2023 – 029 – Supporting Documentation Federal Agency: Department of Agriculture Federal Program Name: Supplemental Nutritional Assistance Program (SNAP) Assistance Listing Number: 10.561 Federal Award Identification Number and Year: 235KY414Q3903 - 2023 Award Period: July 1, 2022 – June 30, 2023 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: 2 CFR part 200.403(g) states costs must meet criteria to be allowable under federal awards including be adequately documented. Condition: Credit card statements and receipts for transactions in which credit cards were used were not retained. Questioned costs: None. Context: During our testing, it was noted that 1 out of the 17 tested that the University did not maintain proper support for the expenditure. Cause: The University did not maintain documentation to support the expenditure. Effect: The University did not follow the policies and procedures in place to maintain supporting documentation for expenditures. Repeat Finding: No. Recommendation: We recommend the University develop a procedure for ensuring all expenditures made via corporate credit card receive appropriate approval. We also recommend management maintain proper recordkeeping and retention of documentation. Views of responsible officials: There is no disagreement with the audit finding.
Block Grants for Prevention and Treatment of Substance Abuse ALN No. 93.959 U.S. Department of Health and Human Services Opioid STR ALN No. 93.788 U.S. Department of Health and Human Services Criteria or Specific Requirement – Activities Allowed and Unallowed and Cost Principles – 2 CFR Part 200, Subpart E, and Period of Performance – 2 CFR sections 200.308, 200.309, and 200.403(h) Condition – A sample of 80 expenditures were selected from each of the following populations: • ALN No. 93.959 – 1,631 items totaling $1,399,666 • ALN No. 93.788 – 1,728 items totaling $2,664,710 The samples were not, and are not intended to be, statistically valid. Of the 80 expenditures tested from each grant program, the following were determined to lack appropriate supporting documentation to support being charged to grant program: • ALN No. 93.959 - 47 items totaling $48,756, including projected errors over the total population totaling $582,093 • ALN No. 93.788 - 7 items totaling $30,061, including projected errors over the total population totaling $138,133 The Organization did not have adequate supporting documentation demonstrating actual time and effort reporting and lacked evidence of supporting invoices. Cause – The Organization charged budgeted percentages to the grant programs without a system in place to monitor and track that actual time and effort was consistent with budgeted percentages. In addition, the Organization charged expenditures to the grant programs without evidence of supporting invoices. Effect or potential effect – Costs charged to the grant programs could have varied from actual time and effort. In addition, costs charged to the grant could not be supported by actual invoices. Questioned costs – • ALN No. 93.959 - $48,756 • ALN No. 93.788 - $30,061 Context – The Organization did not have a reasonable methodology of allocating costs to these grant programs and did not maintain proper supporting invoices. Identification as a repeat finding, if applicable – Repeat finding (2022-003). Recommendation – Management should implement policies and procedures that strengthen internal control over compliance in relation to activities allowed and cost principles. The policy and procedure should be designed to ensure that a reasonable allocation methodology is implemented and followed or that time and effort is certified by the employee on a regular basis. In addition, management should implement a document retention policy consistent with 2 CFR 200.334.
Block Grants for Prevention and Treatment of Substance Abuse ALN No. 93.959 U.S. Department of Health and Human Services Opioid STR ALN No. 93.788 U.S. Department of Health and Human Services Criteria or Specific Requirement – Activities Allowed and Unallowed and Cost Principles – 2 CFR Part 200, Subpart E, and Period of Performance – 2 CFR sections 200.308, 200.309, and 200.403(h) Condition – A sample of 80 expenditures were selected from each of the following populations: • ALN No. 93.959 – 1,631 items totaling $1,399,666 • ALN No. 93.788 – 1,728 items totaling $2,664,710 The samples were not, and are not intended to be, statistically valid. Of the 80 expenditures tested from each grant program, the following were determined to lack appropriate supporting documentation to support being charged to grant program: • ALN No. 93.959 - 47 items totaling $48,756, including projected errors over the total population totaling $582,093 • ALN No. 93.788 - 7 items totaling $30,061, including projected errors over the total population totaling $138,133 The Organization did not have adequate supporting documentation demonstrating actual time and effort reporting and lacked evidence of supporting invoices. Cause – The Organization charged budgeted percentages to the grant programs without a system in place to monitor and track that actual time and effort was consistent with budgeted percentages. In addition, the Organization charged expenditures to the grant programs without evidence of supporting invoices. Effect or potential effect – Costs charged to the grant programs could have varied from actual time and effort. In addition, costs charged to the grant could not be supported by actual invoices. Questioned costs – • ALN No. 93.959 - $48,756 • ALN No. 93.788 - $30,061 Context – The Organization did not have a reasonable methodology of allocating costs to these grant programs and did not maintain proper supporting invoices. Identification as a repeat finding, if applicable – Repeat finding (2022-003). Recommendation – Management should implement policies and procedures that strengthen internal control over compliance in relation to activities allowed and cost principles. The policy and procedure should be designed to ensure that a reasonable allocation methodology is implemented and followed or that time and effort is certified by the employee on a regular basis. In addition, management should implement a document retention policy consistent with 2 CFR 200.334.
Criteria: Disbursements made to vendors ought to be supported with an invoice. Cost principles in 2 CFR 200.403(g) require adequate documentation. Condition: A transaction selected for testing did not have adequate documentation to support the payment that was made. Cause: The lack of a formal record keeping process to allow for invoices to be retained in a rational manner caused documentation to be misplaced. Effect or potential effect: Internal control over the financial activities of the YWCA New Hampshire are weakened. Failure to obtain and/or retain a receipt to support payment increases the risk that an inappropriate disbursement is made. Questioned costs: The questioned cost is immaterial as related to this charge without documentation. Context: The YWCA New Hampshire expended in excess of $750,000 in federal awards and assistance during the year ending June 30, 2023 requiring a compliance audit in accordance with the Uniform Guidance. The organization has not required a compliance audit in previous years and management was not aware of the various requirements of the Uniform Guidance. This was a single instance from a nonstatistical haphazard sample. 29 Recommendation: We recommend that processes and procedures be developed to ensure that all supporting documentation is filed and retained in a safe and secure location for future reference, as needed. Views of Responsible Officials: YWCA New Hampshire’s management concurs with this audit finding.
Condition: The auditee submitted reimbursement requests to the Mississippi Department of Education (MDE) that were not fully supported: Standard monthly amounts requested for Digital Learning Instructor (DLI) labor exceeded actual contract costs, resulting in overstatements. 1 of 60 items sampled lacked support for $11,700 in charges. Cause: The Consortium requested funds before receiving invoices or verifying actual expenses. There was no reconciliation process in place to verify that reimbursement requests matched actual expenditures. Effect: Federal funds were received in excess of allowable costs and not returned to the grantor. These excess reimbursements represent questioned costs which the grantor could request funds to be refunded. Criteria: In accordance with 2 CFR §200.403 and §200.430, costs must be necessary, reasonable, and allocable, and adequately documented to be allowable under federal awards. Questioned Costs: Total known questioned costs are $49,082, which includes: $37,382 related to Digital Learning Instructor (DLI) contract labor, including $34,445 in excess labor charges and $2,937 in related indirect costs. These charges were identified through a 100% review of all DLI contract labor activity for fiscal year 2023. $11,700 from a single reimbursement request that partially lacked supporting documentation. This item was identified during testing of a sample of 60 items totaling $6,545,759.87. Based on this sample, we project likely questioned costs of $16,918, using a non-statistical method. Therefore, total questioned costs are estimated at $54,300. Recommendation: Reimbursement requests should only be submitted after expenses are incurred and documented. The Consortium should wait for invoices before requesting funds, or reconcile estimates to actual costs and return excess funds, and maintain full documentation for all requests. Views of Responsible Officials: The Consortium acknowledges the finding and is working to establish a reconciliation process to identify and return any excess funds, and providing staff training on documentation and cost principles.
FINDING REFERENCE NUMBER 2023-031 (See Finding Reference Number 2023-003) FEDERAL PROGRAM (ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF) U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES AWARD NUMBERS 2021G996117; 2022G996117; 2023996117 (Federal Award Years: 2021 through 2023) ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM) COMPLIANCE REQUIREMENT ALLOWABLE COSTS/COSTS PRINCIPLES TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS CRITERIA Uniform Guidance at 2 CFR 200 Subpart E §200.403, Factor affecting allowability of costs, establishes that: “Except where otherwise authorized by statute, costs must meet the following criteria to be allowable under Federal awards: (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 recipient or subrecipient. (d) Be accorded consistent treatment. For example, a cost must 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 requirements of any other federally-financed program in either the current or a prior period. See § 200.306(b). (g) Be adequately documented. See §§ 200.300 through 200.309.” STATEMENT OF CONDITION As part of our audit procedures over allowable costs requirements for TANF program, we selected seven (7) voucher payments related to activities of prevention. We found the following deficiencies: (a) When we obtained the vouchers related to payments of a contractor, we also requested the contract and the proposal, we noted that the Entity is a subrecipient and not a contractor. The transactions related to this contract were not identified as subrecipient in the SEFA (see Finding Reference Number 2023-058). We audited three (3) vouchers of this subrecipient, in each one, this Entity claimed reimbursement for utilities, supplies, and materials. When we observed documentation in the file, we noted that the entity administers other Federal awards; and no evidence was observed in the voucher that proper distribution of administrative costs is made among all Federal awards. In addition, the contract required a certification indicating absence of duplication of services provided, and it was not included in the invoice or supporting documentation. (b) In the other four (4) vouchers evaluated related to payments to contractors, reimbursement claimed by the contractors included the purchase of laptops and digital screens. No evidence was provided that indicated who is responsible for this equipment, where it is located, and how it is safeguarded. These suppliers were contracted to provide training and workshops for participants of TANF. In the invoices evaluated we noted that ADSEF is paying for all costs of the entity, including supplies, maintenance of vehicles, mileage for some personnel, telephone charges, internet, and other utilities. In the final draft of the SEFA submitted for audit procedures, ADSEF reported the amount of $2,411,184, which included all transactions related to preventive services. QUESTIONED COSTS None. PERSPECTIVE INFORMATION This is a systemic deficiency. Total transactions related to prevention services were one-hundred seven (107), amounting to $2,411,184. ADSEF does not have internal guidance and procedures establishing how transactions with sub-recipients will be handled and how they are accounted for. Furthermore, there are no internal controls documenting the evaluation of the operational costs of suppliers contracted to provide a service, and their operational expenses must be covered by them and not claimed directly from the program. STATEMENT OF CAUSE ADSEF does not have a work plan and internal control guidance that clearly defines permissible activities and describes the activities that will be carried out to meet program requirements through the contracting of suppliers and sub-recipients. POSSIBLE ASSERTED EFFECT ADSEF may be incurring non-allowable costs by reimbursing expenses not properly stipulated in the allowable cost regulations for program administration. Furthermore, the expenses incurred by the sub-recipient are not identified in the database in a manner that allows them to be identified for the preparation of the SEFA. IDENTIFICATION OF REPEAT FINDING No reported as prior audit finding. RECOMMENDATIONS We recommend management to establish internal control processes consistent with the requirements of 2 CFR 200. In addition, design and implement internal control processes to meet the requirements of subrecipient monitoring and procurement standards.
2023-001 Supporting Documentation and Approval of Disbursements Federal Program - U.S. Department of the Treasury – Coronavirus State and Local Fiscal Recovery Funds (ALN 21.027) Federal Award Number - SLFRP0136 Compliance Requirement - Allowable Costs/Cost Principles (2 CFR § 200.403 and § 200.302) Criteria - Per 2 CFR § 200.403(g), to be allowable under a federal award, costs must be adequately documented. Additionally, 2 CFR § 200.302 requires the non-Federal entity to establish and maintain effective internal controls over federal awards that provide reasonable assurance of compliance with federal statutes, regulations, and the terms and conditions of the award. Condition - During our testing of expense and disbursement transactions charged to the federal program, we identified instances where payments were made without adequate supporting documentation or evidence of appropriate review and approval. While the costs appear consistent with the purpose of the program and are considered allowable in nature, the absence of documentation limits the ability to verify the appropriateness and accuracy of the expenditures. A majority of these transactions were related to temporary housing assistance, including payments to hotels. Cause - The organization does not currently have or did not follow a formal process to ensure that all disbursements are properly documented and reviewed. Effect - Failure to maintain adequate documentation impairs the organization’s ability to demonstrate compliance with federal requirements and increases the risk of errors or inappropriate expenditures going undetected. Questioned Costs - $0. No costs are questioned at this time, as the disbursements appear consistent with program objectives. Recommendation - We recommend that the organization strengthen internal controls over the disbursement process by implementing procedures requiring all expenses to be supported by documentation such as invoices or receipts and be reviewed and approved by appropriate personnel prior to payment. This is especially important for recurring or program-critical costs such as temporary housing. Views of Responsible Officials - we agree with the finding and determined it was due to an oversight by the organization on establishing proper procedures for a new program. Verbal communications were not recorded appropriately and approvals were not signed by management.
Type of finding: Federal Award. Situation: Material weakness; Material noncompliance with federal regulations. Federal Program: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing 21.027 Compliance Requirements: Activities allowed or unallowed / Allowable costs/Cost Principle Prior-Year(s) Audit Finding(s): 2022-004 Questioned Costs: $164,619 Condition: The Municipality could not provide supporting documentation for the disbursement of $164,619 of program funds. Documentation for the disbursement of $164,619 of program funds was not identified by the Municipality nor provided for our review, therefore we could not ascertain that the disbursements complied with program regulations. Context: The Municipality recognized as revenue $3,518,621 during the fiscal year ended on June 30, 2023. A total of $164,619 of program funds were disbursed without sufficient and appropriate documentation. The Municipality indicated that Revenue Replacement was their only project expenditure category on their annual March 2023 SLFRF Compliance Report. Revenue loss in and of itself is not an eligible use. Instead, recipients calculate lost revenue based on the formula provided in the Interim Final Rule and Final Rule to determine the limit for funds that can be used for the provision of government services. Entities are expected to use the direct payments to meet pandemic response needs and rebuild a strong, more equitable economy as the country recovers. Interim and final regulations state that recipients may not use funds to pay interest or principal on outstanding debt, as these expenses would not address the needs of pandemic response or its negative economic impacts. Such expenses would also not be considered provision of government services, as these financing expenses do not directly provide services or aid to citizens. The Coronavirus State and Local Fiscal Recovery Funds program is authorized by sections 602 and 603 of the Social Security Act as added by section 9901 of the American Rescue Plan Act of 2021, Pub. L. No. 117-2 (Mar. 11, 2021). Recipients may use payments from the Fund to among other things, replace lost public sector revenue to provide government services. Criteria: Uniform Guidance states in 2 CFR 200.403 that otherwise authorized by statue, costs must be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity and be adequately documented. As per 2 CFR 200.302 the other non-Federal entity’s financial management system must provide for the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statues, regulations, and the terms and conditions of the Federal Award. Further, Coronavirus Local Fiscal Recovery Fund Award terms and conditions state the following regarding the maintenance of and Access to Records: 1. Recipient shall maintain records and financial documents sufficient to evidence compliance with section 603 © of the Act, Treasury’s regulations implementing that section, and guidance issued by Treasury regarding the foregoing. 2. The Treasury Office of Inspector General and the Government Accountability Office, or their authorized representatives, shall have the right of access of records (electronic or otherwise) of Recipient in order to conduct audits or other investigations. 3. Records shall be maintained by the Recipient for a period of five (5) years after all funds have been expended or returned the Treasury, whichever is later. Cause: The Municipality applied inconsistent program procedures to disbursement transactions totaling $164,619. Effect: Coronavirus Local Fiscal Recovery Fund Award terms and conditions state the following regarding Remedial Actions: In the event of recipient’s noncompliance with section 603 of the Act, other applicable laws, Treasury’s implementing regulations, guidance, or any reporting or other program requirements, Treasury may impose additional conditions on the receipt of a subsequent tranche of future award funds, if any, or take other available remedies as set forth in 2 CFR 200.339. In case of a violation of section 603 © of the Act regarding the use of funds, previous payments shall be subject to recoupment as provided in section 603 © of the Act. Auditor’s recommendation: The Municipality must strengthen internal controls and procedures to ensure that disbursement of program funds is properly documented and allowed under program regulations. The Municipality must ensure that all documentation that serves as evidence for eligible expenses be preserved and maintained for at least five years. 2023-003, cont. Views of Responsible officials and corrective actions:
Type of finding: Federal Award. Situation: Material weakness; material noncompliance with federal regulations. Federal Program: Disaster Grants – Public Assistance (Presidentially Declared Disasters) Assistance Listing 97.036 Compliance Requirements: Activities allowed or unallowed / Allowable costs/Cost Principle Prior-Year(s) Audit Finding(s): 2022-005, 2021-002 Questioned Costs: $14,435 Condition: The Municipality could not provide supporting documentation for the disbursement of $14,435 of program funds. Documentation for the disbursement of $14,435 of program funds was not identified by the Municipality nor provided for our review, therefore we could not ascertain that the disbursements complied with program regulations. Context: A total of $14,435 of program funds were disbursed without sufficient and appropriate documentation. In previous years, program funds were also disbursed without sufficient and appropriate documentation and were accounted for as increases in the due from other funds account. The Municipality repaid during the current year the amount of $49,839. As of June 30, 2023 the balance of the due from other funds account is $505,271. Program regulation states that costs must be directly tied to the performance of eligible work; adequately documented; reduced by all applicable credits, such as insurance proceeds and salvage values; authorized and not prohibited under Federal or State government laws or regulation; consistent with the applicant’s internal policies, regulations, and procedures that apply uniformly toboth Federal awards and other activities of the applicant; and necessary and reasonable to accomplish the work properly and efficiently. We could not ascertain that these disbursements complied with program regulations. The Public Assistance Program is authorized under the Robert T. Stafford Disaster Relief and Emergency assistance Act, as Amended (Stafford Act). Assistance is provided so that communities can quickly respond to and recover from major disasters or emergencies declared by the President. The Municipality has approved grants for the Hurricane Irma and Maria disasters declared on September 2017 (disasters 3384EMPR, 4336 DRPR and 4339 DRPR). The program approves funding for debris removal, emergency protective measures, and the restoration of disaster-damaged, publicly owned facilities. It also encourages protection of damaged facilities from future incidents by providing assistance for hazard mitigation measures. Criteria: Uniform Guidance states in 2 CFR 200.403 that otherwise authorized by statue, costs must be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity and be adequately documented. As per 2 CFR 200.302 the other non-Federal entity’s financial management system must provide for the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statues, regulations, and the terms and conditions of the Federal Award. As per 44 CFR section 206.201 and 206.203, the public assistance program provides grant funding for emergency protective measures and debris removal (Emergency Work) and for permanent restoration of damaged facilities, including cost-effective hazard mitigation to protect facilities from future damage (Permanent Work) Cause: The Municipality applied inconsistent program procedures to the three disbursement transactions totaling $189,389 Effect: Remedies for noncompliance are described in 2 CFR 200.339. Grantor may impose additional conditions as described in 2 CRF 200.208 or take one or more of the actions listed on 2 CRF 200.339 as appropriate in the circumstances. Program regulations provide for recovery of assistance and penalty provisions on 44 CFR Part 206. Auditor’s recommendation: The Municipality must strengthen internal controls and procedures to assure that disbursement of program funds are properly documented, can be directly tied to the performance of eligible work, and is allowed under program regulations. Views of Responsible officials and corrective actions:
U.S. Department of Health and Human Services Medicaid Cluster: State Medicaid Fraud Control Units, 93.775 State Survey and Certification of Health Care Providers and Suppliers (Title XVIII) Medicare, 93.777 Medical Assistance Program (Medicaid; Title XIX), 93.778 Allowable Activities and Allowable Costs/Cost Principles Material Weakness in Internal Control over Compliance Grant Award Number: Affects all grant awards included under assistance listing 93.778 on the Schedule of Expenditures of Federal Awards. Criteria: Title 2 U.S. Code of Federal Regulations (CFR) Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) section 200.403 provides that costs must be adequately documented to support the allowability of the cost. Condition: Underlying supporting documentation for certain administrative costs was not maintained by the Division of Health Care Financing and Policy (DHCFP). Cause: DHCFP did not have adequate internal controls to ensure supporting documentation for administrative expenditures was maintained. Effect: Administrative costs were charged to the federal program without appropriate supporting documentation. Questioned Costs: $5,459 Context/Sampling: A nonstatistical sample of 60 transactions ($634,037) out of a population of 4,335 transactions ($134,939,132) was selected for testing. No documentation was available to support seven transactions, totaling $5,459, that were charged to the federal program. These charges included general ledger descriptions of: • Per diem in-state • Annual leave • Building and grounds lease assessment • IT virtual server hosting • IT security assessment Of the seven transactions, five were journal vouchers that did not contain the underlying support for the journal voucher. One transaction was coded as a direct payment voucher and one transaction was coded as an expenditure to a cash receipt (rather than payment voucher). Repeat Finding from Prior Year: No Recommendation: We recommend DHCFP enhance internal controls to ensure supporting documentation for administrative expenditures is maintained. Views of Responsible Officials: The Division of Health Care Financing and Policy agrees with this finding.
State Agency: Illinois Department of Human Services (IDHS) Federal Agency: U.S. Department of Health and Human Services (USDHHS) Program Name: Temporary Assistance for Needy Families, Child Care and Development Fund (CCDF) Cluster ALN and Program Expenditures: 93.558 ($578,867,422). 93.575/93.596 ($783,907,069) Award Numbers: Various – see schedule of award numbers Federal Award Year: Various – see schedule of award numbers Questioned Costs: $878 (TANF Federal), $2,540 (TANF Maintenance of Effort) $1,691 (CCDF Federal), $231 (CCDF Maintenance of Effort) Compliance Requirement: Allowable Costs/Cost Principles and Matching, Level of Effort, and Earmarking Finding 2023-014: Unallowable Costs Charged to the TANF and CCDF Cluster Programs Condition Found: IDHS could not provide documentation to support payments made on behalf of beneficiaries of the Temporary Assistance for Needy Families (TANF) and Child Care and Development Fund (CCDF) Cluster programs. The State of Illinois operates the Child Care Assistance Program (CCAP) which provides eligible families child care services at an approved, licensed providers. Payments are made by IDHS directly to the child care provider on behalf of an eligible family. Providers submit billings to IDHS detailing the name of the recipient of the services and the number of days for which services were received. IDHS performs monitoring reviews of childcare providers on a rotational basis. During these monitoring reviews, IDHS reviews provider records to ensure services billed are adequately documented. During our testing of CCAP beneficiary payments claimed under the TANF program (40 payments totaling $8,463 in federal claim and $22,307 in MOE claim) and CCDF (40 payments totaling $184,226 in federal claim and $2,385 in MOE claim), we noted 3 TANF payments and 3 CCDF payments for which IDHS could not provide documentation supporting the services provided to eligible beneficiaries which are unallowable costs. These unallowable expenditures were reported and claimed to federal programs as follows: "See Table in the Audit Report". Additionally, we noted IDHS has not performed a monitoring review in 2023 or either of the previous two fiscal years to ensure billing information provided by the child care providers is accurate for any of the 58 unique providers sampled. As a result, IDHS does not have adequate controls in place to ensure information provided by providers is accurate and the related child care payments made were appropriate. Criteria or Requirement: 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, costs must meet certain general criteria. Those criteria require, among other things, that each expenditure must be necessary, reasonable, and supported by adequate documentation. Additionally, 45 CFR section 98.67 requires lead agencies to expend and account for CCDF funds in accordance with their own laws and procedures, and for fiscal control and accounting procedures to be sufficient to permit the tracing of funds to a level of expenditure adequate to establish that such funds have not been used in violation of those laws and procedures. IDHS CCAP Policy Memo 07.10.01 requires the agency to perform monitoring reviews over all Child Care Resource and Referrals (CCR&R), site administered, and non-contracted child care providers who participate in the IDHS Child Care Assistance Program. These reviews are conducted to ensure that services billed to the Department are adequately documented and contractual obligations are fulfilled. 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal control designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should be designed to ensure that supporting documentation for CCAP payments is obtained and maintained. Additionally, effective internal controls should be designed to ensure that billing information provided by providers is complete and accurate. Cause: In discussing these conditions with IDHS officials, management stated that IDHS does not require submission of billing certificates to IDHS or its contracted agencies to receive payment. Additionally, the CCAP payments cited were entered by the provider via the IDHS Telephone Billing System and IDHS does not have a procedure to review billing certificates entered through this system. Possible Asserted Effect: Failure to maintain documentation that supports payments to TANF and CCDF beneficiaries of the Child Care Assistance Program and adequately monitor these beneficiaries results in noncompliance and unallowable costs. Repeat Finding: A similar finding was not reported in the prior year audit. (Finding Code 2023-014) Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend IDHS review the process and procedures in place for collecting and maintaining documentation to support amounts paid to beneficiaries of the Child Care Assistance Program. Further, we recommend IDHS ensure monitoring reviews are performed for CCAP beneficiaries under the CCDF and TANF programs in accordance with established policies and procedures. Views of IDHS Officials:The Department accepts the recommendation. The Department will work to review and update the process and procedures for collecting, reviewing, and maintaining documentation supporting amounts paid to beneficiaries of ACCAP and TANF Programs. Additionally, the Department will assess the need to develop and implement tools to ensure that monitoring reviews are performed in accordance with established policies and procedures.
State Agency: Illinois Department of Human Services (IDHS) Federal Agency: U.S. Department of Health and Human Services (USDHHS) Program Name: Temporary Assistance for Needy Families, Child Care and Development Fund (CCDF) Cluster ALN and Program Expenditures: 93.558 ($578,867,422). 93.575/93.596 ($783,907,069) Award Numbers: Various – see schedule of award numbers Federal Award Year: Various – see schedule of award numbers Questioned Costs: $878 (TANF Federal), $2,540 (TANF Maintenance of Effort) $1,691 (CCDF Federal), $231 (CCDF Maintenance of Effort) Compliance Requirement: Allowable Costs/Cost Principles and Matching, Level of Effort, and Earmarking Finding 2023-014: Unallowable Costs Charged to the TANF and CCDF Cluster Programs Condition Found: IDHS could not provide documentation to support payments made on behalf of beneficiaries of the Temporary Assistance for Needy Families (TANF) and Child Care and Development Fund (CCDF) Cluster programs. The State of Illinois operates the Child Care Assistance Program (CCAP) which provides eligible families child care services at an approved, licensed providers. Payments are made by IDHS directly to the child care provider on behalf of an eligible family. Providers submit billings to IDHS detailing the name of the recipient of the services and the number of days for which services were received. IDHS performs monitoring reviews of childcare providers on a rotational basis. During these monitoring reviews, IDHS reviews provider records to ensure services billed are adequately documented. During our testing of CCAP beneficiary payments claimed under the TANF program (40 payments totaling $8,463 in federal claim and $22,307 in MOE claim) and CCDF (40 payments totaling $184,226 in federal claim and $2,385 in MOE claim), we noted 3 TANF payments and 3 CCDF payments for which IDHS could not provide documentation supporting the services provided to eligible beneficiaries which are unallowable costs. These unallowable expenditures were reported and claimed to federal programs as follows: "See Table in the Audit Report". Additionally, we noted IDHS has not performed a monitoring review in 2023 or either of the previous two fiscal years to ensure billing information provided by the child care providers is accurate for any of the 58 unique providers sampled. As a result, IDHS does not have adequate controls in place to ensure information provided by providers is accurate and the related child care payments made were appropriate. Criteria or Requirement: 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, costs must meet certain general criteria. Those criteria require, among other things, that each expenditure must be necessary, reasonable, and supported by adequate documentation. Additionally, 45 CFR section 98.67 requires lead agencies to expend and account for CCDF funds in accordance with their own laws and procedures, and for fiscal control and accounting procedures to be sufficient to permit the tracing of funds to a level of expenditure adequate to establish that such funds have not been used in violation of those laws and procedures. IDHS CCAP Policy Memo 07.10.01 requires the agency to perform monitoring reviews over all Child Care Resource and Referrals (CCR&R), site administered, and non-contracted child care providers who participate in the IDHS Child Care Assistance Program. These reviews are conducted to ensure that services billed to the Department are adequately documented and contractual obligations are fulfilled. 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal control designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should be designed to ensure that supporting documentation for CCAP payments is obtained and maintained. Additionally, effective internal controls should be designed to ensure that billing information provided by providers is complete and accurate. Cause: In discussing these conditions with IDHS officials, management stated that IDHS does not require submission of billing certificates to IDHS or its contracted agencies to receive payment. Additionally, the CCAP payments cited were entered by the provider via the IDHS Telephone Billing System and IDHS does not have a procedure to review billing certificates entered through this system. Possible Asserted Effect: Failure to maintain documentation that supports payments to TANF and CCDF beneficiaries of the Child Care Assistance Program and adequately monitor these beneficiaries results in noncompliance and unallowable costs. Repeat Finding: A similar finding was not reported in the prior year audit. (Finding Code 2023-014) Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend IDHS review the process and procedures in place for collecting and maintaining documentation to support amounts paid to beneficiaries of the Child Care Assistance Program. Further, we recommend IDHS ensure monitoring reviews are performed for CCAP beneficiaries under the CCDF and TANF programs in accordance with established policies and procedures. Views of IDHS Officials:The Department accepts the recommendation. The Department will work to review and update the process and procedures for collecting, reviewing, and maintaining documentation supporting amounts paid to beneficiaries of ACCAP and TANF Programs. Additionally, the Department will assess the need to develop and implement tools to ensure that monitoring reviews are performed in accordance with established policies and procedures.
State Agency: Illinois Department of Human Services (IDHS) Federal Agency: U.S. Department of Health and Human Services (USDHHS) Program Name: Temporary Assistance for Needy Families, Child Care and Development Fund (CCDF) Cluster ALN and Program Expenditures: 93.558 ($578,867,422). 93.575/93.596 ($783,907,069) Award Numbers: Various – see schedule of award numbers Federal Award Year: Various – see schedule of award numbers Questioned Costs: $878 (TANF Federal), $2,540 (TANF Maintenance of Effort) $1,691 (CCDF Federal), $231 (CCDF Maintenance of Effort) Compliance Requirement: Allowable Costs/Cost Principles and Matching, Level of Effort, and Earmarking Finding 2023-014: Unallowable Costs Charged to the TANF and CCDF Cluster Programs Condition Found: IDHS could not provide documentation to support payments made on behalf of beneficiaries of the Temporary Assistance for Needy Families (TANF) and Child Care and Development Fund (CCDF) Cluster programs. The State of Illinois operates the Child Care Assistance Program (CCAP) which provides eligible families child care services at an approved, licensed providers. Payments are made by IDHS directly to the child care provider on behalf of an eligible family. Providers submit billings to IDHS detailing the name of the recipient of the services and the number of days for which services were received. IDHS performs monitoring reviews of childcare providers on a rotational basis. During these monitoring reviews, IDHS reviews provider records to ensure services billed are adequately documented. During our testing of CCAP beneficiary payments claimed under the TANF program (40 payments totaling $8,463 in federal claim and $22,307 in MOE claim) and CCDF (40 payments totaling $184,226 in federal claim and $2,385 in MOE claim), we noted 3 TANF payments and 3 CCDF payments for which IDHS could not provide documentation supporting the services provided to eligible beneficiaries which are unallowable costs. These unallowable expenditures were reported and claimed to federal programs as follows: "See Table in the Audit Report". Additionally, we noted IDHS has not performed a monitoring review in 2023 or either of the previous two fiscal years to ensure billing information provided by the child care providers is accurate for any of the 58 unique providers sampled. As a result, IDHS does not have adequate controls in place to ensure information provided by providers is accurate and the related child care payments made were appropriate. Criteria or Requirement: 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, costs must meet certain general criteria. Those criteria require, among other things, that each expenditure must be necessary, reasonable, and supported by adequate documentation. Additionally, 45 CFR section 98.67 requires lead agencies to expend and account for CCDF funds in accordance with their own laws and procedures, and for fiscal control and accounting procedures to be sufficient to permit the tracing of funds to a level of expenditure adequate to establish that such funds have not been used in violation of those laws and procedures. IDHS CCAP Policy Memo 07.10.01 requires the agency to perform monitoring reviews over all Child Care Resource and Referrals (CCR&R), site administered, and non-contracted child care providers who participate in the IDHS Child Care Assistance Program. These reviews are conducted to ensure that services billed to the Department are adequately documented and contractual obligations are fulfilled. 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal control designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should be designed to ensure that supporting documentation for CCAP payments is obtained and maintained. Additionally, effective internal controls should be designed to ensure that billing information provided by providers is complete and accurate. Cause: In discussing these conditions with IDHS officials, management stated that IDHS does not require submission of billing certificates to IDHS or its contracted agencies to receive payment. Additionally, the CCAP payments cited were entered by the provider via the IDHS Telephone Billing System and IDHS does not have a procedure to review billing certificates entered through this system. Possible Asserted Effect: Failure to maintain documentation that supports payments to TANF and CCDF beneficiaries of the Child Care Assistance Program and adequately monitor these beneficiaries results in noncompliance and unallowable costs. Repeat Finding: A similar finding was not reported in the prior year audit. (Finding Code 2023-014) Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend IDHS review the process and procedures in place for collecting and maintaining documentation to support amounts paid to beneficiaries of the Child Care Assistance Program. Further, we recommend IDHS ensure monitoring reviews are performed for CCAP beneficiaries under the CCDF and TANF programs in accordance with established policies and procedures. Views of IDHS Officials:The Department accepts the recommendation. The Department will work to review and update the process and procedures for collecting, reviewing, and maintaining documentation supporting amounts paid to beneficiaries of ACCAP and TANF Programs. Additionally, the Department will assess the need to develop and implement tools to ensure that monitoring reviews are performed in accordance with established policies and procedures.
State Agency: Illinois Department of Human Services (IDHS) Federal Agency: U.S. Department of Health and Human Services (USDHHS) Program Name: Temporary Assistance for Needy Families, Child Care and Development Fund (CCDF) Cluster ALN and Program Expenditures: 93.558 ($578,867,422). 93.575/93.596 ($783,907,069) Award Numbers: Various – see schedule of award numbers Federal Award Year: Various – see schedule of award numbers Questioned Costs: $878 (TANF Federal), $2,540 (TANF Maintenance of Effort) $1,691 (CCDF Federal), $231 (CCDF Maintenance of Effort) Compliance Requirement: Allowable Costs/Cost Principles and Matching, Level of Effort, and Earmarking Finding 2023-014: Unallowable Costs Charged to the TANF and CCDF Cluster Programs Condition Found: IDHS could not provide documentation to support payments made on behalf of beneficiaries of the Temporary Assistance for Needy Families (TANF) and Child Care and Development Fund (CCDF) Cluster programs. The State of Illinois operates the Child Care Assistance Program (CCAP) which provides eligible families child care services at an approved, licensed providers. Payments are made by IDHS directly to the child care provider on behalf of an eligible family. Providers submit billings to IDHS detailing the name of the recipient of the services and the number of days for which services were received. IDHS performs monitoring reviews of childcare providers on a rotational basis. During these monitoring reviews, IDHS reviews provider records to ensure services billed are adequately documented. During our testing of CCAP beneficiary payments claimed under the TANF program (40 payments totaling $8,463 in federal claim and $22,307 in MOE claim) and CCDF (40 payments totaling $184,226 in federal claim and $2,385 in MOE claim), we noted 3 TANF payments and 3 CCDF payments for which IDHS could not provide documentation supporting the services provided to eligible beneficiaries which are unallowable costs. These unallowable expenditures were reported and claimed to federal programs as follows: "See Table in the Audit Report". Additionally, we noted IDHS has not performed a monitoring review in 2023 or either of the previous two fiscal years to ensure billing information provided by the child care providers is accurate for any of the 58 unique providers sampled. As a result, IDHS does not have adequate controls in place to ensure information provided by providers is accurate and the related child care payments made were appropriate. Criteria or Requirement: 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, costs must meet certain general criteria. Those criteria require, among other things, that each expenditure must be necessary, reasonable, and supported by adequate documentation. Additionally, 45 CFR section 98.67 requires lead agencies to expend and account for CCDF funds in accordance with their own laws and procedures, and for fiscal control and accounting procedures to be sufficient to permit the tracing of funds to a level of expenditure adequate to establish that such funds have not been used in violation of those laws and procedures. IDHS CCAP Policy Memo 07.10.01 requires the agency to perform monitoring reviews over all Child Care Resource and Referrals (CCR&R), site administered, and non-contracted child care providers who participate in the IDHS Child Care Assistance Program. These reviews are conducted to ensure that services billed to the Department are adequately documented and contractual obligations are fulfilled. 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal control designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should be designed to ensure that supporting documentation for CCAP payments is obtained and maintained. Additionally, effective internal controls should be designed to ensure that billing information provided by providers is complete and accurate. Cause: In discussing these conditions with IDHS officials, management stated that IDHS does not require submission of billing certificates to IDHS or its contracted agencies to receive payment. Additionally, the CCAP payments cited were entered by the provider via the IDHS Telephone Billing System and IDHS does not have a procedure to review billing certificates entered through this system. Possible Asserted Effect: Failure to maintain documentation that supports payments to TANF and CCDF beneficiaries of the Child Care Assistance Program and adequately monitor these beneficiaries results in noncompliance and unallowable costs. Repeat Finding: A similar finding was not reported in the prior year audit. (Finding Code 2023-014) Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend IDHS review the process and procedures in place for collecting and maintaining documentation to support amounts paid to beneficiaries of the Child Care Assistance Program. Further, we recommend IDHS ensure monitoring reviews are performed for CCAP beneficiaries under the CCDF and TANF programs in accordance with established policies and procedures. Views of IDHS Officials:The Department accepts the recommendation. The Department will work to review and update the process and procedures for collecting, reviewing, and maintaining documentation supporting amounts paid to beneficiaries of ACCAP and TANF Programs. Additionally, the Department will assess the need to develop and implement tools to ensure that monitoring reviews are performed in accordance with established policies and procedures.
State Agency: Illinois Department of Human Services (IDHS) Federal Agency: U.S. Department of Health and Human Services (USDHHS) Program Name: Temporary Assistance for Needy Families ALN and Program Expenditures: 93.558 ($578,867,422) Award Numbers: Various – see table of award numbers Federal Award Year: Various – see table of award numbers Questioned Costs: $33,257 Compliance Requirement: Eligibility Finding 2023-016: Improper TANF Beneficiary Payments Condition Found: IDHS made improper payments to beneficiaries of the Temporary Assistance for Needy Families (TANF) program. During our testwork of 50 TANF program beneficiary payments (with total payments sampled of $19,844), we noted four beneficiaries (with payments of $1,747) received payments that were improperly calculated using amounts inconsistent with information contained in the beneficiary’s case file. As a result of the calculation errors, the monthly payments for these beneficiaries were understated in total by $218. Total payments made to these beneficiaries under the TANF program were $18,594 for the year ended June 30, 2023. In addition, IDHS identified a system error in June 2025 impacting beneficiaries whose benefit payments were calculated using diverted income. Diverted income occurs in dependent eligible only TANF cases where an ineligible working adult in the household has income which is allocated to the eligible members of the household to determine the overall TANF program benefit payment. The State’s benefit system was erroneously excluding the ineligible working adult in the benefit calculation potentially resulting in an overpayment of TANF benefits on cases with diverted income. IDHS identified benefit payments paid during the year ended June 30, 2023 totaling $7,181,916 were calculated using diverted income for 2,572 beneficiaries. The system calculation error related to these benefit payments resulted in total TANF overpayments of $33,257 during the year ended June 30, 2023. The payment errors identified above had not been corrected by IDHS or refunded to USDHHS (if required) as of the date we communicated our findings to IDHS (August 27, 2025). We further noted IDHS did not establish control procedures at an adequate level of precision to ensure TANF program benefits were accurately calculated based on the beneficiary’s case file supporting documentation. Payments made to beneficiaries of the TANF cash assistance program totaled $36,637,652 during the year ended June 30, 2023. Criteria or Requirement: 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, costs must meet certain general criteria. Those criteria require, among other things, that each expenditure must be necessary, reasonable, and supported by adequate documentation. In accordance with the OMB Compliance Supplement, dated May 2023, IDHS is required to determine eligibility in accordance with eligibility requirements defined in the approved State Plan. The current State Plan requires payments to be made to eligible beneficiaries in accordance with payment levels established within the State Plan. Further, the State Plan requires an excluded or ineligible individual’s income to be considered in the calculation of the payment level of the TANF unit. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, 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. Effective internal controls should include establishing internal control at an appropriate level of precision to identify benefit payment errors in a timely manner. Cause: In discussing these conditions with IDHS officials, management stated the exceptions noted were due to an oversight to secure or upload supporting documentation adequately and case actions not being thoroughly reviewed. Possible Asserted Effect: Failure to properly calculate benefit payments may result in unallowable costs being charged to the TANF program. Repeat Finding: A similar finding was not reported in the prior year audit. (Finding Code 2023-016) Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend IDHS review its current process for calculating beneficiary payments and consider changes necessary to ensure payments are properly calculated and paid. Views of IDHS Officials: The Department accepts the recommendation and will work to review and modify the process of calculating beneficiary payments to ensure payments are properly calculated and paid.
FINDING NO: 2023-018 STATE AGENCY: Oklahoma Department of Transportation FEDERAL AGENCY: U.S. Department of Transportation ALN: 20.509 FEDERAL PROGRAM NAME: Formula Grants for Rural Areas FEDERAL AWARD NUMBER: OK-2017-023-05, OK-2018-023-03, OK-2019-025-03, OK-2020-021-02, OK- 2021-018-00, OK-2022-016-00, OK-2022-025-00, OK-2022-027-00, OK-2023-026-00 FEDERAL AWARD YEAR: 2017, 2018, 2019, 2020, 2021, 2022, 2023 CONTROL CATEGORY: Activities Allowed or Unallowed, Allowable Costs/Cost Principles QUESTIONED COSTS: $0 Criteria: 2 CFR 1201.1 states, “Except as otherwise provided in this part, the Department of Transportation adopts the Office of Management and Budget Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR part 200). This part supersedes and repeals the requirements of the Department of Transportation Common Rules (49 CFR part 18 - Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments and 49 CFR part 19 - Uniform Administrative Requirements - Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and other Non-Profit Organizations), except that grants and cooperative agreements executed prior to December 26, 2014 shall continue to be subject to 49 CFR parts 18 and 19 as in effect on the date of such grants or agreements. New parts with terminology specific to the Department of Transportation follow.” 2 CFR 200.302 states in part, “(a) Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. See § 200.450.” 2 CFR 200.403 states, “Except where otherwise authorized by statute, costs must meet the following criteria to be allowable under Federal awards: … (g) Be adequately documented.” 45 CFR §75.303 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).” Condition and Context: The Office of Mobility and Public Transit (OMPT) at the Oklahoma Department of Transportation (Department) is responsible for the administration of various grants funded by the U.S. Department of Transportation’s Federal Transit Administration (FTA) in accordance with the State Management Plan (SMP). OMPT charges eligible payroll costs to job pieces which are assigned by grant. Based on review of FTA administrative expenditures reported in SFY 2023, we noted that 100% of payroll expenses totaling $1,095,793.06 were reported and charged to job piece 2938830 which is associated with Assistance Listing (AL) # 20.509 – Formula Grants for Rural Areas. Consequently, payroll charges applicable to other FTA grants were not claimed under the appropriate AL Number. Cause: OMPT instructed staff to charge payroll related costs to job piece 2938830 and did not have a control process in place to ensure employees charged their time based on the actual grant worked on. Effect: An overstatement of expenditures reported under AL # 20.509 – Formula Grants for Rural Areas and an understatement of other grants funded by the FTA. Recommendation: We recommend that the Department strengthen internal controls to ensure payroll expenditures are charged to the appropriate grant. In addition, we recommend training be provided to staff to ensure that payroll charges are correctly distributed based on work performed. Views of Responsible Official(s) Contact Person: Eric Rose/Bobby Parkinson Anticipated Completion Date: 7/1/2025 Corrective Action Planned: The Oklahoma Department of Transportation agrees with the finding. See corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-018 STATE AGENCY: Oklahoma Department of Transportation FEDERAL AGENCY: U.S. Department of Transportation ALN: 20.509 FEDERAL PROGRAM NAME: Formula Grants for Rural Areas FEDERAL AWARD NUMBER: OK-2017-023-05, OK-2018-023-03, OK-2019-025-03, OK-2020-021-02, OK- 2021-018-00, OK-2022-016-00, OK-2022-025-00, OK-2022-027-00, OK-2023-026-00 FEDERAL AWARD YEAR: 2017, 2018, 2019, 2020, 2021, 2022, 2023 CONTROL CATEGORY: Activities Allowed or Unallowed, Allowable Costs/Cost Principles QUESTIONED COSTS: $0 Criteria: 2 CFR 1201.1 states, “Except as otherwise provided in this part, the Department of Transportation adopts the Office of Management and Budget Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR part 200). This part supersedes and repeals the requirements of the Department of Transportation Common Rules (49 CFR part 18 - Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments and 49 CFR part 19 - Uniform Administrative Requirements - Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and other Non-Profit Organizations), except that grants and cooperative agreements executed prior to December 26, 2014 shall continue to be subject to 49 CFR parts 18 and 19 as in effect on the date of such grants or agreements. New parts with terminology specific to the Department of Transportation follow.” 2 CFR 200.302 states in part, “(a) Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. See § 200.450.” 2 CFR 200.403 states, “Except where otherwise authorized by statute, costs must meet the following criteria to be allowable under Federal awards: … (g) Be adequately documented.” 45 CFR §75.303 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).” Condition and Context: The Office of Mobility and Public Transit (OMPT) at the Oklahoma Department of Transportation (Department) is responsible for the administration of various grants funded by the U.S. Department of Transportation’s Federal Transit Administration (FTA) in accordance with the State Management Plan (SMP). OMPT charges eligible payroll costs to job pieces which are assigned by grant. Based on review of FTA administrative expenditures reported in SFY 2023, we noted that 100% of payroll expenses totaling $1,095,793.06 were reported and charged to job piece 2938830 which is associated with Assistance Listing (AL) # 20.509 – Formula Grants for Rural Areas. Consequently, payroll charges applicable to other FTA grants were not claimed under the appropriate AL Number. Cause: OMPT instructed staff to charge payroll related costs to job piece 2938830 and did not have a control process in place to ensure employees charged their time based on the actual grant worked on. Effect: An overstatement of expenditures reported under AL # 20.509 – Formula Grants for Rural Areas and an understatement of other grants funded by the FTA. Recommendation: We recommend that the Department strengthen internal controls to ensure payroll expenditures are charged to the appropriate grant. In addition, we recommend training be provided to staff to ensure that payroll charges are correctly distributed based on work performed. Views of Responsible Official(s) Contact Person: Eric Rose/Bobby Parkinson Anticipated Completion Date: 7/1/2025 Corrective Action Planned: The Oklahoma Department of Transportation agrees with the finding. See corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-088 (Repeat 2022-085) STATE AGENCY: State of Oklahoma, Office of Management and Enterprise Services FEDERAL AGENCY: US Department of Treasury ALN: 21.023 FEDERAL PROGRAM NAME: Emergency Rental Assistance (ERA 1 and ERA 2) FEDERAL AWARD NUMBER: ERA028 and ERAE0259 FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; and Allowable Costs/Cost Principles QUESTIONED COSTS: $2,410,251 Criteria: U.S. Department of the Treasury Emergency Rental Assistance Grantee Award Form (8) (a-b) Compliance with Applicable Law and Regulations, states in part, “a. Recipient agrees to comply with the requirements of Section 501 and Treasury interpretive guidance regarding such requirements. Recipient also agrees to comply with all other applicable federal statutes, regulations, and executive orders, and Recipient shall provide for such compliance in any agreements it enters into with other parties relating to this award. b. Federal regulations applicable to this award include, without limitation, the following: i. Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, 2 C.F.R. Part 200, other than such provisions as Treasury may determine are inapplicable to this Award and subject to such exceptions as may be otherwise provided by Treasury.” 2 CFR § 200.303(a) – Internal Controls states in part, “The 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.” The Consolidated Appropriations Act § Section 501 (c)(5) Use of Funds - Administrative Costs states in part, “A. IN GENERAL.- Not more than 10 percent of the amount paid to an eligible grantee under this section may be used for administrative costs attributable to providing financial assistance and housing stability services under paragraphs (2) and (3), respectively, including for data collection and reporting requirements related to such funds. B. No OTHER ADMINISTRATIVE COSTS.- Amounts paid under this section shall not be used for any administrative costs other than to the extent allowed under subparagraph (A)” 2 CFR § 200.334 – Retention requirements for records state in part, “Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient.” 2 CFR § 200.337 – Access to records states in part, “(a) Records of non-Federal entities. The Federal awarding agency, Inspectors General, the Comptroller General of the United States, and the pass-through entity, or any of their authorized representatives, must have the right of access to any documents, papers, or other records of the non-Federal entity which are pertinent to the Federal award, in order to make audits, examinations, excerpts, and transcripts. The right also includes timely and reasonable access to the non-Federal entity's personnel for the purpose of interview and discussion related to such documents.” 2 CFR § 200.403 – Factors affecting allowability of costs states in part, “Except where otherwise authorized by statute, costs must meet the following criteria to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles.” Condition and Context: When reviewing SFY23 payroll administrative expenditures, we noted that Communities Foundation of Oklahoma paid $2,372,400 in bonuses to 146 employees. Of these bonuses, 47 people received between $10,000 - $19,999, and 44 people received more than $20,000. We found the expenditures to be unallowable; we found no guidance that stated ERA administrative funds could be expended on bonuses. Also, while testing 116 of 5,284 payroll administrative expenditures we noted the following: • For 4 of 116, or 3.45% of claims tested, the contract was for an unreasonable rate and the invoices provided were not itemized and specific enough to determine if the time spent was for an allowable activity related to ERA 1 or ERA 2. • For 9 of 116, or 7.76% of claims tested, the payment was for more than the contracted rate. • For 23 of 116, or 19.83% of claims tested, the subrecipient was unable to provide a contract for the period paid. • For 9 of 116, or 7.76% of claims tested, the contract was not signed by the Executive Director and was not valid. • For 22 of 115, or 19.13% of claims tested, the payroll cost was allowable; however, the expense was attributable to multiple jurisdictions and only 90.33% of the cost should have been charged to the State of Oklahoma, but the subrecipient was unable to support the allocation was completed and that 100% of the cost was not charged to the State. The issues noted above resulted in total questioned cost of $37,851. We are unable to note the questioned costs per exception due to the same sample items being noted on multiple exceptions. Cause: OMES personnel responsible for oversight of the ERA 1 and ERA 2 grants do not normally oversee Federal grant programs; they do not understand the types of activities that may be supported by the ERA 1 and ERA 2 grants, nor do they have adequate experience with administering Federal grant funds. OMES did not establish and maintain effective internal control over the Federal award that provides reasonable assurance that OMES is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. OMES did not ensure that the subrecipients established and maintained effective internal control over the Federal award to provide reasonable assurance that the non-Federal entity was managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Effect: Unallowable payroll costs totaling $2,410,251, including unallowable bonus payments of $2,372,400, were charged to the ERA program as payroll administrative expenditures. These funds could have been used toward Oklahoma applicants in need of ERA funding. Recommendation: We recommend that OMES develop and implement internal controls to ensure it administers current and future ERA grants in accordance with applicable Federal laws and grant requirements, including ensuring that grant subrecipients are properly informed of federal requirements related to allowable costs. In addition, we recommend that OMES ensure the subrecipient has established effective internal controls over the Federal award to provide reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. We recommend that OMES ensure adequate supporting documentation for administrative expenditures incurred is obtained, reviewed, and maintained by OMES to ensure subrecipients only expend ERA funds for allowable activities and costs. We recommend that OMES only reimburse subrecipients for administrative costs based on supporting documentation of actual costs incurred. We recommend OMES ensure the personnel responsible for oversight for the ERA grant obtain the necessary training and knowledge to ensure compliance with the Federal grant requirements. Views of Responsible Official(s) Contact Person: Brandy Manek Anticipated Completion Date: Ongoing throughout the life of the grant Corrective Action Planned: The Office of Management and Enterprise Services partially agrees with the finding. See corrective action plan located in the corrective action plan section of this report. Auditor Response: Per 2 CFR 200.430(f), the payroll bonuses were not approved per the contract with the State Oklahoma. Further, the bonus policy created by CFO was not written until 2024, which is after the audit period. CFO states the contractors ‘continued to be paid the same remuneration in the time period between the expiration of the original contracts and when the new contracts and/or addendums were created and signed’; however, for nine of 10, SAI did not receive a contract that was for the rate paid for the contractor. OMES states ‘The entities were addressing more urgent matter to assist the people of Oklahoma with the objectives of the program and did not have the bandwidth to draft and sign new agreements.’ SAI disagrees with the lack of bandwidth. We reviewed the number of contracts received per contractors mentioned above and found that we received anywhere from two to six contracts per contractor. In addition, CFO closed their application portal on 8/31/2022, which is a month prior to the first missing contract date. We do understand that applications were still being reviewed and payments were being made; however, we find that CFO had the capacity to create, and sign amended contracts for the time periods being paid.
FINDING NO: 2023-091 STATE AGENCY: State of Oklahoma, Office of Management and Enterprise Services FEDERAL AGENCY: US Department of Treasury ALN: 21.023 FEDERAL PROGRAM NAME: Emergency Rental Assistance (ERA 1 and ERA 2) FEDERAL AWARD NUMBER: ERA028 and ERAE0259 FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; and Period of Performance QUESTIONED COSTS: $10,985,211 Criteria: U.S Department of the Treasury Emergency Rental Assistance Grantee Award Form (8) (a-b) Compliance with Applicable Law and Regulations, states in part, “a. Recipient agrees to comply with the requirements of Section 501 and Treasury interpretive guidance regarding such requirements. Recipient also agrees to comply with all other applicable federal statutes, regulations, and executive orders, and Recipient shall provide for such compliance in any agreements it enters into with other parties relating to this award. b. Federal regulations applicable to this award include, without limitation, the following: i. Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, 2 C.F.R. Part 200, other than such provisions as Treasury may determine are inapplicable to this Award and subject to such exceptions as may be otherwise provided by Treasury.” 2 CFR § 200.303(a) – Internal Controls states in part, “The 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.” 2 CFR § 200.403(f) – Factors Affecting Allowability of Costs states in part, “Except where otherwise authorized by statute, costs must meet the following criteria to be allowable under Federal awards: … (f) Not be included as a cost or used to meet cost sharing requirements of any other federally-financed program in either the current or a prior period.” The US Department of Treasury Emergency Rental Assistance (ERA) FAQ #42 states in part “The nonprofit organization deposits and maintains the ERA funds in a separate account that is not commingled with other funds.” The US Department of Treasury Emergency Rental Assistance (ERA) FAQ #42 states in part “There are several options for a grantee to resolve its responsibility for improper payments, including the following: 1. ERA grantees may recharacterize expenditures initially reported under their ERA1 award as ultimately being funded by their ERA2 award, provided the expenditures are made during the ERA2 award period of performance and meet the ERA2 award requirements. For example, a grantee could consider the following option to achieve this: (1) recharacterize an improper payment made with ERA1 award funds as being made with ERA2 award funds provided the ERA1 improper payment was made during the ERA2 award period of performance; or (2) recharacterize an equivalent amount of ERA2 payments made during the ERA1 award period of performance that are in compliance with ERA1 award requirements at the time they were made as ERA1 payments.” The US Department of Treasury Emergency Rental Assistance ERA 1 Reporting Guidance states in part, “ERA Recipients are required to certify and submit reports on each ERA award separately… Recipients with multiple ERA awards must take care to ensure that they do not commingle, funds, data, or records across two awards and to submit separate reports for each award.” The US Department of Treasury Emergency Rental Assistance Closeout Resource states in part, “Treasury does not prohibit ERA grantees from recharacterizing expenditures initially reported under one award as ultimately being funded by the other (between ERA1 and ERA2 awards), provided the grantee updates all relevant program reports to reflect the recharacterization … program financial reporting must be updated should a grantee choose to recharacterize the allocation of expenditures between its ERA 1 and ERA 2 awards.” The US Department of Treasury Emergency Rental Assistance Closeout Resource states in part, “ A. Basic Closeout Requirements • Closeout must occur after the end of the award period of performance (also called the end of the award term) to ensure collection of robust, and complete reporting data from all grantees. Grantees may not close out their ERA1 awards before the end of the award period of performance on September 30, 2022. • ERA1 funds received through reallocation are subject to a 90-day extension of the availability of such funds. Grantees that received reallocated funds may elect to begin closeout after September 30, 2022 or to defer closeout until after December 29, 2022. C. Closeout Activities 1. Allowable Operations The end date of the award period of performance is the last day for a grantee to obligate funds for ERA1 activities (September 30, 2022 for award funds received pursuant to the grantee’s initial allocation and December 29, 2022 for reallocated funds). Funds statutorily available for administrative costs are not considered to be “automatically” obligated; therefore, grantees must obligate award funds by the end of the award period of performance to cover their administrative costs for closeout activities. Obligated funds may be expended by grantees for up to 120 calendar days after the end of the award period of performance for allowable administrative activities. Obligated funds may be expended by subrecipients for up to 90 calendar days after the end of the award period of performance for allowable administrative activities or an earlier date as agreed upon by subrecipient and grantee per 2 CFR 200.344(a).” Condition and Context: While documenting controls over Period of Performance for the ERA 1 grant, we noted payments made to subrecipients in the Statewide Accounting System were all put under one fund and were not distinguishable between ERA 1 and ERA 2. Therefore, OMES was unable to determine at a glance whether the funds distributed to subrecipients were attributable to ERA 1 or ERA 2. Further, we determined one of the subrecipients, Communities Foundation of Oklahoma (CFO), did not have sufficient internal controls over ERA 1 program spending to ensure all funds were expended by the end of the period of performance. During our testwork of 30 of 116 adjusting journal entries totaling $35,811,879.92 for CFO, we noted the following: • For eight of 30, or 26.67% of adjustments tested, the adjustment was to move expenses from ERA 2 to ERA 1 to meet ERA 1 spending requirements prior to closeout of the program. CFO comingled ERA 1 and ERA 2 funds and could not directly support each recharacterization with documentation for the specific transactions involved, but stated it was recharacterized to meet ERA 1 spending limits prior to the end of the period. • For 11 of 30, or 36.67%, the adjustment was to move expenses between jurisdictions (City, State, County), which is unallowable per FAQ #42 and ERA reporting guidance. This resulted in $2,586,978 in questioned costs. (incurred on or before September 30, 2022), we noted 207 transactions occurred after September 30, 2022. Of the 207 transactions, we noted 40 that resulted in $10,711,668 (of this amount $2,313,435 is already questioned above) in questioned costs. We noted the following: • For 13 of 207, or 6.28% of transactions tested, the adjustment was to move funds between funding jurisdictions (City, State, County), which is unallowable per FAQ #42 and ERA reporting guidance. (This resulted in $1,594,881 in questioned costs, of which $24,450 is questioned above) • For 11 of 207, or 5.31%, the adjustment was to move funds between ERA 2 and ERA 1 and the adjustment was not directly supported with documentation for the specific transactions involved. It was noted as recharacterized to meet ERA 1 spending limits prior to the end of the period, and CFO did not go back to revise any prior monthly or quarterly reports as required by Treasury. (This resulted in $7,003,715 in questioned costs, of which $2,200,000 is questioned above) • For 7 of 207, or 3.38% of transactions tested, the adjustment was to ‘correct accounts’ or ‘tie out accounts’; we determined these were not attributable to specific transactions but were ‘plug’ numbers to zero out the ERA 1 balance prior to the end of the period of performance to meet spend down requirements and were not supported by actual expenditures that can be determined to have been incurred on or before September 30, 2022. (This resulted in $1,837,072 in questioned costs, of which $88,985 is questioned above) • For 7 of 207, or 3.38% of transactions tested, the adjustment was to CFO management fees. Management fees were retained on a percentage basis; therefore, the fee is not supported by actual expenditures that can be determined to have been incurred on or before September 30, 2022. (This resulted in $1,430,228 in questioned costs which were all questioned on finding 2023-028). • We noted a total of $8,271,796 in management fees that were not expended for ERA 1 and therefore were not spent within the period of performance. Of this amount, $6,841,568 were management fees questioned in the SFY2021 and SFY2022 State of Oklahoma Single Audit reports and the remaining $1,430,228 is questioned on finding 2023-028. • For 2 of 207, or 0.97% of transactions tested, the payment was not supported by an itemized invoice to enable a determination that all the costs were incurred prior to September 30, 2022. (This resulted in $276,000 in questioned costs) Cause: OMES personnel responsible for oversight of the ERA 1 and ERA 2 grants do not normally oversee Federal grant programs, do not understand the types of activities that may be supported by the ERA 1 and ERA 2 grants, and do not have adequate experience with administering Federal grant funds. OMES did not ensure the personnel responsible for oversight of the ERA 1 And ERA 2 grants received the proper training to understand and did not ensure they used available resources to help them understand, the grant requirements. OMES did not establish and maintain effective internal control over the Federal award that provides reasonable assurance that OMES manages the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Effect: Unallowable costs or adjustments, totaling $10,985,211, were charged to the ERA program by one subrecipient for SFY 2023 as administrative expenditures. Administrative expenditures for other jurisdictions were reimbursed 100% by the State. OMES did not accurately and correctly report ERA program expenditures on federal reports. Lastly, not all ERA 1 funds were spent within the program’s period of performance. Recommendation: We recommend that the OMES develop and implement internal controls to ensure that program obligations and expenditures are accurately reported by the subrecipient. In addition. we also recommend OMES obtain and review federal reports and supporting documentation before submitting the information to the Federal agency. Lastly, we recommend that the OMES personnel responsible for oversight of the ERA grant obtain the necessary training and knowledge to ensure compliance with federal reporting requirements. Views of Responsible Official(s) Contact Person: Ongoing throughout the life of the grant Anticipated Completion Date: Brandy Manek Corrective Action Planned: The Office of Management and Enterprise Services partially agrees with the finding. See corrective action plan located in the corrective action plan section of this report. Auditor Response: CFO Response 1bullet 1 - SAI acknowledges that funds 49400 and 49200 were created for ERA 1 and ERA 2; however, our finding is addressing the fact that all ERA 1 and 2 payments were classified as fund 49000. CFO Response 1 bullet 2 - SAI acknowledges that the date shows December 29, 2022; however, CFO used plug numbers in their tracking spreadsheet which is not a true tracking of expenditures, and funds were recharacterized to meet spend down requirements; however, reports were not revised to reflect the changes. CFO Response 2 bullet 1 - CFO partially agrees. CFO Response 2 bullet 2 - CFO agrees that funds cannot be moved from ERA 2 to ERA 1. CFO Response 2 bullet 3 - SAI acknowledges that CFO has 31 separate accounts for ERA funds; however, in the transaction data SAI was provided, these eight adjustments are transfers of funds between ERA 1 and ERA 2. CFO Response 2 bullet 4 -We have removed the portion stating reports should have been revised. While this was present in the reporting instructions, we also acknowledge the guidance referred to by CFO. CFO Response 3 bullet 1 - The expenditure description clearly states CFO/CCP moved funds from the State to ‘xyz’ or visa versa. Further, it does not appear that the tracking of spending limits for either ERA grant was kept. CFO Response 3 bullet 2 - SAI notes that FAQ #42 does not directly address ‘jurisdictions’; however, it does explain that ‘The nonprofit organization deposits and maintains the ERA funds in a separate account that is not commingled with other funds.’ Because there are adjustments to move expenses between jurisdictions, this conflicts with guidance. CFO Response 4 bullet 1 - SAI acknowledges that the date shows December 29, 2022; however, CFO used plug numbers in their tracking spreadsheet which is not a true tracking of expenditures, and funds were recharacterized to meet spend down requirements; however, reports were not revised to reflect the changes. CFO Response 5 bullet 1 - The expenditure description clearly states CFO/CCP moved funds from the State to ‘xyz’ or visa versa. Further, it does not appear that the tracking of spending limits for either ERA grant was kept. CFO Response 5 bullet 2 - SAI notes that FAQ #42 does not directly address ‘jurisdictions’; however, it does explain that ‘The nonprofit organization deposits and maintains the ERA funds in a separate account that is not commingled with other funds.’ Because there are adjustments to move expenses between jurisdictions, this conflicts with guidance. CFO Response 6 bullet 1 - CFO partially agrees. CFO Response 6 bullet 2 - CFO agrees that funds cannot be moved from ERA 2 to ERA 1. CFO Response 6 bullet 3 -We have removed the portion stating reports should have been revised. While this was present in the reporting instructions, we also acknowledge the guidance referred to by CFO. CFO Response 6 bullet 3 - SAI acknowledges that the date shows December 29, 2022; however, CFO used plug numbers in their tracking spreadsheet which is not a true tracking of expenditures, and funds were recharacterized to meet spend down requirements; however, reports were not revised to reflect the changes. CFO Response 7 bullet 1 - CFO partially agrees. CFO Response 7 bullet 2 - CFO agrees that funds cannot be moved from ERA 2 to ERA 1. CFO Response 7 bullet 3 - SAI acknowledges that the date shows December 29, 2022; however, CFO used plug numbers in their tracking spreadsheet which is not a true tracking of expenditures, and funds were recharacterized to meet spend down requirements; however, reports were not revised to reflect the changes. CFO Response 8 - SAI reiterates that management fees did not represent actual expenditures; therefore, the transactions are questioned. CFO Response 9 - SAI reiterates that management fees did not represent actual expenditures; therefore, the transactions are questioned. In addition, see previous response above. CFO Response 10 bullets 1 and 2 - Support was only provided for one of the two questioned itemized invoices; however, an itemized invoice was not provided but rather an excel spreadsheet that does not provide the dates for the costs incurred for the applicants. Therefore, we are unable to determine whether costs were incurred prior to September 30, 2022, and the costs will remain questioned.
FINDING NO: 2023-088 (Repeat 2022-085) STATE AGENCY: State of Oklahoma, Office of Management and Enterprise Services FEDERAL AGENCY: US Department of Treasury ALN: 21.023 FEDERAL PROGRAM NAME: Emergency Rental Assistance (ERA 1 and ERA 2) FEDERAL AWARD NUMBER: ERA028 and ERAE0259 FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; and Allowable Costs/Cost Principles QUESTIONED COSTS: $2,410,251 Criteria: U.S. Department of the Treasury Emergency Rental Assistance Grantee Award Form (8) (a-b) Compliance with Applicable Law and Regulations, states in part, “a. Recipient agrees to comply with the requirements of Section 501 and Treasury interpretive guidance regarding such requirements. Recipient also agrees to comply with all other applicable federal statutes, regulations, and executive orders, and Recipient shall provide for such compliance in any agreements it enters into with other parties relating to this award. b. Federal regulations applicable to this award include, without limitation, the following: i. Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, 2 C.F.R. Part 200, other than such provisions as Treasury may determine are inapplicable to this Award and subject to such exceptions as may be otherwise provided by Treasury.” 2 CFR § 200.303(a) – Internal Controls states in part, “The 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.” The Consolidated Appropriations Act § Section 501 (c)(5) Use of Funds - Administrative Costs states in part, “A. IN GENERAL.- Not more than 10 percent of the amount paid to an eligible grantee under this section may be used for administrative costs attributable to providing financial assistance and housing stability services under paragraphs (2) and (3), respectively, including for data collection and reporting requirements related to such funds. B. No OTHER ADMINISTRATIVE COSTS.- Amounts paid under this section shall not be used for any administrative costs other than to the extent allowed under subparagraph (A)” 2 CFR § 200.334 – Retention requirements for records state in part, “Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient.” 2 CFR § 200.337 – Access to records states in part, “(a) Records of non-Federal entities. The Federal awarding agency, Inspectors General, the Comptroller General of the United States, and the pass-through entity, or any of their authorized representatives, must have the right of access to any documents, papers, or other records of the non-Federal entity which are pertinent to the Federal award, in order to make audits, examinations, excerpts, and transcripts. The right also includes timely and reasonable access to the non-Federal entity's personnel for the purpose of interview and discussion related to such documents.” 2 CFR § 200.403 – Factors affecting allowability of costs states in part, “Except where otherwise authorized by statute, costs must meet the following criteria to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles.” Condition and Context: When reviewing SFY23 payroll administrative expenditures, we noted that Communities Foundation of Oklahoma paid $2,372,400 in bonuses to 146 employees. Of these bonuses, 47 people received between $10,000 - $19,999, and 44 people received more than $20,000. We found the expenditures to be unallowable; we found no guidance that stated ERA administrative funds could be expended on bonuses. Also, while testing 116 of 5,284 payroll administrative expenditures we noted the following: • For 4 of 116, or 3.45% of claims tested, the contract was for an unreasonable rate and the invoices provided were not itemized and specific enough to determine if the time spent was for an allowable activity related to ERA 1 or ERA 2. • For 9 of 116, or 7.76% of claims tested, the payment was for more than the contracted rate. • For 23 of 116, or 19.83% of claims tested, the subrecipient was unable to provide a contract for the period paid. • For 9 of 116, or 7.76% of claims tested, the contract was not signed by the Executive Director and was not valid. • For 22 of 115, or 19.13% of claims tested, the payroll cost was allowable; however, the expense was attributable to multiple jurisdictions and only 90.33% of the cost should have been charged to the State of Oklahoma, but the subrecipient was unable to support the allocation was completed and that 100% of the cost was not charged to the State. The issues noted above resulted in total questioned cost of $37,851. We are unable to note the questioned costs per exception due to the same sample items being noted on multiple exceptions. Cause: OMES personnel responsible for oversight of the ERA 1 and ERA 2 grants do not normally oversee Federal grant programs; they do not understand the types of activities that may be supported by the ERA 1 and ERA 2 grants, nor do they have adequate experience with administering Federal grant funds. OMES did not establish and maintain effective internal control over the Federal award that provides reasonable assurance that OMES is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. OMES did not ensure that the subrecipients established and maintained effective internal control over the Federal award to provide reasonable assurance that the non-Federal entity was managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Effect: Unallowable payroll costs totaling $2,410,251, including unallowable bonus payments of $2,372,400, were charged to the ERA program as payroll administrative expenditures. These funds could have been used toward Oklahoma applicants in need of ERA funding. Recommendation: We recommend that OMES develop and implement internal controls to ensure it administers current and future ERA grants in accordance with applicable Federal laws and grant requirements, including ensuring that grant subrecipients are properly informed of federal requirements related to allowable costs. In addition, we recommend that OMES ensure the subrecipient has established effective internal controls over the Federal award to provide reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. We recommend that OMES ensure adequate supporting documentation for administrative expenditures incurred is obtained, reviewed, and maintained by OMES to ensure subrecipients only expend ERA funds for allowable activities and costs. We recommend that OMES only reimburse subrecipients for administrative costs based on supporting documentation of actual costs incurred. We recommend OMES ensure the personnel responsible for oversight for the ERA grant obtain the necessary training and knowledge to ensure compliance with the Federal grant requirements. Views of Responsible Official(s) Contact Person: Brandy Manek Anticipated Completion Date: Ongoing throughout the life of the grant Corrective Action Planned: The Office of Management and Enterprise Services partially agrees with the finding. See corrective action plan located in the corrective action plan section of this report. Auditor Response: Per 2 CFR 200.430(f), the payroll bonuses were not approved per the contract with the State Oklahoma. Further, the bonus policy created by CFO was not written until 2024, which is after the audit period. CFO states the contractors ‘continued to be paid the same remuneration in the time period between the expiration of the original contracts and when the new contracts and/or addendums were created and signed’; however, for nine of 10, SAI did not receive a contract that was for the rate paid for the contractor. OMES states ‘The entities were addressing more urgent matter to assist the people of Oklahoma with the objectives of the program and did not have the bandwidth to draft and sign new agreements.’ SAI disagrees with the lack of bandwidth. We reviewed the number of contracts received per contractors mentioned above and found that we received anywhere from two to six contracts per contractor. In addition, CFO closed their application portal on 8/31/2022, which is a month prior to the first missing contract date. We do understand that applications were still being reviewed and payments were being made; however, we find that CFO had the capacity to create, and sign amended contracts for the time periods being paid.
FINDING NO: 2023-091 STATE AGENCY: State of Oklahoma, Office of Management and Enterprise Services FEDERAL AGENCY: US Department of Treasury ALN: 21.023 FEDERAL PROGRAM NAME: Emergency Rental Assistance (ERA 1 and ERA 2) FEDERAL AWARD NUMBER: ERA028 and ERAE0259 FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; and Period of Performance QUESTIONED COSTS: $10,985,211 Criteria: U.S Department of the Treasury Emergency Rental Assistance Grantee Award Form (8) (a-b) Compliance with Applicable Law and Regulations, states in part, “a. Recipient agrees to comply with the requirements of Section 501 and Treasury interpretive guidance regarding such requirements. Recipient also agrees to comply with all other applicable federal statutes, regulations, and executive orders, and Recipient shall provide for such compliance in any agreements it enters into with other parties relating to this award. b. Federal regulations applicable to this award include, without limitation, the following: i. Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, 2 C.F.R. Part 200, other than such provisions as Treasury may determine are inapplicable to this Award and subject to such exceptions as may be otherwise provided by Treasury.” 2 CFR § 200.303(a) – Internal Controls states in part, “The 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.” 2 CFR § 200.403(f) – Factors Affecting Allowability of Costs states in part, “Except where otherwise authorized by statute, costs must meet the following criteria to be allowable under Federal awards: … (f) Not be included as a cost or used to meet cost sharing requirements of any other federally-financed program in either the current or a prior period.” The US Department of Treasury Emergency Rental Assistance (ERA) FAQ #42 states in part “The nonprofit organization deposits and maintains the ERA funds in a separate account that is not commingled with other funds.” The US Department of Treasury Emergency Rental Assistance (ERA) FAQ #42 states in part “There are several options for a grantee to resolve its responsibility for improper payments, including the following: 1. ERA grantees may recharacterize expenditures initially reported under their ERA1 award as ultimately being funded by their ERA2 award, provided the expenditures are made during the ERA2 award period of performance and meet the ERA2 award requirements. For example, a grantee could consider the following option to achieve this: (1) recharacterize an improper payment made with ERA1 award funds as being made with ERA2 award funds provided the ERA1 improper payment was made during the ERA2 award period of performance; or (2) recharacterize an equivalent amount of ERA2 payments made during the ERA1 award period of performance that are in compliance with ERA1 award requirements at the time they were made as ERA1 payments.” The US Department of Treasury Emergency Rental Assistance ERA 1 Reporting Guidance states in part, “ERA Recipients are required to certify and submit reports on each ERA award separately… Recipients with multiple ERA awards must take care to ensure that they do not commingle, funds, data, or records across two awards and to submit separate reports for each award.” The US Department of Treasury Emergency Rental Assistance Closeout Resource states in part, “Treasury does not prohibit ERA grantees from recharacterizing expenditures initially reported under one award as ultimately being funded by the other (between ERA1 and ERA2 awards), provided the grantee updates all relevant program reports to reflect the recharacterization … program financial reporting must be updated should a grantee choose to recharacterize the allocation of expenditures between its ERA 1 and ERA 2 awards.” The US Department of Treasury Emergency Rental Assistance Closeout Resource states in part, “ A. Basic Closeout Requirements • Closeout must occur after the end of the award period of performance (also called the end of the award term) to ensure collection of robust, and complete reporting data from all grantees. Grantees may not close out their ERA1 awards before the end of the award period of performance on September 30, 2022. • ERA1 funds received through reallocation are subject to a 90-day extension of the availability of such funds. Grantees that received reallocated funds may elect to begin closeout after September 30, 2022 or to defer closeout until after December 29, 2022. C. Closeout Activities 1. Allowable Operations The end date of the award period of performance is the last day for a grantee to obligate funds for ERA1 activities (September 30, 2022 for award funds received pursuant to the grantee’s initial allocation and December 29, 2022 for reallocated funds). Funds statutorily available for administrative costs are not considered to be “automatically” obligated; therefore, grantees must obligate award funds by the end of the award period of performance to cover their administrative costs for closeout activities. Obligated funds may be expended by grantees for up to 120 calendar days after the end of the award period of performance for allowable administrative activities. Obligated funds may be expended by subrecipients for up to 90 calendar days after the end of the award period of performance for allowable administrative activities or an earlier date as agreed upon by subrecipient and grantee per 2 CFR 200.344(a).” Condition and Context: While documenting controls over Period of Performance for the ERA 1 grant, we noted payments made to subrecipients in the Statewide Accounting System were all put under one fund and were not distinguishable between ERA 1 and ERA 2. Therefore, OMES was unable to determine at a glance whether the funds distributed to subrecipients were attributable to ERA 1 or ERA 2. Further, we determined one of the subrecipients, Communities Foundation of Oklahoma (CFO), did not have sufficient internal controls over ERA 1 program spending to ensure all funds were expended by the end of the period of performance. During our testwork of 30 of 116 adjusting journal entries totaling $35,811,879.92 for CFO, we noted the following: • For eight of 30, or 26.67% of adjustments tested, the adjustment was to move expenses from ERA 2 to ERA 1 to meet ERA 1 spending requirements prior to closeout of the program. CFO comingled ERA 1 and ERA 2 funds and could not directly support each recharacterization with documentation for the specific transactions involved, but stated it was recharacterized to meet ERA 1 spending limits prior to the end of the period. • For 11 of 30, or 36.67%, the adjustment was to move expenses between jurisdictions (City, State, County), which is unallowable per FAQ #42 and ERA reporting guidance. This resulted in $2,586,978 in questioned costs. (incurred on or before September 30, 2022), we noted 207 transactions occurred after September 30, 2022. Of the 207 transactions, we noted 40 that resulted in $10,711,668 (of this amount $2,313,435 is already questioned above) in questioned costs. We noted the following: • For 13 of 207, or 6.28% of transactions tested, the adjustment was to move funds between funding jurisdictions (City, State, County), which is unallowable per FAQ #42 and ERA reporting guidance. (This resulted in $1,594,881 in questioned costs, of which $24,450 is questioned above) • For 11 of 207, or 5.31%, the adjustment was to move funds between ERA 2 and ERA 1 and the adjustment was not directly supported with documentation for the specific transactions involved. It was noted as recharacterized to meet ERA 1 spending limits prior to the end of the period, and CFO did not go back to revise any prior monthly or quarterly reports as required by Treasury. (This resulted in $7,003,715 in questioned costs, of which $2,200,000 is questioned above) • For 7 of 207, or 3.38% of transactions tested, the adjustment was to ‘correct accounts’ or ‘tie out accounts’; we determined these were not attributable to specific transactions but were ‘plug’ numbers to zero out the ERA 1 balance prior to the end of the period of performance to meet spend down requirements and were not supported by actual expenditures that can be determined to have been incurred on or before September 30, 2022. (This resulted in $1,837,072 in questioned costs, of which $88,985 is questioned above) • For 7 of 207, or 3.38% of transactions tested, the adjustment was to CFO management fees. Management fees were retained on a percentage basis; therefore, the fee is not supported by actual expenditures that can be determined to have been incurred on or before September 30, 2022. (This resulted in $1,430,228 in questioned costs which were all questioned on finding 2023-028). • We noted a total of $8,271,796 in management fees that were not expended for ERA 1 and therefore were not spent within the period of performance. Of this amount, $6,841,568 were management fees questioned in the SFY2021 and SFY2022 State of Oklahoma Single Audit reports and the remaining $1,430,228 is questioned on finding 2023-028. • For 2 of 207, or 0.97% of transactions tested, the payment was not supported by an itemized invoice to enable a determination that all the costs were incurred prior to September 30, 2022. (This resulted in $276,000 in questioned costs) Cause: OMES personnel responsible for oversight of the ERA 1 and ERA 2 grants do not normally oversee Federal grant programs, do not understand the types of activities that may be supported by the ERA 1 and ERA 2 grants, and do not have adequate experience with administering Federal grant funds. OMES did not ensure the personnel responsible for oversight of the ERA 1 And ERA 2 grants received the proper training to understand and did not ensure they used available resources to help them understand, the grant requirements. OMES did not establish and maintain effective internal control over the Federal award that provides reasonable assurance that OMES manages the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Effect: Unallowable costs or adjustments, totaling $10,985,211, were charged to the ERA program by one subrecipient for SFY 2023 as administrative expenditures. Administrative expenditures for other jurisdictions were reimbursed 100% by the State. OMES did not accurately and correctly report ERA program expenditures on federal reports. Lastly, not all ERA 1 funds were spent within the program’s period of performance. Recommendation: We recommend that the OMES develop and implement internal controls to ensure that program obligations and expenditures are accurately reported by the subrecipient. In addition. we also recommend OMES obtain and review federal reports and supporting documentation before submitting the information to the Federal agency. Lastly, we recommend that the OMES personnel responsible for oversight of the ERA grant obtain the necessary training and knowledge to ensure compliance with federal reporting requirements. Views of Responsible Official(s) Contact Person: Ongoing throughout the life of the grant Anticipated Completion Date: Brandy Manek Corrective Action Planned: The Office of Management and Enterprise Services partially agrees with the finding. See corrective action plan located in the corrective action plan section of this report. Auditor Response: CFO Response 1bullet 1 - SAI acknowledges that funds 49400 and 49200 were created for ERA 1 and ERA 2; however, our finding is addressing the fact that all ERA 1 and 2 payments were classified as fund 49000. CFO Response 1 bullet 2 - SAI acknowledges that the date shows December 29, 2022; however, CFO used plug numbers in their tracking spreadsheet which is not a true tracking of expenditures, and funds were recharacterized to meet spend down requirements; however, reports were not revised to reflect the changes. CFO Response 2 bullet 1 - CFO partially agrees. CFO Response 2 bullet 2 - CFO agrees that funds cannot be moved from ERA 2 to ERA 1. CFO Response 2 bullet 3 - SAI acknowledges that CFO has 31 separate accounts for ERA funds; however, in the transaction data SAI was provided, these eight adjustments are transfers of funds between ERA 1 and ERA 2. CFO Response 2 bullet 4 -We have removed the portion stating reports should have been revised. While this was present in the reporting instructions, we also acknowledge the guidance referred to by CFO. CFO Response 3 bullet 1 - The expenditure description clearly states CFO/CCP moved funds from the State to ‘xyz’ or visa versa. Further, it does not appear that the tracking of spending limits for either ERA grant was kept. CFO Response 3 bullet 2 - SAI notes that FAQ #42 does not directly address ‘jurisdictions’; however, it does explain that ‘The nonprofit organization deposits and maintains the ERA funds in a separate account that is not commingled with other funds.’ Because there are adjustments to move expenses between jurisdictions, this conflicts with guidance. CFO Response 4 bullet 1 - SAI acknowledges that the date shows December 29, 2022; however, CFO used plug numbers in their tracking spreadsheet which is not a true tracking of expenditures, and funds were recharacterized to meet spend down requirements; however, reports were not revised to reflect the changes. CFO Response 5 bullet 1 - The expenditure description clearly states CFO/CCP moved funds from the State to ‘xyz’ or visa versa. Further, it does not appear that the tracking of spending limits for either ERA grant was kept. CFO Response 5 bullet 2 - SAI notes that FAQ #42 does not directly address ‘jurisdictions’; however, it does explain that ‘The nonprofit organization deposits and maintains the ERA funds in a separate account that is not commingled with other funds.’ Because there are adjustments to move expenses between jurisdictions, this conflicts with guidance. CFO Response 6 bullet 1 - CFO partially agrees. CFO Response 6 bullet 2 - CFO agrees that funds cannot be moved from ERA 2 to ERA 1. CFO Response 6 bullet 3 -We have removed the portion stating reports should have been revised. While this was present in the reporting instructions, we also acknowledge the guidance referred to by CFO. CFO Response 6 bullet 3 - SAI acknowledges that the date shows December 29, 2022; however, CFO used plug numbers in their tracking spreadsheet which is not a true tracking of expenditures, and funds were recharacterized to meet spend down requirements; however, reports were not revised to reflect the changes. CFO Response 7 bullet 1 - CFO partially agrees. CFO Response 7 bullet 2 - CFO agrees that funds cannot be moved from ERA 2 to ERA 1. CFO Response 7 bullet 3 - SAI acknowledges that the date shows December 29, 2022; however, CFO used plug numbers in their tracking spreadsheet which is not a true tracking of expenditures, and funds were recharacterized to meet spend down requirements; however, reports were not revised to reflect the changes. CFO Response 8 - SAI reiterates that management fees did not represent actual expenditures; therefore, the transactions are questioned. CFO Response 9 - SAI reiterates that management fees did not represent actual expenditures; therefore, the transactions are questioned. In addition, see previous response above. CFO Response 10 bullets 1 and 2 - Support was only provided for one of the two questioned itemized invoices; however, an itemized invoice was not provided but rather an excel spreadsheet that does not provide the dates for the costs incurred for the applicants. Therefore, we are unable to determine whether costs were incurred prior to September 30, 2022, and the costs will remain questioned.
FINDING NO: 2023-005 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State And Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles QUESTIONED COSTS: $236,115 Criteria: 2 CFR § 200.303 – Internal Controls 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.” 2 CFR § 200.403, states in part, “Except where otherwise authorized by statute, costs must meet the following criteria to be allowable under Federal awards: … (f) Not be included as a cost or used to meet cost sharing requirements of any other federally-financed program in either the current or a prior period. See § 200.306(b).” Condition and Context: During our cash basis reconciliation of the Office of Management and Enterprise Services (OMES) Schedule of Expenditures of Federal Awards (SEFA) for SFY 2023 to the State of Oklahoma - Statewide Accounting System, we reconciled the agency’s cash basis expenditures of $4,295,065 for AL #21.027. However, we noted $235,290 of OMES CSLFRF expenditures from class fund 488 (ARPA Advance Grants) for administrative costs to run the grant were expended on AL #84.825C - Governor's Emergency Education Relief (GEER) and AL #21.023 - Emergency Rental Assistance (ERA). In addition, during our accounts payable reconciliation of the OMES SEFA for SFY 2023 to State of Oklahoma - Statewide Accounting System, we reconciled the agency’s accounts payable expenditures of $27,323 for AL #21.027. However, we noted $825 of CSLFRF expenditures from class fund 488 was used on expenditures for AL #84.825C - GEER. Cause: The State of Oklahoma/Office of Management and Enterprise Services (OMES) did not have adequate controls in place to prevent expending CSLFRF class fund 488 funds on other federal programs. Effect: Unallowable costs totaling $236,115 were charged to CSLFRF grant for SFY 2023. Recommendation: We recommend OMES develop and implement procedures to ensure CSLFRF funds (class fund 488) are not expended on other federal programs. Views of Responsible Official(s) Contact Person: Parker Wise Anticipated Completion Date: Controls have been put into place and will continue through the end of the Federal Period of Performance and closeout. Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-005 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State And Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles QUESTIONED COSTS: $236,115 Criteria: 2 CFR § 200.303 – Internal Controls 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.” 2 CFR § 200.403, states in part, “Except where otherwise authorized by statute, costs must meet the following criteria to be allowable under Federal awards: … (f) Not be included as a cost or used to meet cost sharing requirements of any other federally-financed program in either the current or a prior period. See § 200.306(b).” Condition and Context: During our cash basis reconciliation of the Office of Management and Enterprise Services (OMES) Schedule of Expenditures of Federal Awards (SEFA) for SFY 2023 to the State of Oklahoma - Statewide Accounting System, we reconciled the agency’s cash basis expenditures of $4,295,065 for AL #21.027. However, we noted $235,290 of OMES CSLFRF expenditures from class fund 488 (ARPA Advance Grants) for administrative costs to run the grant were expended on AL #84.825C - Governor's Emergency Education Relief (GEER) and AL #21.023 - Emergency Rental Assistance (ERA). In addition, during our accounts payable reconciliation of the OMES SEFA for SFY 2023 to State of Oklahoma - Statewide Accounting System, we reconciled the agency’s accounts payable expenditures of $27,323 for AL #21.027. However, we noted $825 of CSLFRF expenditures from class fund 488 was used on expenditures for AL #84.825C - GEER. Cause: The State of Oklahoma/Office of Management and Enterprise Services (OMES) did not have adequate controls in place to prevent expending CSLFRF class fund 488 funds on other federal programs. Effect: Unallowable costs totaling $236,115 were charged to CSLFRF grant for SFY 2023. Recommendation: We recommend OMES develop and implement procedures to ensure CSLFRF funds (class fund 488) are not expended on other federal programs. Views of Responsible Official(s) Contact Person: Parker Wise Anticipated Completion Date: Controls have been put into place and will continue through the end of the Federal Period of Performance and closeout. Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-005 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State And Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles QUESTIONED COSTS: $236,115 Criteria: 2 CFR § 200.303 – Internal Controls 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.” 2 CFR § 200.403, states in part, “Except where otherwise authorized by statute, costs must meet the following criteria to be allowable under Federal awards: … (f) Not be included as a cost or used to meet cost sharing requirements of any other federally-financed program in either the current or a prior period. See § 200.306(b).” Condition and Context: During our cash basis reconciliation of the Office of Management and Enterprise Services (OMES) Schedule of Expenditures of Federal Awards (SEFA) for SFY 2023 to the State of Oklahoma - Statewide Accounting System, we reconciled the agency’s cash basis expenditures of $4,295,065 for AL #21.027. However, we noted $235,290 of OMES CSLFRF expenditures from class fund 488 (ARPA Advance Grants) for administrative costs to run the grant were expended on AL #84.825C - Governor's Emergency Education Relief (GEER) and AL #21.023 - Emergency Rental Assistance (ERA). In addition, during our accounts payable reconciliation of the OMES SEFA for SFY 2023 to State of Oklahoma - Statewide Accounting System, we reconciled the agency’s accounts payable expenditures of $27,323 for AL #21.027. However, we noted $825 of CSLFRF expenditures from class fund 488 was used on expenditures for AL #84.825C - GEER. Cause: The State of Oklahoma/Office of Management and Enterprise Services (OMES) did not have adequate controls in place to prevent expending CSLFRF class fund 488 funds on other federal programs. Effect: Unallowable costs totaling $236,115 were charged to CSLFRF grant for SFY 2023. Recommendation: We recommend OMES develop and implement procedures to ensure CSLFRF funds (class fund 488) are not expended on other federal programs. Views of Responsible Official(s) Contact Person: Parker Wise Anticipated Completion Date: Controls have been put into place and will continue through the end of the Federal Period of Performance and closeout. Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-005 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State And Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles QUESTIONED COSTS: $236,115 Criteria: 2 CFR § 200.303 – Internal Controls 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.” 2 CFR § 200.403, states in part, “Except where otherwise authorized by statute, costs must meet the following criteria to be allowable under Federal awards: … (f) Not be included as a cost or used to meet cost sharing requirements of any other federally-financed program in either the current or a prior period. See § 200.306(b).” Condition and Context: During our cash basis reconciliation of the Office of Management and Enterprise Services (OMES) Schedule of Expenditures of Federal Awards (SEFA) for SFY 2023 to the State of Oklahoma - Statewide Accounting System, we reconciled the agency’s cash basis expenditures of $4,295,065 for AL #21.027. However, we noted $235,290 of OMES CSLFRF expenditures from class fund 488 (ARPA Advance Grants) for administrative costs to run the grant were expended on AL #84.825C - Governor's Emergency Education Relief (GEER) and AL #21.023 - Emergency Rental Assistance (ERA). In addition, during our accounts payable reconciliation of the OMES SEFA for SFY 2023 to State of Oklahoma - Statewide Accounting System, we reconciled the agency’s accounts payable expenditures of $27,323 for AL #21.027. However, we noted $825 of CSLFRF expenditures from class fund 488 was used on expenditures for AL #84.825C - GEER. Cause: The State of Oklahoma/Office of Management and Enterprise Services (OMES) did not have adequate controls in place to prevent expending CSLFRF class fund 488 funds on other federal programs. Effect: Unallowable costs totaling $236,115 were charged to CSLFRF grant for SFY 2023. Recommendation: We recommend OMES develop and implement procedures to ensure CSLFRF funds (class fund 488) are not expended on other federal programs. Views of Responsible Official(s) Contact Person: Parker Wise Anticipated Completion Date: Controls have been put into place and will continue through the end of the Federal Period of Performance and closeout. Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-005 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State And Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles QUESTIONED COSTS: $236,115 Criteria: 2 CFR § 200.303 – Internal Controls 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.” 2 CFR § 200.403, states in part, “Except where otherwise authorized by statute, costs must meet the following criteria to be allowable under Federal awards: … (f) Not be included as a cost or used to meet cost sharing requirements of any other federally-financed program in either the current or a prior period. See § 200.306(b).” Condition and Context: During our cash basis reconciliation of the Office of Management and Enterprise Services (OMES) Schedule of Expenditures of Federal Awards (SEFA) for SFY 2023 to the State of Oklahoma - Statewide Accounting System, we reconciled the agency’s cash basis expenditures of $4,295,065 for AL #21.027. However, we noted $235,290 of OMES CSLFRF expenditures from class fund 488 (ARPA Advance Grants) for administrative costs to run the grant were expended on AL #84.825C - Governor's Emergency Education Relief (GEER) and AL #21.023 - Emergency Rental Assistance (ERA). In addition, during our accounts payable reconciliation of the OMES SEFA for SFY 2023 to State of Oklahoma - Statewide Accounting System, we reconciled the agency’s accounts payable expenditures of $27,323 for AL #21.027. However, we noted $825 of CSLFRF expenditures from class fund 488 was used on expenditures for AL #84.825C - GEER. Cause: The State of Oklahoma/Office of Management and Enterprise Services (OMES) did not have adequate controls in place to prevent expending CSLFRF class fund 488 funds on other federal programs. Effect: Unallowable costs totaling $236,115 were charged to CSLFRF grant for SFY 2023. Recommendation: We recommend OMES develop and implement procedures to ensure CSLFRF funds (class fund 488) are not expended on other federal programs. Views of Responsible Official(s) Contact Person: Parker Wise Anticipated Completion Date: Controls have been put into place and will continue through the end of the Federal Period of Performance and closeout. Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-005 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State And Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles QUESTIONED COSTS: $236,115 Criteria: 2 CFR § 200.303 – Internal Controls 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.” 2 CFR § 200.403, states in part, “Except where otherwise authorized by statute, costs must meet the following criteria to be allowable under Federal awards: … (f) Not be included as a cost or used to meet cost sharing requirements of any other federally-financed program in either the current or a prior period. See § 200.306(b).” Condition and Context: During our cash basis reconciliation of the Office of Management and Enterprise Services (OMES) Schedule of Expenditures of Federal Awards (SEFA) for SFY 2023 to the State of Oklahoma - Statewide Accounting System, we reconciled the agency’s cash basis expenditures of $4,295,065 for AL #21.027. However, we noted $235,290 of OMES CSLFRF expenditures from class fund 488 (ARPA Advance Grants) for administrative costs to run the grant were expended on AL #84.825C - Governor's Emergency Education Relief (GEER) and AL #21.023 - Emergency Rental Assistance (ERA). In addition, during our accounts payable reconciliation of the OMES SEFA for SFY 2023 to State of Oklahoma - Statewide Accounting System, we reconciled the agency’s accounts payable expenditures of $27,323 for AL #21.027. However, we noted $825 of CSLFRF expenditures from class fund 488 was used on expenditures for AL #84.825C - GEER. Cause: The State of Oklahoma/Office of Management and Enterprise Services (OMES) did not have adequate controls in place to prevent expending CSLFRF class fund 488 funds on other federal programs. Effect: Unallowable costs totaling $236,115 were charged to CSLFRF grant for SFY 2023. Recommendation: We recommend OMES develop and implement procedures to ensure CSLFRF funds (class fund 488) are not expended on other federal programs. Views of Responsible Official(s) Contact Person: Parker Wise Anticipated Completion Date: Controls have been put into place and will continue through the end of the Federal Period of Performance and closeout. Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-005 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State And Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles QUESTIONED COSTS: $236,115 Criteria: 2 CFR § 200.303 – Internal Controls 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.” 2 CFR § 200.403, states in part, “Except where otherwise authorized by statute, costs must meet the following criteria to be allowable under Federal awards: … (f) Not be included as a cost or used to meet cost sharing requirements of any other federally-financed program in either the current or a prior period. See § 200.306(b).” Condition and Context: During our cash basis reconciliation of the Office of Management and Enterprise Services (OMES) Schedule of Expenditures of Federal Awards (SEFA) for SFY 2023 to the State of Oklahoma - Statewide Accounting System, we reconciled the agency’s cash basis expenditures of $4,295,065 for AL #21.027. However, we noted $235,290 of OMES CSLFRF expenditures from class fund 488 (ARPA Advance Grants) for administrative costs to run the grant were expended on AL #84.825C - Governor's Emergency Education Relief (GEER) and AL #21.023 - Emergency Rental Assistance (ERA). In addition, during our accounts payable reconciliation of the OMES SEFA for SFY 2023 to State of Oklahoma - Statewide Accounting System, we reconciled the agency’s accounts payable expenditures of $27,323 for AL #21.027. However, we noted $825 of CSLFRF expenditures from class fund 488 was used on expenditures for AL #84.825C - GEER. Cause: The State of Oklahoma/Office of Management and Enterprise Services (OMES) did not have adequate controls in place to prevent expending CSLFRF class fund 488 funds on other federal programs. Effect: Unallowable costs totaling $236,115 were charged to CSLFRF grant for SFY 2023. Recommendation: We recommend OMES develop and implement procedures to ensure CSLFRF funds (class fund 488) are not expended on other federal programs. Views of Responsible Official(s) Contact Person: Parker Wise Anticipated Completion Date: Controls have been put into place and will continue through the end of the Federal Period of Performance and closeout. Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-005 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State And Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles QUESTIONED COSTS: $236,115 Criteria: 2 CFR § 200.303 – Internal Controls 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.” 2 CFR § 200.403, states in part, “Except where otherwise authorized by statute, costs must meet the following criteria to be allowable under Federal awards: … (f) Not be included as a cost or used to meet cost sharing requirements of any other federally-financed program in either the current or a prior period. See § 200.306(b).” Condition and Context: During our cash basis reconciliation of the Office of Management and Enterprise Services (OMES) Schedule of Expenditures of Federal Awards (SEFA) for SFY 2023 to the State of Oklahoma - Statewide Accounting System, we reconciled the agency’s cash basis expenditures of $4,295,065 for AL #21.027. However, we noted $235,290 of OMES CSLFRF expenditures from class fund 488 (ARPA Advance Grants) for administrative costs to run the grant were expended on AL #84.825C - Governor's Emergency Education Relief (GEER) and AL #21.023 - Emergency Rental Assistance (ERA). In addition, during our accounts payable reconciliation of the OMES SEFA for SFY 2023 to State of Oklahoma - Statewide Accounting System, we reconciled the agency’s accounts payable expenditures of $27,323 for AL #21.027. However, we noted $825 of CSLFRF expenditures from class fund 488 was used on expenditures for AL #84.825C - GEER. Cause: The State of Oklahoma/Office of Management and Enterprise Services (OMES) did not have adequate controls in place to prevent expending CSLFRF class fund 488 funds on other federal programs. Effect: Unallowable costs totaling $236,115 were charged to CSLFRF grant for SFY 2023. Recommendation: We recommend OMES develop and implement procedures to ensure CSLFRF funds (class fund 488) are not expended on other federal programs. Views of Responsible Official(s) Contact Person: Parker Wise Anticipated Completion Date: Controls have been put into place and will continue through the end of the Federal Period of Performance and closeout. Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-005 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State And Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles QUESTIONED COSTS: $236,115 Criteria: 2 CFR § 200.303 – Internal Controls 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.” 2 CFR § 200.403, states in part, “Except where otherwise authorized by statute, costs must meet the following criteria to be allowable under Federal awards: … (f) Not be included as a cost or used to meet cost sharing requirements of any other federally-financed program in either the current or a prior period. See § 200.306(b).” Condition and Context: During our cash basis reconciliation of the Office of Management and Enterprise Services (OMES) Schedule of Expenditures of Federal Awards (SEFA) for SFY 2023 to the State of Oklahoma - Statewide Accounting System, we reconciled the agency’s cash basis expenditures of $4,295,065 for AL #21.027. However, we noted $235,290 of OMES CSLFRF expenditures from class fund 488 (ARPA Advance Grants) for administrative costs to run the grant were expended on AL #84.825C - Governor's Emergency Education Relief (GEER) and AL #21.023 - Emergency Rental Assistance (ERA). In addition, during our accounts payable reconciliation of the OMES SEFA for SFY 2023 to State of Oklahoma - Statewide Accounting System, we reconciled the agency’s accounts payable expenditures of $27,323 for AL #21.027. However, we noted $825 of CSLFRF expenditures from class fund 488 was used on expenditures for AL #84.825C - GEER. Cause: The State of Oklahoma/Office of Management and Enterprise Services (OMES) did not have adequate controls in place to prevent expending CSLFRF class fund 488 funds on other federal programs. Effect: Unallowable costs totaling $236,115 were charged to CSLFRF grant for SFY 2023. Recommendation: We recommend OMES develop and implement procedures to ensure CSLFRF funds (class fund 488) are not expended on other federal programs. Views of Responsible Official(s) Contact Person: Parker Wise Anticipated Completion Date: Controls have been put into place and will continue through the end of the Federal Period of Performance and closeout. Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-005 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State And Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles QUESTIONED COSTS: $236,115 Criteria: 2 CFR § 200.303 – Internal Controls 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.” 2 CFR § 200.403, states in part, “Except where otherwise authorized by statute, costs must meet the following criteria to be allowable under Federal awards: … (f) Not be included as a cost or used to meet cost sharing requirements of any other federally-financed program in either the current or a prior period. See § 200.306(b).” Condition and Context: During our cash basis reconciliation of the Office of Management and Enterprise Services (OMES) Schedule of Expenditures of Federal Awards (SEFA) for SFY 2023 to the State of Oklahoma - Statewide Accounting System, we reconciled the agency’s cash basis expenditures of $4,295,065 for AL #21.027. However, we noted $235,290 of OMES CSLFRF expenditures from class fund 488 (ARPA Advance Grants) for administrative costs to run the grant were expended on AL #84.825C - Governor's Emergency Education Relief (GEER) and AL #21.023 - Emergency Rental Assistance (ERA). In addition, during our accounts payable reconciliation of the OMES SEFA for SFY 2023 to State of Oklahoma - Statewide Accounting System, we reconciled the agency’s accounts payable expenditures of $27,323 for AL #21.027. However, we noted $825 of CSLFRF expenditures from class fund 488 was used on expenditures for AL #84.825C - GEER. Cause: The State of Oklahoma/Office of Management and Enterprise Services (OMES) did not have adequate controls in place to prevent expending CSLFRF class fund 488 funds on other federal programs. Effect: Unallowable costs totaling $236,115 were charged to CSLFRF grant for SFY 2023. Recommendation: We recommend OMES develop and implement procedures to ensure CSLFRF funds (class fund 488) are not expended on other federal programs. Views of Responsible Official(s) Contact Person: Parker Wise Anticipated Completion Date: Controls have been put into place and will continue through the end of the Federal Period of Performance and closeout. Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-005 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State And Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles QUESTIONED COSTS: $236,115 Criteria: 2 CFR § 200.303 – Internal Controls 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.” 2 CFR § 200.403, states in part, “Except where otherwise authorized by statute, costs must meet the following criteria to be allowable under Federal awards: … (f) Not be included as a cost or used to meet cost sharing requirements of any other federally-financed program in either the current or a prior period. See § 200.306(b).” Condition and Context: During our cash basis reconciliation of the Office of Management and Enterprise Services (OMES) Schedule of Expenditures of Federal Awards (SEFA) for SFY 2023 to the State of Oklahoma - Statewide Accounting System, we reconciled the agency’s cash basis expenditures of $4,295,065 for AL #21.027. However, we noted $235,290 of OMES CSLFRF expenditures from class fund 488 (ARPA Advance Grants) for administrative costs to run the grant were expended on AL #84.825C - Governor's Emergency Education Relief (GEER) and AL #21.023 - Emergency Rental Assistance (ERA). In addition, during our accounts payable reconciliation of the OMES SEFA for SFY 2023 to State of Oklahoma - Statewide Accounting System, we reconciled the agency’s accounts payable expenditures of $27,323 for AL #21.027. However, we noted $825 of CSLFRF expenditures from class fund 488 was used on expenditures for AL #84.825C - GEER. Cause: The State of Oklahoma/Office of Management and Enterprise Services (OMES) did not have adequate controls in place to prevent expending CSLFRF class fund 488 funds on other federal programs. Effect: Unallowable costs totaling $236,115 were charged to CSLFRF grant for SFY 2023. Recommendation: We recommend OMES develop and implement procedures to ensure CSLFRF funds (class fund 488) are not expended on other federal programs. Views of Responsible Official(s) Contact Person: Parker Wise Anticipated Completion Date: Controls have been put into place and will continue through the end of the Federal Period of Performance and closeout. Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-005 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State And Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles QUESTIONED COSTS: $236,115 Criteria: 2 CFR § 200.303 – Internal Controls 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.” 2 CFR § 200.403, states in part, “Except where otherwise authorized by statute, costs must meet the following criteria to be allowable under Federal awards: … (f) Not be included as a cost or used to meet cost sharing requirements of any other federally-financed program in either the current or a prior period. See § 200.306(b).” Condition and Context: During our cash basis reconciliation of the Office of Management and Enterprise Services (OMES) Schedule of Expenditures of Federal Awards (SEFA) for SFY 2023 to the State of Oklahoma - Statewide Accounting System, we reconciled the agency’s cash basis expenditures of $4,295,065 for AL #21.027. However, we noted $235,290 of OMES CSLFRF expenditures from class fund 488 (ARPA Advance Grants) for administrative costs to run the grant were expended on AL #84.825C - Governor's Emergency Education Relief (GEER) and AL #21.023 - Emergency Rental Assistance (ERA). In addition, during our accounts payable reconciliation of the OMES SEFA for SFY 2023 to State of Oklahoma - Statewide Accounting System, we reconciled the agency’s accounts payable expenditures of $27,323 for AL #21.027. However, we noted $825 of CSLFRF expenditures from class fund 488 was used on expenditures for AL #84.825C - GEER. Cause: The State of Oklahoma/Office of Management and Enterprise Services (OMES) did not have adequate controls in place to prevent expending CSLFRF class fund 488 funds on other federal programs. Effect: Unallowable costs totaling $236,115 were charged to CSLFRF grant for SFY 2023. Recommendation: We recommend OMES develop and implement procedures to ensure CSLFRF funds (class fund 488) are not expended on other federal programs. Views of Responsible Official(s) Contact Person: Parker Wise Anticipated Completion Date: Controls have been put into place and will continue through the end of the Federal Period of Performance and closeout. Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-005 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State And Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles QUESTIONED COSTS: $236,115 Criteria: 2 CFR § 200.303 – Internal Controls 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.” 2 CFR § 200.403, states in part, “Except where otherwise authorized by statute, costs must meet the following criteria to be allowable under Federal awards: … (f) Not be included as a cost or used to meet cost sharing requirements of any other federally-financed program in either the current or a prior period. See § 200.306(b).” Condition and Context: During our cash basis reconciliation of the Office of Management and Enterprise Services (OMES) Schedule of Expenditures of Federal Awards (SEFA) for SFY 2023 to the State of Oklahoma - Statewide Accounting System, we reconciled the agency’s cash basis expenditures of $4,295,065 for AL #21.027. However, we noted $235,290 of OMES CSLFRF expenditures from class fund 488 (ARPA Advance Grants) for administrative costs to run the grant were expended on AL #84.825C - Governor's Emergency Education Relief (GEER) and AL #21.023 - Emergency Rental Assistance (ERA). In addition, during our accounts payable reconciliation of the OMES SEFA for SFY 2023 to State of Oklahoma - Statewide Accounting System, we reconciled the agency’s accounts payable expenditures of $27,323 for AL #21.027. However, we noted $825 of CSLFRF expenditures from class fund 488 was used on expenditures for AL #84.825C - GEER. Cause: The State of Oklahoma/Office of Management and Enterprise Services (OMES) did not have adequate controls in place to prevent expending CSLFRF class fund 488 funds on other federal programs. Effect: Unallowable costs totaling $236,115 were charged to CSLFRF grant for SFY 2023. Recommendation: We recommend OMES develop and implement procedures to ensure CSLFRF funds (class fund 488) are not expended on other federal programs. Views of Responsible Official(s) Contact Person: Parker Wise Anticipated Completion Date: Controls have been put into place and will continue through the end of the Federal Period of Performance and closeout. Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-005 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State And Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles QUESTIONED COSTS: $236,115 Criteria: 2 CFR § 200.303 – Internal Controls 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.” 2 CFR § 200.403, states in part, “Except where otherwise authorized by statute, costs must meet the following criteria to be allowable under Federal awards: … (f) Not be included as a cost or used to meet cost sharing requirements of any other federally-financed program in either the current or a prior period. See § 200.306(b).” Condition and Context: During our cash basis reconciliation of the Office of Management and Enterprise Services (OMES) Schedule of Expenditures of Federal Awards (SEFA) for SFY 2023 to the State of Oklahoma - Statewide Accounting System, we reconciled the agency’s cash basis expenditures of $4,295,065 for AL #21.027. However, we noted $235,290 of OMES CSLFRF expenditures from class fund 488 (ARPA Advance Grants) for administrative costs to run the grant were expended on AL #84.825C - Governor's Emergency Education Relief (GEER) and AL #21.023 - Emergency Rental Assistance (ERA). In addition, during our accounts payable reconciliation of the OMES SEFA for SFY 2023 to State of Oklahoma - Statewide Accounting System, we reconciled the agency’s accounts payable expenditures of $27,323 for AL #21.027. However, we noted $825 of CSLFRF expenditures from class fund 488 was used on expenditures for AL #84.825C - GEER. Cause: The State of Oklahoma/Office of Management and Enterprise Services (OMES) did not have adequate controls in place to prevent expending CSLFRF class fund 488 funds on other federal programs. Effect: Unallowable costs totaling $236,115 were charged to CSLFRF grant for SFY 2023. Recommendation: We recommend OMES develop and implement procedures to ensure CSLFRF funds (class fund 488) are not expended on other federal programs. Views of Responsible Official(s) Contact Person: Parker Wise Anticipated Completion Date: Controls have been put into place and will continue through the end of the Federal Period of Performance and closeout. Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-005 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State And Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles QUESTIONED COSTS: $236,115 Criteria: 2 CFR § 200.303 – Internal Controls 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.” 2 CFR § 200.403, states in part, “Except where otherwise authorized by statute, costs must meet the following criteria to be allowable under Federal awards: … (f) Not be included as a cost or used to meet cost sharing requirements of any other federally-financed program in either the current or a prior period. See § 200.306(b).” Condition and Context: During our cash basis reconciliation of the Office of Management and Enterprise Services (OMES) Schedule of Expenditures of Federal Awards (SEFA) for SFY 2023 to the State of Oklahoma - Statewide Accounting System, we reconciled the agency’s cash basis expenditures of $4,295,065 for AL #21.027. However, we noted $235,290 of OMES CSLFRF expenditures from class fund 488 (ARPA Advance Grants) for administrative costs to run the grant were expended on AL #84.825C - Governor's Emergency Education Relief (GEER) and AL #21.023 - Emergency Rental Assistance (ERA). In addition, during our accounts payable reconciliation of the OMES SEFA for SFY 2023 to State of Oklahoma - Statewide Accounting System, we reconciled the agency’s accounts payable expenditures of $27,323 for AL #21.027. However, we noted $825 of CSLFRF expenditures from class fund 488 was used on expenditures for AL #84.825C - GEER. Cause: The State of Oklahoma/Office of Management and Enterprise Services (OMES) did not have adequate controls in place to prevent expending CSLFRF class fund 488 funds on other federal programs. Effect: Unallowable costs totaling $236,115 were charged to CSLFRF grant for SFY 2023. Recommendation: We recommend OMES develop and implement procedures to ensure CSLFRF funds (class fund 488) are not expended on other federal programs. Views of Responsible Official(s) Contact Person: Parker Wise Anticipated Completion Date: Controls have been put into place and will continue through the end of the Federal Period of Performance and closeout. Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-005 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State And Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles QUESTIONED COSTS: $236,115 Criteria: 2 CFR § 200.303 – Internal Controls 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.” 2 CFR § 200.403, states in part, “Except where otherwise authorized by statute, costs must meet the following criteria to be allowable under Federal awards: … (f) Not be included as a cost or used to meet cost sharing requirements of any other federally-financed program in either the current or a prior period. See § 200.306(b).” Condition and Context: During our cash basis reconciliation of the Office of Management and Enterprise Services (OMES) Schedule of Expenditures of Federal Awards (SEFA) for SFY 2023 to the State of Oklahoma - Statewide Accounting System, we reconciled the agency’s cash basis expenditures of $4,295,065 for AL #21.027. However, we noted $235,290 of OMES CSLFRF expenditures from class fund 488 (ARPA Advance Grants) for administrative costs to run the grant were expended on AL #84.825C - Governor's Emergency Education Relief (GEER) and AL #21.023 - Emergency Rental Assistance (ERA). In addition, during our accounts payable reconciliation of the OMES SEFA for SFY 2023 to State of Oklahoma - Statewide Accounting System, we reconciled the agency’s accounts payable expenditures of $27,323 for AL #21.027. However, we noted $825 of CSLFRF expenditures from class fund 488 was used on expenditures for AL #84.825C - GEER. Cause: The State of Oklahoma/Office of Management and Enterprise Services (OMES) did not have adequate controls in place to prevent expending CSLFRF class fund 488 funds on other federal programs. Effect: Unallowable costs totaling $236,115 were charged to CSLFRF grant for SFY 2023. Recommendation: We recommend OMES develop and implement procedures to ensure CSLFRF funds (class fund 488) are not expended on other federal programs. Views of Responsible Official(s) Contact Person: Parker Wise Anticipated Completion Date: Controls have been put into place and will continue through the end of the Federal Period of Performance and closeout. Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-208 (Repeat Finding 2022-206) STATE AGENCY: Oklahoma Department of Health FEDERAL AGENCY: United States Department of Health and Human Services ALN: 93.268 FEDERAL PROGRAM NAME: Immunizations Cooperative Agreements FEDERAL AWARD NUMBER: 6 NH23IP922575-02-06, 6 NH23IP922575-02-05, 6 NH23IP922575-03-01 FEDERAL AWARD YEAR: 2021, 2022 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles QUESTIONED COSTS: Unknown Criteria: 7 CFR § 246.3 Administration. Delegation to the State agency states in part, “The State agency is responsible for the effective and efficient administration of the Program in accordance with the requirements of this part; the Department's regulations governing nondiscrimination (7 CFR parts 15, 15a, and 15b); governing administration of grants (2 CFR part 200, subparts A through F…).” 2 CFR §200.403 (a) Factors affecting allowability of costs states, “Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles.” Condition: The Oklahoma State Department of Health (the “Department”) entered into a contract with a vendor, which included the following clause in its statement of work for the Department: “… development and implementation of a communications strategy around OSDH legislative priorities leading up to and during the 2022 session.” In accordance with applicable law, direct lobbying communications by award recipients are prohibited. Direct lobbying includes any attempt to influence legislative or other similar deliberations at all levels of government through communications that directly express a view on proposed or pending legislation and other orders and which are directed to members, staff, or other employees of a legislative body or to government officials or employees who participate in the formulation of legislation or other orders. The amount indicated in the statement of work provided for payment of up to $100,000 in lobbying activity. Cause and Effect: As a result of the unallowable activities being included in the statement of work, the Department charged lobbying costs against federal funds. Immunizations Cooperative assistance listing 93.268: Voucher Supplier Date Account Activity PO ID Amount 467138 221538 9/20/2022 541130 FEES 3409024811 1,429.73 The Department’s support for the above invoices did not include an itemized detail of specific services provided. Thus, we are unable to determine how much, if any, of these charges related to possible lobbying activity. Due to the qualitative impact of utilizing federal funds for a statement of work containing lobbying activities and not clearly being able to decipher which invoices the cited $100,000 of lobbying activity was paid, the Department is considered noncompliant with 2 CFR §200.403. Recommendation: We recommend a more thorough review of the statements of work occur to prevent unallowable activities when authorizing a purchase order funded by federal sources. Views of Responsible Official(s) Contact Person: Stefan Von Dollen Anticipated Completion Date: 6/30/24 Corrective Action Planned: The Oklahoma State Department of Health agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-208 (Repeat Finding 2022-206) STATE AGENCY: Oklahoma Department of Health FEDERAL AGENCY: United States Department of Health and Human Services ALN: 93.268 FEDERAL PROGRAM NAME: Immunizations Cooperative Agreements FEDERAL AWARD NUMBER: 6 NH23IP922575-02-06, 6 NH23IP922575-02-05, 6 NH23IP922575-03-01 FEDERAL AWARD YEAR: 2021, 2022 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles QUESTIONED COSTS: Unknown Criteria: 7 CFR § 246.3 Administration. Delegation to the State agency states in part, “The State agency is responsible for the effective and efficient administration of the Program in accordance with the requirements of this part; the Department's regulations governing nondiscrimination (7 CFR parts 15, 15a, and 15b); governing administration of grants (2 CFR part 200, subparts A through F…).” 2 CFR §200.403 (a) Factors affecting allowability of costs states, “Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles.” Condition: The Oklahoma State Department of Health (the “Department”) entered into a contract with a vendor, which included the following clause in its statement of work for the Department: “… development and implementation of a communications strategy around OSDH legislative priorities leading up to and during the 2022 session.” In accordance with applicable law, direct lobbying communications by award recipients are prohibited. Direct lobbying includes any attempt to influence legislative or other similar deliberations at all levels of government through communications that directly express a view on proposed or pending legislation and other orders and which are directed to members, staff, or other employees of a legislative body or to government officials or employees who participate in the formulation of legislation or other orders. The amount indicated in the statement of work provided for payment of up to $100,000 in lobbying activity. Cause and Effect: As a result of the unallowable activities being included in the statement of work, the Department charged lobbying costs against federal funds. Immunizations Cooperative assistance listing 93.268: Voucher Supplier Date Account Activity PO ID Amount 467138 221538 9/20/2022 541130 FEES 3409024811 1,429.73 The Department’s support for the above invoices did not include an itemized detail of specific services provided. Thus, we are unable to determine how much, if any, of these charges related to possible lobbying activity. Due to the qualitative impact of utilizing federal funds for a statement of work containing lobbying activities and not clearly being able to decipher which invoices the cited $100,000 of lobbying activity was paid, the Department is considered noncompliant with 2 CFR §200.403. Recommendation: We recommend a more thorough review of the statements of work occur to prevent unallowable activities when authorizing a purchase order funded by federal sources. Views of Responsible Official(s) Contact Person: Stefan Von Dollen Anticipated Completion Date: 6/30/24 Corrective Action Planned: The Oklahoma State Department of Health agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-209 (Repeat Finding 2022-206) STATE AGENCY: Oklahoma Department of Health FEDERAL AGENCY: United States Department of Health and Human Services ALN: 93.323 FEDERAL PROGRAM NAME: Epidemiology and Laboratory Capacity for Infectious Diseases FEDERAL AWARD NUMBER: NU50CK000535-02-06 FEDERAL AWARD YEAR: 2021, 2022 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles QUESTIONED COSTS: Unknown Criteria: 7 CFR § 246.3 Administration. Delegation to the State agency states in part, “The State agency is responsible for the effective and efficient administration of the Program in accordance with the requirements of this part; the Department's regulations governing nondiscrimination (7 CFR parts 15, 15a, and 15b); governing administration of grants (2 CFR part 200, subparts A through F…).” 2 CFR §200.403 (a) Factors affecting allowability of costs states, “Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles.” Condition: The Oklahoma State Department of Health (the “Department”) entered into a contract with a vendor, which included the following clause in its statement of work for the Department: “… development and implementation of a communications strategy around OSDH legislative priorities leading up to and during the 2022 session.” In accordance with applicable law, direct lobbying communications by award recipients are prohibited. Direct lobbying includes any attempt to influence legislative or other similar deliberations at all levels of government through communications that directly express a view on proposed or pending legislation and other orders and which are directed to members, staff, or other employees of a legislative body or to government officials or employees who participate in the formulation of legislation or other orders. The amount indicated in the statement of work provided for payment of up to $100,000 in lobbying activity. Cause and Effect: As a result of the unallowable activities being included in the statement of work, the Department charged lobbying costs against federal funds. Through inspection of the invoices provided by the Department relating to this vendor, it was also discovered that voucher 463351, for $3,000 was included in federal expenditures in duplicate, once in fiscal year 2022’s SEFA and again in fiscal year 2023’s SEFA. Due to not receiving detailed supporting schedules of related FFR’s it is not known if the Department was reimbursed twice for this single voucher. Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) assistance listing 93.323: Voucher Supplier Date Account Activity PO ID Amount 465771 221538 8/29/2022 515490 FEES 3409024811 5,614.00 462826 221538 7/11/2022 515490 FEES 3409024811 18,000.50 463350 221538 7/20/2022 515490 FEES 3409024811 172,009.16 463351 221538 7/20/2022 515490 FEES 3409024811 3,000.00 465481 221538 8/24/2022 515490 FEES 3409024811 270,313.14 Voucher 465771 invoice included line items discussing campaign check ins, and it cannot be determined whether this could relate to lobbying activities. The invoice also includes various client communications and consulting. Voucher 462826’s invoice detail is similarly vague with consulting and project updates. Vouchers 463350 and 465481 appear to be solely for radio and television advertising, thus these invoices appear allowable based on the compliance supplement stating “recruiting and enrolling providers” along with the language which identifies key activities of 93.268 to include implementing community engagement strategies to promote COVID vaccination; however, lobbying activities could exist within the invoicing that is not specifically called out. Due to the qualitative impact of utilizing federal funds for a statement of work containing lobbying activities and not clearly being able to decipher which invoices the cited $100,000 of lobbying activity was paid, the Department is considered noncompliant with 2 CFR §200.403. Recommendation: We recommend a more thorough review of the statements of work occur to prevent unallowable activities when authorizing a purchase order funded by federal sources. Views of Responsible Official(s) Contact Person: Stefan Von Dollen Anticipated Completion Date: 6/30/24 Corrective Action Planned: The Oklahoma State Department of Health agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-209 (Repeat Finding 2022-206) STATE AGENCY: Oklahoma Department of Health FEDERAL AGENCY: United States Department of Health and Human Services ALN: 93.323 FEDERAL PROGRAM NAME: Epidemiology and Laboratory Capacity for Infectious Diseases FEDERAL AWARD NUMBER: NU50CK000535-02-06 FEDERAL AWARD YEAR: 2021, 2022 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles QUESTIONED COSTS: Unknown Criteria: 7 CFR § 246.3 Administration. Delegation to the State agency states in part, “The State agency is responsible for the effective and efficient administration of the Program in accordance with the requirements of this part; the Department's regulations governing nondiscrimination (7 CFR parts 15, 15a, and 15b); governing administration of grants (2 CFR part 200, subparts A through F…).” 2 CFR §200.403 (a) Factors affecting allowability of costs states, “Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles.” Condition: The Oklahoma State Department of Health (the “Department”) entered into a contract with a vendor, which included the following clause in its statement of work for the Department: “… development and implementation of a communications strategy around OSDH legislative priorities leading up to and during the 2022 session.” In accordance with applicable law, direct lobbying communications by award recipients are prohibited. Direct lobbying includes any attempt to influence legislative or other similar deliberations at all levels of government through communications that directly express a view on proposed or pending legislation and other orders and which are directed to members, staff, or other employees of a legislative body or to government officials or employees who participate in the formulation of legislation or other orders. The amount indicated in the statement of work provided for payment of up to $100,000 in lobbying activity. Cause and Effect: As a result of the unallowable activities being included in the statement of work, the Department charged lobbying costs against federal funds. Through inspection of the invoices provided by the Department relating to this vendor, it was also discovered that voucher 463351, for $3,000 was included in federal expenditures in duplicate, once in fiscal year 2022’s SEFA and again in fiscal year 2023’s SEFA. Due to not receiving detailed supporting schedules of related FFR’s it is not known if the Department was reimbursed twice for this single voucher. Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) assistance listing 93.323: Voucher Supplier Date Account Activity PO ID Amount 465771 221538 8/29/2022 515490 FEES 3409024811 5,614.00 462826 221538 7/11/2022 515490 FEES 3409024811 18,000.50 463350 221538 7/20/2022 515490 FEES 3409024811 172,009.16 463351 221538 7/20/2022 515490 FEES 3409024811 3,000.00 465481 221538 8/24/2022 515490 FEES 3409024811 270,313.14 Voucher 465771 invoice included line items discussing campaign check ins, and it cannot be determined whether this could relate to lobbying activities. The invoice also includes various client communications and consulting. Voucher 462826’s invoice detail is similarly vague with consulting and project updates. Vouchers 463350 and 465481 appear to be solely for radio and television advertising, thus these invoices appear allowable based on the compliance supplement stating “recruiting and enrolling providers” along with the language which identifies key activities of 93.268 to include implementing community engagement strategies to promote COVID vaccination; however, lobbying activities could exist within the invoicing that is not specifically called out. Due to the qualitative impact of utilizing federal funds for a statement of work containing lobbying activities and not clearly being able to decipher which invoices the cited $100,000 of lobbying activity was paid, the Department is considered noncompliant with 2 CFR §200.403. Recommendation: We recommend a more thorough review of the statements of work occur to prevent unallowable activities when authorizing a purchase order funded by federal sources. Views of Responsible Official(s) Contact Person: Stefan Von Dollen Anticipated Completion Date: 6/30/24 Corrective Action Planned: The Oklahoma State Department of Health agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-209 (Repeat Finding 2022-206) STATE AGENCY: Oklahoma Department of Health FEDERAL AGENCY: United States Department of Health and Human Services ALN: 93.323 FEDERAL PROGRAM NAME: Epidemiology and Laboratory Capacity for Infectious Diseases FEDERAL AWARD NUMBER: NU50CK000535-02-06 FEDERAL AWARD YEAR: 2021, 2022 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles QUESTIONED COSTS: Unknown Criteria: 7 CFR § 246.3 Administration. Delegation to the State agency states in part, “The State agency is responsible for the effective and efficient administration of the Program in accordance with the requirements of this part; the Department's regulations governing nondiscrimination (7 CFR parts 15, 15a, and 15b); governing administration of grants (2 CFR part 200, subparts A through F…).” 2 CFR §200.403 (a) Factors affecting allowability of costs states, “Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles.” Condition: The Oklahoma State Department of Health (the “Department”) entered into a contract with a vendor, which included the following clause in its statement of work for the Department: “… development and implementation of a communications strategy around OSDH legislative priorities leading up to and during the 2022 session.” In accordance with applicable law, direct lobbying communications by award recipients are prohibited. Direct lobbying includes any attempt to influence legislative or other similar deliberations at all levels of government through communications that directly express a view on proposed or pending legislation and other orders and which are directed to members, staff, or other employees of a legislative body or to government officials or employees who participate in the formulation of legislation or other orders. The amount indicated in the statement of work provided for payment of up to $100,000 in lobbying activity. Cause and Effect: As a result of the unallowable activities being included in the statement of work, the Department charged lobbying costs against federal funds. Through inspection of the invoices provided by the Department relating to this vendor, it was also discovered that voucher 463351, for $3,000 was included in federal expenditures in duplicate, once in fiscal year 2022’s SEFA and again in fiscal year 2023’s SEFA. Due to not receiving detailed supporting schedules of related FFR’s it is not known if the Department was reimbursed twice for this single voucher. Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) assistance listing 93.323: Voucher Supplier Date Account Activity PO ID Amount 465771 221538 8/29/2022 515490 FEES 3409024811 5,614.00 462826 221538 7/11/2022 515490 FEES 3409024811 18,000.50 463350 221538 7/20/2022 515490 FEES 3409024811 172,009.16 463351 221538 7/20/2022 515490 FEES 3409024811 3,000.00 465481 221538 8/24/2022 515490 FEES 3409024811 270,313.14 Voucher 465771 invoice included line items discussing campaign check ins, and it cannot be determined whether this could relate to lobbying activities. The invoice also includes various client communications and consulting. Voucher 462826’s invoice detail is similarly vague with consulting and project updates. Vouchers 463350 and 465481 appear to be solely for radio and television advertising, thus these invoices appear allowable based on the compliance supplement stating “recruiting and enrolling providers” along with the language which identifies key activities of 93.268 to include implementing community engagement strategies to promote COVID vaccination; however, lobbying activities could exist within the invoicing that is not specifically called out. Due to the qualitative impact of utilizing federal funds for a statement of work containing lobbying activities and not clearly being able to decipher which invoices the cited $100,000 of lobbying activity was paid, the Department is considered noncompliant with 2 CFR §200.403. Recommendation: We recommend a more thorough review of the statements of work occur to prevent unallowable activities when authorizing a purchase order funded by federal sources. Views of Responsible Official(s) Contact Person: Stefan Von Dollen Anticipated Completion Date: 6/30/24 Corrective Action Planned: The Oklahoma State Department of Health agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-209 (Repeat Finding 2022-206) STATE AGENCY: Oklahoma Department of Health FEDERAL AGENCY: United States Department of Health and Human Services ALN: 93.323 FEDERAL PROGRAM NAME: Epidemiology and Laboratory Capacity for Infectious Diseases FEDERAL AWARD NUMBER: NU50CK000535-02-06 FEDERAL AWARD YEAR: 2021, 2022 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles QUESTIONED COSTS: Unknown Criteria: 7 CFR § 246.3 Administration. Delegation to the State agency states in part, “The State agency is responsible for the effective and efficient administration of the Program in accordance with the requirements of this part; the Department's regulations governing nondiscrimination (7 CFR parts 15, 15a, and 15b); governing administration of grants (2 CFR part 200, subparts A through F…).” 2 CFR §200.403 (a) Factors affecting allowability of costs states, “Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles.” Condition: The Oklahoma State Department of Health (the “Department”) entered into a contract with a vendor, which included the following clause in its statement of work for the Department: “… development and implementation of a communications strategy around OSDH legislative priorities leading up to and during the 2022 session.” In accordance with applicable law, direct lobbying communications by award recipients are prohibited. Direct lobbying includes any attempt to influence legislative or other similar deliberations at all levels of government through communications that directly express a view on proposed or pending legislation and other orders and which are directed to members, staff, or other employees of a legislative body or to government officials or employees who participate in the formulation of legislation or other orders. The amount indicated in the statement of work provided for payment of up to $100,000 in lobbying activity. Cause and Effect: As a result of the unallowable activities being included in the statement of work, the Department charged lobbying costs against federal funds. Through inspection of the invoices provided by the Department relating to this vendor, it was also discovered that voucher 463351, for $3,000 was included in federal expenditures in duplicate, once in fiscal year 2022’s SEFA and again in fiscal year 2023’s SEFA. Due to not receiving detailed supporting schedules of related FFR’s it is not known if the Department was reimbursed twice for this single voucher. Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) assistance listing 93.323: Voucher Supplier Date Account Activity PO ID Amount 465771 221538 8/29/2022 515490 FEES 3409024811 5,614.00 462826 221538 7/11/2022 515490 FEES 3409024811 18,000.50 463350 221538 7/20/2022 515490 FEES 3409024811 172,009.16 463351 221538 7/20/2022 515490 FEES 3409024811 3,000.00 465481 221538 8/24/2022 515490 FEES 3409024811 270,313.14 Voucher 465771 invoice included line items discussing campaign check ins, and it cannot be determined whether this could relate to lobbying activities. The invoice also includes various client communications and consulting. Voucher 462826’s invoice detail is similarly vague with consulting and project updates. Vouchers 463350 and 465481 appear to be solely for radio and television advertising, thus these invoices appear allowable based on the compliance supplement stating “recruiting and enrolling providers” along with the language which identifies key activities of 93.268 to include implementing community engagement strategies to promote COVID vaccination; however, lobbying activities could exist within the invoicing that is not specifically called out. Due to the qualitative impact of utilizing federal funds for a statement of work containing lobbying activities and not clearly being able to decipher which invoices the cited $100,000 of lobbying activity was paid, the Department is considered noncompliant with 2 CFR §200.403. Recommendation: We recommend a more thorough review of the statements of work occur to prevent unallowable activities when authorizing a purchase order funded by federal sources. Views of Responsible Official(s) Contact Person: Stefan Von Dollen Anticipated Completion Date: 6/30/24 Corrective Action Planned: The Oklahoma State Department of Health agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-209 (Repeat Finding 2022-206) STATE AGENCY: Oklahoma Department of Health FEDERAL AGENCY: United States Department of Health and Human Services ALN: 93.323 FEDERAL PROGRAM NAME: Epidemiology and Laboratory Capacity for Infectious Diseases FEDERAL AWARD NUMBER: NU50CK000535-02-06 FEDERAL AWARD YEAR: 2021, 2022 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles QUESTIONED COSTS: Unknown Criteria: 7 CFR § 246.3 Administration. Delegation to the State agency states in part, “The State agency is responsible for the effective and efficient administration of the Program in accordance with the requirements of this part; the Department's regulations governing nondiscrimination (7 CFR parts 15, 15a, and 15b); governing administration of grants (2 CFR part 200, subparts A through F…).” 2 CFR §200.403 (a) Factors affecting allowability of costs states, “Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles.” Condition: The Oklahoma State Department of Health (the “Department”) entered into a contract with a vendor, which included the following clause in its statement of work for the Department: “… development and implementation of a communications strategy around OSDH legislative priorities leading up to and during the 2022 session.” In accordance with applicable law, direct lobbying communications by award recipients are prohibited. Direct lobbying includes any attempt to influence legislative or other similar deliberations at all levels of government through communications that directly express a view on proposed or pending legislation and other orders and which are directed to members, staff, or other employees of a legislative body or to government officials or employees who participate in the formulation of legislation or other orders. The amount indicated in the statement of work provided for payment of up to $100,000 in lobbying activity. Cause and Effect: As a result of the unallowable activities being included in the statement of work, the Department charged lobbying costs against federal funds. Through inspection of the invoices provided by the Department relating to this vendor, it was also discovered that voucher 463351, for $3,000 was included in federal expenditures in duplicate, once in fiscal year 2022’s SEFA and again in fiscal year 2023’s SEFA. Due to not receiving detailed supporting schedules of related FFR’s it is not known if the Department was reimbursed twice for this single voucher. Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) assistance listing 93.323: Voucher Supplier Date Account Activity PO ID Amount 465771 221538 8/29/2022 515490 FEES 3409024811 5,614.00 462826 221538 7/11/2022 515490 FEES 3409024811 18,000.50 463350 221538 7/20/2022 515490 FEES 3409024811 172,009.16 463351 221538 7/20/2022 515490 FEES 3409024811 3,000.00 465481 221538 8/24/2022 515490 FEES 3409024811 270,313.14 Voucher 465771 invoice included line items discussing campaign check ins, and it cannot be determined whether this could relate to lobbying activities. The invoice also includes various client communications and consulting. Voucher 462826’s invoice detail is similarly vague with consulting and project updates. Vouchers 463350 and 465481 appear to be solely for radio and television advertising, thus these invoices appear allowable based on the compliance supplement stating “recruiting and enrolling providers” along with the language which identifies key activities of 93.268 to include implementing community engagement strategies to promote COVID vaccination; however, lobbying activities could exist within the invoicing that is not specifically called out. Due to the qualitative impact of utilizing federal funds for a statement of work containing lobbying activities and not clearly being able to decipher which invoices the cited $100,000 of lobbying activity was paid, the Department is considered noncompliant with 2 CFR §200.403. Recommendation: We recommend a more thorough review of the statements of work occur to prevent unallowable activities when authorizing a purchase order funded by federal sources. Views of Responsible Official(s) Contact Person: Stefan Von Dollen Anticipated Completion Date: 6/30/24 Corrective Action Planned: The Oklahoma State Department of Health agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-209 (Repeat Finding 2022-206) STATE AGENCY: Oklahoma Department of Health FEDERAL AGENCY: United States Department of Health and Human Services ALN: 93.323 FEDERAL PROGRAM NAME: Epidemiology and Laboratory Capacity for Infectious Diseases FEDERAL AWARD NUMBER: NU50CK000535-02-06 FEDERAL AWARD YEAR: 2021, 2022 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles QUESTIONED COSTS: Unknown Criteria: 7 CFR § 246.3 Administration. Delegation to the State agency states in part, “The State agency is responsible for the effective and efficient administration of the Program in accordance with the requirements of this part; the Department's regulations governing nondiscrimination (7 CFR parts 15, 15a, and 15b); governing administration of grants (2 CFR part 200, subparts A through F…).” 2 CFR §200.403 (a) Factors affecting allowability of costs states, “Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles.” Condition: The Oklahoma State Department of Health (the “Department”) entered into a contract with a vendor, which included the following clause in its statement of work for the Department: “… development and implementation of a communications strategy around OSDH legislative priorities leading up to and during the 2022 session.” In accordance with applicable law, direct lobbying communications by award recipients are prohibited. Direct lobbying includes any attempt to influence legislative or other similar deliberations at all levels of government through communications that directly express a view on proposed or pending legislation and other orders and which are directed to members, staff, or other employees of a legislative body or to government officials or employees who participate in the formulation of legislation or other orders. The amount indicated in the statement of work provided for payment of up to $100,000 in lobbying activity. Cause and Effect: As a result of the unallowable activities being included in the statement of work, the Department charged lobbying costs against federal funds. Through inspection of the invoices provided by the Department relating to this vendor, it was also discovered that voucher 463351, for $3,000 was included in federal expenditures in duplicate, once in fiscal year 2022’s SEFA and again in fiscal year 2023’s SEFA. Due to not receiving detailed supporting schedules of related FFR’s it is not known if the Department was reimbursed twice for this single voucher. Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) assistance listing 93.323: Voucher Supplier Date Account Activity PO ID Amount 465771 221538 8/29/2022 515490 FEES 3409024811 5,614.00 462826 221538 7/11/2022 515490 FEES 3409024811 18,000.50 463350 221538 7/20/2022 515490 FEES 3409024811 172,009.16 463351 221538 7/20/2022 515490 FEES 3409024811 3,000.00 465481 221538 8/24/2022 515490 FEES 3409024811 270,313.14 Voucher 465771 invoice included line items discussing campaign check ins, and it cannot be determined whether this could relate to lobbying activities. The invoice also includes various client communications and consulting. Voucher 462826’s invoice detail is similarly vague with consulting and project updates. Vouchers 463350 and 465481 appear to be solely for radio and television advertising, thus these invoices appear allowable based on the compliance supplement stating “recruiting and enrolling providers” along with the language which identifies key activities of 93.268 to include implementing community engagement strategies to promote COVID vaccination; however, lobbying activities could exist within the invoicing that is not specifically called out. Due to the qualitative impact of utilizing federal funds for a statement of work containing lobbying activities and not clearly being able to decipher which invoices the cited $100,000 of lobbying activity was paid, the Department is considered noncompliant with 2 CFR §200.403. Recommendation: We recommend a more thorough review of the statements of work occur to prevent unallowable activities when authorizing a purchase order funded by federal sources. Views of Responsible Official(s) Contact Person: Stefan Von Dollen Anticipated Completion Date: 6/30/24 Corrective Action Planned: The Oklahoma State Department of Health agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-099 STATE AGENCY: Oklahoma Department of Human Services FEDERAL AGENCY: Department of Health and Human Services ALN: 93.575 FEDERAL PROGRAM NAME: CCDF Cluster FEDERAL AWARD NUMBER: 2101OKCSC6 FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Eligibility, Special Tests and Provisions – Child Care Provider Eligibility for ARP Act Stabilization QUESTIONED COSTS: $2,110,487 Criteria: American Rescue Plan Act of 2021 (ARP) § 2202(e)(1) states in part, USES OF FUNDS-, ”In GENERAL - A qualified child care provider that receives funds through such a subgrant shall use the funds for at least one of the following: (A) Personnel costs, including payroll and salaries or similar compensation for an employee (including any sole proprietor or independent contractor), employee benefits, premium pay, or costs for employee recruitment and retention. (B) Rent (including rent under a lease agreement) or payment on any mortgage obligation, utilities, facility maintenance or improvements, or insurance. (C) Personal protective equipment, cleaning and sanitization supplies and services, or training and professional development related to health and safety practices. (D) Purchases of or updates to equipment and supplies to respond to the COVID–19 public health emergency. (E) Goods and services necessary to maintain or resume child care services. (F) Mental health supports for children and employees.” 2 CFR § 200.303(a) – Internal Controls states in part, “The 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.” 2 CFR § 200.403 Factors affecting allowability of costs states in part, “Costs must…(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, … and (g) Be adequately documented.” Condition and Context: DHS (Department) began implementing a new Quality Rating and Improvement System (QRIS), also known as Stars, that became effective January 1, 2023. Under the new system, the State of Oklahoma has five levels (1-5) of quality ratings for all licensed childcare programs. All licensed programs immediately qualify as a 1 Star. In preparation of the new system, all daycares were asked to submit an updated Stars application (also called reapplication period). A Stars resource booklet, applicable to the daycare type, facility, small home, or large home, and a cover letter was e-mailed to each daycare on June 1, 2022, to provide guidance when requesting a Stars level. The Department offered a financial incentive to those daycares who submitted an application on or before November 30, 2022. The application asked each daycare to provide Stars Level Requested; the higher the Stars level approved the greater the grant funding and subsidy payments. For example, if you were a 1 Star facility for cycles 5 & 6 and you requested and were approved to become a 5 Star facility for cycles 7 & 8, you would receive approximately 3 times more funding for those cycles. Daycares were informed that Stars criteria reviews would not be performed during the reapplication period unless a serious non-compliance was observed during a regular monitoring visit. Also, the Stars yearly monitoring visit, and two partial visits, were waived by the Department for calendar year 2023. The Department provided Childcare ARP Act Stabilization grant funding to daycare homes and centers for SFY 2023 (July 1, 2022 to June 30, 2023) based on an approved grant application per cycle. For cycles 5 & 6 (July 2022 – December 2022) the award was based on licensed capacity. Stabilization grant funding for cycles 7 & 8 (January 2023 – June 2023) were awarded based on licensed capacity and Stars rating. When attempting to obtain the supporting documentation for discretionary stabilization benefit payments, we were informed by the Department that no financial documentation was requested from the homes or centers for the funding provided in SFY 2023. As a result, we requested the documentation directly from the homes and centers. We tested a total of 89 daycare homes and centers that received ARP Act Discretionary stabilization funds during SFY 2023 (July 1, 2022 – June 30, 2023). The universe included 8,994 providers with $227,904,150 in total awards. Tested awards for daycare homes and centers totaled $8,672,400. We noted the following issues for the 89 grant recipients tested: • For 16 (17.98%) of 89 daycare providers tested, stabilization funds were not expended on allowable activities. Expenditures for unallowable activities totaled $633,361.47. • For 19 (21.35%) of 89 daycare providers tested, stabilization funds could not be supported with adequate documentation; therefore, we could not determine whether the stabilization funds were expended on allowable activities. Expenditures for unsupported activities totaled $1,477,125.62. • For 42 (53.84%) of 78 (excluded 11 providers that only received one cycle payment) daycare providers tested, the Stars rating increased by at least 2 from cycles 5-6 to cycles 7-8. Cause: The Department had no process or internal controls in place to ensure they monitor stabilization funds expended by childcare providers. Also, the Department did not have adequate controls in place to support the increase in Stars rating for homes and centers since there were no reviews and/or monitoring performed on which to quantify their assessments. Finally, most daycare homes and centers commingled their regular and grant funds, making it difficult to determine whether homes and centers used the daycare stabilization funds for allowable activities. Effect: Stabilization funds were not expended in compliance with Section 2202(e)(1) of the ARP Act of 2021. Further, allowing daycares to request their own Star level increase dramatically increased the amount of funding most daycare homes or centers received, and the increased Star level may not have been appropriate based on the actual performance, or quality and safety level, of the daycare. Lastly, with no Department monitoring of stabilization funds expended by providers, and most daycare providers having commingled grant funds with their regular funds, grant funds could continue to be expended on unallowable activities. Recommendation: We recommend the Department develop and implement financial daycare controls to ensure stabilization funds are expended by daycares according to grant guidelines. Further, we recommend the Department ensure adequate Stars reviews and/or monitoring have been performed, prior to increasing grant funding and subsidy payments. Lastly, we recommend Department work with daycare homes and centers to ensure grant funds are maintained in separate bank accounts, from personal funds. Views of Responsible Official(s) Contact Person: Kayla Urtz Anticipated Completion Date: N/A Corrective Action Planned: The Department of Human Services does not agree with the finding. Please see the corrective action plan located in the corrective action plan section of this report. Auditor Response: The Department of Human Services advanced all CCDF Stabilization funds without having proper controls in place to ensure the funds were spent on allowable CCDF costs. Federal regulations state the lead agency (i.e., DHS) is responsible for fiscal controls and accounting procedures sufficient to permit the tracing of funds to a level adequate to establish that CCDF funds have not been used in violation of this grant.
FINDING NO: 2023-104 STATE AGENCY: Oklahoma Department of Human Services FEDERAL AGENCY: Department of Health and Human Services ALN: 93.575 FEDERAL PROGRAM NAME: CCDF Cluster FEDERAL AWARD NUMBER: 2101OKCDC6 FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Eligibility QUESTIONED COSTS: $11,942,325 Condition and Context: DHS begam implementing a new Childcare Desert Grant program starting in August 2022 in order to help increase accessibility to quality childcare for working families living in a county where there is not enough licensed childcare to support the needs of the residents. The grants were available for new or existing daycare homes or centers seeking to increase licensed capacity. Funds awarded under this program were intended to be used for minor construction, program materials, or technology and software for business development necessary to meet licensing requirements. For new daycares, applicants could receive a total of $10,000 per child with an initial advance of $5,000 per child payment made at the time of approval based on the licensed capacity, and a second $5,000 per child payment made at 12 months based on the enrollment. For expansion/ existing daycares, applicants could receive a total of $10,000 per child with an initial advance of $5,000 per child payment made at the time of approval based on the number of expanded slots, and a second $5,000 per child payment made at 12 months based on the number of children enrolled in the expanded slots. We tested a sample of 73 (58 new and 15 existing sites) Child Care Centers (CCC) or Family Daycare Homes (FDCH) that received American Rescue Plan (ARP) Desert grant supplemental funds during SFY 2023 (July 1, 2022 – June 30, 2023). The universe included 348 Child Care providers with $43,725,000 in total awards. Tested awards for sampled providers totaled $16,180,000. We noted the following Desert grant Eligibility or Activities Allowed expenditure exceptions: ELIGIBILITY • The eligibility criteria per the 1st round Desert Grant Application was not met and the required qualifications were not provided prior to the application approval date for the following: o For 2 of 58 (3.45%) new facilities, the license K8 # issuance date and application visit date were not prior to the Childcare Desert Grant Application approval date. o For 6 of 58 (10.34%) new facilities, the CCC/FDCH did not complete and return the Desert Grant New Program Questionnaire. o For 1 of 58 (1.72%) new facilities, a Physical Plant description (which shows the facility layout, square footage and any proposed re-modeling) was obtained, however, it does not agree to the DHS monitoring visit form. o For 1 of 58 (1.72%) new facilities, the CCC had a change in ownership without a break in operations. • For 11 of 73 (15.07%) awards paid, the Desert grant award amount per CCC/FDCH was not calculated correctly and in compliance with program requirements: overpayments totaled $1,945,000. We questioned these costs. • The new/expanded CCC's/FDCH's did not comply with all post application approval eligibility criteria applicable to the SFY23 time period as follows: For 10 of 58 (17.24%) of new facilities, the permit date was not within 90 days of the grant fund payment. • For 67 of 73 (91.78%) Desert Grant awardees, OKDHS awarded STARS under the OKDHS Quality Rating Improvement System (QRIS) without any monitoring visits to verify the program met the requirements for the STAR level awarded. • For 18 of 73 (24.66%) Desert Grant awardees, the Program received Desert Grant Funds, Stabilization Funds and/or STARS Subsidies; however, no records were provided for review, therefore, it was not possible to ascertain if the awardee was tracking the expenditures for each grant separately, or if funds were comingled inappropriately. ACTIVITIES ALLOWED • For 1 of 73 (1.72%) Desert Grant CCC awardees, construction and remodeling costs significantly exceeded the $350,000 limit for minor remodeling and, failed to meet the requirement under 45 CFR § 98.2 (2) because the facility was extensively altered such as to significantly change its function and purpose. OKDHS appears to have approved the construction plans for this provider without any review of the actual costs. We questioned the Desert Grant funds expended over the $350,000 limit totaling $146,122.50 which is included in the $1,945,000 overpayments listed above. • For 2 of 73 (2.74%) Desert Grant awardees, it appears that the program is sectarian in nature and, expenditures were made for items not necessary to meet licensing requirements or were for sectarian instruction. The questioned costs are covered in other bullets since there is an overlap in some of the exceptions. • For 23 of 73 (31.51%) awardees paid a total $2,515,000 (15.54% of total award amount of $16,180,000), the CCC/FDCH did not provide any records, therefore, we are unable to verify these expenditures were allowable. We questioned these costs. • For 50 of 73 (68.49%) Desert Grant awardees that did provide records to SAI: o 47 of 50 (94%) awardees reported expenditures for unallowable activities totaling $6,413,783.04. We questioned these costs. o 36 of 50 (72%) awardees reported expenditures on tracking spreadsheet totaling $1,068,542 for which adequate supporting documentation (i.e., receipts, invoices) was not present. We questioned these costs. • For 8 of 73 (9.59%) Desert Grant awardees, it appears that possible misappropriation of funds has occurred including the following: o Large expenditures for non-childcare related activities o Remodeling and/or equipment purchases for other entities or sectarian organizations o Using funds to start up and operate other entities/nonprofits including paying employees for fulltime work when they are actually working for other entities o Excessive payroll costs and other unnecessary and unreasonable costs o Large transfers of grant funds into personal accounts or other entities’ accounts o Comingling of grant funds with sectarian related accounts • One awardee that received Desert Grant awards for elementary and middle school age children after school programs operated at two public schools received a combined total of $2,165,000 in first round funding (the largest Desert Grant recipient). The award amount received was based on the potential licensing capacity of the schools (per square footage of gym/cafeteria and classrooms, available restrooms, outdoor playgrounds, kitchens, etc.); however, the awardee was not the owner of the facility or renting the facility because the public school provided the space without charge and therefore was not actually running and operating an independent day care facility. The awardee also had significantly lower costs than a true day care facility would have but still received the same amount per child as facilities with significantly higher operating and start-up costs. In addition, the awardee’s spouse was the Director of the CCDF program at the time the awards were made. We questioned 100% of these two awards and the questioned costs are included the exceptions noted above. SAI noted that 20 of 73 (27.40%) Desert Grant Awardees paid a total of $2,000,000 in 1st round awards were no longer operating (no longer listed on the DHS Child Locator site) as of the end of March 2025. Cause: The Department did not design the Desert grant program to ensure ARP Act CCDF funds were only used to expand access to childcare assistance to more income eligible families and improve the quality and availability of childcare. • The Department allowed programs with the least restrictive licensing requirements (i.e., out of school, after school, summer programs) to receive the same amount per child as a program offering full time infant to school age childcare. • The Department did not award funds based on the actual costs necessary for each individual CCC or FDCH to meet licensing requirements which resulted in many providers that had large amounts of cash at their disposal even after meeting licensing requirements. • The Department advanced Desert grant funds to awardees in one lump sum instead of on an incremental basis ensuring planned remodeling work and program equipment and materials were being completed and/or acquired appropriately and, were reasonable and necessary to meet program requirements. • The Department awarded the first round of Desert Grant funds based solely on potential capacity and did not consider any other significant factors (i.e., business experience, number of children likely to be enrolled, ability to hire, train and retain qualified staff, etc.) essential to the operational sustainability of the new CCC or FDCH at the capacity level awarded. This contributed to many instances in which the CCC/ FDCH closed within two years of receiving the award or is currently operating at an enrollment level significantly below the awarded capacity. • The Desert Grant Application included language that was insufficient to adequately inform the Desert grant awardees of all unallowable uses of the funds, including remodeling funding limits, limitations for sectarian organizations and, expenditures that were only allowable under other ARP CCDF stabilization grants. • The Department did not have adequate safeguards in place to ensure Desert Grant funds were not inappropriately awarded to immediate family members of CCDF program administers. Many daycare homes and centers commingled their grant funds with personal accounts and/or other business accounts making it difficult to determine whether homes and centers used the daycare Desert Grant funds for allowable activities. The Desert Grant program may not effectively increase and/or sustain the increase in total capacity of childcare centers in low-income areas as intended. The Department has not established adequate policies and procedures to monitor Desert Grant funds expended by childcare providers. OKDHS CCDF did not normally create or administer new grant programs other than CCDF regular childcare subsidy program. In addition, the ARP CCDF Discretionary and supplemental funds had to be obligated by September 30, 2023, and liquidated by September 30, 2024, which reduced the timeline available to develop the new grant programs. However, OKDHS CCDF did have extensive experience with childcare licensing requirements and associated costs of operating the various types of childcare programs. Effect: Desert grant funds were not used by majority of CCC and FDCH to expand daycare attendance within desert regions, since there were no repercussions to not meeting the licensing capacity they paid on. The failure to monitor the use of Desert grant funds may lead to the Departments inability to recover grant funds not used in accordance with the grant requirements and/or used for non-childcare expenditures or misappropriated for other uses. The Desert Grant program may not effectively increase and/or sustain the increase in total capacity of childcare centers in low-income areas as intended. Recommendation: We recommend the Department develop policies and procedures to ensure Desert grant funds are monitored to ensure funds are expended properly to meet the objective of the grant. We recommend the Department perform a review of all Desert grant funds awarded and expended, identify all funds not used for the Desert grants intended purposes, and ensure remaining funds are expended appropriately or returned. We also recommend the Department recoup all funds for the following: o Funds awarded based on incorrect capacity counts o Expenditures for non-childcare purposes o Expenditures that benefited entities other than the facility awarded the desert grant o Excessive or unreasonable expenditures o Unexpended funds not needed to meet program requirements o Unaccounted for funds (i.e., funds transferred out or comingled with investment accounts, personal accounts, or other business/non-profit accounts) Criteria: 2 CFR § 200.303(a) – Internal Controls states in part, “The 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.” 2 CFR § 200.403 Factors affecting allowability of costs states in part, “Costs must…(a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, and (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, and (g) Be adequately documented.” The Desert grant FAQs state in part, …“How much are the Child Care Desert grants? For New Programs: Applicants may receive a total of $10,000 per child with an initial payment made at the time of approval based on license capacity, and a second $5,000 per child payment made at 12 months based on enrollment. The second payment cannot exceed the amount of the first payment. For Expansion Programs: Applicants may receive a total of $10,000 per child with an initial payment made at the time of approval based on the number of expanded slots, and a second $5,000 per child payment made at 12 months based on the number of children enrolled in the expansion slots. … What are the Qualifications for grant eligibility? … • Must accept subsidy payments • Must participate in the Quality Rating Improvement System (QRIS/STARS) • Must operate for a minimum of two years after date of initial award. • Be located in an identified child care desert. (A list of Child Care Desert counties can be reviewed at the end of this document.) • Make services available to families regardless of race, color, creed, religion, national origin, sex, marital status, disability, age, sexual orientation, or familial status. • Complete grant participation agreement, located at the end of the application. • Complete and return questionnaire that will be provided to you via email after you submit the grant application. • Be determined eligible by Oklahoma Human Services staff who review the applications. NOTE: Programs that have recently closed and reopen without an increase in capacity do not qualify OR Programs that have recently had a change in ownership without a break in operation do not qualify. … Child care providers must NOT use the funds for any of the following purposes: • Purchase of land or property • Major construction or renovations. Major renovation means: (1) structural changes to the foundation, roof, floor, exterior or load-bearing walls of a facility or the extension of a facility to increase its floor area; or (2) extensive alteration of a facility such as to significantly change its function and purpose, even if such renovation does not include any structural change. • Consumable supplies (diapers, wipes, soap, paper products) or office supplies (paper, staples, pens) • One-time field trips for children • Child care tuition (scholarships) • Items prohibited by licensing • Used items • Non-child care expenses … How long do I have to start operating my program after I receive the initial award? Child care programs will have 90 days from receipt of the awarded grant funds to complete the application process and be placed on a six-month permit. Once you have a permit, you can begin serving children. If you are not on permit within 90 days, you may be required to return the initial award amount. … You must be approved for a 2-star level or higher within 12 months of receipt of initial award. If you do not meet this requirement, you may be required to return the initial award and will not qualify for a second award. You must be approved for a subsidy contract within 12 months of receipt of initial award. If you do not meet this requirement, you may be required to return the initial award and will not qualify for a second award. Child care programs must participate in QRIS at two star or higher in order to receive a subsidy contract. The Desert Grant application states in part, “By signing this application, I understand that it is my responsibility to maintain records and other documentation to support the use of funds I receive, as well as to document my compliance with the requirements. I understand I must provide these documents to Oklahoma Human Services if requested. … Allowable uses of Grant Funds: Grant funds can be used to cover minor construction projects or program materials per application. All materials must be new, and must be purchased from a retail store, not a private party. In the event the grant recipient wishes to have the cost of assembly and/or installation covered by a grant, the labor must be performed by a licensed and bonded contractor. The grant may be used for technology and software to create and maintain business management systems. Provider Affirmation The following signature affirms that I will adhere to the qualifications listed above and will only spend the funds on allowable uses. I understand that I may be required to re-pay grant funds if I do not adhere to all the terms of this agreement. 42 U.S. Code § 9858 c(c)(2)(I) states in part, “In the case of a sectarian agency or organization, no funds made available under this subchapter may be used for the purposes described in paragraph (1) except to the extent that renovation or repair is necessary to bring the facility of such agency or organization into compliance with health and safety requirements…” 42 U.S. Code § 9858k(a) states, “No financial assistance provided under this subchapter, pursuant to the choice of a parent under section 9858c(c)(2)(A)(i)(I) of this title or through any other grant or contract under the State plan, shall be expended for any sectarian purpose or activity, including sectarian worship or instruction.” 42 U.S. Code § 9858k(b) states in part, “With regard to services provided to students enrolled in grades 1 through 12, no financial assistance provided under this subchapter shall be expended for— (1) any services provided to such students during the regular school day; (2) any services for which such students receive academic credit toward graduation.” 42 U.S. Code § 9858d(b) states in part, “…no funds shall be expended for the purchase or improvement of land, or for the purchase, construction, or permanent improvement (other than minor remodeling) of any building or facility. 45 CFR § 98.2, states in part, Definitions states in part, “Major renovation means any renovation that has a cost equal to or exceeding $350,000 in CCDF funds for child care centers and $50,000 in CCDF funds for family child care homes, which amount shall be adjusted annually for inflation and published on the Office of Child Care website. If renovation costs exceed these thresholds and do not include: (1) Structural changes to the foundation, roof, floor, exterior or load-bearing walls of a facility, or the extension of a facility to increase its floor area; or (2) Extensive alteration of a facility such as to significantly change its function and purpose for direct child care services, even if such renovation does not include any structural change; and improve the health, safety, and/or quality of child care, then it shall not be considered major renovation;” Views of Responsible Official(s) Contact Person: Kayla Urtz Anticipated Completion Date: N/A Corrective Action Planned: The Department of Human Services does not agree with the finding. Please see the corrective action plan located in the corrective action plan section of this report. Auditor Response: The Department of Human Services advanced all Supplemental Desert grant funds without having proper controls in place to ensure the funds were spent on allowable CCDF costs. Federal regulations state the lead agency (i.e., DHS) is responsible for fiscal controls and accounting procedures sufficient to permit the tracing of funds to a level adequate to establish that CCDF funds have not been used in violation of this grant. The OKDHS stated we drew our conclusions from incomplete documentation, but that is not an accurate statement. We requested support from the sampled daycares to attempt to support costs for minor construction, program materials, or technology per the grant application. For most of the costs sampled, our conclusion was validated by either lack of adequate support, costs not being allowed, or no support provided.
FINDING NO: 2023-099 STATE AGENCY: Oklahoma Department of Human Services FEDERAL AGENCY: Department of Health and Human Services ALN: 93.575 FEDERAL PROGRAM NAME: CCDF Cluster FEDERAL AWARD NUMBER: 2101OKCSC6 FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Eligibility, Special Tests and Provisions – Child Care Provider Eligibility for ARP Act Stabilization QUESTIONED COSTS: $2,110,487 Criteria: American Rescue Plan Act of 2021 (ARP) § 2202(e)(1) states in part, USES OF FUNDS-, ”In GENERAL - A qualified child care provider that receives funds through such a subgrant shall use the funds for at least one of the following: (A) Personnel costs, including payroll and salaries or similar compensation for an employee (including any sole proprietor or independent contractor), employee benefits, premium pay, or costs for employee recruitment and retention. (B) Rent (including rent under a lease agreement) or payment on any mortgage obligation, utilities, facility maintenance or improvements, or insurance. (C) Personal protective equipment, cleaning and sanitization supplies and services, or training and professional development related to health and safety practices. (D) Purchases of or updates to equipment and supplies to respond to the COVID–19 public health emergency. (E) Goods and services necessary to maintain or resume child care services. (F) Mental health supports for children and employees.” 2 CFR § 200.303(a) – Internal Controls states in part, “The 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.” 2 CFR § 200.403 Factors affecting allowability of costs states in part, “Costs must…(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, … and (g) Be adequately documented.” Condition and Context: DHS (Department) began implementing a new Quality Rating and Improvement System (QRIS), also known as Stars, that became effective January 1, 2023. Under the new system, the State of Oklahoma has five levels (1-5) of quality ratings for all licensed childcare programs. All licensed programs immediately qualify as a 1 Star. In preparation of the new system, all daycares were asked to submit an updated Stars application (also called reapplication period). A Stars resource booklet, applicable to the daycare type, facility, small home, or large home, and a cover letter was e-mailed to each daycare on June 1, 2022, to provide guidance when requesting a Stars level. The Department offered a financial incentive to those daycares who submitted an application on or before November 30, 2022. The application asked each daycare to provide Stars Level Requested; the higher the Stars level approved the greater the grant funding and subsidy payments. For example, if you were a 1 Star facility for cycles 5 & 6 and you requested and were approved to become a 5 Star facility for cycles 7 & 8, you would receive approximately 3 times more funding for those cycles. Daycares were informed that Stars criteria reviews would not be performed during the reapplication period unless a serious non-compliance was observed during a regular monitoring visit. Also, the Stars yearly monitoring visit, and two partial visits, were waived by the Department for calendar year 2023. The Department provided Childcare ARP Act Stabilization grant funding to daycare homes and centers for SFY 2023 (July 1, 2022 to June 30, 2023) based on an approved grant application per cycle. For cycles 5 & 6 (July 2022 – December 2022) the award was based on licensed capacity. Stabilization grant funding for cycles 7 & 8 (January 2023 – June 2023) were awarded based on licensed capacity and Stars rating. When attempting to obtain the supporting documentation for discretionary stabilization benefit payments, we were informed by the Department that no financial documentation was requested from the homes or centers for the funding provided in SFY 2023. As a result, we requested the documentation directly from the homes and centers. We tested a total of 89 daycare homes and centers that received ARP Act Discretionary stabilization funds during SFY 2023 (July 1, 2022 – June 30, 2023). The universe included 8,994 providers with $227,904,150 in total awards. Tested awards for daycare homes and centers totaled $8,672,400. We noted the following issues for the 89 grant recipients tested: • For 16 (17.98%) of 89 daycare providers tested, stabilization funds were not expended on allowable activities. Expenditures for unallowable activities totaled $633,361.47. • For 19 (21.35%) of 89 daycare providers tested, stabilization funds could not be supported with adequate documentation; therefore, we could not determine whether the stabilization funds were expended on allowable activities. Expenditures for unsupported activities totaled $1,477,125.62. • For 42 (53.84%) of 78 (excluded 11 providers that only received one cycle payment) daycare providers tested, the Stars rating increased by at least 2 from cycles 5-6 to cycles 7-8. Cause: The Department had no process or internal controls in place to ensure they monitor stabilization funds expended by childcare providers. Also, the Department did not have adequate controls in place to support the increase in Stars rating for homes and centers since there were no reviews and/or monitoring performed on which to quantify their assessments. Finally, most daycare homes and centers commingled their regular and grant funds, making it difficult to determine whether homes and centers used the daycare stabilization funds for allowable activities. Effect: Stabilization funds were not expended in compliance with Section 2202(e)(1) of the ARP Act of 2021. Further, allowing daycares to request their own Star level increase dramatically increased the amount of funding most daycare homes or centers received, and the increased Star level may not have been appropriate based on the actual performance, or quality and safety level, of the daycare. Lastly, with no Department monitoring of stabilization funds expended by providers, and most daycare providers having commingled grant funds with their regular funds, grant funds could continue to be expended on unallowable activities. Recommendation: We recommend the Department develop and implement financial daycare controls to ensure stabilization funds are expended by daycares according to grant guidelines. Further, we recommend the Department ensure adequate Stars reviews and/or monitoring have been performed, prior to increasing grant funding and subsidy payments. Lastly, we recommend Department work with daycare homes and centers to ensure grant funds are maintained in separate bank accounts, from personal funds. Views of Responsible Official(s) Contact Person: Kayla Urtz Anticipated Completion Date: N/A Corrective Action Planned: The Department of Human Services does not agree with the finding. Please see the corrective action plan located in the corrective action plan section of this report. Auditor Response: The Department of Human Services advanced all CCDF Stabilization funds without having proper controls in place to ensure the funds were spent on allowable CCDF costs. Federal regulations state the lead agency (i.e., DHS) is responsible for fiscal controls and accounting procedures sufficient to permit the tracing of funds to a level adequate to establish that CCDF funds have not been used in violation of this grant.
FINDING NO: 2023-104 STATE AGENCY: Oklahoma Department of Human Services FEDERAL AGENCY: Department of Health and Human Services ALN: 93.575 FEDERAL PROGRAM NAME: CCDF Cluster FEDERAL AWARD NUMBER: 2101OKCDC6 FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Eligibility QUESTIONED COSTS: $11,942,325 Condition and Context: DHS begam implementing a new Childcare Desert Grant program starting in August 2022 in order to help increase accessibility to quality childcare for working families living in a county where there is not enough licensed childcare to support the needs of the residents. The grants were available for new or existing daycare homes or centers seeking to increase licensed capacity. Funds awarded under this program were intended to be used for minor construction, program materials, or technology and software for business development necessary to meet licensing requirements. For new daycares, applicants could receive a total of $10,000 per child with an initial advance of $5,000 per child payment made at the time of approval based on the licensed capacity, and a second $5,000 per child payment made at 12 months based on the enrollment. For expansion/ existing daycares, applicants could receive a total of $10,000 per child with an initial advance of $5,000 per child payment made at the time of approval based on the number of expanded slots, and a second $5,000 per child payment made at 12 months based on the number of children enrolled in the expanded slots. We tested a sample of 73 (58 new and 15 existing sites) Child Care Centers (CCC) or Family Daycare Homes (FDCH) that received American Rescue Plan (ARP) Desert grant supplemental funds during SFY 2023 (July 1, 2022 – June 30, 2023). The universe included 348 Child Care providers with $43,725,000 in total awards. Tested awards for sampled providers totaled $16,180,000. We noted the following Desert grant Eligibility or Activities Allowed expenditure exceptions: ELIGIBILITY • The eligibility criteria per the 1st round Desert Grant Application was not met and the required qualifications were not provided prior to the application approval date for the following: o For 2 of 58 (3.45%) new facilities, the license K8 # issuance date and application visit date were not prior to the Childcare Desert Grant Application approval date. o For 6 of 58 (10.34%) new facilities, the CCC/FDCH did not complete and return the Desert Grant New Program Questionnaire. o For 1 of 58 (1.72%) new facilities, a Physical Plant description (which shows the facility layout, square footage and any proposed re-modeling) was obtained, however, it does not agree to the DHS monitoring visit form. o For 1 of 58 (1.72%) new facilities, the CCC had a change in ownership without a break in operations. • For 11 of 73 (15.07%) awards paid, the Desert grant award amount per CCC/FDCH was not calculated correctly and in compliance with program requirements: overpayments totaled $1,945,000. We questioned these costs. • The new/expanded CCC's/FDCH's did not comply with all post application approval eligibility criteria applicable to the SFY23 time period as follows: For 10 of 58 (17.24%) of new facilities, the permit date was not within 90 days of the grant fund payment. • For 67 of 73 (91.78%) Desert Grant awardees, OKDHS awarded STARS under the OKDHS Quality Rating Improvement System (QRIS) without any monitoring visits to verify the program met the requirements for the STAR level awarded. • For 18 of 73 (24.66%) Desert Grant awardees, the Program received Desert Grant Funds, Stabilization Funds and/or STARS Subsidies; however, no records were provided for review, therefore, it was not possible to ascertain if the awardee was tracking the expenditures for each grant separately, or if funds were comingled inappropriately. ACTIVITIES ALLOWED • For 1 of 73 (1.72%) Desert Grant CCC awardees, construction and remodeling costs significantly exceeded the $350,000 limit for minor remodeling and, failed to meet the requirement under 45 CFR § 98.2 (2) because the facility was extensively altered such as to significantly change its function and purpose. OKDHS appears to have approved the construction plans for this provider without any review of the actual costs. We questioned the Desert Grant funds expended over the $350,000 limit totaling $146,122.50 which is included in the $1,945,000 overpayments listed above. • For 2 of 73 (2.74%) Desert Grant awardees, it appears that the program is sectarian in nature and, expenditures were made for items not necessary to meet licensing requirements or were for sectarian instruction. The questioned costs are covered in other bullets since there is an overlap in some of the exceptions. • For 23 of 73 (31.51%) awardees paid a total $2,515,000 (15.54% of total award amount of $16,180,000), the CCC/FDCH did not provide any records, therefore, we are unable to verify these expenditures were allowable. We questioned these costs. • For 50 of 73 (68.49%) Desert Grant awardees that did provide records to SAI: o 47 of 50 (94%) awardees reported expenditures for unallowable activities totaling $6,413,783.04. We questioned these costs. o 36 of 50 (72%) awardees reported expenditures on tracking spreadsheet totaling $1,068,542 for which adequate supporting documentation (i.e., receipts, invoices) was not present. We questioned these costs. • For 8 of 73 (9.59%) Desert Grant awardees, it appears that possible misappropriation of funds has occurred including the following: o Large expenditures for non-childcare related activities o Remodeling and/or equipment purchases for other entities or sectarian organizations o Using funds to start up and operate other entities/nonprofits including paying employees for fulltime work when they are actually working for other entities o Excessive payroll costs and other unnecessary and unreasonable costs o Large transfers of grant funds into personal accounts or other entities’ accounts o Comingling of grant funds with sectarian related accounts • One awardee that received Desert Grant awards for elementary and middle school age children after school programs operated at two public schools received a combined total of $2,165,000 in first round funding (the largest Desert Grant recipient). The award amount received was based on the potential licensing capacity of the schools (per square footage of gym/cafeteria and classrooms, available restrooms, outdoor playgrounds, kitchens, etc.); however, the awardee was not the owner of the facility or renting the facility because the public school provided the space without charge and therefore was not actually running and operating an independent day care facility. The awardee also had significantly lower costs than a true day care facility would have but still received the same amount per child as facilities with significantly higher operating and start-up costs. In addition, the awardee’s spouse was the Director of the CCDF program at the time the awards were made. We questioned 100% of these two awards and the questioned costs are included the exceptions noted above. SAI noted that 20 of 73 (27.40%) Desert Grant Awardees paid a total of $2,000,000 in 1st round awards were no longer operating (no longer listed on the DHS Child Locator site) as of the end of March 2025. Cause: The Department did not design the Desert grant program to ensure ARP Act CCDF funds were only used to expand access to childcare assistance to more income eligible families and improve the quality and availability of childcare. • The Department allowed programs with the least restrictive licensing requirements (i.e., out of school, after school, summer programs) to receive the same amount per child as a program offering full time infant to school age childcare. • The Department did not award funds based on the actual costs necessary for each individual CCC or FDCH to meet licensing requirements which resulted in many providers that had large amounts of cash at their disposal even after meeting licensing requirements. • The Department advanced Desert grant funds to awardees in one lump sum instead of on an incremental basis ensuring planned remodeling work and program equipment and materials were being completed and/or acquired appropriately and, were reasonable and necessary to meet program requirements. • The Department awarded the first round of Desert Grant funds based solely on potential capacity and did not consider any other significant factors (i.e., business experience, number of children likely to be enrolled, ability to hire, train and retain qualified staff, etc.) essential to the operational sustainability of the new CCC or FDCH at the capacity level awarded. This contributed to many instances in which the CCC/ FDCH closed within two years of receiving the award or is currently operating at an enrollment level significantly below the awarded capacity. • The Desert Grant Application included language that was insufficient to adequately inform the Desert grant awardees of all unallowable uses of the funds, including remodeling funding limits, limitations for sectarian organizations and, expenditures that were only allowable under other ARP CCDF stabilization grants. • The Department did not have adequate safeguards in place to ensure Desert Grant funds were not inappropriately awarded to immediate family members of CCDF program administers. Many daycare homes and centers commingled their grant funds with personal accounts and/or other business accounts making it difficult to determine whether homes and centers used the daycare Desert Grant funds for allowable activities. The Desert Grant program may not effectively increase and/or sustain the increase in total capacity of childcare centers in low-income areas as intended. The Department has not established adequate policies and procedures to monitor Desert Grant funds expended by childcare providers. OKDHS CCDF did not normally create or administer new grant programs other than CCDF regular childcare subsidy program. In addition, the ARP CCDF Discretionary and supplemental funds had to be obligated by September 30, 2023, and liquidated by September 30, 2024, which reduced the timeline available to develop the new grant programs. However, OKDHS CCDF did have extensive experience with childcare licensing requirements and associated costs of operating the various types of childcare programs. Effect: Desert grant funds were not used by majority of CCC and FDCH to expand daycare attendance within desert regions, since there were no repercussions to not meeting the licensing capacity they paid on. The failure to monitor the use of Desert grant funds may lead to the Departments inability to recover grant funds not used in accordance with the grant requirements and/or used for non-childcare expenditures or misappropriated for other uses. The Desert Grant program may not effectively increase and/or sustain the increase in total capacity of childcare centers in low-income areas as intended. Recommendation: We recommend the Department develop policies and procedures to ensure Desert grant funds are monitored to ensure funds are expended properly to meet the objective of the grant. We recommend the Department perform a review of all Desert grant funds awarded and expended, identify all funds not used for the Desert grants intended purposes, and ensure remaining funds are expended appropriately or returned. We also recommend the Department recoup all funds for the following: o Funds awarded based on incorrect capacity counts o Expenditures for non-childcare purposes o Expenditures that benefited entities other than the facility awarded the desert grant o Excessive or unreasonable expenditures o Unexpended funds not needed to meet program requirements o Unaccounted for funds (i.e., funds transferred out or comingled with investment accounts, personal accounts, or other business/non-profit accounts) Criteria: 2 CFR § 200.303(a) – Internal Controls states in part, “The 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.” 2 CFR § 200.403 Factors affecting allowability of costs states in part, “Costs must…(a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, and (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, and (g) Be adequately documented.” The Desert grant FAQs state in part, …“How much are the Child Care Desert grants? For New Programs: Applicants may receive a total of $10,000 per child with an initial payment made at the time of approval based on license capacity, and a second $5,000 per child payment made at 12 months based on enrollment. The second payment cannot exceed the amount of the first payment. For Expansion Programs: Applicants may receive a total of $10,000 per child with an initial payment made at the time of approval based on the number of expanded slots, and a second $5,000 per child payment made at 12 months based on the number of children enrolled in the expansion slots. … What are the Qualifications for grant eligibility? … • Must accept subsidy payments • Must participate in the Quality Rating Improvement System (QRIS/STARS) • Must operate for a minimum of two years after date of initial award. • Be located in an identified child care desert. (A list of Child Care Desert counties can be reviewed at the end of this document.) • Make services available to families regardless of race, color, creed, religion, national origin, sex, marital status, disability, age, sexual orientation, or familial status. • Complete grant participation agreement, located at the end of the application. • Complete and return questionnaire that will be provided to you via email after you submit the grant application. • Be determined eligible by Oklahoma Human Services staff who review the applications. NOTE: Programs that have recently closed and reopen without an increase in capacity do not qualify OR Programs that have recently had a change in ownership without a break in operation do not qualify. … Child care providers must NOT use the funds for any of the following purposes: • Purchase of land or property • Major construction or renovations. Major renovation means: (1) structural changes to the foundation, roof, floor, exterior or load-bearing walls of a facility or the extension of a facility to increase its floor area; or (2) extensive alteration of a facility such as to significantly change its function and purpose, even if such renovation does not include any structural change. • Consumable supplies (diapers, wipes, soap, paper products) or office supplies (paper, staples, pens) • One-time field trips for children • Child care tuition (scholarships) • Items prohibited by licensing • Used items • Non-child care expenses … How long do I have to start operating my program after I receive the initial award? Child care programs will have 90 days from receipt of the awarded grant funds to complete the application process and be placed on a six-month permit. Once you have a permit, you can begin serving children. If you are not on permit within 90 days, you may be required to return the initial award amount. … You must be approved for a 2-star level or higher within 12 months of receipt of initial award. If you do not meet this requirement, you may be required to return the initial award and will not qualify for a second award. You must be approved for a subsidy contract within 12 months of receipt of initial award. If you do not meet this requirement, you may be required to return the initial award and will not qualify for a second award. Child care programs must participate in QRIS at two star or higher in order to receive a subsidy contract. The Desert Grant application states in part, “By signing this application, I understand that it is my responsibility to maintain records and other documentation to support the use of funds I receive, as well as to document my compliance with the requirements. I understand I must provide these documents to Oklahoma Human Services if requested. … Allowable uses of Grant Funds: Grant funds can be used to cover minor construction projects or program materials per application. All materials must be new, and must be purchased from a retail store, not a private party. In the event the grant recipient wishes to have the cost of assembly and/or installation covered by a grant, the labor must be performed by a licensed and bonded contractor. The grant may be used for technology and software to create and maintain business management systems. Provider Affirmation The following signature affirms that I will adhere to the qualifications listed above and will only spend the funds on allowable uses. I understand that I may be required to re-pay grant funds if I do not adhere to all the terms of this agreement. 42 U.S. Code § 9858 c(c)(2)(I) states in part, “In the case of a sectarian agency or organization, no funds made available under this subchapter may be used for the purposes described in paragraph (1) except to the extent that renovation or repair is necessary to bring the facility of such agency or organization into compliance with health and safety requirements…” 42 U.S. Code § 9858k(a) states, “No financial assistance provided under this subchapter, pursuant to the choice of a parent under section 9858c(c)(2)(A)(i)(I) of this title or through any other grant or contract under the State plan, shall be expended for any sectarian purpose or activity, including sectarian worship or instruction.” 42 U.S. Code § 9858k(b) states in part, “With regard to services provided to students enrolled in grades 1 through 12, no financial assistance provided under this subchapter shall be expended for— (1) any services provided to such students during the regular school day; (2) any services for which such students receive academic credit toward graduation.” 42 U.S. Code § 9858d(b) states in part, “…no funds shall be expended for the purchase or improvement of land, or for the purchase, construction, or permanent improvement (other than minor remodeling) of any building or facility. 45 CFR § 98.2, states in part, Definitions states in part, “Major renovation means any renovation that has a cost equal to or exceeding $350,000 in CCDF funds for child care centers and $50,000 in CCDF funds for family child care homes, which amount shall be adjusted annually for inflation and published on the Office of Child Care website. If renovation costs exceed these thresholds and do not include: (1) Structural changes to the foundation, roof, floor, exterior or load-bearing walls of a facility, or the extension of a facility to increase its floor area; or (2) Extensive alteration of a facility such as to significantly change its function and purpose for direct child care services, even if such renovation does not include any structural change; and improve the health, safety, and/or quality of child care, then it shall not be considered major renovation;” Views of Responsible Official(s) Contact Person: Kayla Urtz Anticipated Completion Date: N/A Corrective Action Planned: The Department of Human Services does not agree with the finding. Please see the corrective action plan located in the corrective action plan section of this report. Auditor Response: The Department of Human Services advanced all Supplemental Desert grant funds without having proper controls in place to ensure the funds were spent on allowable CCDF costs. Federal regulations state the lead agency (i.e., DHS) is responsible for fiscal controls and accounting procedures sufficient to permit the tracing of funds to a level adequate to establish that CCDF funds have not been used in violation of this grant. The OKDHS stated we drew our conclusions from incomplete documentation, but that is not an accurate statement. We requested support from the sampled daycares to attempt to support costs for minor construction, program materials, or technology per the grant application. For most of the costs sampled, our conclusion was validated by either lack of adequate support, costs not being allowed, or no support provided.
INELIGIBLE COSTS / CRITERIA / UNIFORM GUIDANCE 2 CFR PART 200 UNIFORM ADMINSTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS, SUBPART E: COST PRINCIPLES SECTION 200.403(F) STATES "EXCEPT WHERE OTHERWISE AUTHORIZED BY STATUTE, COSTS MUST MEET THE FOLLOWING CRITERIA IN ORDER TO BE ALLOWABLE UNDER FEDERAL AWARDS: (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 PRIOR PERIOD. / CONDITION / ON MAY 11, 2022 THE CITY WAS AWARDED AN ARPA GRANT THROUGH MISSISSIPPI COUNTY, MISSOURI FOR THE DEMOLITION OF A HAZARDOUS SCHOOL STRUCTURE IN ORDER TO FACILITATE THE CONSTRUCTION OF A PUBLIC HEALTH FACILITY. COSTS OF DEMOLITION WERE SUBMITTED AND REIMBURSED BY THE MISSISSIPPI COUNTY, MISSOURI ARPA GRANT IN AUGUST AND SEPTEMBER 2022. ON DECEMBER 12, 2022, THE CITY WAS AWARDED AN ARPA GRANT THROUGH THE MISSOURI DEPARTMENT OF ELEMENTARY AND SECONDARY EDUCATION (DESE) FOR THE SAME PROJECT. THE GRANT REQUIRED A 50% MATCH. THE BUDGET SUBMITTED TO DESE INDICATED THAT THE GRANT FROM MISSISSIPPI COUNTY, MISSOURI WOULD BE USED AS A MATCH. ON DECEMBER 14, 2022, THE CITY SUBMITTED INVOICES TO DESE FOR REIMBURSEMENT IN THE AMOUNT OF $94,921.26. THE INVOICES SUBMITTED HAD PREVIOUSLY BEEN REIMBURSED BY THE MISSISSIPPI COUNTY ARPA GRANT. THUS, THE CLAIM FOR REIMBURSEMENT WAS DUPLICATED, AND THE CITY WAS REIMBURSED TWICE FOR THE SAME COSTS. / CAUSE / THE CITY RECEIVED A MISCOMMUNICATION REGARDING THE ELIGIBILITY OF COSTS. ALSO, THE CITY WAS NO FULLY AWARE OF THE COST STANDARDS CONTAINED IN UNIFORM GUIDANCE. / EFFECT / THE CITY HAS DUPLICATED THE REQUEST FOR REIMBURSEMENT OF COSTS SUBMITTED TO THE DEPARTMENT OF ELEMENTARY AND SECONDARY EDUCATION AND THE MISSISSIPPI COUNTY, MISSOURI IN THE AMOUNT OF $94,921.26. / QUESTIONED COSTS / THE AMOUNT OF $94,921.26 IS BEING QUESTIONED, SINCE THE COST HAS PREVIOUSLY BEEN REPORTED AS A COST OF ANOTHER PROGRAM. / PERSPECTIVE / THE FINDING IS AN ISOLATED INSTANCE, IN THAT THE QUESTIONED COSTS PERTAINED TO A SINGLE INVOICE. / PRIOR FINDING / THE CITY DID NOT HAVE A SINGLE AUDIT IN THE PRIOR YEAR, AND THEREFORE PRIOR AUDIT FINDINGS DO NOT APPLY TO THIS MATTER. / RECOMMENDATIONS / I WOULD RECOMMEND CONTACTING THE MISSOURI DEPARTMENT OF ELEMENTARY AND SECONDARY EDUCATION AND MISSISSIPPI COUNTY, MISSOURI, AND ADVISE THEM OF THE QUESTIONED COSTS. I WOULD RECOMMEND FILING AMENDED REPORTS AS NEEDED. ALSO, I WOULD RECOMMEND REQUESTING THAT OTHER ELIGIBLE COSTS BE SUBSTITUTED FOR THE REIMBURSEMENT. I WOULD ALSO RECOMMEND THAT THE CITY ADMINISTRATIVE STAFF FULLY REVIEW THE ADMINISTRATIVE AND COST STANDARDS CONTAINED IN UNIFORM GUIDANCE. FURTHER, THE CITY SHOULD CONSULT WITH AN OUTSIDE PROFESSIONAL AS NEEDED. / MANAGEMENT RESPONSE / MANAGEMENT AGREES WITH THE FINDING. MANAGEMENT WILL CONTACT THE GRANTOR AGENCIES TO RESOLVE THE MATTER AS QUICKLY AS POSSIBLE. FURTHER, THE ADMINISTRATIVE STAFF WILL RECEIVE TRAINING IN REGARDS TO THE ADMINISTRATIVE AND COST STANDARDS OF THE UNIFORM GUIDANCE. ALSO, OUTSIDE PROFESSIONALS WILL BE CONSULTED AS NEEDED.