eckerd and Telamon for the period under audit. No questioned costs were noted. • One of our 60 non-payroll selections was for EmployIndy indirect costs of $17,815. Management provided a calculation of the indirect costs, from which we selected specific charges from the cost pool that the indirect cost was calculated from. Management was unable to provide support for any of the selected charges. Questioned costs of $17,815 were noted. Identification as a repeat finding, if applicable: This is a repeat finding. Appeared as finding 2022-005 in the prior report. Recommendation: We recommend that management implement a consistent multi-stage review process for expenditures that are to be allocated to the WIOA cluster and that management clearly organize and retain records of purchase to support amounts being listed as expenditures on their SEFA. Views of responsible officials and planned corrective actions: Management acknowledges the finding. See management’s corrective action plan attached to this audit report.
FINDING 2023-005 Information on the federal program: Federal Agency: Department of Labor Pass-Through Entity: Indiana Department of Workforce Development Federal Program: WIOA Assistance Listing Number: 17.258, 17.259, 17.278 Compliance Requirement: Activities Allowed or Unallowed Audit Findings: Material Weakness, Qualified Opinion Criteria: 2 CFR 200.403 establishes principles and standards for determining costs for federal awards carried out through grants, cost reimbursement contracts, and other agreements with state and local governments. To be allowable, under federal awards, cost must meet certain criteria: a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period. g) Be adequately documented. h) Cost must be incurred during the approved budget period. Additionally, 2 CFR 200.303 indicates that non-Federal Entities receiving Federal awards 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 terms and conditions of the Federal award. Condition: For 15 of the 60 samples selected, EmployIndy was unable to provide adequate support for the selection amounts. As a result, we were unable to determine the allowability of these sample selections under the WIOA grant. Cause: The condition was caused by a lack of internal controls over WIOA subrecipient/service provider claims for accrued expenditures and indirect costs. Effect: As a result of these matters, expenditures could be inaccurately charged to the federal grant. Questioned costs: There are $45,619 of known questioned costs as this is the amount of the WIOA expenditures tested that could not be reconciled to source documents. Context: During our testing procedures over WIOA disbursements for the activities allowed or unallowed compliance requirement, the following were identified: • For two of our 60 non-payroll selections management was unable to provide adequate supporting documentation for the expenditure. These selections pertained to the subrecipient, Eckerd Connects. Questioned costs of $7,303 were noted. • For four of our 60 non-payroll selections, management was able to provide a summary listing of charges by category (AER report), however, supporting invoices or other documents for the summary of charges was not provided. Questioned costs of $20,501 were noted. • For two of our 60 non-payroll selections in which expenditures related to personnel and fringe expenses, we noted the expenses allocated to WIOA Youth, Adult, and Dislocated Worker grants based on a set percentage rather than time actually spent working on grant related projects. Both instances pertain to charges incurred by the subrecipient, Eckerd Connects. No questioned costs were noted. • For six of our 60 non-payroll selections, we noted indirect costs charged by subrecipients that did not have proper support for the indirect cost rate for the period under audit. Five of the selections were Eckerd Connects and one related to Telamon Corporation. Per inquiry of management, Eckerd and Telamon have a federally approved indirect cost rate. Management provided a signed contract with Eckerd that covers the period January 1, 2020 to June 30, 2021 that lists the federally approved rate. The Telamon contract/application provided covers the period of July 1, 2021 to June 30, 2022. Management was unable to provide support stating the federally approved rate for Eckerd and Telamon for the period under audit. No questioned costs were noted. • One of our 60 non-payroll selections was for EmployIndy indirect costs of $17,815. Management provided a calculation of the indirect costs, from which we selected specific charges from the cost pool that the indirect cost was calculated from. Management was unable to provide support for any of the selected charges. Questioned costs of $17,815 were noted. Identification as a repeat finding, if applicable: This is a repeat finding. Appeared as finding 2022-005 in the prior report. Recommendation: We recommend that management implement a consistent multi-stage review process for expenditures that are to be allocated to the WIOA cluster and that management clearly organize and retain records of purchase to support amounts being listed as expenditures on their SEFA. Views of responsible officials and planned corrective actions: Management acknowledges the finding. See management’s corrective action plan attached to this audit report.
FINDING 2023-005 Information on the federal program: Federal Agency: Department of Labor Pass-Through Entity: Indiana Department of Workforce Development Federal Program: WIOA Assistance Listing Number: 17.258, 17.259, 17.278 Compliance Requirement: Activities Allowed or Unallowed Audit Findings: Material Weakness, Qualified Opinion Criteria: 2 CFR 200.403 establishes principles and standards for determining costs for federal awards carried out through grants, cost reimbursement contracts, and other agreements with state and local governments. To be allowable, under federal awards, cost must meet certain criteria: a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period. g) Be adequately documented. h) Cost must be incurred during the approved budget period. Additionally, 2 CFR 200.303 indicates that non-Federal Entities receiving Federal awards 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 terms and conditions of the Federal award. Condition: For 15 of the 60 samples selected, EmployIndy was unable to provide adequate support for the selection amounts. As a result, we were unable to determine the allowability of these sample selections under the WIOA grant. Cause: The condition was caused by a lack of internal controls over WIOA subrecipient/service provider claims for accrued expenditures and indirect costs. Effect: As a result of these matters, expenditures could be inaccurately charged to the federal grant. Questioned costs: There are $45,619 of known questioned costs as this is the amount of the WIOA expenditures tested that could not be reconciled to source documents. Context: During our testing procedures over WIOA disbursements for the activities allowed or unallowed compliance requirement, the following were identified: • For two of our 60 non-payroll selections management was unable to provide adequate supporting documentation for the expenditure. These selections pertained to the subrecipient, Eckerd Connects. Questioned costs of $7,303 were noted. • For four of our 60 non-payroll selections, management was able to provide a summary listing of charges by category (AER report), however, supporting invoices or other documents for the summary of charges was not provided. Questioned costs of $20,501 were noted. • For two of our 60 non-payroll selections in which expenditures related to personnel and fringe expenses, we noted the expenses allocated to WIOA Youth, Adult, and Dislocated Worker grants based on a set percentage rather than time actually spent working on grant related projects. Both instances pertain to charges incurred by the subrecipient, Eckerd Connects. No questioned costs were noted. • For six of our 60 non-payroll selections, we noted indirect costs charged by subrecipients that did not have proper support for the indirect cost rate for the period under audit. Five of the selections were Eckerd Connects and one related to Telamon Corporation. Per inquiry of management, Eckerd and Telamon have a federally approved indirect cost rate. Management provided a signed contract with Eckerd that covers the period January 1, 2020 to June 30, 2021 that lists the federally approved rate. The Telamon contract/application provided covers the period of July 1, 2021 to June 30, 2022. Management was unable to provide support stating the federally approved rate for Eckerd and Telamon for the period under audit. No questioned costs were noted. • One of our 60 non-payroll selections was for EmployIndy indirect costs of $17,815. Management provided a calculation of the indirect costs, from which we selected specific charges from the cost pool that the indirect cost was calculated from. Management was unable to provide support for any of the selected charges. Questioned costs of $17,815 were noted. Identification as a repeat finding, if applicable: This is a repeat finding. Appeared as finding 2022-005 in the prior report. Recommendation: We recommend that management implement a consistent multi-stage review process for expenditures that are to be allocated to the WIOA cluster and that management clearly organize and retain records of purchase to support amounts being listed as expenditures on their SEFA. Views of responsible officials and planned corrective actions: Management acknowledges the finding. See management’s corrective action plan attached to this audit report.
FINDING 2023-006 Information on the federal program: Federal Agency: Department of Labor Pass-Through Entity: Indiana Department of Workforce Development Federal Program: WIOA Assistance Listing Number: 17.258, 17.259, 17.278 Compliance Requirement: Activities Allowed or Unallowed Audit Findings: Material Weakness, Internal Controls Criteria: 2 CFR 200.403 establishes principles and standards for determining costs for federal awards carried out through grants, cost reimbursement contracts, and other agreements with state and local governments. To be allowable, under federal awards, cost must meet certain criteria: a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period. g) Be adequately documented. h) Cost must be incurred during the approved budget period. Additionally, 2 CFR 200.303 indicates that non-Federal Entities receiving Federal awards 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 terms and conditions of the Federal award. Condition: EmployIndy did not formally review and approve 12 selected WIOA non-payroll expenditures in a sample of 60 to determine that they are allowable under the WIOA federal regulations. Cause: The condition was caused by a lack of internal controls over WIOA subrecipient/service provider claims for accrued expenditures. Effect: As a result of these matters, expenditures could be inaccurately charged to the federal grant. Questioned costs: There are no questioned costs. Context: During our testing procedures over WIOA disbursements for the activities allowed or unallowed compliance requirement, we identified expenditures that are not formally reviewed by management for allowability under the WIOA grant. Identification as a repeat finding, if applicable: This is a repeat finding. Appeared as finding 2022-006 in the prior report. Recommendation: We recommend that management implement a consistent multi-stage review process for expenditures that are to be allocated to the WIOA cluster and that management clearly organize and retain records of purchase to support amounts being listed as expenditures on their SEFA. Views of responsible officials and planned corrective actions: Management acknowledges the finding. See management’s corrective action plan attached to this audit report.
FINDING 2023-006 Information on the federal program: Federal Agency: Department of Labor Pass-Through Entity: Indiana Department of Workforce Development Federal Program: WIOA Assistance Listing Number: 17.258, 17.259, 17.278 Compliance Requirement: Activities Allowed or Unallowed Audit Findings: Material Weakness, Internal Controls Criteria: 2 CFR 200.403 establishes principles and standards for determining costs for federal awards carried out through grants, cost reimbursement contracts, and other agreements with state and local governments. To be allowable, under federal awards, cost must meet certain criteria: a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period. g) Be adequately documented. h) Cost must be incurred during the approved budget period. Additionally, 2 CFR 200.303 indicates that non-Federal Entities receiving Federal awards 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 terms and conditions of the Federal award. Condition: EmployIndy did not formally review and approve 12 selected WIOA non-payroll expenditures in a sample of 60 to determine that they are allowable under the WIOA federal regulations. Cause: The condition was caused by a lack of internal controls over WIOA subrecipient/service provider claims for accrued expenditures. Effect: As a result of these matters, expenditures could be inaccurately charged to the federal grant. Questioned costs: There are no questioned costs. Context: During our testing procedures over WIOA disbursements for the activities allowed or unallowed compliance requirement, we identified expenditures that are not formally reviewed by management for allowability under the WIOA grant. Identification as a repeat finding, if applicable: This is a repeat finding. Appeared as finding 2022-006 in the prior report. Recommendation: We recommend that management implement a consistent multi-stage review process for expenditures that are to be allocated to the WIOA cluster and that management clearly organize and retain records of purchase to support amounts being listed as expenditures on their SEFA. Views of responsible officials and planned corrective actions: Management acknowledges the finding. See management’s corrective action plan attached to this audit report.
FINDING 2023-006 Information on the federal program: Federal Agency: Department of Labor Pass-Through Entity: Indiana Department of Workforce Development Federal Program: WIOA Assistance Listing Number: 17.258, 17.259, 17.278 Compliance Requirement: Activities Allowed or Unallowed Audit Findings: Material Weakness, Internal Controls Criteria: 2 CFR 200.403 establishes principles and standards for determining costs for federal awards carried out through grants, cost reimbursement contracts, and other agreements with state and local governments. To be allowable, under federal awards, cost must meet certain criteria: a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period. g) Be adequately documented. h) Cost must be incurred during the approved budget period. Additionally, 2 CFR 200.303 indicates that non-Federal Entities receiving Federal awards 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 terms and conditions of the Federal award. Condition: EmployIndy did not formally review and approve 12 selected WIOA non-payroll expenditures in a sample of 60 to determine that they are allowable under the WIOA federal regulations. Cause: The condition was caused by a lack of internal controls over WIOA subrecipient/service provider claims for accrued expenditures. Effect: As a result of these matters, expenditures could be inaccurately charged to the federal grant. Questioned costs: There are no questioned costs. Context: During our testing procedures over WIOA disbursements for the activities allowed or unallowed compliance requirement, we identified expenditures that are not formally reviewed by management for allowability under the WIOA grant. Identification as a repeat finding, if applicable: This is a repeat finding. Appeared as finding 2022-006 in the prior report. Recommendation: We recommend that management implement a consistent multi-stage review process for expenditures that are to be allocated to the WIOA cluster and that management clearly organize and retain records of purchase to support amounts being listed as expenditures on their SEFA. Views of responsible officials and planned corrective actions: Management acknowledges the finding. See management’s corrective action plan attached to this audit report.
FINDING 2023-006 Information on the federal program: Federal Agency: Department of Labor Pass-Through Entity: Indiana Department of Workforce Development Federal Program: WIOA Assistance Listing Number: 17.258, 17.259, 17.278 Compliance Requirement: Activities Allowed or Unallowed Audit Findings: Material Weakness, Internal Controls Criteria: 2 CFR 200.403 establishes principles and standards for determining costs for federal awards carried out through grants, cost reimbursement contracts, and other agreements with state and local governments. To be allowable, under federal awards, cost must meet certain criteria: a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period. g) Be adequately documented. h) Cost must be incurred during the approved budget period. Additionally, 2 CFR 200.303 indicates that non-Federal Entities receiving Federal awards 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 terms and conditions of the Federal award. Condition: EmployIndy did not formally review and approve 12 selected WIOA non-payroll expenditures in a sample of 60 to determine that they are allowable under the WIOA federal regulations. Cause: The condition was caused by a lack of internal controls over WIOA subrecipient/service provider claims for accrued expenditures. Effect: As a result of these matters, expenditures could be inaccurately charged to the federal grant. Questioned costs: There are no questioned costs. Context: During our testing procedures over WIOA disbursements for the activities allowed or unallowed compliance requirement, we identified expenditures that are not formally reviewed by management for allowability under the WIOA grant. Identification as a repeat finding, if applicable: This is a repeat finding. Appeared as finding 2022-006 in the prior report. Recommendation: We recommend that management implement a consistent multi-stage review process for expenditures that are to be allocated to the WIOA cluster and that management clearly organize and retain records of purchase to support amounts being listed as expenditures on their SEFA. Views of responsible officials and planned corrective actions: Management acknowledges the finding. See management’s corrective action plan attached to this audit report.
Questioned Costs $- Finding No. 2023‐004: Student Eligibility (Control Deficiency) Federal Agency: U.S. Department of Education Assistance Listing Number and Title: 84.002A – Adult Education – Basic Grants to States Condition During our audit, we noted one instance in which a student was permitted to enroll in Workplace Literacy and Adult Basic Education programs without meeting the eligibility criteria for those programs. Criteria Section 200.403 – Factors affecting allowability of costs of Title 2 U.S. Code of Federal Regulations (“CFR”) Part 200, states “(c) – in order for costs to be allowable under Federal awards it must be consistent with policies and procedures that apply uniformly to both federally‐financed and other activities of non‐Federal entity.” Cause The inaccurate eligibility determinations may be attributed to general oversight by the program personnel. Effect Failure to adhere to the program’s eligibility requirements exposes the Department to an undue risk of noncompliance with the requirements of Title 2 U.S. CFR Part 200. Context A sample of 25 individuals were selected for audit from a population of 3,627 individuals eligible to participate in Workplace Literacy and Adult Basic Education programs. Our test found that one individual was improperly deemed as being eligible to participate in Workplace Literacy and Adult Basic Education programs. Our sample was a statistically valid sample. Repeat Finding This is a repeat of prior audit Finding No. 2022‐03. Recommendation We recommend that program personnel ensure that the appropriate eligibility criteria are followed when determining an individual’s ability to enroll in Workplace Literacy and Adult Basic Education programs. Cause and View of Responsible Officials The local service provider was unaware of the eligibility requirements for basic skills deficient individuals and did not thoroughly understand workplace adult education and literacy activities as defined in United States Code, Title 29, Chapter 32 Workforce Innovation and Opportunity Act §3272. The Office of Curriculum and Instructional Design Community Education Specialist will ensure the local service provider is informed through written eligibility procedures and training
Reference Number: 2023-010 Federal Program Title: Coronavirus State and Local Fiscal Recovery Funds Federal Assistance Listing Number: 21.027 Federal Agency: U.S. Department of Treasury Pass-Through Entity: N/A Federal Award Number and Year: Fiscal Year 2022-23 Name of Department: County Executive Office Department of Public Health Category of Finding: Period of Performance Type of Finding: Material Weakness in Internal Control Over Compliance; Instance of Noncompliance Criteria In accordance with Title 2 U.S. Code of Federal Regulations (CFR) § 200.1, period of performance is the total estimated time interval between the start of an initial Federal award and the planned end date, which may include one or more funded portions, or budget periods. Identification of the period of performance in the Federal award per § 200.211(b)(5) does not commit the awarding agency to fund the award beyond the currently approved budget period. Per 2 CFR § 200.403 in order for costs to be allowable under Federal awards (h) cost must be incurred during the approved budget period. Per 2 CFR § 200.1, the budget period is the time interval from the start date of a funded portion of an award to the end date of that funded portion during which recipients are authorized to expend the funds awarded. Per 31 CFR § 35.5, a recipient may only use Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) for the purposes enumerated in § 35.6 (b) through (f) to cover costs incurred during the period beginning March 3, 2021, and ending December 31, 2024. Condition During our audit of the CSLFRF program, we selected twenty-five (25) employees with payroll expenditures included in the County’s CSLFRF claims during FY 2022-23, and the expenditures for two employees were incurred before March 3, 2021. Cause DPH made adjustments to employee expenditure codes to improve the capture and claiming of eligible costs in October 2022; however, certain transactions were erroneously captured from May 2020 and February 2021, which is outside the period of performance. Effect Submitting claims with costs incurred or obligated prior to the period of performance start date of March 3, 2021, results in unallowable costs and noncompliance with the period of performance requirements 31 CFR 35.5. Questioned Costs Known questioned costs were $4,703. Context Of the twenty-five (25) employees selected for testing, which totaled $59,861, from a population of more than 250 employees in five departments with expenditures totaling $43,302,346, expenditures were included for two employees totaling $4,703 that were incurred before the period of performance began March 3, 2021. The sample was not a statistically valid sample. Recommendation We recommend the County verify the date worked for all employees included in the CSLFRF claims was incurred or obligated on or after March 3, 2021.
Federal Agency: U.S. Department of Homeland Security Federal Program Name: Staffing for Adequate Fire and Emergency Response ALN: 97.083 Award Period: March 14, 2023 – March 13, 2026 Compliance Requirement: Period of Performance Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Prior Year Finding: No Criteria or specific requirement: Compliance – A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308 200.309 and 200.403(h)). A period of performance may contain one or more budget periods. Social Services Block Grant funds must be expended by the state in the fiscal year allotted or in the succeeding fiscal year. Control – Per 2 CFR Section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Department of Homeland Security charged costs to the program that were incurred outside of the grant award’s period of performance. Context: One of the six pay-periods selected for testing, had expenditures totaling $19,871, that were incurred on March 13, 2023, which is prior to the award’s period of performance start date of March 14, 2023. Questioned costs: Known costs of $19,871. Cause: Personnel Costs for March 13, 2023 embedded in the pay period report of March 13, 2023 through March 26, 2023 were submitted as expenditures before the period of performance start date of March 14, 2023. This was caused by an oversight of removing the first day of employment March 13, 2023 from the expenditures when the first reimbursement was submitted for payment to FEMA. Effect: The Department was not compliant with the grant’s period of performance which could result in the grantor’s disallowance of the costs. Recommendation: We recommend that the Department review and enhance its procedures and controls to ensure that expenditures charged to the program are incurred within the grant’s period of performance. Views of responsible officials: We concur with your finding and have taken the following corrective action: 1. The error has been reported to FEMA and the transaction for correcting this error will be submitted with the next reimbursement request as a negative adjustment. 2. We are continuously monitoring the expenditure consistency with the grant award timeline. 3. We are working with our Grant Coordinator to ensure that all of our grants are consistent with the requirements of the award.
Section III - Federal Award Findings and Questioned Costs Finding 2023-002 Significant Deficiency Assistance Listing: 84.351 C.A.R.E. Condition: Cleveland Play House does not have adequate documentation to support all charges to the federal program. Of the 40 payroll charges tested, 32 did not have adequate documentation. Of the 40 non-payroll charges tested, supporting documentation for 2 charges was unable to be located. In addition, management provided an Excel spreadsheet to support the charges that were made to the program rather than reporting from their financial management system that is compliant with Section 200.302. Criteria: 2 CFR 200.430(i) states that charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. 2 CFR 200.403(g) states that for costs to be allowed under Federal awards, they must be adequately documented. In addition, Section 200.302 requires that the financial management system must provide for an identification, in its accounts, of all federal awards received and expended and the federal programs under which they were received; an accurate, current and complete disclosure of the financial results of each federal award or program; and a comparison of expenditures with budget amounts for each federal award. Cause: Due to significant organizational turnover in fiscal years 2022 and 2023, individuals were not completing timesheets to document level of effort for federal programs. Although management was verbally communicating with these individuals during the year and tracking the time they spent on the program within a spreadsheet, this is not considered adequate documentation. In addition, and also a result of the turnover, certain documentation to support non-payroll expenditures was unable to be located. Effect: Cleveland Play House did not have adequate documentation to support all costs charged to the federal program. In addition, an ineffective financial management system could lead to incorrect identification of costs charged to a federal program and an inability to substantiate that doublecharging did not occur. Repeat finding: This is a repeat finding, refer to 2022-002. Section III - Federal Award Findings and Questioned Costs (Continued) Questioned costs: Non-payroll: $267 Payroll: $49,059 Recommendation: We recommend that Cleveland Play House develop a policy and procedure to ensure that all hours submitted for federal reimbursement are supported with timesheets that are approved by a supervisor. In addition, staff should be made aware of the policy and procedures to ensure retention of documentation for non-payroll expenditures. Views of responsible officials: Management concurs with this recommendation. See also corrective action plan.
CONDITION: During my review of a random sample of thirty-three (33) invoices related to the District’s expenditures of federal funds, I noted that there was not an approved purchase order issued in twenty-six (26) of those instances. CRITERIA: In accordance with the District’s Procurement Policy for Federal Programs (#626.5), the District shall use properly prepared and approved purchase orders for federal purchases. In addition, Section 2 CFR 200.403(g) of the Uniform Guidance requires that all expenditures (costs) must be adequately documented. EFFECT: The District did not comply with the District’s Procurement Policy for Federal Programs (#626.5), or Section 2 CFR 200.403(g) of the Uniform Guidance, regarding the use of purchase orders and the adequate documentation of federal expenditures. QUESTIONED COST: None CAUSE: Management of the District did not properly interpret the provisions of its Procurement Policy for Federal Programs to include the use of purchase orders for federal expenditures in all instances. RECOMMENDATION: I recommend that the District utilize properly prepared and approved purchase orders for all future federal program purchases in compliance with its Procurement Policy for Federal Programs (#626.5) and Section 2 CFR 200.403(g) of the Uniform Guidance. VIEWS OF RESPONSIBLE OFFICIALS: The School District concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
CONDITION: During my review of a random sample of thirty-three (33) invoices related to the District’s expenditures of federal funds, I noted that there was not an approved purchase order issued in twenty-six (26) of those instances. CRITERIA: In accordance with the District’s Procurement Policy for Federal Programs (#626.5), the District shall use properly prepared and approved purchase orders for federal purchases. In addition, Section 2 CFR 200.403(g) of the Uniform Guidance requires that all expenditures (costs) must be adequately documented. EFFECT: The District did not comply with the District’s Procurement Policy for Federal Programs (#626.5), or Section 2 CFR 200.403(g) of the Uniform Guidance, regarding the use of purchase orders and the adequate documentation of federal expenditures. QUESTIONED COST: None CAUSE: Management of the District did not properly interpret the provisions of its Procurement Policy for Federal Programs to include the use of purchase orders for federal expenditures in all instances. RECOMMENDATION: I recommend that the District utilize properly prepared and approved purchase orders for all future federal program purchases in compliance with its Procurement Policy for Federal Programs (#626.5) and Section 2 CFR 200.403(g) of the Uniform Guidance. VIEWS OF RESPONSIBLE OFFICIALS: The School District concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.