(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.
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.
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.
Criteria or Specific Requirement: 2 CFR 200.403 details the factors affecting the allowability of cost. Specifically, 2 CRF 200.403(e) provides that costs must be determined in accordance with generally accepted accounting principles (GAAP). GAAP provides that audit costs are not incurred until the audit services are performed. Condition: The Organization has charged audit costs to the program and received reimbursement; however, the audit cost charged to the program had not yet been incurred prior to June 30, 2023. Cause: Failure to understand, follow, and apply generally accepted accounting principles as it relates to audit costs for the Organization. Effect: The Organization charged audit costs to this program and received reimbursement from the grantor before the costs were incurred. Questioned Costs: $ 12,494 Prevalence of Audit Finding: In addition to the above, audit costs of $ 16,428 were charged to other federal programs before being incurred. Recommendation: Management should review the Organization's fiscal policy manual policies and procedures for consistency and compliance with GAAP and Uniform Guidance Cost Principles. View of Responsible Official (Unaudited): There is no disagreement with the audit finding regarding costs allowed or allowable.
FINDING 2023-009 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 20611-054-PN01, 21611-054-PN01, 21619-054-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 32 WABASH CITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The School Corporation is a member of the Wabash Miami Area Programs for Exceptional Children (Cooperative). During fiscal years 2021-2022 and 2022-2023, the Cooperative operated the special education programs and spent the federal money on behalf of all its members. As the grant agreements were between the Indiana Department of Education (IDOE) and each member school corporation, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met for each member school corporation. The Cooperative did not have effective internal controls to ensure nonpublic school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for the 20611-054-PN01, 21611-054-PN01, and 21619-054-PN01 grant awards could not be verified for the individual member school coporations. The nonpublic school share funds for all member schools were comingled and the aggregate amount of expenditures was then allocated to the member school corporations on a percentage basis. These allocations were the amounts reported to the IDOE. As such, we were unable to identify which expenditures were for each school in order to verify the minimum amount per the grant award was expended and properly reported to the IDOE as required. The lack of internal controls and noncompliance were isolated to the 20611-054-PN01, 21611-054-PN01, and 21619-054-PN01 grant awards. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . ." INDIANA STATE BOARD OF ACCOUNTS 33 WABASH CITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause A proper system of internal controls was not designed by management of the School Corporation, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, it could not be determined if each school spent their required earmarking dollars. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure Non-Public Proportionate Share funds are appropriately allocated to the member school based on expenses charged directly on behalf of the member school corporations. Supporting documentation for these expenses should be retained for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-009 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 20611-054-PN01, 21611-054-PN01, 21619-054-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 32 WABASH CITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The School Corporation is a member of the Wabash Miami Area Programs for Exceptional Children (Cooperative). During fiscal years 2021-2022 and 2022-2023, the Cooperative operated the special education programs and spent the federal money on behalf of all its members. As the grant agreements were between the Indiana Department of Education (IDOE) and each member school corporation, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met for each member school corporation. The Cooperative did not have effective internal controls to ensure nonpublic school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for the 20611-054-PN01, 21611-054-PN01, and 21619-054-PN01 grant awards could not be verified for the individual member school coporations. The nonpublic school share funds for all member schools were comingled and the aggregate amount of expenditures was then allocated to the member school corporations on a percentage basis. These allocations were the amounts reported to the IDOE. As such, we were unable to identify which expenditures were for each school in order to verify the minimum amount per the grant award was expended and properly reported to the IDOE as required. The lack of internal controls and noncompliance were isolated to the 20611-054-PN01, 21611-054-PN01, and 21619-054-PN01 grant awards. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . ." INDIANA STATE BOARD OF ACCOUNTS 33 WABASH CITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause A proper system of internal controls was not designed by management of the School Corporation, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, it could not be determined if each school spent their required earmarking dollars. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure Non-Public Proportionate Share funds are appropriately allocated to the member school based on expenses charged directly on behalf of the member school corporations. Supporting documentation for these expenses should be retained for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-009 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 20611-054-PN01, 21611-054-PN01, 21619-054-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 32 WABASH CITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The School Corporation is a member of the Wabash Miami Area Programs for Exceptional Children (Cooperative). During fiscal years 2021-2022 and 2022-2023, the Cooperative operated the special education programs and spent the federal money on behalf of all its members. As the grant agreements were between the Indiana Department of Education (IDOE) and each member school corporation, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met for each member school corporation. The Cooperative did not have effective internal controls to ensure nonpublic school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for the 20611-054-PN01, 21611-054-PN01, and 21619-054-PN01 grant awards could not be verified for the individual member school coporations. The nonpublic school share funds for all member schools were comingled and the aggregate amount of expenditures was then allocated to the member school corporations on a percentage basis. These allocations were the amounts reported to the IDOE. As such, we were unable to identify which expenditures were for each school in order to verify the minimum amount per the grant award was expended and properly reported to the IDOE as required. The lack of internal controls and noncompliance were isolated to the 20611-054-PN01, 21611-054-PN01, and 21619-054-PN01 grant awards. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . ." INDIANA STATE BOARD OF ACCOUNTS 33 WABASH CITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause A proper system of internal controls was not designed by management of the School Corporation, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, it could not be determined if each school spent their required earmarking dollars. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure Non-Public Proportionate Share funds are appropriately allocated to the member school based on expenses charged directly on behalf of the member school corporations. Supporting documentation for these expenses should be retained for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Block Grants for Prevention and Treatment of Substance Abuse Assistance Listing Number: 93.959 Federal Award Identification Number and Year: 4512-9069 – 2023 Pass-Through Agency: Commonwealth of Massachusetts – Department of Public Health Pass-Through Number(s): SUBABUSETSSFY2300000702 Award Period: July 1, 2022 - June 30, 2024 Type of Finding: Period of Performance Significant Deficiency in Internal Control over Compliance Other Matters Criteria or specific requirement: 2 CFR sections 200.308, 200.309 and 200.403(h) states 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. Condition: Internal controls were not in place to ensure that grant expenses charged to the grant were during the approved federal award's period of performance. Questioned costs: None reportable. Context: For 7 of the 8 transactions tested, we identified the Commission charged expenditures to the grant that were incurred outside of the period of performance, prior to the start date of the grant. Cause: Procedures were not in place to ensure expenditures charged to the grant were incurred during the period of performance. Effect: The expenditures incurred before the period of performance are subject to disallowance and are considered questioned costs. Recommendation: We recommend procedures be implemented to ensure that all costs charged to the grant are incurred within the grant period of performance. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Block Grants for Prevention and Treatment of Substance Abuse Assistance Listing Number: 93.959 Federal Award Identification Number and Year: 4512-9069 – 2023 Pass-Through Agency: Commonwealth of Massachusetts – Department of Public Health Pass-Through Number(s): SUBABUSETSSFY2300000702 Award Period: July 1, 2022 - June 30, 2024 Type of Finding: Period of Performance Significant Deficiency in Internal Control over Compliance Other Matters Criteria or specific requirement: 2 CFR sections 200.308, 200.309 and 200.403(h) states 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. Condition: Internal controls were not in place to ensure that grant expenses charged to the grant were during the approved federal award's period of performance. Questioned costs: None reportable. Context: For 7 of the 8 transactions tested, we identified the Commission charged expenditures to the grant that were incurred outside of the period of performance, prior to the start date of the grant. Cause: Procedures were not in place to ensure expenditures charged to the grant were incurred during the period of performance. Effect: The expenditures incurred before the period of performance are subject to disallowance and are considered questioned costs. Recommendation: We recommend procedures be implemented to ensure that all costs charged to the grant are incurred within the grant period of performance. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Block Grants for Prevention and Treatment of Substance Abuse Assistance Listing Number: 93.959 Federal Award Identification Number and Year: 4512-9069 – 2023 Pass-Through Agency: Commonwealth of Massachusetts – Department of Public Health Pass-Through Number(s): SUBABUSETSSFY2300000702 Award Period: July 1, 2022 - June 30, 2024 Type of Finding: Period of Performance Significant Deficiency in Internal Control over Compliance Other Matters Criteria or specific requirement: 2 CFR sections 200.308, 200.309 and 200.403(h) states 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. Condition: Internal controls were not in place to ensure that grant expenses charged to the grant were during the approved federal award's period of performance. Questioned costs: None reportable. Context: For 7 of the 8 transactions tested, we identified the Commission charged expenditures to the grant that were incurred outside of the period of performance, prior to the start date of the grant. Cause: Procedures were not in place to ensure expenditures charged to the grant were incurred during the period of performance. Effect: The expenditures incurred before the period of performance are subject to disallowance and are considered questioned costs. Recommendation: We recommend procedures be implemented to ensure that all costs charged to the grant are incurred within the grant period of performance. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Block Grants for Prevention and Treatment of Substance Abuse Assistance Listing Number: 93.959 Federal Award Identification Number and Year: 4512-9069 – 2023 Pass-Through Agency: Commonwealth of Massachusetts – Department of Public Health Pass-Through Number(s): SUBABUSETSSFY2300000702 Award Period: July 1, 2022 - June 30, 2024 Type of Finding: Period of Performance Significant Deficiency in Internal Control over Compliance Other Matters Criteria or specific requirement: 2 CFR sections 200.308, 200.309 and 200.403(h) states 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. Condition: Internal controls were not in place to ensure that grant expenses charged to the grant were during the approved federal award's period of performance. Questioned costs: None reportable. Context: For 7 of the 8 transactions tested, we identified the Commission charged expenditures to the grant that were incurred outside of the period of performance, prior to the start date of the grant. Cause: Procedures were not in place to ensure expenditures charged to the grant were incurred during the period of performance. Effect: The expenditures incurred before the period of performance are subject to disallowance and are considered questioned costs. Recommendation: We recommend procedures be implemented to ensure that all costs charged to the grant are incurred within the grant period of performance. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Block Grants for Prevention and Treatment of Substance Abuse Assistance Listing Number: 93.959 Federal Award Identification Number and Year: 4512-9069 – 2023 Pass-Through Agency: Commonwealth of Massachusetts – Department of Public Health Pass-Through Number(s): SUBABUSETSSFY2300000702 Award Period: July 1, 2022 - June 30, 2024 Type of Finding: Period of Performance Significant Deficiency in Internal Control over Compliance Other Matters Criteria or specific requirement: 2 CFR sections 200.308, 200.309 and 200.403(h) states 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. Condition: Internal controls were not in place to ensure that grant expenses charged to the grant were during the approved federal award's period of performance. Questioned costs: None reportable. Context: For 7 of the 8 transactions tested, we identified the Commission charged expenditures to the grant that were incurred outside of the period of performance, prior to the start date of the grant. Cause: Procedures were not in place to ensure expenditures charged to the grant were incurred during the period of performance. Effect: The expenditures incurred before the period of performance are subject to disallowance and are considered questioned costs. Recommendation: We recommend procedures be implemented to ensure that all costs charged to the grant are incurred within the grant period of performance. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Block Grants for Prevention and Treatment of Substance Abuse Assistance Listing Number: 93.959 Federal Award Identification Number and Year: 4512-9069 – 2023 Pass-Through Agency: Commonwealth of Massachusetts – Department of Public Health Pass-Through Number(s): SUBABUSETSSFY2300000702 Award Period: July 1, 2022 - June 30, 2024 Type of Finding: Period of Performance Significant Deficiency in Internal Control over Compliance Other Matters Criteria or specific requirement: 2 CFR sections 200.308, 200.309 and 200.403(h) states 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. Condition: Internal controls were not in place to ensure that grant expenses charged to the grant were during the approved federal award's period of performance. Questioned costs: None reportable. Context: For 7 of the 8 transactions tested, we identified the Commission charged expenditures to the grant that were incurred outside of the period of performance, prior to the start date of the grant. Cause: Procedures were not in place to ensure expenditures charged to the grant were incurred during the period of performance. Effect: The expenditures incurred before the period of performance are subject to disallowance and are considered questioned costs. Recommendation: We recommend procedures be implemented to ensure that all costs charged to the grant are incurred within the grant period of performance. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Block Grants for Prevention and Treatment of Substance Abuse Assistance Listing Number: 93.959 Federal Award Identification Number and Year: 4512-9069 – 2023 Pass-Through Agency: Commonwealth of Massachusetts – Department of Public Health Pass-Through Number(s): SUBABUSETSSFY2300000702 Award Period: July 1, 2022 - June 30, 2024 Type of Finding: Period of Performance Significant Deficiency in Internal Control over Compliance Other Matters Criteria or specific requirement: 2 CFR sections 200.308, 200.309 and 200.403(h) states 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. Condition: Internal controls were not in place to ensure that grant expenses charged to the grant were during the approved federal award's period of performance. Questioned costs: None reportable. Context: For 7 of the 8 transactions tested, we identified the Commission charged expenditures to the grant that were incurred outside of the period of performance, prior to the start date of the grant. Cause: Procedures were not in place to ensure expenditures charged to the grant were incurred during the period of performance. Effect: The expenditures incurred before the period of performance are subject to disallowance and are considered questioned costs. Recommendation: We recommend procedures be implemented to ensure that all costs charged to the grant are incurred within the grant period of performance. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Block Grants for Prevention and Treatment of Substance Abuse Assistance Listing Number: 93.959 Federal Award Identification Number and Year: 4512-9069 – 2023 Pass-Through Agency: Commonwealth of Massachusetts – Department of Public Health Pass-Through Number(s): SUBABUSETSSFY2300000702 Award Period: July 1, 2022 - June 30, 2024 Type of Finding: Period of Performance Significant Deficiency in Internal Control over Compliance Other Matters Criteria or specific requirement: 2 CFR sections 200.308, 200.309 and 200.403(h) states 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. Condition: Internal controls were not in place to ensure that grant expenses charged to the grant were during the approved federal award's period of performance. Questioned costs: None reportable. Context: For 7 of the 8 transactions tested, we identified the Commission charged expenditures to the grant that were incurred outside of the period of performance, prior to the start date of the grant. Cause: Procedures were not in place to ensure expenditures charged to the grant were incurred during the period of performance. Effect: The expenditures incurred before the period of performance are subject to disallowance and are considered questioned costs. Recommendation: We recommend procedures be implemented to ensure that all costs charged to the grant are incurred within the grant period of performance. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Block Grants for Prevention and Treatment of Substance Abuse Assistance Listing Number: 93.959 Federal Award Identification Number and Year: 4512-9069 – 2023 Pass-Through Agency: Commonwealth of Massachusetts – Department of Public Health Pass-Through Number(s): SUBABUSETSSFY2300000702 Award Period: July 1, 2022 - June 30, 2024 Type of Finding: Period of Performance Significant Deficiency in Internal Control over Compliance Other Matters Criteria or specific requirement: 2 CFR sections 200.308, 200.309 and 200.403(h) states 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. Condition: Internal controls were not in place to ensure that grant expenses charged to the grant were during the approved federal award's period of performance. Questioned costs: None reportable. Context: For 7 of the 8 transactions tested, we identified the Commission charged expenditures to the grant that were incurred outside of the period of performance, prior to the start date of the grant. Cause: Procedures were not in place to ensure expenditures charged to the grant were incurred during the period of performance. Effect: The expenditures incurred before the period of performance are subject to disallowance and are considered questioned costs. Recommendation: We recommend procedures be implemented to ensure that all costs charged to the grant are incurred within the grant period of performance. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Block Grants for Prevention and Treatment of Substance Abuse Assistance Listing Number: 93.959 Federal Award Identification Number and Year: 4512-9069 – 2023 Pass-Through Agency: Commonwealth of Massachusetts – Department of Public Health Pass-Through Number(s): SUBABUSETSSFY2300000702 Award Period: July 1, 2022 - June 30, 2024 Type of Finding: Period of Performance Significant Deficiency in Internal Control over Compliance Other Matters Criteria or specific requirement: 2 CFR sections 200.308, 200.309 and 200.403(h) states 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. Condition: Internal controls were not in place to ensure that grant expenses charged to the grant were during the approved federal award's period of performance. Questioned costs: None reportable. Context: For 7 of the 8 transactions tested, we identified the Commission charged expenditures to the grant that were incurred outside of the period of performance, prior to the start date of the grant. Cause: Procedures were not in place to ensure expenditures charged to the grant were incurred during the period of performance. Effect: The expenditures incurred before the period of performance are subject to disallowance and are considered questioned costs. Recommendation: We recommend procedures be implemented to ensure that all costs charged to the grant are incurred within the grant period of performance. Views of responsible officials: There is no disagreement with the audit finding.
FINDING 2023-003 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 21611-007-PN01, 22611-007-PN01, 22619-007-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the prior audit report. The prior audit finding number was 2021-003. Condition and Context The School Corporation is a member of the Daviess-Martin Special Education Cooperative (Cooperative). During fiscal year 2021-2022 and 2022-2023, the Cooperative operated the special education programs and spent the federal money on behalf of all its member schools. As the grant agreements were between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure nonpublic school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for the 21611-007-PN01, 22611-007-PN01, and 22619-007-PN01 grant awards could not be verified for the individual member schools. Total grant expenditures were posted as expended. The nonpublic proportionate share expenditures were then determined by applying the budgeted percentage for nonpublic school expenditures to the total expenditures. These were the amounts reported to the IDOE. As such, we were unable to identify if the minimum amount per the grant awards was expended and properly reported to the IDOE as required. The lack of internal controls and noncompliance was isolated to the 21611-007-PN01, 22611-007-PN01, and 22619-007-PN01 grant awards. INDIANA STATE BOARD OF ACCOUNTS 22 WASHINGTON COMMUNITY SCHOOLS, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. INDIANA STATE BOARD OF ACCOUNTS 23 WASHINGTON COMMUNITY SCHOOLS, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure Non-Public Proportionate Share funds are appropriately allocated to the member school based on expenditures charged directly on behalf of the member school. Supporting documentation for these expenditures should be retained for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-003 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 21611-007-PN01, 22611-007-PN01, 22619-007-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the prior audit report. The prior audit finding number was 2021-003. Condition and Context The School Corporation is a member of the Daviess-Martin Special Education Cooperative (Cooperative). During fiscal year 2021-2022 and 2022-2023, the Cooperative operated the special education programs and spent the federal money on behalf of all its member schools. As the grant agreements were between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure nonpublic school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for the 21611-007-PN01, 22611-007-PN01, and 22619-007-PN01 grant awards could not be verified for the individual member schools. Total grant expenditures were posted as expended. The nonpublic proportionate share expenditures were then determined by applying the budgeted percentage for nonpublic school expenditures to the total expenditures. These were the amounts reported to the IDOE. As such, we were unable to identify if the minimum amount per the grant awards was expended and properly reported to the IDOE as required. The lack of internal controls and noncompliance was isolated to the 21611-007-PN01, 22611-007-PN01, and 22619-007-PN01 grant awards. INDIANA STATE BOARD OF ACCOUNTS 22 WASHINGTON COMMUNITY SCHOOLS, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. INDIANA STATE BOARD OF ACCOUNTS 23 WASHINGTON COMMUNITY SCHOOLS, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure Non-Public Proportionate Share funds are appropriately allocated to the member school based on expenditures charged directly on behalf of the member school. Supporting documentation for these expenditures should be retained for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-003 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 21611-007-PN01, 22611-007-PN01, 22619-007-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the prior audit report. The prior audit finding number was 2021-003. Condition and Context The School Corporation is a member of the Daviess-Martin Special Education Cooperative (Cooperative). During fiscal year 2021-2022 and 2022-2023, the Cooperative operated the special education programs and spent the federal money on behalf of all its member schools. As the grant agreements were between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure nonpublic school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for the 21611-007-PN01, 22611-007-PN01, and 22619-007-PN01 grant awards could not be verified for the individual member schools. Total grant expenditures were posted as expended. The nonpublic proportionate share expenditures were then determined by applying the budgeted percentage for nonpublic school expenditures to the total expenditures. These were the amounts reported to the IDOE. As such, we were unable to identify if the minimum amount per the grant awards was expended and properly reported to the IDOE as required. The lack of internal controls and noncompliance was isolated to the 21611-007-PN01, 22611-007-PN01, and 22619-007-PN01 grant awards. INDIANA STATE BOARD OF ACCOUNTS 22 WASHINGTON COMMUNITY SCHOOLS, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. INDIANA STATE BOARD OF ACCOUNTS 23 WASHINGTON COMMUNITY SCHOOLS, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure Non-Public Proportionate Share funds are appropriately allocated to the member school based on expenditures charged directly on behalf of the member school. Supporting documentation for these expenditures should be retained for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-003 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 21611-007-PN01, 22611-007-PN01, 22619-007-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the prior audit report. The prior audit finding number was 2021-003. Condition and Context The School Corporation is a member of the Daviess-Martin Special Education Cooperative (Cooperative). During fiscal year 2021-2022 and 2022-2023, the Cooperative operated the special education programs and spent the federal money on behalf of all its member schools. As the grant agreements were between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure nonpublic school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for the 21611-007-PN01, 22611-007-PN01, and 22619-007-PN01 grant awards could not be verified for the individual member schools. Total grant expenditures were posted as expended. The nonpublic proportionate share expenditures were then determined by applying the budgeted percentage for nonpublic school expenditures to the total expenditures. These were the amounts reported to the IDOE. As such, we were unable to identify if the minimum amount per the grant awards was expended and properly reported to the IDOE as required. The lack of internal controls and noncompliance was isolated to the 21611-007-PN01, 22611-007-PN01, and 22619-007-PN01 grant awards. INDIANA STATE BOARD OF ACCOUNTS 22 WASHINGTON COMMUNITY SCHOOLS, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. INDIANA STATE BOARD OF ACCOUNTS 23 WASHINGTON COMMUNITY SCHOOLS, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure Non-Public Proportionate Share funds are appropriately allocated to the member school based on expenditures charged directly on behalf of the member school. Supporting documentation for these expenditures should be retained for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.