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.
2023-005 Allowable Cost Documentation Federal Program: Research and Development Cluster (ALN 47.041-Engineering, Award 1940055, Award Period 9/1/19 – 3/31/25 and ALN 47.084-Technology, Innovation and Partnerships, Award 1940055, Award Period 9/19/22 – 3/31/25) Federal Agency: National Science Foundation Criteria: 2 CFR 200.403 requires that costs must be adequately documented. Condition: We selected 48 non-payroll expenses for testing. Of those 48, 21 were found to have insufficient documentation to determine if the cost were allowable or unallowable to the federal program. The 21 expenses found to have insufficient documentation were purchased on a credit card. Cause: The Organization did not maintain sufficient internal controls over credit card usage to ensure detailed receipts were available to support the expense charged to the federal program. Effect: The Organization was not compliance with 2 CFR 200.403 which requires that costs charged to federal programs are adequately documented. Without a policy that requires detailed receipts to be submitted for credit card charges, there is a risk that unallowable costs are charged to the program. Identification as a repeat finding, if applicable: The finding is a repeat of Finding 2022-007 in the prior year. Recommendation: We recommend the Organization implement internal controls that require detailed receipts to be submitted for all credit card charges. The charges listed on the receipts should be reviewed for allowability and approved by the appropriate personnel before charging to the federal program. View of Responsible Officials: The Organization has since implemented a formal credit card policy which requires that detailed receipts be submitted for review and approval for all credit card charges. Questioned Costs: $25,573. This is the total known cost from the 21 transactions identified in our sample to have insufficient documentation.
2023-009 – Subrecipient Monitoring – Internal Control and Compliance over Subrecipient Monitoring Identification of the Federal Program: Assistance Listing Number: 14.218 Assistance Listing Title: Community Development Block Grants-Entitlement Grants Cluster Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Entity: County of San Bernadino Community Development and Housing Federal Award Identification Number: ADEL-21-1-05M/5262, ADEL-23-2-05Z/3679 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): In accordance with 2 CFR 200.403 Factors affecting allowability of costs (g), the costs to be allowable must be adequately documented. Furthermore, pursuant to 2 CFR 200.332 Requirements for pass-through entities, the entities must monitor the activities of a subrecipient as necessary to ensure that the subrecipient complies with Federal statutes, regulations, and the terms and conditions of the subaward. The pass-through entity is responsible for monitoring the overall performance of a subrecipient to ensure that the goals and objectives of the subaward are achieved. In monitoring a subrecipient, a pass-through entity must: a. Review financial and performance reports. b. Ensure that the subrecipient takes corrective action on all significant developments that negatively affect the subaward. c. Issue a management decision for audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521. d. Resolve audit findings specifically related to the subaward. Condition: For the fiscal year ended June 30, 2023, the City was unable to provide the complete and accurate documentation for the subrecipient-related expenditures which include the reimbursement package and proof of cash receipts. In relation to project ADEL-21-1-05M/5262, the reported $14,020 subrecipient’s personnel-related expenditure was lifted from the monthly status of expenditures monitoring file with $14,067 verified as grant amount. It was noted that the expenditures were incurred through June 30, 2022, and the related reimbursements were received through June 30, 2023. The audit team vouched the supporting remittance advices provided and identified only $4,720 related to the project. The remaining amount of $9,300 was unverified. As for project ADEL-23-2-05Z/3679, no support related to fiscal year 2023 was received, therefore, the reported amount of $18,253 could not be verified. Cause: The City did not have sufficient subrecipient monitoring policy and record-keeping requirements established. Effect or Potential Effect: Due to the insufficient documentation provided, the auditor was unable to verify the amounts reported related to the City’s subrecipients, resulting in questioned costs and findings of non-compliance. Questioned Costs: $27,553. Context: See condition above for the context of the finding. Identification as a Repeat Finding, If Applicable: Not applicable. Recommendation: We recommend the City enhance its subrecipient monitoring activities and establish a formal record-keeping policy to ensure complete and timely documentation of expenditures. Views of Responsible Officials: Management concurs with the finding.
U.S. Department of Health and Human Services Leading Edge Acceleration Projects (LEAP) in Health Information Technology - 93.345 Award# 90AX0034/01-00 Criteria or Specific Requirement – Allowable Costs/Cost Principles/Cash Management Federal regulations state that “charges to federal awards for salaries and wages, must be based on records that accurately reflect the work performed.” The regulations also state that “the records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated” and “budget estimates alone do not qualify as support for charges to federal awards” (2 CFR 200.430(i)). Additionally, costs may not be included as a cost of any other federally-financed program in either the current or a prior period (2 CFR 200.403(f)). Non-federal entities must minimize the time elapsing between the transfer of funds from the U.S. Treasury or pass-through entity and disbursement by the non-federal entity for direct program or project costs and the proportionate share of allowable indirect costs, whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means (2 CFR Section 200.305(b)).issuance or redemption of checks, warrants, or payment by other means (2 CFR Section 200.305(b)). Condition – During our test work over the LEAP grant, we noted the Organization did not have time and activity records with sufficient detail per federal regulations to support its compensation and fringe benefit expenses. Additionally, it appeared a substantial portion of certain employee's time was 100% charged to the LEAP award; however, may have also been included on other federal awards and been reimbursed. Lastly, indirect costs were charged to the federal program on the salary expenses which were not fully supported as required by the Uniform Guidance. Cause – There is a lack of understanding of the requirements of the time and activity reports and a lack of detail tracking by project of personnel time. Effect – Based on testing completed, the Organization did not have sufficient procedures to record and verify employees time and activity throughout fiscal year 2023. This resulted in the Organization drawing down funds for unsupported expenses. Questioned Costs – Total questioned costs are $278,735. This includes $192,231 of all salaries and benefits charged to the award which lacked documentation to support the charge and allocation to the grant and $86,504 in indirect costs charged on these related expenses. Context - There was a total of $192,231 in salaries and fringe benefits charged to the LEAP award during the year ended June 30, 2023 which encompassed six employees. One hundred percent of the employees were reviewed and none had proper documentation to support the charge and allocation to the grant (e.g ., daily time and activity records, etc.). Per discussions with management and further review, the amounts charged to the grant were based on the approved budget for the position and the internal allocation performed each payroll period. Additionally, it is uncertain how much of these employees' were also charged to other federally financed programs during the year. Identification as a Repeat Finding, if applicable – Not applicable Recommendation – We recommend that management utilize a time and activity method which meets the requirements of federal regulations. We also recommend employees and their supervisors are provided training on the requirements. Views of Responsible Official and Planned Corrective Actions – Management agrees with finding. See corrective action plan.
FA 2023-001 Improve/Strengthen Controls over Expenditures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Period of Performance Procurement and Suspension and Debarment Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education Assistance Listing Number and Title: 84.371C – Comprehensive Literacy Development Federal Award Number: S371C190016-19A (Years: 2017-21) Questioned Costs: $124,399.84 Repeat of Prior Year Finding: FA 2022-002 Description: A review of expenditures and journal entries related to the Comprehensive Literacy Development program revealed that the School District’s internal control procedures were not operating to ensure that appropriate reviews and approvals occurred and the School District’s procurement procedures were followed. Background Information: The Comprehensive Literacy Development Program (CLD) was authorized under Sections 2222-2225 of the Elementary and Secondary Education Act of 1965 to create a comprehensive literacy program to advance literacy skills, including pre-literacy skills, reading, and writing, for children from birth to grade 12, with an emphasis on disadvantaged children, including children living in poverty, English learners, and children with disabilities. CLD funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the expenditure of funds by LEAs. CLD funds totaling $802,825.69 were expended and reported on the Burke County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2023. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to 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 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order 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 non-Federal entity… (g) Be adequately documented, (h) Cost must be incurred during the approved budget period…” Additionally, provisions included in the Uniform Guidance, Section 200.318 – General Procurement Standards state in part that “(a) the non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations and… (b) non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders.” In addition, provisions included in the Uniform Guidance, Section 200.320 – Methods of Procurement to Be Followed provide guidance for procurement through small purchase procedures and state “If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources.” Condition: Auditors performed a review of various expenditure activity associated with the CLD program to determine if appropriate internal controls were implemented and applicable compliance requirements were met. The following deficiencies were identified: • A sample of 60 expenditures was randomly selected for testing using a non-statistical sampling approach. Evidence of review and approval was not reflected for 11 expenditures, and adequate evidence of receipt was not maintained for 14 expenditures. • A sample of two journal entries was randomly selected for testing using a non-statistical sampling approach. Evidence of review to ensure that the activity was allowable and occurred during the period of performance was not reflected for either journal entry tested. • A sample of 43 procurement transactions was randomly selected for testing using a nonstatistical sampling approach. Four procurement transactions did not reflect evidence of supervisory review and approval, and the School District could not provide evidence that an adequate number of rate or price quotations were obtained from qualified sources for 13 small purchase procurements reviewed. Questioned Costs: Upon testing a sample of $157,184.97 in procurement transactions, known questioned costs of $124,399.84 were identified for expenditures that did not follow the School District’s procurement procedures. Using the total population of $743,095.26 in procurement transactions, we project the likely questioned costs to be approximately $588,102.87. Cause: The School District did not maintain evidence of review and approval of expenditures, journal entries, and procurement transactions as a result of oversight. Small purchase procurement transactions did not follow the School District’s procurement policy because the Federal Programs Directors was unaware that it was necessary to follow these procedures for the purchase of instructional materials. Effect or Potential Effect: The School District is not in compliance with the Uniform Guidance and GaDOE guidance. Failure to review expenditures for allowability, and journal entries for allowability and period of performance compliance exposes the School District to unnecessary risk of error and misuse of federal funds. In addition, failure to appropriately follow applicable procurement procedures exposes the School District to unnecessary risk of error and misuse of federal funds. Lastly, this deficiency could lead to the return of grant funds associated with unallowable expenditures. Recommendation: The School District should review current internal control procedures related to the CLD program. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that all expenditures, journal entries, and procurement transactions reflect evidence of review for associated compliance requirements. In addition, expenditure voucher packages should contain all required components. Furthermore, the School District should evaluate and improve internal control procedures to ensure that required procurement methods are properly identified and followed and required procurement documentation is properly identified, safeguarded, and retained. Management should develop a monitoring process to ensure that these procedures are operating appropriately. Views of Responsible Officials: We concur with this finding. The finding states evidence of review and approval was not reflected for 11 expenditures. While 11 invoices were not approved by the Director in charge of the grant, 10 were approved by the building level Principal or Central Office Director and the Superintendent, and 1 was approved by the Superintendent. Additionally, all expenditures charged to the grant were submitted to the Georgia Department of Education for review and approval for reimbursement of expenditures. All expenditures were approved and reimbursed. The finding states adequate evidence of receipt was not maintained for 14 expenditures. While packing slips weren’t provided for 14 voucher packages, 13 of the packages were reviewed and approved for payment by the Director in charge of the grant, and 1 was approved by the Principal and Superintendent. Approval for payment isn’t granted unless items are received. The finding states evidence of review to ensure that the activity was allowable and occurred during the period of performance was not reflected for 2 journal entries. The journal entry to record indirect costs in the amount of $3,572 did not exceed the indirect costs budgeted amount of $20,000 included in the grant budget submitted by the School District and approved by the Georgia Department of Education. While not approved by the Director in charge of the grant, the journal entry was accurate and properly recorded indirect costs. Additionally, the journal entry was submitted to the Georgia Department of Education for review and approval for reimbursement of expenditures. As stated above, all expenditures were approved and reimbursed. The journal entry to reverse salary and benefit accruals is an annual, standard journal entry utilized for operational efficiency and best practice to reverse salary and benefit accruals that are required under Generally Accepted Accounting Principles. While not approved by the Director in charge of the grant, the journal entry was appropriate and necessary to ensure expenditures were accurately recorded in the proper accounting period and only included reversals related to personnel the Director approved to be paid from the grant. The finding states 3 procurement transactions did not reflect evidence of supervisory review and approval. While 3 transactions included invoices that were not approved by the Director in charge of the grant, 2 invoices were approved by the building level Principal and the Superintendent, and 1 was approved by the Superintendent. All 3 of the transactions included purchase orders that were properly approved by the Director in charge of the grant. Auditor’s Concluding Remarks: Under the Uniform Guidance, auditees are required to implement internal controls over federal awards. Upon completing procedures over internal controls associated with the Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Period of Performance, and Procurement and Suspension and Debarment compliance requirements, auditors obtained an understanding of internal controls put in place and subsequently tested those controls. Auditors noted that the internal controls described by the School District were not in place for the transactions identified. Based on this information, we reaffirm our finding and will review the status of the finding during our next audit.
FA 2023-003 Strengthen Controls over Expenditures Compliance Requirements: Period of Performance Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: 84.027 – Special Education Grants to States 84.173 – Special Education Preschool Grants Federal Award Numbers: HO27A210073(Year: 2022), HO27A220073 (Year: 2023), HO27X220073 (Year: 2023) Questioned Costs: None Identified Repeat of Prior Year Finding: FA 2022-003 Description: A review of journal entries charged to the Special Education Cluster revealed that the School District’s internal control procedures were not operating to ensure that appropriate reviews and approvals occurred. Background Information: The Special Education Cluster (SEC), which is comprised of the Special Education Grants to States (IDEA, Part B) and Special Education Preschool Grants (IDEA Preschool) programs, was authorized under the Individuals with Disabilities Education Act (IDEA). Special Education Cluster funding is available to ensure that all children with disabilities have available to them a free appropriate public education that emphasizes special education and related services designed to meet their unique needs and prepares them for further education, employment, and independent living; ensure that the rights of children with disabilities and their parents are protected; assist states, localities, educational service agencies, and federal agencies to provide for the education of all children with disabilities; and assess and ensure the effectiveness of efforts to educate children with disabilities. SEC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. SEC funds totaling $1,053,381.74 were expended and reported on the Burke County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2023. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to 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 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order 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 non-Federal entity… (g) Be adequately documented, (h) Cost must be incurred during the approved budget period…” Condition: A sample of four journal entries was randomly selected for testing using a non-statistical sampling approach. These journal entries were reviewed to determine if appropriate internal controls were implemented and applicable period of performance compliance requirements were met. Evidence of review to ensure that the activity was allowable and occurred during the period of performance was not reflected for those journal entries tested. Cause: The School District did not maintain evidence of review and approval of journal entries as a result of oversight. Effect or Potential Effect: The School District is not in compliance with the Uniform Guidance and GaDOE guidance. Failure to review journal entries for allowability and period of performance compliance exposes the School District to unnecessary risk of error and misuse of federal funds Lastly, this deficiency could lead to the return of grant funds associated with unallowable expenditures. Recommendation: The School District should review current internal control procedures related to the Special Education Cluster. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that all journal entries reflect evidence of review for associated compliance requirements. Additionally,, management should develop a monitoring process to ensure that these procedures are operating appropriately. Views of Responsible Officials: We concur with this finding. The finding states evidence of review to ensure that the activity was allowable and occurred during the period of performance was not reflected for 4 journal entries. While not approved by the Director in charge of the grant, one journal entry, in the amount of $1.52, was made to eliminate fund balance which cannot exist in any federal grant. While not approved by the Director in charge of the grant, one journal entry was necessary to accurately match revenues and expenditures to the appropriate grant years as two grants were operating simultaneously during the period from July 1, 2022, through September 30, 2022. A reclassification journal entry was made to reclassify grant revenue from account number 404-2838-4535-00000-8010-0 (2023 grant) to account number 404-2838-4535- 00000-8010-1 (2022 grant). Two journal entries to reverse salary and benefit accruals are annual, standard journal entries utilized for operational efficiency and best practice to reverse salary and benefit accruals that are required under Generally Accepted Accounting Principles. While not approved by the Director in charge of the grant, the journal entries were appropriate and necessary to ensure expenditures were accurately recorded in the proper accounting period and only included reversals related to personnel the Director approved to be paid from the grant. Auditor’s Concluding Remarks: Under the Uniform Guidance, auditees are required to implement internal controls over federal awards. Upon completing procedures over internal controls associated with the Period of Performance and Procurement and Suspension and Debarment compliance requirements, auditors obtained an understanding of internal controls put in place and subsequently tested those controls. Auditors noted that the internal controls described by the School District were not in place for the transactions identified. Based on this information, we reaffirm our finding and will review the status of the finding during our next audit.
Federal Program: Head Start Cluster (CFDA 93.600) Federal Agency: U.S. Department of Health and Human Services Federal Award Number(s): 08CH012021-02-01 Compliance Requirement: Allowable Costs/Cost Principles Questioned Costs: $125 Condition – During testing of expenditures charged to the Head Start program several transactions were identified for which adequate supporting documentation such as invoices, receipts, or other evidence demonstrating the nature and purpose of the expenditures could not be provided. Criteria – Under 2 CFR 200.403(g) costs charged to federal awards must be adequately documented to be allowable. Additionally, 2 CFR 200.302(b)(3) requires non-federal entities to maintain records that “identify adequately the source and application of funds” for federally funded activities. Cause – Internal control procedures were not consistently followed related to retaining supporting documentation for federal program expenditures. Control over documentation retention was not sufficiently designed or monitored to ensure that all required records were maintained and readily available. Effect – Inadequate documentation increases the risk that unallowable costs may be charged to the federal program and may result in disallowed costs or repayment to the federal awarding agency. Recommendation – We recommend that the government strengthen its internal controls over documentation retention for federal program expenditures and ensure staff is knowledgeable regarding Uniform Guidance documentation requirements. Client Response – Management acknowledges this finding. We no longer service this program. In the future if we take a grant of this size on, training will be held for any employees involved with the grant. Status of Finding – This is not a repeat finding from the prior year.
2023-011 Improve Controls and Compliance with Approval of Allowable Costs Federal Program Information Federal Agency: U.S. Department of Housing and Urban Development Award Name(s): CDBG Entitlement Grants Cluster Assistance Listing Number(s): 14.218 Award Year: 2023 Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Type of Finding Internal Control over Compliance – Significant Deficiency Criteria or Specific Requirement Per Uniform Guidance (2 CFR § 200.403, 200.405), recipients of federal funds must ensure that costs charged to federal awards are allowable, properly approved, and supported by adequate documentation. Effective internal controls should be in place to verify that all expenditures, including vendor invoices, are reviewed and approved prior to payment and charging to federal grants. SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (CONTINUED) Condition and Context During testing of 34 vendor invoices charged to the Community Development Block Grants/Entitlement Grants program, 2 invoices were identified that had not been approved prior to payment or being charged to the grant. Cause The City did not consistently enforce controls requiring the review and approval of all invoices before they were processed as federal expenditures. Effect or Potential Effect The lack of proper invoice approval increases the risk of unauthorized, erroneous, or unallowable costs being charged to the federal program. Questioned Costs No questioned costs are reported. Identification as a Repeat Finding This was not a finding in the prior year. Recommendation The City should strengthen its internal controls by requiring documented approval for all invoices prior to payment and charging to federal programs, and perform periodic reviews to ensure ongoing compliance with allowable cost procedures. Views of Responsible Official Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.
Finding 2023-006 – Activities Allowed or Unallowed/Allowable Costs/Cost Principles – Material Weakness in Internal Controls over Compliance and Instance of Noncompliance Head Start ALN# 93.600 (Repeat 2022-008) U.S. Department of Health & Human Services Federal Grant/Contract Number: 10CH011215-03-03; 10CH011215-03-C3; 10CH011215-04; 10HE000901-01-C6 Grant period – 2022 & 2023 Criteria – Per 2 CFR 200.303, 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. These internal controls should follow 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). Per 2 CFR section 200.403 – Factors affecting allowability of costs – Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: paragraph (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles; paragraph (g) Be adequately documented. Per 2 CFR section 200.404 – Reasonable costs – A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. Per 2 CFR section 200.405 – Allocable costs –focuses on how costs are allocable, ensuring they are directly tied to the federal award or its benefits. Per 2 CFR 200.430(i), charges to Federal awards for salaries and wages must be based on records that are supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated and that are incorporated into the official records of the non-Federal entity. Condition – From the population of all disbursements charged to the grant, we selected 25 program disbursements, of which 9 invoices could not be located. Cause – Turnover in staff and the passage of time since the period under audit has caused documentation to be misplaced. Effect – Inadequate or inconsistent documentation of expenses may result in erroneous or fraudulent transactions occurring, loss of funding, or disallowed costs. Questioned Costs – Known questioned costs totaling $121 were identified related to 10 invoices could not be located. In addition, likely questioned costs are estimated at $34,616, based on the projection of the error identified in the tested transactions to the applicable population. Recommendation – Documentation should be prepared, reviewed, and retained to support the expense. Management’s Response – Management has reviewed and accepted the finding. See “Corrective Action Plan”.
FINDING 2023-004 Subject: Title I Grants to Local Educational Agencies - Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: Title I Grants to Local Educational Agencies Assistance Listings Number: 84.010 Federal Award Numbers and Years (or Other Identifying Numbers): S010A200014, S010A210014, S010A220014 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Repeat Findings This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-003. Condition and Context Costs charged to grant funds must be adequately documented. To adequately document payroll expenses charged to the grant fund, contracts or other documentation supporting the employees' approved rates of pay are necessary. The School Corporation utilized a financial software system that has two different sides, an employee portal side and an administrator side. Employee contracts are approved by the employee, the Superintendent of Schools, and the President of the School Board within the system on the employee portal side. Once approved, the data in the employee portal side is fed into a process in the administrator side. The School Corporation could not provide contracts or approved payroll rates for 6 out of 24 employees tested. As such, we could not verify the employees were paid its correct rates for hours spent working on grant related activities. This resulted in known questioned costs of $149,870. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 24 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.334 states 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 the Federal awards that are renewed quarterly or annual, from the date of 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 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (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. . . . (g) Be adequately documented. . . ." 2 CFR 200.430(i) states in part: "Standards for documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities (for IHE, this per the IHE's definition of IBS); . . . (vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. . . ." INDIANA STATE BOARD OF ACCOUNTS 25 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause The School Corporation did not maintain or provide adequate documentation to support payroll expenses charged to the grant fund. While employee contracts are approved within the financial software system, the process lacked sufficient oversight and record retention practices to ensure that approved pay rates were accessible and verifiable. Effect Without access to approved contracts or documentation verifying payroll rates for 6 of the 24 employees tested, the School Corporation could not demonstrate that payroll costs charged to the grant were accurate and allowable. This lack of documentation resulted in known questioned costs totaling $149,870. Additionally, the absence of reliable records increases the risk of noncompliance with federal grant requirements and necessitates expanded audit procedures, which will likely lead to higher audit costs. Questioned Costs Questioned costs in the amount of $149,870 were identified as described in the Condition and Context. Recommendation The School Corporation should establish and enforce formal documentation procedures to verify payroll rates for all employees whose compensation is charged to federal grants. This includes maintaining approved contracts, salary schedules, and supporting records that clearly demonstrate the accuracy and allowability of payroll costs. A review and approval process by a second knowledgeable party should be implemented to ensure compliance prior to submission. Additionally, the School Corporation should provide necessary support and resources for staff involved in payroll and grant management to strengthen recordkeeping practices. These measures will reduce the risk of noncompliance, minimize questioned costs, and help control future audit expenses. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-009 Subject: COVID-19 - Education Stabilization Fund - Allowable Costs/Costs Principles Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U, 84.425C, 84.425W Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425D210013, S425U210013, S425C200018, S425W210015 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Costs Principles Audit Findings: Material Weakness, Other Matters Condition and Context The COVID-19 - Education Stabilization Fund established by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, and further funded by the Coronavirus Response and Relief Supplemental Appropriations Act (CRSSA) and the American Rescue Plan (ARP) Act, was for the purpose of preventing, preparing for, or responding to the novel coronavirus. Based on information obtained during the audit, the scope of testing was expanded to include additional transactions in order to assess compliance with federal grant requirements. The expanded testing was necessary to obtain sufficient evidence regarding the allowability and documentation of grant expenditures. The following issues were noted during testing: Vendor Disbursements The School Corporation was unable to provide supporting documentation for three vendors tested: Mamas Against Violence, LTIA, and Kingdom Life. Although Memorandums of Understanding (MOUs) were initiated by the Treasurer, no evidence was provided to demonstrate that the MOUs were reviewed or approved by the School Board at the time of execution. Information provided was based on documentation generated by the School Corporation, including purchase orders, handwritten vendor claim forms, and copies of check payments. However, no itemized vendor invoices were submitted to substantiate the services provided or the payments made, nor to detail the nature of the services rendered. In addition, the School Corporation was unable to provide supporting documentation to verify student participation or substantiate any of the reported metrics associated with the MOU agreements. Payroll Records Out of ten additional payroll transactions tested, three employee pay rates could not be verified. One employee's pay rate did not agree with the salary ordinance, and the School Corporation was unable to provide documentation confirming School Board approval of the rate. The second employee's compensation could not be traced to specific work performed, as neither an hourly rate nor the number of hours worked was documented. The third employee's authorized salary was $30 per hour; however, the issued paycheck reflected $20 per hour. These issues combined resulted in known questioned costs of $38,400. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 35 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.334 states 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 the Federal awards that are renewed quarterly or annual, from the date of 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 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (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. . . . (g) Be adequately documented. . . ." 2 CFR 200.430(i) states in part: "Standards for documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities (for IHE, this per the IHE's definition of IBS); . . . (vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. . . ." INDIANA STATE BOARD OF ACCOUNTS 36 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause The School Corporation demonstrated weaknesses in documentation and compliance practices. Vendor contracts and payments lacked adequate supporting records, including evidence of the School Board approval for MOUs and itemized invoices. The School Board approved pay rates, hours worked, and reconciliation of authorized salaries to amounts paid, limiting the ability to verify the accuracy and appropriateness of expenditures. Effect Without proper documentation, the allowability of grant expenditures cannot be substantiated, creating a risk that unallowable costs may be charged to the federal grant. In addition, incomplete payroll records prevent verification of compensation, heightening the risk of inaccurate payments, unsupported variances, and potential misuse of federal funds. Questioned Costs Questioned costs in the amount of $38,400 were identified as described in the Condition and Context. Recommendation To address these deficiencies, the School Corporation should strengthen documentation practices by ensuring all vendor contracts, MOUs, and invoices are properly reviewed, approved by the School Board, and retained. Payroll internal controls should be improved by reconciling authorized salary ordinances to actual pay rates, documenting hours worked, and retaining evidence of the School Board approval for all compensation. In addition, periodic monitoring and internal reviews should be implemented to verify adherence to federal grant requirements and School Corporation policies, thereby reducing the risk of noncompliance and enhancing accountability. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding: Internal Control Over Compliance Federal Assistance Listing Number 93.959 - Block Grants for Prevention and Treatment of Substance Abuse U.S. Department of Health and Human Services Criteria: According to 2 CFR Part 200.403 factors affecting allowability of costs - costs must meet the following general criteria in order 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 non-Federal entity, (d) be accorded consistent treatment, (e) be determined in accordance with generally accepted accounting principles, (f) to be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period and (g) be adequately documented. In addition, according to 2 CFR Part 200.303, 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. Condition: The Organization did not maintain documentation to support the review and approval of allowable costs and draw requests as designed by their internal control structure. Questioned Costs: N/A Context: We tested 40 payroll and nonpayroll expense for allowable costs and allowable activities applied to the grant for the year ended June 30, 2023 for transactional expenses approval process based on the Organization's internal control design. Four selections did not have approval documentation maintained. We tested 8 invoices for cash management for review and approval prior to the Organization requesting federal funds based on the Organization's internal control design. Five selections did not have review and approval documentation maintained. We tested 8 invoices for period of performance for review and approval prior to the Organization requesting federal funds based on the Organization's internal control design. Six selections did not have review and approval documentation maintained. Effect: The Organization did not maintain documentation to support that costs and reimbursement invoices had been approved in accordance with their internal control design. Cause: The entity did not have policy and procedures in place to maintain adequate supporting documentation to show internal controls were operating as designed. Identification as a Repeat Finding: 2022-003 Recommendation: We recommend that the Organization implement policies and procedures to maintain documentation of internal controls over compliance to support controls are operating as designed. Views of Responsible Officials: The Organization agrees with the finding. See separate auditee document for planned corrective action.
Criteria or Specific Requirement: 2 CFR §200.302(b)(3) and §200.403(g) require that recipients maintain records sufficient to substantiate expenditures of federal awards and ensure that costs are adequately documented. Condition: During testing of expenditures for the Crime Victim Assistance Program, we noted that supporting documentation (e.g., invoices or payroll detail) for a number of transactions was incomplete or unavailable. Context: We tested a sample of 40 expenses out of 2,913 expenses during the year. Questioned Costs: No known or likely questioned costs exceed $25,000 Effect: Although alternative audit procedures were performed to verify the reasonableness and allowability of the costs, incomplete documentation indicates a weakness in recordkeeping controls. However, the number and dollar value of affected transactions were not material to the Crime Victim Assistance Program as a whole, and no questioned costs were identified. Cause: The organization experienced turnover in financial management positions and converted accounting systems multiple times during the audit period. During these transitions, some historical documentation was not migrated to the current system or retained in accessible form. Recommendation: We recommend that Safe Harbor Crisis Center strengthen its document retention policies and ensure that all grant-related supporting documentation is archived in a centralized electronic system accessible to both management and auditors, particularly during staff transitions or system conversions. Views of Responsible Officials: Management agrees with the finding and is implementing procedures to correct his which is further discussed in the corrective action plan. Corrective Action Plan: See Corrective Action Plan prepared by Management.
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.