(2022-027) Title: Internal control over EBT reconciliation procedures needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster (COVID-19) Pandemic EBT Food Benefits (P-EBT) (COVID-19) Assistance Listing Number: 10.551, 10.561; 10.542 Federal Award Identification Number: SNAP Benefits, Maine; P-EBT Benefits, Maine Compliance Area: Allowable costs/cost principles Special tests and provisions Type of Finding: Significant deficiency Questioned costs Known Questioned Costs: $80,555 under ALN 10.542, P-EBT Food Benefits Likely Questioned Costs: $80,555 under ALN 10.542, P-EBT Food Benefits Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 274.4 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. The Department shall account for all Electronic Benefit Transfer (EBT) issuances through a reconciliation of total funds entered into, exiting from, and remaining in the EBT system each day. Condition: The Supplemental Nutrition Assistance Program (SNAP) provides monthly benefits to eligible households to purchase nutritious foods. The Pandemic EBT (P-EBT) Food Benefits program provides temporary emergency nutrition benefits to eligible school children. Both programs utilize EBT cards as the mechanism to provide benefits. Benefit information is transmitted by the Department to the Electronic Payment Processing and Information Control (EPPIC) system for processing. As EBT purchases are made by SNAP and P-EBT clients, EPPIC automatically draws Federal funds using the Automated Standard Application for Payments (ASAP) system in order to pay retailers. The Department is required by Federal program regulations to reconcile EBT activity between the systems every day. The Department did not perform daily reconciliations from July 2021 through April 2022. The Department retrospectively performed these daily reconciliations in April 2022. This retrospective reconciliation process identified an error in July 2021 SNAP benefit issuances. Benefits totaling $80,555 were incorrectly issued out of the Federal P-EBT Food Benefits program instead of the Federal/State SNAP program due to an EPPIC processing error. The error has not been corrected as of February 2023. Context: In fiscal year 2022, the State provided approximately: ? 119,000 SNAP clients with $466 million in Federal benefits, and ? 115,000 P-EBT clients with $61.5 million in Federal benefits. Cause: ? Lack of adequate policies and procedures ? Lack of supervisory oversight to ensure required reconciliations are completed ? The staff member responsible for performing this Federal requirement did not have access to the ASAP system for nine months of the fiscal year, which is needed to perform the daily reconciliation. Access to the ASAP system was granted in April 2022. Effect: ? SNAP program expenditures are understated and P-EBT Food Benefits program expenditures are overstated by $80,555 as reported to the Federal government. ? Known questioned costs ? Potential future questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that the Department maintain policies and procedures to ensure compliance with Federal program regulations and that require: ? completion of EBT reconciliations on a daily basis, and ? timely correction of issuance errors. Corrective Action Plan: See F-13 Management?s Response: The Department partially agrees with this finding. The Department agrees that reconciliations were not completed as required until April of 2022, but that they were done retrospectively. The Department disagrees that there are questioned costs in the amount of $80,555. This debt was not caused by a failure to perform reconciliations. Rather, it was discovered by the retroactive reconciliations performed by the Department. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: In accordance with 7 CFR 274.4, the Department is required to perform daily reconciliations of the EBT system. The Department?s failure to perform these daily reconciliations resulted in noncompliance with Federal regulations. Furthermore, if the daily reconciliations had been performed as required, the issuance error would have been detected and corrected in a timely manner, preventing reoccurrence throughout the month of July 2021. In accordance with 2 CFR 200.403, for a cost to be allowable under a Federal award, the costs must be reasonable and necessary for the performance of the Federal award. Issuing benefits out of the wrong Federal program is not a necessary cost for the performance of the Federal award; therefore, the Office of the State Auditor questions the allowability of these costs. The finding remains as stated. (State Number: 22-1108-03)
(2022-041) Title: Internal control over CACFP claim reimbursements needs improvement Prior Year Findings: None State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child and Adult Care Food Program (CACFP) Assistance Listing Number: 10.558 Federal Award Identification Number: 214ME301N1099, 214ME301N1199, 224ME301N1199, 214ME320N1150, 214ME325N2020, 224ME320N1150, 224ME325N2020, 214ME202H1706, 204ME320N1050 Compliance Area: Allowable costs/cost principles Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: $11,222 Likely Questioned Costs: Undeterminable. Due to the variety of institution types in the test population and varied meal claim counts, the projection of questioned costs utilizing the error rate related to the known exception and amount tested would not produce a reasonable estimate of likely questioned costs. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 226.7, .10, .11, and .16 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. Each State agency shall establish procedures for institutions to properly submit claims for reimbursement (CFR). Such procedures must include State agency edit checks, including but not limited to ensuring that payments are made only for approved meal types and that the number of meals for which reimbursement is provided does not exceed the product of the total enrollment, operating days, and approved meal types. Prior to submitting its consolidated monthly claim to the State agency, each sponsoring organization must conduct reasonable edit checks on the sponsored centers? meal claims. Condition: The Child and Adult Care Food Program (CACFP) provides nutritious foods that contribute to wellness, healthy growth, and development of eligible children and adults receiving care in day-care centers, day-care homes (DCHs), and at-risk after school snack programs. Each child and adult care center, including day-care homes, must submit a monthly CFR to the State. CFRs by DCHs are first submitted to Sponsoring Organizations (SOs). SOs are responsible for reviewing and consolidating claims into one comprehensive CFR for submission to the State agency. The State reimburses the SOs and centers for actual meals served based on the CFR. The State utilizes the Child Nutrition Program Web (CNPWeb) system to process monthly claims. System edits were relied upon when the claims were submitted; however, edits were not properly implemented during fiscal year 2022. Furthermore, the Department did not obtain enrollment data from DCHs to set maximum claim reimbursement restrictions when processing claims. The Office of the State Auditor (OSA) tested meal counts claimed on 60 CFRs submitted by SOs and found that 14 contained discrepancies. The SOs? CFRs included meals claimed that exceeded the allowable licensed capacity for facilities included in the consolidated CFR. OSA relied on licensed capacity rather than enrollment data when testing claims, as enrollment data was not obtained by the Department. The meals claimed for reimbursement exceeded licensed capacity for 14 facilities. The amount paid over allowable capacity for these facilities totaled $11,222. The Department could not provide documentation to support that the amount paid in excess of capacity was allowable. OSA deemed monthly reimbursements to one SO to be significant to CACFP. To test a sample of claims for this SO, OSA selected all 12 months of the SO?s CFRs and used a risk-based approach for DCH claims and a random approach for all other claims. OSA selected a non-statistical random sample of claims from all other facilities and SOs for the remaining sample. Context: In fiscal year 2022, CACFP expenditures totaled $9.4 million, of which $5.7 million was paid through SOs. Cause: ? Lack of policies and procedures ? Lack of supervisory oversight Effect: ? Known questioned costs ? Potential future questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that the Department implement policies and procedures that require: ? review, approval and testing of system controls to ensure that edit checks are operating as designed; and ? review of monthly CFRs for accuracy. We further recommend that the Department follow up with SOs to identify unallowable costs and recoup costs if warranted. Corrective Action Plan: See F-16 Management?s Response: The Department disagrees with this finding. As explained to OSA by DOE, DHHS, and USDA, Child Care Centers/Providers can enroll and claim over the licensed capacity. The claim edit check that was in place for SY22 for DCH Providers was Total Monthly Attendance x Approved Meal Types due to the fact that providers can enroll over the licensed capacity. Sponsors have been trained: Total Monthly Attendance equals the number of unique kids who attended during the day, are enrolled in CACFP and who ate at least one meal or snack during the day, then add up those daily totals for the month. To use licensed capacity as an edit check, which OSA did to calculate the costs in question, disallows provider reimbursement for eligible meals. CACFP Total Monthly Attendance is a better edit check as it only calculates attendance for enrolled participants. For the provider claims in question the CACFP Team tested them against the Total Monthly Attendance edit check and none suggest an overclaim. The CACFP Team discovered the missing enrollment edit check on 8/24/22 and immediately submitted a ticket to the web designers. This correction required multiple meetings with the web designers and in-depth system testing. The correction to the edit check was completed on 12/23/22. The claim edit checks now in place are: Attendance x Approved Meal Types (same as before) ? AND- Enrollment x Operating Days x Approved Meal Types. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 Auditor?s Concluding Remarks: In accordance with 7 CFR 226.7(k), the Department must establish procedures for facilities to properly submit claims; however, the Department did not have the following procedures in place: ? The Department did not obtain enrollment data to be utilized in the calculation of claims for reimbursement. ? The edit checks that the Department relied upon did not function as intended. The design and implementation of edit checks must ensure that: o payments are only made for approved meal types; and o the number of meals reimbursed does not exceed the total enrollment times the number of operating days times the approved meal types. The Department discovered that the edit checks were not operating as intended on August 24, 2022; however, the Department cannot provide evidence of when the failure occurred as the Department did not test system controls at any time during implementation. Furthermore, the discovery of failed edit checks was identified as a result of an inquiry made by USDA, not by Department controls. OSA also issued finding 2022-033, a material weakness for this system, due to the lack of controls over the system. As stated above and in the Condition of this finding, OSA could not use enrollment data to test the allowability of claims because this data was not obtained by the Department. As an alternative procedure, OSA identified DCHs with CFRs that exceeded licensed capacity and provided this information to the Department for consideration. The Department did not provide documentation to support the allowability of these CFRs, as OSA recognizes Child Care Centers/Providers can enroll and submit CFRs over licensed capacity. In accordance with 2 CFR 200.403, for a cost to be allowable under a Federal award, the costs must be reasonable and necessary for the performance of the Federal award and must be adequately documented. Because the Department did not provide the requested documentation, OSA questions the allowability of these costs. The finding remains as stated. (State Number: 22-1115-01)
(2022-025) Title: Internal control over automated SNAP eligibility determinations and benefit calculations needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster (COVID-19) Assistance Listing Number: 10.551, 10.561 Federal Award Identification Number: SNAP Benefits, Maine Compliance Area: Allowable costs/cost principles Eligibility Special tests and provisions Type of Finding: Significant deficiency Questioned costs Known Questioned Costs: $2,952 Likely Questioned Costs: $7,686,166. Likely questioned costs were projected by dividing the known questioned costs in the sample by total authorized benefits tested to establish an error rate, then applying that error rate to total authorized benefits in fiscal year 2022. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 272.10; Families First Coronavirus Response Act (FFCRA) (Public Law 116-127), Section 2302 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statues, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. 7 CFR 272.10 requires all State agencies to sufficiently automate their SNAP operations and computerize their systems for obtaining, maintaining, utilizing and transmitting information concerning SNAP. The FFCRA established emergency allotments for households participating in SNAP to provide temporary food needs at the applicable maximum allotment for the household size. Condition: The Supplemental Nutrition Assistance Program (SNAP) administered by the Office for Family Independence (OFI) provides monthly benefits to eligible households to purchase nutritious foods. OFI is required by Federal program regulations to utilize an automated information system for SNAP. The information system must maintain all casefile information necessary to properly process eligibility determinations and benefit computations. The Automated Client Eligibility System (ACES) is the information system used by OFI to automate SNAP operations. ACES relies on the maintenance of a complex framework of system rules to make eligibility determinations, benefit calculations, and notifications when redetermination or revalidation of client eligibility factors is warranted. The Office of the State Auditor (OSA) tested a sample of 60 cases to verify the accuracy of automated SNAP operations utilizing ACES. In two cases, ACES did not properly process casefile information related to social security income in system benefit calculations. Of the two cases, one case resulted in a monthly calculated benefit overpayment of $33 and one case resulted in a monthly calculated benefit overpayment of $2; however, both cases were paid accurate total monthly benefits due to the emergency allotment from the FFCRA which provided the maximum benefit amount for each case. Existing policies and procedures over the automated information system did not identify these errors in system benefit calculations. OSA?s audit procedures also identified one case where household countable assets were inaccurately entered into ACES by OFI personnel. The case should have been deemed ineligible based on household asset limits; however, the case received a monthly benefit amount of $234 for three months and $250 for nine months of fiscal year 2022. The Department does not review information entered into ACES prior to SNAP eligibility determinations and benefit calculations. Known questioned costs total $2,952. OSA selected a non-statistical random sample. OSA issued two other related findings: 2022-082, Internal control over the eligibility determination process needs improvement; and 2022-083, improvement. over needs Context: In fiscal year 2022, the State provided approximately 119,000 SNAP eligible clients with $466 million in Federal benefits. Cause: ? Lack of adequate policies and procedures ? Lack of supervisory oversight Effect: ? Known questioned costs ? Potential future questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that the Department implement additional policies and procedures to ensure that: ? automated eligibility determinations and benefit calculations are processed in accordance with Federal regulations, and ? case information entered into ACES is accurate. Corrective Action Plan: See F-12 Management?s Response: The Department partially agrees with this finding. The Department acknowledges that errors were made in three cases out of the sample of sixty reviewed. However, the Department disagrees with the calculation of the payment error in the third case. Asset limits were eliminated for all categorically eligible households effective January 1, 2022, as part of SNAP rule #212. Therefore, the known questioned costs should only be $1,452. There is an incorrect reference in the condition, in two cases the income type is state supplement income which is issued by the Department and not the Social Security Administration. The Department will continue to review its standard operating procedures to identify opportunities for improvement. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: OSA recognizes that categorically eligible household asset limits were eliminated by a State SNAP rule change effective January 1, 2022, based on guidance from the U.S. Department of Agriculture?s Food and Nutrition Service. In the third case noted in Management?s Response above, OFI is incorrectly applying the rule change. The change in eligibility criteria is only applicable to new determinations or redeterminations; therefore, in the case identified by OSA, the applicant would have had to apply for redetermination subsequent to the rule change in order for the asset limitation to be exempted from the eligibility determination process. OSA?s calculation of questioned costs totaling $2,952 for all fiscal year 2022 benefits related to this case is accurate. In regard to the incorrect reference noted in Management?s Response, OFI contends that ?information related to social security income? is an incorrect reference in the Condition; however, OSA maintains that the reference is correct and refers to State Supplemental Payments paid to eligible recipients of social security income. The reference as written, or as OFI suggests, does not change the deficiency reported by OSA which identified that controls relied upon in the automated information system did not identify errors in benefit calculations related to this income component. The finding remains as stated. (State Number: 22-1108-06)
(2022-026) Title: Internal control over the issuance of SNAP benefits needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster (COVID-19) Assistance Listing Number: 10.551, 10.561 Federal Award Identification Number: SNAP Benefits, Maine Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statues, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. Condition: The Department receives date of death (DOD) information from the Maine Center for Disease Control & Prevention (MeCDC) and the Social Security Administration (SSA) on a weekly basis. The Office of the State Auditor (OSA) obtained DOD information from MeCDC and compared it to clients who received Supplemental Nutrition Assistance Program (SNAP) benefits during fiscal year 2022. Of the cases that had benefit issuances after the client?s DOD, OSA identified 998 cases where SNAP benefits were issued in excess of 30 days following the client?s DOD. In 17 of the 998 cases, benefits were issued 140 days or more after the client?s DOD. In 4 of the 17 cases, MeCDC?s reported DOD did not match the DOD documented in the client?s eligibility system case file. Issuance of benefits to a deceased client does not necessarily result in unallowable program costs, as the issued benefits may not be expended. Context: In fiscal year 2022, the State provided approximately 119,000 SNAP clients with $466 million in Federal benefits. Of the 119,000 SNAP clients, 1,875 had a DOD in fiscal year 2022. Cause: ? Lack of adequate procedures ? Lack of supervisory oversight Effect: ? Benefits issued on behalf of deceased clients may go undetected, and may result in unallowable benefit transaction activity. ? Potential questioned costs and disallowances Recommendation: We recommend that the Department improve procedures to ensure that DOD information is received, reviewed, and updated in the eligibility system on a biweekly or monthly basis to prevent incorrect issuances of benefits. Corrective Action Plan: See F-13 Management?s Response: The Department partially agrees with this finding. The Department acknowledges the 17 exceptions cited, 4 of which also contained a data mismatch between our ACES system and Maine?s CDC DAVE system. However, it should be noted that although we agree with the specific exceptions cited, they represent only 17 cases or 0.9% out of a pool of approximately 1,875 deceased clients identified, well within a reasonable margin of error. The reference to 998 cases cited in the finding, where SNAP benefits were issued in excess of 30 days, is inconsistent with the 365-day requirement from FNS. It should be noted that language contained in 7 CFR 272.14(c)(1) only requires that states make a comparison of deceased matched data with no less frequency of once per year. Our date of death procedures includes weekly processing of discrepancy reports from federal agencies as well as monthly crosswalks between ACES and Maine?s CDC. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: The Department receives DOD information from MeCDC and the SSA on a weekly basis, and as noted in Management?s Response, has established policies and procedures that require crossmatching of SNAP client information with DOD information on a more frequent basis than the annual requirement cited above. The 17 cases noted as exceptions had benefits issued 140 days or more past DOD and represented the most egregious cases; however, a total of 998 cases were identified out of 1,875 deceased clients where benefits were issued more than 30 days after DOD. This represents 53% of deceased clients in fiscal year 2022 that should have been identified through weekly processing of discrepancy reports from the SSA and through the monthly data crossmatch between ACES and MeCDC. The established procedures are not effective in preventing incorrect issuances of benefits. The finding remains as stated. (State Number: 22-1108-04)
(2022-027) Title: Internal control over EBT reconciliation procedures needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster (COVID-19) Pandemic EBT Food Benefits (P-EBT) (COVID-19) Assistance Listing Number: 10.551, 10.561; 10.542 Federal Award Identification Number: SNAP Benefits, Maine; P-EBT Benefits, Maine Compliance Area: Allowable costs/cost principles Special tests and provisions Type of Finding: Significant deficiency Questioned costs Known Questioned Costs: $80,555 under ALN 10.542, P-EBT Food Benefits Likely Questioned Costs: $80,555 under ALN 10.542, P-EBT Food Benefits Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 274.4 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. The Department shall account for all Electronic Benefit Transfer (EBT) issuances through a reconciliation of total funds entered into, exiting from, and remaining in the EBT system each day. Condition: The Supplemental Nutrition Assistance Program (SNAP) provides monthly benefits to eligible households to purchase nutritious foods. The Pandemic EBT (P-EBT) Food Benefits program provides temporary emergency nutrition benefits to eligible school children. Both programs utilize EBT cards as the mechanism to provide benefits. Benefit information is transmitted by the Department to the Electronic Payment Processing and Information Control (EPPIC) system for processing. As EBT purchases are made by SNAP and P-EBT clients, EPPIC automatically draws Federal funds using the Automated Standard Application for Payments (ASAP) system in order to pay retailers. The Department is required by Federal program regulations to reconcile EBT activity between the systems every day. The Department did not perform daily reconciliations from July 2021 through April 2022. The Department retrospectively performed these daily reconciliations in April 2022. This retrospective reconciliation process identified an error in July 2021 SNAP benefit issuances. Benefits totaling $80,555 were incorrectly issued out of the Federal P-EBT Food Benefits program instead of the Federal/State SNAP program due to an EPPIC processing error. The error has not been corrected as of February 2023. Context: In fiscal year 2022, the State provided approximately: ? 119,000 SNAP clients with $466 million in Federal benefits, and ? 115,000 P-EBT clients with $61.5 million in Federal benefits. Cause: ? Lack of adequate policies and procedures ? Lack of supervisory oversight to ensure required reconciliations are completed ? The staff member responsible for performing this Federal requirement did not have access to the ASAP system for nine months of the fiscal year, which is needed to perform the daily reconciliation. Access to the ASAP system was granted in April 2022. Effect: ? SNAP program expenditures are understated and P-EBT Food Benefits program expenditures are overstated by $80,555 as reported to the Federal government. ? Known questioned costs ? Potential future questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that the Department maintain policies and procedures to ensure compliance with Federal program regulations and that require: ? completion of EBT reconciliations on a daily basis, and ? timely correction of issuance errors. Corrective Action Plan: See F-13 Management?s Response: The Department partially agrees with this finding. The Department agrees that reconciliations were not completed as required until April of 2022, but that they were done retrospectively. The Department disagrees that there are questioned costs in the amount of $80,555. This debt was not caused by a failure to perform reconciliations. Rather, it was discovered by the retroactive reconciliations performed by the Department. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: In accordance with 7 CFR 274.4, the Department is required to perform daily reconciliations of the EBT system. The Department?s failure to perform these daily reconciliations resulted in noncompliance with Federal regulations. Furthermore, if the daily reconciliations had been performed as required, the issuance error would have been detected and corrected in a timely manner, preventing reoccurrence throughout the month of July 2021. In accordance with 2 CFR 200.403, for a cost to be allowable under a Federal award, the costs must be reasonable and necessary for the performance of the Federal award. Issuing benefits out of the wrong Federal program is not a necessary cost for the performance of the Federal award; therefore, the Office of the State Auditor questions the allowability of these costs. The finding remains as stated. (State Number: 22-1108-03)
(2022-025) Title: Internal control over automated SNAP eligibility determinations and benefit calculations needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster (COVID-19) Assistance Listing Number: 10.551, 10.561 Federal Award Identification Number: SNAP Benefits, Maine Compliance Area: Allowable costs/cost principles Eligibility Special tests and provisions Type of Finding: Significant deficiency Questioned costs Known Questioned Costs: $2,952 Likely Questioned Costs: $7,686,166. Likely questioned costs were projected by dividing the known questioned costs in the sample by total authorized benefits tested to establish an error rate, then applying that error rate to total authorized benefits in fiscal year 2022. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 272.10; Families First Coronavirus Response Act (FFCRA) (Public Law 116-127), Section 2302 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statues, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. 7 CFR 272.10 requires all State agencies to sufficiently automate their SNAP operations and computerize their systems for obtaining, maintaining, utilizing and transmitting information concerning SNAP. The FFCRA established emergency allotments for households participating in SNAP to provide temporary food needs at the applicable maximum allotment for the household size. Condition: The Supplemental Nutrition Assistance Program (SNAP) administered by the Office for Family Independence (OFI) provides monthly benefits to eligible households to purchase nutritious foods. OFI is required by Federal program regulations to utilize an automated information system for SNAP. The information system must maintain all casefile information necessary to properly process eligibility determinations and benefit computations. The Automated Client Eligibility System (ACES) is the information system used by OFI to automate SNAP operations. ACES relies on the maintenance of a complex framework of system rules to make eligibility determinations, benefit calculations, and notifications when redetermination or revalidation of client eligibility factors is warranted. The Office of the State Auditor (OSA) tested a sample of 60 cases to verify the accuracy of automated SNAP operations utilizing ACES. In two cases, ACES did not properly process casefile information related to social security income in system benefit calculations. Of the two cases, one case resulted in a monthly calculated benefit overpayment of $33 and one case resulted in a monthly calculated benefit overpayment of $2; however, both cases were paid accurate total monthly benefits due to the emergency allotment from the FFCRA which provided the maximum benefit amount for each case. Existing policies and procedures over the automated information system did not identify these errors in system benefit calculations. OSA?s audit procedures also identified one case where household countable assets were inaccurately entered into ACES by OFI personnel. The case should have been deemed ineligible based on household asset limits; however, the case received a monthly benefit amount of $234 for three months and $250 for nine months of fiscal year 2022. The Department does not review information entered into ACES prior to SNAP eligibility determinations and benefit calculations. Known questioned costs total $2,952. OSA selected a non-statistical random sample. OSA issued two other related findings: 2022-082, Internal control over the eligibility determination process needs improvement; and 2022-083, improvement. over needs Context: In fiscal year 2022, the State provided approximately 119,000 SNAP eligible clients with $466 million in Federal benefits. Cause: ? Lack of adequate policies and procedures ? Lack of supervisory oversight Effect: ? Known questioned costs ? Potential future questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that the Department implement additional policies and procedures to ensure that: ? automated eligibility determinations and benefit calculations are processed in accordance with Federal regulations, and ? case information entered into ACES is accurate. Corrective Action Plan: See F-12 Management?s Response: The Department partially agrees with this finding. The Department acknowledges that errors were made in three cases out of the sample of sixty reviewed. However, the Department disagrees with the calculation of the payment error in the third case. Asset limits were eliminated for all categorically eligible households effective January 1, 2022, as part of SNAP rule #212. Therefore, the known questioned costs should only be $1,452. There is an incorrect reference in the condition, in two cases the income type is state supplement income which is issued by the Department and not the Social Security Administration. The Department will continue to review its standard operating procedures to identify opportunities for improvement. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: OSA recognizes that categorically eligible household asset limits were eliminated by a State SNAP rule change effective January 1, 2022, based on guidance from the U.S. Department of Agriculture?s Food and Nutrition Service. In the third case noted in Management?s Response above, OFI is incorrectly applying the rule change. The change in eligibility criteria is only applicable to new determinations or redeterminations; therefore, in the case identified by OSA, the applicant would have had to apply for redetermination subsequent to the rule change in order for the asset limitation to be exempted from the eligibility determination process. OSA?s calculation of questioned costs totaling $2,952 for all fiscal year 2022 benefits related to this case is accurate. In regard to the incorrect reference noted in Management?s Response, OFI contends that ?information related to social security income? is an incorrect reference in the Condition; however, OSA maintains that the reference is correct and refers to State Supplemental Payments paid to eligible recipients of social security income. The reference as written, or as OFI suggests, does not change the deficiency reported by OSA which identified that controls relied upon in the automated information system did not identify errors in benefit calculations related to this income component. The finding remains as stated. (State Number: 22-1108-06)
(2022-026) Title: Internal control over the issuance of SNAP benefits needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster (COVID-19) Assistance Listing Number: 10.551, 10.561 Federal Award Identification Number: SNAP Benefits, Maine Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statues, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. Condition: The Department receives date of death (DOD) information from the Maine Center for Disease Control & Prevention (MeCDC) and the Social Security Administration (SSA) on a weekly basis. The Office of the State Auditor (OSA) obtained DOD information from MeCDC and compared it to clients who received Supplemental Nutrition Assistance Program (SNAP) benefits during fiscal year 2022. Of the cases that had benefit issuances after the client?s DOD, OSA identified 998 cases where SNAP benefits were issued in excess of 30 days following the client?s DOD. In 17 of the 998 cases, benefits were issued 140 days or more after the client?s DOD. In 4 of the 17 cases, MeCDC?s reported DOD did not match the DOD documented in the client?s eligibility system case file. Issuance of benefits to a deceased client does not necessarily result in unallowable program costs, as the issued benefits may not be expended. Context: In fiscal year 2022, the State provided approximately 119,000 SNAP clients with $466 million in Federal benefits. Of the 119,000 SNAP clients, 1,875 had a DOD in fiscal year 2022. Cause: ? Lack of adequate procedures ? Lack of supervisory oversight Effect: ? Benefits issued on behalf of deceased clients may go undetected, and may result in unallowable benefit transaction activity. ? Potential questioned costs and disallowances Recommendation: We recommend that the Department improve procedures to ensure that DOD information is received, reviewed, and updated in the eligibility system on a biweekly or monthly basis to prevent incorrect issuances of benefits. Corrective Action Plan: See F-13 Management?s Response: The Department partially agrees with this finding. The Department acknowledges the 17 exceptions cited, 4 of which also contained a data mismatch between our ACES system and Maine?s CDC DAVE system. However, it should be noted that although we agree with the specific exceptions cited, they represent only 17 cases or 0.9% out of a pool of approximately 1,875 deceased clients identified, well within a reasonable margin of error. The reference to 998 cases cited in the finding, where SNAP benefits were issued in excess of 30 days, is inconsistent with the 365-day requirement from FNS. It should be noted that language contained in 7 CFR 272.14(c)(1) only requires that states make a comparison of deceased matched data with no less frequency of once per year. Our date of death procedures includes weekly processing of discrepancy reports from federal agencies as well as monthly crosswalks between ACES and Maine?s CDC. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: The Department receives DOD information from MeCDC and the SSA on a weekly basis, and as noted in Management?s Response, has established policies and procedures that require crossmatching of SNAP client information with DOD information on a more frequent basis than the annual requirement cited above. The 17 cases noted as exceptions had benefits issued 140 days or more past DOD and represented the most egregious cases; however, a total of 998 cases were identified out of 1,875 deceased clients where benefits were issued more than 30 days after DOD. This represents 53% of deceased clients in fiscal year 2022 that should have been identified through weekly processing of discrepancy reports from the SSA and through the monthly data crossmatch between ACES and MeCDC. The established procedures are not effective in preventing incorrect issuances of benefits. The finding remains as stated. (State Number: 22-1108-04)
(2022-027) Title: Internal control over EBT reconciliation procedures needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster (COVID-19) Pandemic EBT Food Benefits (P-EBT) (COVID-19) Assistance Listing Number: 10.551, 10.561; 10.542 Federal Award Identification Number: SNAP Benefits, Maine; P-EBT Benefits, Maine Compliance Area: Allowable costs/cost principles Special tests and provisions Type of Finding: Significant deficiency Questioned costs Known Questioned Costs: $80,555 under ALN 10.542, P-EBT Food Benefits Likely Questioned Costs: $80,555 under ALN 10.542, P-EBT Food Benefits Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 274.4 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. The Department shall account for all Electronic Benefit Transfer (EBT) issuances through a reconciliation of total funds entered into, exiting from, and remaining in the EBT system each day. Condition: The Supplemental Nutrition Assistance Program (SNAP) provides monthly benefits to eligible households to purchase nutritious foods. The Pandemic EBT (P-EBT) Food Benefits program provides temporary emergency nutrition benefits to eligible school children. Both programs utilize EBT cards as the mechanism to provide benefits. Benefit information is transmitted by the Department to the Electronic Payment Processing and Information Control (EPPIC) system for processing. As EBT purchases are made by SNAP and P-EBT clients, EPPIC automatically draws Federal funds using the Automated Standard Application for Payments (ASAP) system in order to pay retailers. The Department is required by Federal program regulations to reconcile EBT activity between the systems every day. The Department did not perform daily reconciliations from July 2021 through April 2022. The Department retrospectively performed these daily reconciliations in April 2022. This retrospective reconciliation process identified an error in July 2021 SNAP benefit issuances. Benefits totaling $80,555 were incorrectly issued out of the Federal P-EBT Food Benefits program instead of the Federal/State SNAP program due to an EPPIC processing error. The error has not been corrected as of February 2023. Context: In fiscal year 2022, the State provided approximately: ? 119,000 SNAP clients with $466 million in Federal benefits, and ? 115,000 P-EBT clients with $61.5 million in Federal benefits. Cause: ? Lack of adequate policies and procedures ? Lack of supervisory oversight to ensure required reconciliations are completed ? The staff member responsible for performing this Federal requirement did not have access to the ASAP system for nine months of the fiscal year, which is needed to perform the daily reconciliation. Access to the ASAP system was granted in April 2022. Effect: ? SNAP program expenditures are understated and P-EBT Food Benefits program expenditures are overstated by $80,555 as reported to the Federal government. ? Known questioned costs ? Potential future questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that the Department maintain policies and procedures to ensure compliance with Federal program regulations and that require: ? completion of EBT reconciliations on a daily basis, and ? timely correction of issuance errors. Corrective Action Plan: See F-13 Management?s Response: The Department partially agrees with this finding. The Department agrees that reconciliations were not completed as required until April of 2022, but that they were done retrospectively. The Department disagrees that there are questioned costs in the amount of $80,555. This debt was not caused by a failure to perform reconciliations. Rather, it was discovered by the retroactive reconciliations performed by the Department. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: In accordance with 7 CFR 274.4, the Department is required to perform daily reconciliations of the EBT system. The Department?s failure to perform these daily reconciliations resulted in noncompliance with Federal regulations. Furthermore, if the daily reconciliations had been performed as required, the issuance error would have been detected and corrected in a timely manner, preventing reoccurrence throughout the month of July 2021. In accordance with 2 CFR 200.403, for a cost to be allowable under a Federal award, the costs must be reasonable and necessary for the performance of the Federal award. Issuing benefits out of the wrong Federal program is not a necessary cost for the performance of the Federal award; therefore, the Office of the State Auditor questions the allowability of these costs. The finding remains as stated. (State Number: 22-1108-03)
(2022-045) Confidential finding, see below for more information Title: Internal control over UI claim payments needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Labor State Bureau: Unemployment Compensation Federal Agency: U.S. Department of Labor Assistance Listing Title: Unemployment Insurance (UI) (COVID-19) Assistance Listing Number: 17.225 Federal Award Identification Number: Unemployment Insurance Trust Fund, Maine, UI347192055A23, UI372842255A23, UI359482160A23, UI372272255A23, UI356522155A23, UI348602055A23, UI340622055A23 Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: $19,278 Likely Questioned Costs: Likely questioned costs totaling $2.7 million were projected within each entitlement program by dividing the identified ineligible benefit payments in our sample by the total benefit payments tested to establish an error rate, then applying that error rate to each entitlement program?s benefit payment totals for fiscal year 2022. Criteria: 2 CFR 200.303; 2 CFR 200.403; 20 CFR 615.8; Middle Class Tax Relief and Job Creation Act of 2012; Social Security Act (SSA) Title III, Section 303; Unemployment Insurance Program Letter (UIPL) No. 5-13; Coronavirus Aid, Relief, and Economic Security (CARES) Act; 26 MRSA 1190 through 1199; Consolidated Appropriations Act, 2021; American Rescue Plan Act of 2021 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. A State administering UI must have State laws and policies in place that are consistent with Federal provisions and required by 20 CFR 615.8; the Middle Class Tax Relief and Job Creation Act of 2012; SSA Title III, Section 303; and UIPL No. 5-13, as follows: ? Standards for claim filing and processing including appeals and reviews, communication with claimants and employers, eligibility standards and disqualifications, and Interstate Benefit Payments and agreements ? Standards for reasonable work search criteria and policies requiring performance of internal audits of work search activity ? Standards for program integrity outlining procedures for identification and recovery of overpayments and penalties, including recovery through offset of future benefit payments The State of Maine?s statutory requirements for UI program benefits are outlined in 26 MRSA 1190 through 1199. In March 2020, as a nationwide response to the effects of the COVID-19 pandemic, including rapidly increasing unemployment rates, the Federal Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act created three temporary Federal unemployment compensation entitlement programs that continued in fiscal year 2022, as follows: ? Pandemic Unemployment Assistance (PUA) provides UI benefits for individuals who are not eligible for regular UI benefits and are unemployed, partially unemployed, or unable or unavailable to work due to COVID-19. Covered individuals include the self-employed, independent contractors, part-time workers, and others not normally eligible to receive regular UI benefits. ? Pandemic Emergency Unemployment Compensation (PEUC) provides an additional 13 weeks of UI benefits for unemployed workers who have exhausted regular UI benefits. This was extended to 24 weeks through enactment of the Consolidated Appropriations Act signed into law at the end of December 2020. ? Federal Pandemic Unemployment Compensation (FPUC) initially provided an additional $600 weekly to all unemployed workers receiving traditional UI benefits, PUA, or PEUC. This was changed to $300 weekly in December 2020 through enactment of the Consolidated Appropriations Act. The Federal American Rescue Plan Act signed into law in March 2021 granted additional extensions of the PUA, PEUC, and FPUC programs through September 2021. Condition: Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Department Controls: The Department has complementary controls in place over claimant eligibility, including: ? internal work search audits performed by MDOL personnel required for one percent of weekly claims, and ? establishment of a Benefits Quality Control Unit tasked with investigating a prescribed number of UI paid claims and denied claims each week. Audit Testing Results: As part of the initial eligibility determination process, State UI law requires MDOL to confirm claimant separation from employment through correspondence with a claimant?s most recent employer. OSA?s test of 60 regular UI claimants? initial eligibility identified one claimant where a separation letter was not sent to the most recent employer as required. As part of the continuing eligibility determination process, State UI law requires a weekly claim to be filed and work search activities to be reported. In OSA?s test of 60 regular UI claimants? continuing eligibility, the following exceptions were noted: ? Three claimants reported the same work search activity for multiple claims ranging from three to eighteen weeks without the existence of further verifiable details. Controls were not in place to require additional work search verification procedures prior to continued benefit payments. OSA did not report the underlying benefits paid as questioned costs. ? One claimant did not report work search activities for a period of three weeks. OSA reported benefits totaling $1,476 paid to the claimant during this time as known questioned costs. As part of the PUA eligibility determination process, Federal program regulations require that claimants provide proof of employment information. In OSA?s test of 60 PUA claimants, nine claimants were deemed ineligible to receive benefits by MDOL. These claimants were required to provide proof of employment within 90 days of notification from MDOL. MDOL did not notify two of the claimants until May 2021, six of the claimants until July 2021, and one of the claimants until February 2022. As a result, claimants who did not provide proof of employment received benefits in fiscal year 2021 and fiscal year 2022. Benefits paid to these ineligible claimants totaled $14,832 in fiscal year 2022; OSA reported this amount as known questioned costs. As part of the PEUC eligibility determination process, Federal program regulations require the claimant to have exhausted regular UI benefits. In OSA?s test of 60 PEUC claimants, one claimant received benefits before the exhaustion of regular UI benefits. Regular UI benefits were exhausted prior to fiscal year 2022 and all ineligible PEUC benefit payments occurred in the prior year; therefore, OSA did not report questioned costs for fiscal year 2022. OSA selected non-statistical random samples. Data Analytics: Additional audit procedures included obtaining information from Maine Vital Records and performing cross-matches with benefit payment data from ReEmployME. These procedures identified that: ? based on an analysis of claimant dates of death, five claimants received UI benefit payments from various entitlement programs after their dates of death. These benefit payments totaled $2,970 through the end of fiscal year 2022. OSA reported this amount as known questioned costs. ? based on an analysis of claimant dates of birth, the following claimants received UI benefits during fiscal year 2022: ? 2 claimants under the age of 10. State UI law does not restrict benefit payments based on age. Employment and wage documentation required for eligibility were provided by both claimants so MDOL did not deem the claimants ineligible; however, the system did not identify the claimants for further review prior to benefit issuance. OSA did not report questioned costs for these claimants. ? 290 claimants over the age of 80, including: o 275 claimants between the ages of 80 and 89; and o 15 claimants between the ages of 90 and 99. MDOL does not have adequate procedures in place to identify and review claimant dates of death as well as the reasonableness of claimant age prior to the issuance of benefit payments. Context: The UI program provided $98.5 million in State UI benefits and $163.3 million in Federal UI benefits during fiscal year 2022. Cause: ? Lack of resources ? Lack of adequate controls over initial and continuing claimant eligibility determinations ? Lack of adequate supervisory oversight over information system application controls ? Lack of adequate policies and procedures to identify and review claimant dates of death prior to the issuance of benefit payments Effect: ? Noncompliance with Federal regulations ? Known questioned costs ? Potential future questioned costs and disallowances ? Potential liability, and applicable interest, due to the Federal government for claims paid to ineligible or fraudulent Federal UI benefit claimants Recommendation: We recommend that the Department enhance policies and procedures to require: ? that eligibility requirements are met and adequately supported prior to issuance of benefit payments. ? implementation of additional information system application controls. ? incorporation of data analytics and data cross-matching procedures to prevent or detect payments to ineligible claimants. This will provide assurance that payments to ineligible claimants are prevented, or detected and corrected, in a timely manner. Corrective Action Plan: See F-17 Management?s Response: The Department partially agrees with this finding. The finding states that the Department?s system does not ensure that benefit payments to ineligible claimants are prevented or detected prior to the issuance of payments. The Department collects the necessary information to determine initial and ongoing eligibility. It is important to note that both federal and state law prohibit the withholding of payment from someone who is already receiving benefits when a potential eligibility issue is identified. The Department must gather additional information and issue a written determination, which also includes notification of the right to appeal the determination. In the meantime, payments must be made. If the Department issues a determination that the individual was ineligible, an overpayment is created, and repayment is required. The finding states that the Department has insufficient controls in place to detect claimants using the same work search activities for multiple claims. The work search activity provided by the three claimants in question was participation in a CareerCenter-led job fair, or other accepted work search activity, on multiple claims. The Department agrees with the recommendation of additional controls in this area and expects to implement additional controls before the end of SFY 23. The finding furthermore states that one claimant filed claims without a work search for three consecutive weeks. A review of the claim determined the claimant appropriately received a documented work search warning for the first week, but no decision was rendered on the two subsequent weeks due to a staff training error. The Department agrees with these testing results of the finding. The finding furthermore states that the Department erred in paying benefits to individuals collecting on the Pandemic Unemployment Assistance (PUA) program. The Continued Assistance Act (CAA), released in December 2020, added a new requirement to the PUA program. To continue to receive PUA benefits, claimants were required to provide documentation substantiating employment or self-employment, or the planned commencement of employment or self-employment within 21 or 90 days (depending on the date of initial PUA filing) from the date of the guidance, or when first noticed by the Department. This last part serves as USDOL?s acknowledgement that it would take time to implement the changes into existing functionality and systems. In Maine, the first notices went out on May 6, 2021. Two of the claimants listed received their notice on this day, with one receiving their denial decision on day 90, and one on day 93, preventing further benefits. The Department agrees with the testing results in the latter case. Five claimants received their notice on July 7, 2021, and a denial 90 days later, properly preventing further benefits. The Department disagrees with the testing results of the finding for the claimants cited in July. The remaining two cases cited were claimants who filed a PUA initial claim, and PUA weekly claims in 2020, prior to the release of the CAA. However, payments for these weeks were not processed until 2021 and 2022. At that time, notices to provide proof of employment were sent, followed by a denial decision for failure to respond/provide adequate proof. However, no overpayment was created because the week ending dates of the weeks paid all pre-dated the implementation of the CAA and therefore were not subject to overpayment. The Department disagrees with these testing results of the finding. The finding also states the Department needs additional controls for claims filed after a claimant?s date of death, as well as the claimant?s age when filing a claim for benefits. Though the Department has made significant enhancements to the Vital Statistic crossmatch process, it agrees that the current crossmatch with the state?s Vital Records office that identifies deceased claimants should be reviewed further. That said, there are timing differences that cannot be avoided, and overpayments cannot be completely ruled out. Overpayments, penalties, and prosecutions are all considered when it is determined someone falsely filed for benefits using a deceased person?s information. Regarding the age of the individual filing for benefits, additional controls were implemented during SFY 23, with additional controls still under review for further enhancement and implementation. Contact: Laura Boyett, Director, Bureau of Unemployment Compensation, DOL, 207-621-5156 Auditor?s Concluding Remarks: Management?s Response states that the Department collects necessary information to determine initial and continuing claimant eligibility prior to benefit issuance; however, exceptions included in the finding were the result of a failure to solicit or collect required documentation in support of eligibility for claimants prior to the issuance of benefit payments. For PUA eligibility, OSA acknowledges that the December 2020 implementation of the requirement for PUA claimants to provide proof of employment did place a significant burden on MDOL to develop related controls timely and that guidance from U.S. DOL stated that benefit payments should not be held while awaiting documentation; however, MDOL did not implement necessary controls to address this Federal requirement until several months later. As a result, procedures were not in place to prevent payments to ineligible claimants from December 2020 to May 2021, and claimants that should have been deemed ineligible subsequent to December 2020 continued to receive benefits into fiscal year 2022. OSA acknowledges that timing differences for weekly claim filings and claimant dates of death cannot be entirely prevented; however, the exceptions included in the finding concern the timeliness and frequency of data cross-matching procedures, and the initiation of appropriate follow up action in order to prevent overpayments. The finding remains as stated. (State Number: 22-1302-01)
(2022-045) Confidential finding, see below for more information Title: Internal control over UI claim payments needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Labor State Bureau: Unemployment Compensation Federal Agency: U.S. Department of Labor Assistance Listing Title: Unemployment Insurance (UI) (COVID-19) Assistance Listing Number: 17.225 Federal Award Identification Number: Unemployment Insurance Trust Fund, Maine, UI347192055A23, UI372842255A23, UI359482160A23, UI372272255A23, UI356522155A23, UI348602055A23, UI340622055A23 Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: $19,278 Likely Questioned Costs: Likely questioned costs totaling $2.7 million were projected within each entitlement program by dividing the identified ineligible benefit payments in our sample by the total benefit payments tested to establish an error rate, then applying that error rate to each entitlement program?s benefit payment totals for fiscal year 2022. Criteria: 2 CFR 200.303; 2 CFR 200.403; 20 CFR 615.8; Middle Class Tax Relief and Job Creation Act of 2012; Social Security Act (SSA) Title III, Section 303; Unemployment Insurance Program Letter (UIPL) No. 5-13; Coronavirus Aid, Relief, and Economic Security (CARES) Act; 26 MRSA 1190 through 1199; Consolidated Appropriations Act, 2021; American Rescue Plan Act of 2021 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. A State administering UI must have State laws and policies in place that are consistent with Federal provisions and required by 20 CFR 615.8; the Middle Class Tax Relief and Job Creation Act of 2012; SSA Title III, Section 303; and UIPL No. 5-13, as follows: ? Standards for claim filing and processing including appeals and reviews, communication with claimants and employers, eligibility standards and disqualifications, and Interstate Benefit Payments and agreements ? Standards for reasonable work search criteria and policies requiring performance of internal audits of work search activity ? Standards for program integrity outlining procedures for identification and recovery of overpayments and penalties, including recovery through offset of future benefit payments The State of Maine?s statutory requirements for UI program benefits are outlined in 26 MRSA 1190 through 1199. In March 2020, as a nationwide response to the effects of the COVID-19 pandemic, including rapidly increasing unemployment rates, the Federal Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act created three temporary Federal unemployment compensation entitlement programs that continued in fiscal year 2022, as follows: ? Pandemic Unemployment Assistance (PUA) provides UI benefits for individuals who are not eligible for regular UI benefits and are unemployed, partially unemployed, or unable or unavailable to work due to COVID-19. Covered individuals include the self-employed, independent contractors, part-time workers, and others not normally eligible to receive regular UI benefits. ? Pandemic Emergency Unemployment Compensation (PEUC) provides an additional 13 weeks of UI benefits for unemployed workers who have exhausted regular UI benefits. This was extended to 24 weeks through enactment of the Consolidated Appropriations Act signed into law at the end of December 2020. ? Federal Pandemic Unemployment Compensation (FPUC) initially provided an additional $600 weekly to all unemployed workers receiving traditional UI benefits, PUA, or PEUC. This was changed to $300 weekly in December 2020 through enactment of the Consolidated Appropriations Act. The Federal American Rescue Plan Act signed into law in March 2021 granted additional extensions of the PUA, PEUC, and FPUC programs through September 2021. Condition: Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Department Controls: The Department has complementary controls in place over claimant eligibility, including: ? internal work search audits performed by MDOL personnel required for one percent of weekly claims, and ? establishment of a Benefits Quality Control Unit tasked with investigating a prescribed number of UI paid claims and denied claims each week. Audit Testing Results: As part of the initial eligibility determination process, State UI law requires MDOL to confirm claimant separation from employment through correspondence with a claimant?s most recent employer. OSA?s test of 60 regular UI claimants? initial eligibility identified one claimant where a separation letter was not sent to the most recent employer as required. As part of the continuing eligibility determination process, State UI law requires a weekly claim to be filed and work search activities to be reported. In OSA?s test of 60 regular UI claimants? continuing eligibility, the following exceptions were noted: ? Three claimants reported the same work search activity for multiple claims ranging from three to eighteen weeks without the existence of further verifiable details. Controls were not in place to require additional work search verification procedures prior to continued benefit payments. OSA did not report the underlying benefits paid as questioned costs. ? One claimant did not report work search activities for a period of three weeks. OSA reported benefits totaling $1,476 paid to the claimant during this time as known questioned costs. As part of the PUA eligibility determination process, Federal program regulations require that claimants provide proof of employment information. In OSA?s test of 60 PUA claimants, nine claimants were deemed ineligible to receive benefits by MDOL. These claimants were required to provide proof of employment within 90 days of notification from MDOL. MDOL did not notify two of the claimants until May 2021, six of the claimants until July 2021, and one of the claimants until February 2022. As a result, claimants who did not provide proof of employment received benefits in fiscal year 2021 and fiscal year 2022. Benefits paid to these ineligible claimants totaled $14,832 in fiscal year 2022; OSA reported this amount as known questioned costs. As part of the PEUC eligibility determination process, Federal program regulations require the claimant to have exhausted regular UI benefits. In OSA?s test of 60 PEUC claimants, one claimant received benefits before the exhaustion of regular UI benefits. Regular UI benefits were exhausted prior to fiscal year 2022 and all ineligible PEUC benefit payments occurred in the prior year; therefore, OSA did not report questioned costs for fiscal year 2022. OSA selected non-statistical random samples. Data Analytics: Additional audit procedures included obtaining information from Maine Vital Records and performing cross-matches with benefit payment data from ReEmployME. These procedures identified that: ? based on an analysis of claimant dates of death, five claimants received UI benefit payments from various entitlement programs after their dates of death. These benefit payments totaled $2,970 through the end of fiscal year 2022. OSA reported this amount as known questioned costs. ? based on an analysis of claimant dates of birth, the following claimants received UI benefits during fiscal year 2022: ? 2 claimants under the age of 10. State UI law does not restrict benefit payments based on age. Employment and wage documentation required for eligibility were provided by both claimants so MDOL did not deem the claimants ineligible; however, the system did not identify the claimants for further review prior to benefit issuance. OSA did not report questioned costs for these claimants. ? 290 claimants over the age of 80, including: o 275 claimants between the ages of 80 and 89; and o 15 claimants between the ages of 90 and 99. MDOL does not have adequate procedures in place to identify and review claimant dates of death as well as the reasonableness of claimant age prior to the issuance of benefit payments. Context: The UI program provided $98.5 million in State UI benefits and $163.3 million in Federal UI benefits during fiscal year 2022. Cause: ? Lack of resources ? Lack of adequate controls over initial and continuing claimant eligibility determinations ? Lack of adequate supervisory oversight over information system application controls ? Lack of adequate policies and procedures to identify and review claimant dates of death prior to the issuance of benefit payments Effect: ? Noncompliance with Federal regulations ? Known questioned costs ? Potential future questioned costs and disallowances ? Potential liability, and applicable interest, due to the Federal government for claims paid to ineligible or fraudulent Federal UI benefit claimants Recommendation: We recommend that the Department enhance policies and procedures to require: ? that eligibility requirements are met and adequately supported prior to issuance of benefit payments. ? implementation of additional information system application controls. ? incorporation of data analytics and data cross-matching procedures to prevent or detect payments to ineligible claimants. This will provide assurance that payments to ineligible claimants are prevented, or detected and corrected, in a timely manner. Corrective Action Plan: See F-17 Management?s Response: The Department partially agrees with this finding. The finding states that the Department?s system does not ensure that benefit payments to ineligible claimants are prevented or detected prior to the issuance of payments. The Department collects the necessary information to determine initial and ongoing eligibility. It is important to note that both federal and state law prohibit the withholding of payment from someone who is already receiving benefits when a potential eligibility issue is identified. The Department must gather additional information and issue a written determination, which also includes notification of the right to appeal the determination. In the meantime, payments must be made. If the Department issues a determination that the individual was ineligible, an overpayment is created, and repayment is required. The finding states that the Department has insufficient controls in place to detect claimants using the same work search activities for multiple claims. The work search activity provided by the three claimants in question was participation in a CareerCenter-led job fair, or other accepted work search activity, on multiple claims. The Department agrees with the recommendation of additional controls in this area and expects to implement additional controls before the end of SFY 23. The finding furthermore states that one claimant filed claims without a work search for three consecutive weeks. A review of the claim determined the claimant appropriately received a documented work search warning for the first week, but no decision was rendered on the two subsequent weeks due to a staff training error. The Department agrees with these testing results of the finding. The finding furthermore states that the Department erred in paying benefits to individuals collecting on the Pandemic Unemployment Assistance (PUA) program. The Continued Assistance Act (CAA), released in December 2020, added a new requirement to the PUA program. To continue to receive PUA benefits, claimants were required to provide documentation substantiating employment or self-employment, or the planned commencement of employment or self-employment within 21 or 90 days (depending on the date of initial PUA filing) from the date of the guidance, or when first noticed by the Department. This last part serves as USDOL?s acknowledgement that it would take time to implement the changes into existing functionality and systems. In Maine, the first notices went out on May 6, 2021. Two of the claimants listed received their notice on this day, with one receiving their denial decision on day 90, and one on day 93, preventing further benefits. The Department agrees with the testing results in the latter case. Five claimants received their notice on July 7, 2021, and a denial 90 days later, properly preventing further benefits. The Department disagrees with the testing results of the finding for the claimants cited in July. The remaining two cases cited were claimants who filed a PUA initial claim, and PUA weekly claims in 2020, prior to the release of the CAA. However, payments for these weeks were not processed until 2021 and 2022. At that time, notices to provide proof of employment were sent, followed by a denial decision for failure to respond/provide adequate proof. However, no overpayment was created because the week ending dates of the weeks paid all pre-dated the implementation of the CAA and therefore were not subject to overpayment. The Department disagrees with these testing results of the finding. The finding also states the Department needs additional controls for claims filed after a claimant?s date of death, as well as the claimant?s age when filing a claim for benefits. Though the Department has made significant enhancements to the Vital Statistic crossmatch process, it agrees that the current crossmatch with the state?s Vital Records office that identifies deceased claimants should be reviewed further. That said, there are timing differences that cannot be avoided, and overpayments cannot be completely ruled out. Overpayments, penalties, and prosecutions are all considered when it is determined someone falsely filed for benefits using a deceased person?s information. Regarding the age of the individual filing for benefits, additional controls were implemented during SFY 23, with additional controls still under review for further enhancement and implementation. Contact: Laura Boyett, Director, Bureau of Unemployment Compensation, DOL, 207-621-5156 Auditor?s Concluding Remarks: Management?s Response states that the Department collects necessary information to determine initial and continuing claimant eligibility prior to benefit issuance; however, exceptions included in the finding were the result of a failure to solicit or collect required documentation in support of eligibility for claimants prior to the issuance of benefit payments. For PUA eligibility, OSA acknowledges that the December 2020 implementation of the requirement for PUA claimants to provide proof of employment did place a significant burden on MDOL to develop related controls timely and that guidance from U.S. DOL stated that benefit payments should not be held while awaiting documentation; however, MDOL did not implement necessary controls to address this Federal requirement until several months later. As a result, procedures were not in place to prevent payments to ineligible claimants from December 2020 to May 2021, and claimants that should have been deemed ineligible subsequent to December 2020 continued to receive benefits into fiscal year 2022. OSA acknowledges that timing differences for weekly claim filings and claimant dates of death cannot be entirely prevented; however, the exceptions included in the finding concern the timeliness and frequency of data cross-matching procedures, and the initiation of appropriate follow up action in order to prevent overpayments. The finding remains as stated. (State Number: 22-1302-01)
(2022-051) Title: Internal control over CSLFRF expenditures needs improvement Prior Year Findings: None State Department: Labor Administrative and Financial Services State Bureau: Unemployment Compensation Commissioner?s Office Office of the State Controller Federal Agency: U.S. Department of the Treasury Assistance Listing Title: Coronavirus State and Local Fiscal Recovery Funds (COVID-19) Assistance Listing Number: 21.027 Federal Award Identification Number: SLFRP0144 Compliance Area: Activities allowed or unallowed Allowable costs/cost principles Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: $51,482,644 Likely Questioned Costs: $51,482,644 Criteria: 2 CFR 200.303; 2 CFR 200.403; 2 CFR 200.302; Coronavirus State and Local Fiscal Recovery Fund (CSLFRF) Interim Final Rule, Federal Register Volume 86, Issue 93 (May 17, 2021) The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Costs must be adequately documented. The State?s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to determine that such funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. The CSLFRF Interim Final Rule states that recipients may make deposits into the State account of the Unemployment Trust Fund up to the level needed to restore the pre-pandemic balances of such account as of January 27, 2020, or to pay back advances received for the payment of benefits between January 27, 2020, and May 17, 2021, given the close nexus between Unemployment Trust Fund costs, solvency of Unemployment Trust Fund systems, and pandemic economic impacts. Condition: As part of the American Rescue Plan Act, the State was advanced $997 million in Federal CSLFRF to support its response to and recovery from the COVID-19 public health emergency. In response, Public Law 2021, Chapter 483, Section D-1 was enacted and states that ?notwithstanding any provision of law to the contrary, the State Controller shall transfer $80 million from the Federal Expenditures Fund ? ARP State Fiscal Recovery balance to the Department of Labor, Unemployment Compensation Fund no later than November 30, 2021.? To support the allowability of the $80 million transfer under the Public Health and Economic Impacts use category, the Maine Department of Labor (MDOL) prepared an analysis that compared the balance between January 25, 2020 ($502,137,397) and September 30, 2021 ($405,167,938). Under this use category, transfers to the Unemployment Trust Fund are only allowable up to the level needed to restore the Trust Fund to the pre-pandemic balance as of January 27, 2020. The Department of Administrative and Financial Services (DAFS) reviewed and approved the calculation for reasonableness and allowability. As a result, DAFS transferred $80 million from the Federal Fund to the State Unemployment Trust Fund on November 30, 2021. Using the State?s Trust Fund Balance Reports, the Office of the State Auditor (OSA) compared the January 27, 2020, balance ($499,966,386) to the September 30, 2021, balance ($471,449,030). The $28,517,356 difference represents the amount allowed to restore the State Unemployment Trust Fund to the pre-pandemic balance as of January 27, 2020, under the Public Health and Economic Impacts use category. MDOL and DAFS were unable to provide: ? documentation supporting the $405.2 million balance on September 30, 2021, used to substantiate allowability of the $80 million transfer, and ? a justification of why the Trust Fund Balance Reports were not used in the calculation. Therefore, the $80 million transfer exceeds the amount needed to restore the State Unemployment Trust Fund to the pre-pandemic balance by $51,482,644 under the Public Health and Economic Impacts use category. Context: The $80 million transfer to the State?s Unemployment Trust Fund represents approximately 66 percent of the $121.5 million in CSLFRF expenditures during fiscal year 2022. Cause: Misinterpretation of Federal guidance Effect: ? Noncompliance with Federal regulations ? Known questioned costs and potential disallowances Recommendation: We recommend that MDOL and DAFS review expenditures charged to CSLFRF, including the above-noted expenditure, to ensure that costs are adequately documented to support that only allowable costs are funded by CSLFRF. Corrective Action Plan: See F-19 Management?s Response: We disagree with this finding. Likewise, we are unable to determine why the auditor has identified a questioned cost or includes a recommendation that only allowable costs are funded by CSLFRF. The transfer of $80 million to the Unemployment Trust Fund is completely allowable, with a portion categorized under the Public Health and Economic Impacts use category and a portion under the Revenue Loss - Provision of Government Services use category. Questioned costs are defined by the Uniform Guidance, 2CFR ? 200.1, Questioned cost means a cost that is questioned by the auditor because of an audit finding: (1) Which resulted from a violation or possible violation of a statute, regulation, or the terms and conditions of a Federal award, including for funds used to match Federal funds; In this case, there was no violation of statute, regulation or terms of the federal award for the SLFRF program (ALN 21.027). Regardless of category, the transfer of $80M to the UI Trust is considered an allowable cost under the program; thus, there is no portion of the transfer that is considered unallowable and no basis for a questioned cost. (2) Where the costs, at the time of the audit, are not supported by adequate documentation; or All parties agree that the transfer is allowable under the SLFRF program (ALN 21.027) and adequate documentation has been provided to support that determination. (3) Where the costs incurred appear unreasonable and do not reflect the actions a prudent person would take in the circumstances. All parties agree that the cost appears reasonable; consequently, there is no amount that should be questioned. All documentation to support the allowability of this transfer was provided to the auditor for review. There were errors in the original calculation of the total amount eligible under the Public Health and Economic Impacts category; however, we provided documentation to support that the total amount was eligible under the Revenue Loss - Provision of Government Services use category. Although we have identified a weakness in internal control over compliance, there was no actual noncompliance. Consequently, there is no cost that is considered unallowable; therefore, there should be no questioned cost. DOL Contact: Kimberly Smith, Deputy Commissioner, DOL, 207-621-5096 DAFS Contact: Frank Wiltuck, Director of Internal Audit, OSC, 207-626-8420 Auditor?s Concluding Remarks: Management asserts, ?The transfer of $80 million to the Unemployment Trust Fund is completely allowable, with a portion categorized under the Public Health and Economic Impacts use category and a portion under the Revenue Loss - Provision of Government Services use category.? However, OSC did not provide documentation to support this statement, as described below. OSA initially questioned the allowability of the $80 million transfer in November 2022. In the following months and in response to OSA?s request for all documentation to corroborate the allowability of the transfer, OSC only provided evidence to support the transfer under the CSLFRF Public Health and Economic Impacts use category. OSA reviewed this support and identified errors in the calculation for the allowable amount of the transfer under the CSLFRF Public Health and Economic Impacts use category. As a result of these errors, OSA notified the Department that a finding would be issued and costs of $51,482,644 would be questioned. In response to the finding communication from OSA, OSC initiated discussion of alternative use categories for CSLFRF under which the transferred amount would be considered allowable. OSC proposed recategorizing the unallowable portion of the transfer from the Public Health and Economic Impacts use category to the Provision of Government Services use category of CSLFRF. Though the unallowable portion of the transfer (the questioned costs) may ultimately be allowable under this alternative use category, the costs, at the time of the audit, were incurred under the Public Health and Economic Impacts use category. Management states, ?we are unable to determine why the auditor has identified a questioned cost? and has provided the definition of Questioned Costs as defined by 2 CFR 200.1. However, OSC?s interpretation implies that OSA should allow changes in supporting documentation that do not align with the original intent of the usage of funds. The recategorization of the unallowable costs to another use category may be part of OSC?s corrective action plan; however, the documentation provided as audit evidence does not properly support $51,482,644 in CSLFRF Public Health and Economic Impacts costs. OSA cannot allow the Department to alter supporting documentation to avoid questioned costs. If OSA permitted the State to alter supporting documentation whenever OSA identified unallowable costs, there would never be any questioned costs to report. This is not the intent of 2 CFR 200.1. Managements acknowledges ?there were errors in the original calculation of the total amount eligible under the Public Health and Economic Impacts category? and ?we have identified a weakness in internal control over compliance,? which is the basis of this finding. The finding remains as stated. (State Number: 22-1699-01)
(2022-052) Title: Internal control over ESF expenditures needs improvement Prior Year Findings: None State Department: Education State Bureau: Office of Federal Emergency Relief Programs Federal Agency: U.S. Department of Education Assistance Listing Title: Education Stabilization Fund (ESF) (COVID-19) Assistance Listing Number: 84.425D, 84.425U Federal Award Identification Number: S425C200004, S425C210004, S425D200004, S425D210004, S425U210004, S425W210020, S425R210044, S425B200039 Compliance Area: Activities allowed or unallowed Allowable costs/cost principles Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: $620,676 Likely Questioned Costs: Likely questioned costs totaling $6,364,627 were projected by dividing the known questioned costs in our sample by total expenditures tested to establish an error rate, then applying that error rate to total expenditures paid in fiscal year 2022. Criteria: 2 CFR 200.303; 2 CFR 200.403; Coronavirus Aid, Relief, and Economic Security (CARES) Act, Public Law No. 116-136; Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act, Public Law No. 116-260; American Rescue Plan (ARP) Act, Public Law No. 117-2 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. The CARES Act, CRRSA Act, and ARP Act authorized the creation of the Education Stabilization Fund and its subprograms. Governors and State Education Agencies (SEAs) must demonstrate that costs incurred by governors, SEAs, and subrecipients are allowable under the relevant statutory and regulatory provisions, assurances, and certification and agreement, and consistent with the purpose of the Education Stabilization Fund, which is to prevent, prepare for, and respond to COVID-19. Condition: Education Stabilization Funds (ESF) were authorized by Federal legislation for use by school administrative units (SAUs) within the State to prevent, prepare for, and respond to the COVID-19 pandemic. SAUs were required to submit applications to the Office of Federal Emergency Relief Programs (OFERP) under the Department of Education outlining identified uses for ESF including planned projects. Applications included detail on costs and the necessity of costs as a result of the COVID-19 pandemic. Program coordinators within OFERP were responsible for reviewing and approving applications submitted by SAUs. Once there was an approved application on file, SAUs could submit reimbursement requests to the Department for expenditures identified and approved in the application. The Office of the State Auditor (OSA) tested 60 SAU reimbursement requests to ensure that only allowable costs were charged to ESF and found that: ? one request for reimbursement contained an invoice for the purchase and installation of a new hot water boiler. The boiler project description stated that the school was in need of a new hot water boiler because it was likely that the existing equipment would not pass inspection after the current year. The cost of the new boiler and installation totaled $154,800. Replacing a boiler that was likely not going to pass upcoming inspections would have been a necessary project of the SAU independent of the COVID-19 pandemic. ? one request for reimbursement contained an invoice for replacing two sections of roof at a district elementary school. The roofing project description stated that the roof replacement was needed because they had leaks that may start to impact air quality and a functioning roof was needed in order to have students in person full-time. The cost of the roofing job totaled $54,915. Replacing a leaking roof would have been a necessary project of the SAU independent of the COVID-19 pandemic. Both subrecipients had an approved application on file with OFERP listing these specific projects. OSA selected a non-statistical random sample. OSA expanded testing as a result of the exceptions noted above. OSA reviewed the applications on file for the two SAUs and found a roof replacement project totaling $410,961. The SAU documented the roofing project as necessary to address concerns that could contribute to the possible spread of COVID-19. Replacing a roof would have been a necessary project of the SAU independent of the COVID-19 pandemic. The supporting documentation provided by the SAUs and maintained by the State does not demonstrate that the above costs are consistent with the purpose of ESF which is to prevent, prepare for, and respond to COVID-19; as a result, questioned costs total $620,676. Context: In fiscal year 2022, ESF expenditures totaled $126.4 million, of which $120.6 million was paid to subrecipient SAUs. Cause: ? Misinterpretation of Federal regulations ? Lack of explicit Federal guidance surrounding ESF allowability Effect: ? Noncompliance with Federal regulations ? Known questioned costs ? Potential future questioned costs and disallowances Recommendation: We recommend that the Department review all ESF expenditures to ensure that only allowable costs are charged to the Federal program. Expenditures that do not meet ESF criteria for allowability should be transferred out of ESF. Corrective Action Plan: See F-20 Management?s Response: The Maine Department of Education (MDOE) disagrees with the identified questioned costs. The Office of Federal Emergency Relief Programs (OFERP) utilized guidance provided by the U.S. Department of Education (grantor) and conferred in writing with Maine?s assigned U.S. Department of Education program officer throughout the Education Stabilization Fund application review process. The Maine Department of Education?s OFERP provided the auditor with the grantor?s guidance which clearly states that the questioned costs were allowable, reasonable, and necessary to prepare, prevent, and respond to the COVID-19 pandemic. Throughout the application review process, OFERP utilized ESF federal statutory language and the grantor?s published guidance to determine allowability. Once funding applications were approved, SAUs requested reimbursement from the OFERP for the approved costs outlined in the school administrative unit (SAU) application. The OFERP reviewed SAU reimbursement requests and provided payment for approved expenses. The ESF costs outlined in this finding were allowable, reasonable, and necessary to prepare, prevent, and respond to the COVID-19 pandemic. Documentation provided by the grantor supports the determinations made by the Maine Department of Education. Contact: Shelly Chasse-Johndro, Director of OFERP, DOE, 207-458-3180 Auditor?s Concluding Remarks: Supporting documentation provided by the Department for the reimbursements totaling $620,676 related to two roof replacements and a boiler replacement did not provide adequate evidence that these expenditures were necessary and in line with the allowability criteria of ESF, which is to prevent, prepare for, or respond to COVID-19. While all subrecipients had approved applications on file listing these specific projects, additional allowability considerations should have been made and documented prior to reimbursement. All questioned costs reported by OSA are related to projects that, based on the support maintained by the Department, would have been necessary for the SAU to address independent of the COVID-19 pandemic. Without documentation and evidence to substantiate that the expenditures are for needs directly arising from the public health emergency, OSA cannot determine that the reimbursements were in fact to prepare for, prevent, and respond to COVID-19; therefore, OSA questions the allowability of these costs. The finding remains as stated. (State Number: 22-1235-04)
FINDING 2022-005 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 20611-042-PN01, 21611-042-PN01, 21619-042-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness; Modified Opinion Condition and Context The School Corporation is a member of the Northeast Indiana Special Education Cooperative (Cooperative). During fiscal year 2021-2022, the Cooperative operated the special education programs and spent the federal money on behalf of all its members. As the grant agreements were between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for non-public students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure non-public school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for 20611-042-PN01, 21611-042-PN01, and 21619-042-PN01 grant awards could not be verified for the individual schools to verify the minimum amount per the grant awards was expended and properly reported to the IDOE as required. The lack of internal controls and noncompliance were isolated to the 20611-042-PN01, 21611-042-PN01, and 21619-042-PN01 grant awards. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause Management had not developed an effective system of internal control that would have ensured compliance with the grant agreement and the earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement. Effect The failure to establish an effective internal control system, as well as adequately document costs of federal awards, prevented the determination of the School Corporation's compliance with the earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal control, as well as appropriately document and identify federal award expenditures to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-005 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 20611-042-PN01, 21611-042-PN01, 21619-042-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness; Modified Opinion Condition and Context The School Corporation is a member of the Northeast Indiana Special Education Cooperative (Cooperative). During fiscal year 2021-2022, the Cooperative operated the special education programs and spent the federal money on behalf of all its members. As the grant agreements were between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for non-public students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure non-public school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for 20611-042-PN01, 21611-042-PN01, and 21619-042-PN01 grant awards could not be verified for the individual schools to verify the minimum amount per the grant awards was expended and properly reported to the IDOE as required. The lack of internal controls and noncompliance were isolated to the 20611-042-PN01, 21611-042-PN01, and 21619-042-PN01 grant awards. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause Management had not developed an effective system of internal control that would have ensured compliance with the grant agreement and the earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement. Effect The failure to establish an effective internal control system, as well as adequately document costs of federal awards, prevented the determination of the School Corporation's compliance with the earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal control, as well as appropriately document and identify federal award expenditures to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-005 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 20611-042-PN01, 21611-042-PN01, 21619-042-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness; Modified Opinion Condition and Context The School Corporation is a member of the Northeast Indiana Special Education Cooperative (Cooperative). During fiscal year 2021-2022, the Cooperative operated the special education programs and spent the federal money on behalf of all its members. As the grant agreements were between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for non-public students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure non-public school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for 20611-042-PN01, 21611-042-PN01, and 21619-042-PN01 grant awards could not be verified for the individual schools to verify the minimum amount per the grant awards was expended and properly reported to the IDOE as required. The lack of internal controls and noncompliance were isolated to the 20611-042-PN01, 21611-042-PN01, and 21619-042-PN01 grant awards. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause Management had not developed an effective system of internal control that would have ensured compliance with the grant agreement and the earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement. Effect The failure to establish an effective internal control system, as well as adequately document costs of federal awards, prevented the determination of the School Corporation's compliance with the earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal control, as well as appropriately document and identify federal award expenditures to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
(2022-052) Title: Internal control over ESF expenditures needs improvement Prior Year Findings: None State Department: Education State Bureau: Office of Federal Emergency Relief Programs Federal Agency: U.S. Department of Education Assistance Listing Title: Education Stabilization Fund (ESF) (COVID-19) Assistance Listing Number: 84.425D, 84.425U Federal Award Identification Number: S425C200004, S425C210004, S425D200004, S425D210004, S425U210004, S425W210020, S425R210044, S425B200039 Compliance Area: Activities allowed or unallowed Allowable costs/cost principles Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: $620,676 Likely Questioned Costs: Likely questioned costs totaling $6,364,627 were projected by dividing the known questioned costs in our sample by total expenditures tested to establish an error rate, then applying that error rate to total expenditures paid in fiscal year 2022. Criteria: 2 CFR 200.303; 2 CFR 200.403; Coronavirus Aid, Relief, and Economic Security (CARES) Act, Public Law No. 116-136; Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act, Public Law No. 116-260; American Rescue Plan (ARP) Act, Public Law No. 117-2 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. The CARES Act, CRRSA Act, and ARP Act authorized the creation of the Education Stabilization Fund and its subprograms. Governors and State Education Agencies (SEAs) must demonstrate that costs incurred by governors, SEAs, and subrecipients are allowable under the relevant statutory and regulatory provisions, assurances, and certification and agreement, and consistent with the purpose of the Education Stabilization Fund, which is to prevent, prepare for, and respond to COVID-19. Condition: Education Stabilization Funds (ESF) were authorized by Federal legislation for use by school administrative units (SAUs) within the State to prevent, prepare for, and respond to the COVID-19 pandemic. SAUs were required to submit applications to the Office of Federal Emergency Relief Programs (OFERP) under the Department of Education outlining identified uses for ESF including planned projects. Applications included detail on costs and the necessity of costs as a result of the COVID-19 pandemic. Program coordinators within OFERP were responsible for reviewing and approving applications submitted by SAUs. Once there was an approved application on file, SAUs could submit reimbursement requests to the Department for expenditures identified and approved in the application. The Office of the State Auditor (OSA) tested 60 SAU reimbursement requests to ensure that only allowable costs were charged to ESF and found that: ? one request for reimbursement contained an invoice for the purchase and installation of a new hot water boiler. The boiler project description stated that the school was in need of a new hot water boiler because it was likely that the existing equipment would not pass inspection after the current year. The cost of the new boiler and installation totaled $154,800. Replacing a boiler that was likely not going to pass upcoming inspections would have been a necessary project of the SAU independent of the COVID-19 pandemic. ? one request for reimbursement contained an invoice for replacing two sections of roof at a district elementary school. The roofing project description stated that the roof replacement was needed because they had leaks that may start to impact air quality and a functioning roof was needed in order to have students in person full-time. The cost of the roofing job totaled $54,915. Replacing a leaking roof would have been a necessary project of the SAU independent of the COVID-19 pandemic. Both subrecipients had an approved application on file with OFERP listing these specific projects. OSA selected a non-statistical random sample. OSA expanded testing as a result of the exceptions noted above. OSA reviewed the applications on file for the two SAUs and found a roof replacement project totaling $410,961. The SAU documented the roofing project as necessary to address concerns that could contribute to the possible spread of COVID-19. Replacing a roof would have been a necessary project of the SAU independent of the COVID-19 pandemic. The supporting documentation provided by the SAUs and maintained by the State does not demonstrate that the above costs are consistent with the purpose of ESF which is to prevent, prepare for, and respond to COVID-19; as a result, questioned costs total $620,676. Context: In fiscal year 2022, ESF expenditures totaled $126.4 million, of which $120.6 million was paid to subrecipient SAUs. Cause: ? Misinterpretation of Federal regulations ? Lack of explicit Federal guidance surrounding ESF allowability Effect: ? Noncompliance with Federal regulations ? Known questioned costs ? Potential future questioned costs and disallowances Recommendation: We recommend that the Department review all ESF expenditures to ensure that only allowable costs are charged to the Federal program. Expenditures that do not meet ESF criteria for allowability should be transferred out of ESF. Corrective Action Plan: See F-20 Management?s Response: The Maine Department of Education (MDOE) disagrees with the identified questioned costs. The Office of Federal Emergency Relief Programs (OFERP) utilized guidance provided by the U.S. Department of Education (grantor) and conferred in writing with Maine?s assigned U.S. Department of Education program officer throughout the Education Stabilization Fund application review process. The Maine Department of Education?s OFERP provided the auditor with the grantor?s guidance which clearly states that the questioned costs were allowable, reasonable, and necessary to prepare, prevent, and respond to the COVID-19 pandemic. Throughout the application review process, OFERP utilized ESF federal statutory language and the grantor?s published guidance to determine allowability. Once funding applications were approved, SAUs requested reimbursement from the OFERP for the approved costs outlined in the school administrative unit (SAU) application. The OFERP reviewed SAU reimbursement requests and provided payment for approved expenses. The ESF costs outlined in this finding were allowable, reasonable, and necessary to prepare, prevent, and respond to the COVID-19 pandemic. Documentation provided by the grantor supports the determinations made by the Maine Department of Education. Contact: Shelly Chasse-Johndro, Director of OFERP, DOE, 207-458-3180 Auditor?s Concluding Remarks: Supporting documentation provided by the Department for the reimbursements totaling $620,676 related to two roof replacements and a boiler replacement did not provide adequate evidence that these expenditures were necessary and in line with the allowability criteria of ESF, which is to prevent, prepare for, or respond to COVID-19. While all subrecipients had approved applications on file listing these specific projects, additional allowability considerations should have been made and documented prior to reimbursement. All questioned costs reported by OSA are related to projects that, based on the support maintained by the Department, would have been necessary for the SAU to address independent of the COVID-19 pandemic. Without documentation and evidence to substantiate that the expenditures are for needs directly arising from the public health emergency, OSA cannot determine that the reimbursements were in fact to prepare for, prevent, and respond to COVID-19; therefore, OSA questions the allowability of these costs. The finding remains as stated. (State Number: 22-1235-04)
(2022-067) Title: Internal control over payments made to and on behalf of TANF clients needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 93.558 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF Compliance Area: Activities allowed or unallowed Allowable costs/cost principles Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: $1,447 Likely Questioned Costs: Likely questioned costs totaling $35,002 were projected by dividing the identified known overpayment in our sample by total payments tested to establish an error rate, then applying that error rate to total payments to TANF clients for these services and payments to providers on behalf of TANF clients in fiscal year 2022. Criteria: 2 CFR 200.303; 2 CFR 200.403; 45 CFR 263.11 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. The Department must use Federal TANF funds for expenditures that are reasonably calculated to accomplish the purposes of TANF. Use of funds in violation of this is considered misuse of funds. Condition: The Department issues TANF payments directly to a TANF client for various items and services. The Department also issues TANF payments directly to providers on behalf of TANF clients for services rendered such as child care and transportation. The Office of the State Auditor (OSA) tested 60 payments and found that: ? one payment issued in October 2021 overpaid a provider by $22 for Transitional Child Care. Upon further review, OSA found that an additional $506 was overpaid to the child- care provider during fiscal year 2022. The overpayment was identified by the Department in December 2021; however, as of audit testing, 14 months after the overpayment was identified, there has not been a recoupment. ? one payment overpaid a provider by $15 for Transitional Child Care. Upon further review, OSA found that an additional $555 was overpaid to the childcare provider during fiscal year 2022. The overpayment was identified by OSA during testing. ? one payment overpaid a provider by $17 for Transitional Child Care. Upon further review, OSA found that an additional $323 was overpaid to the childcare provider during fiscal year 2022. The overpayment was identified by OSA during testing. ? one payment issued in May 2022 overpaid a TANF client a total of $75 for clothing. An advance allowance was issued to the TANF client; however, the TANF client did not submit a receipt substantiating the purchase as required. The Department identified the overpayment in July 2022 and $66 of the overpayment was recouped on January 6, 2023. OSA selected a non-statistical random sample. Context: In fiscal year 2022, payments to TANF clients for services other than direct cash benefits and payments to providers on behalf of TANF clients totaled $6.8 million. Cause: ? Lack of adequate procedures ? Lack of supervisory oversight Effect: ? Known questioned costs ? Potential future questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that the Department implement procedures to ensure that payments made to TANF clients and providers are accurate, allowable, and adequately documented. We further recommend that the Department increase monitoring procedures over these payments. Corrective Action Plan: See F-24 Management?s Response: The Department disagrees with this finding. The Department?s effective internal controls identified the overpayments, made the referrals, and followed procedures for two of the four exceptions noted. The two exceptions that we did not identify as overpayments we believe are in accordance with the reasonably calculated requirement to accomplish one or more of the four TANF purposes and should not be considered unallowable. The criteria cited do not indicate any requirement to recoup funds within a specific time frame and the exceptions noted demonstrate the effective internal controls rather than indicate any misuse of funds. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: The Department?s internal controls did not identify two overpayments in OSA?s sample. The Department did identify the other two overpayments in OSA?s sample; however, for one of those overpayments, no action had been taken by the Department 14 months after the overpayment was identified. Therefore, the Department?s internal controls do not provide reasonable assurance that the Federal award is being managed in compliance with Federal statutes, regulations, and the terms and condition of the award. In accordance with 2 CFR 200.403, for a cost to be allowable under a Federal award, the costs must be reasonable and necessary for the performance of the Federal award. Overpayments made to providers or clients with Federal funds are not a necessary cost for the performance of the Federal award; therefore, OSA questions the allowability of these costs. The finding remains as stated. (State Number: 22-1111-03)
(2022-067) Title: Internal control over payments made to and on behalf of TANF clients needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 93.558 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF Compliance Area: Activities allowed or unallowed Allowable costs/cost principles Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: $1,447 Likely Questioned Costs: Likely questioned costs totaling $35,002 were projected by dividing the identified known overpayment in our sample by total payments tested to establish an error rate, then applying that error rate to total payments to TANF clients for these services and payments to providers on behalf of TANF clients in fiscal year 2022. Criteria: 2 CFR 200.303; 2 CFR 200.403; 45 CFR 263.11 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. The Department must use Federal TANF funds for expenditures that are reasonably calculated to accomplish the purposes of TANF. Use of funds in violation of this is considered misuse of funds. Condition: The Department issues TANF payments directly to a TANF client for various items and services. The Department also issues TANF payments directly to providers on behalf of TANF clients for services rendered such as child care and transportation. The Office of the State Auditor (OSA) tested 60 payments and found that: ? one payment issued in October 2021 overpaid a provider by $22 for Transitional Child Care. Upon further review, OSA found that an additional $506 was overpaid to the child- care provider during fiscal year 2022. The overpayment was identified by the Department in December 2021; however, as of audit testing, 14 months after the overpayment was identified, there has not been a recoupment. ? one payment overpaid a provider by $15 for Transitional Child Care. Upon further review, OSA found that an additional $555 was overpaid to the childcare provider during fiscal year 2022. The overpayment was identified by OSA during testing. ? one payment overpaid a provider by $17 for Transitional Child Care. Upon further review, OSA found that an additional $323 was overpaid to the childcare provider during fiscal year 2022. The overpayment was identified by OSA during testing. ? one payment issued in May 2022 overpaid a TANF client a total of $75 for clothing. An advance allowance was issued to the TANF client; however, the TANF client did not submit a receipt substantiating the purchase as required. The Department identified the overpayment in July 2022 and $66 of the overpayment was recouped on January 6, 2023. OSA selected a non-statistical random sample. Context: In fiscal year 2022, payments to TANF clients for services other than direct cash benefits and payments to providers on behalf of TANF clients totaled $6.8 million. Cause: ? Lack of adequate procedures ? Lack of supervisory oversight Effect: ? Known questioned costs ? Potential future questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that the Department implement procedures to ensure that payments made to TANF clients and providers are accurate, allowable, and adequately documented. We further recommend that the Department increase monitoring procedures over these payments. Corrective Action Plan: See F-24 Management?s Response: The Department disagrees with this finding. The Department?s effective internal controls identified the overpayments, made the referrals, and followed procedures for two of the four exceptions noted. The two exceptions that we did not identify as overpayments we believe are in accordance with the reasonably calculated requirement to accomplish one or more of the four TANF purposes and should not be considered unallowable. The criteria cited do not indicate any requirement to recoup funds within a specific time frame and the exceptions noted demonstrate the effective internal controls rather than indicate any misuse of funds. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: The Department?s internal controls did not identify two overpayments in OSA?s sample. The Department did identify the other two overpayments in OSA?s sample; however, for one of those overpayments, no action had been taken by the Department 14 months after the overpayment was identified. Therefore, the Department?s internal controls do not provide reasonable assurance that the Federal award is being managed in compliance with Federal statutes, regulations, and the terms and condition of the award. In accordance with 2 CFR 200.403, for a cost to be allowable under a Federal award, the costs must be reasonable and necessary for the performance of the Federal award. Overpayments made to providers or clients with Federal funds are not a necessary cost for the performance of the Federal award; therefore, OSA questions the allowability of these costs. The finding remains as stated. (State Number: 22-1111-03)
(2022-077) Title: Internal control over Child Support Enforcement expenditures needs improvement Prior Year Findings: None State Department: Administrative and Financial Services State Bureau: Health and Human Services Service Center Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Child Support Enforcement Assistance Listing Number: 93.563 Federal Award Identification Number: 2001MECSES, 2101MECSES, 2201MECSES Compliance Area: Activities allowed or unallowed Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.302; 2 CFR 200.403; Cooperative Agreement Between State of Maine DHHS and Maine State Judicial Branch for State Fiscal Years 2022 and 2023, Section V (b)(1) The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Costs must be adequately documented. The State?s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to determine that such funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. Except where otherwise authorized by statute, costs must conform to any limitations or exclusions set forth in cost principles or in the Federal award as to types or amount of cost items. The Administrative Office of the Courts (AOC) under the Judicial Branch must provide a report to the Department of Health and Human Services? (DHHS) Division of Support and Recovery (DSER) for all Judicial Branch estimated expenditures. This report must detail costs that are eligible for Federal financial participation and must be provided within 35 calendar days after the close of the quarters ending in March, June, September, and December. These estimated expenditures are calculated using the per minute rate that was in effect for the prior fiscal year. Within 35 days after the close of the State fiscal year, the AOC will update the per minute rate and provide DSER a report with actual expenditures for the State fiscal year. Condition: The Child Support Enforcement (CSE) program is administered by DSER within DHHS. DHHS has a cooperative agreement with AOC that defines roles, relationships, and responsibilities of the parties, and sets forth a basis for financial reimbursement for court services provided to DHHS by AOC. These services include conducting paternity hearings; hearings to establish, modify, or enforce support orders; civil and criminal complaint hearings related to CSE; providing mediation services; and conducting proceedings related to income withholding responsibilities. AOC sends monthly invoices to the DHHS Service Center (DHHS SC) with estimated costs for work performed for the CSE program. DHHS SC is responsible for transferring funds from the CSE program to AOC. On a quarterly basis, AOC provides DHHS SC with a reconciliation of estimated costs to actual costs. This quarterly reconciliation utilizes the per minute rate that was in effect for the prior fiscal year and is due 35 days after the close of the quarter. Annually, the per minute rate is updated and AOC provides DHHS SC with a final report of actual costs with the updated per minute rate. This final report is due within 35 days after the close of the fiscal year. The Office of the State Auditor (OSA) selected six transfers from DHHS SC to AOC for testing and found that costs incurred for court services were not adequately supported. DHHS SC did not receive two quarterly reports from AOC; therefore, court expenditures were based on estimated costs rather than actual costs. Furthermore, the annual report and reconciliation of estimated costs to actual costs was not completed until five months after the fiscal year end. As a result, expenditure amounts reported by the CSE program are not based on actual costs. OSA reviewed the annual reconciliation and determined that the variance is not material to the program. OSA selected a non-statistical random sample. Context: The CSE program expended $18.8 million in Federal funds during fiscal year 2022, of which $2.2 million was used for court services. Cause: Management override of controls. The program elected to defer reconciling estimated costs to actual costs until the per minute rate was updated by AOC. Effect: CSE program expenditures for fiscal year 2022, specifically relating to AOC expenditures, were understated by the amount included in the annual reconciling invoice for AOC. Recommendation: We recommend that the Department enhance oversight of established procedures to ensure that CSE is in compliance with Federal regulations. Corrective Action Plan: See F-27 Management?s Response: The Department agrees with this finding. The Division of Support Enforcement and Recovery and the Judicial Branch will modify the language of the cooperative agreement to clarify that all allowable costs subject to federal financial participation are adequately and timely documented. Contact: Jerry Joy, Director, Division of Support Enforcement and Recovery, DHHS, 207-624-6985 (State Number: 22-1128-02)
(2022-086) Title: Internal control over deceased client cases and claims analysis needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Office of MaineCare Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Allowable costs/costs principles Eligibility Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Costs must be necessary and reasonable for the performance of the Federal award. Condition: The Office for Family Independence (OFI) is responsible for maintaining complete and accurate client information in the Automated Client Eligibility System (ACES). Information entered into ACES is relied upon by the Office of MaineCare Services (OMS) to approve, deny, process, and analyze claims. OFI relies on numerous data sources for identifying and providing client date of death (DOD) information for input into ACES. In some cases where the exact DOD may not be immediately available, the DOD is entered as the last day of the month so that OFI can close the case of a known deceased client in a timely manner. OFI performs monthly crosswalks to compare the DOD entered in ACES to the reported DOD obtained from the Maine Center for Disease Control & Prevention (MeCDC) vital records. OMS has established procedures to identify claims paid with a service date after DOD. These procedures include staff review of claims and identification of appropriate action for any claim that was improperly paid, as certain claims with service dates after death are allowable. With regards to OMS claims identification procedures, OSA analyzed all claims paid for a client with a DOD in fiscal year 2022 and identified 110 claims paid on behalf of 75 clients that had service dates after death but were not identified by OMS procedures. Claims paid on behalf of these clients after DOD totaled $9,988 in fiscal year 2022. With regards to OFI eligibility procedures, OSA tested a sample of 60 clients with DOD in fiscal year 2022 and identified: ? four clients with a DOD in ACES that did not correspond to the actual DOD provided by MeCDC vital records; and ? one client with no DOD recorded in ACES. OSA selected a non-statistical random sample. Audit procedures also identified that: ? three clients for whom claims were paid after DOD had no DOD recorded in ACES; and ? 13 clients with an incorrect DOD identified by OSA during the fiscal year 2021 audit were still not corrected in ACES. Context: The Medicaid program processed $2.2 billion in paid claims in fiscal year 2022. Cause: ? Lack of adequate procedures to ensure DOD information is entered accurately and appropriately updated in ACES ? Lack of adequate procedures to ensure all claims paid after a client?s DOD are identified Effect: ? Claims paid on behalf of deceased clients may go undetected. ? Potential questioned costs and disallowances Recommendation: We recommend that OFI enhance existing procedures to identify and correct DOD information when a known DOD is not initially provided. We further recommend that OFI implement oversight to ensure DOD information is accurately entered into ACES. We recommend that OMS enhance existing procedures to ensure that all claims with service dates after a client?s DOD are identified for review to detect any claims that are not allowable. Corrective Action Plan: See F-31 Management?s Response: The Department partially agrees with this finding. OFI acknowledges a data mismatch of five clients. Edits were made to the standard operating procedures governing the date of death procedures in November of 2021 including articulation of responsible parties and expected timelines for processing. Additionally, OFI continues to process weekly IEVS discrepancy reports based on death data from our federal partners as well as conduct monthly crosswalks with Maine?s CDC Office of Vital Statistics. OMS worked with OSA to review the original population of over 600 claims that were made after a client?s DOD. The original claims identified by OSA were reduced to 110. OMS did not have sufficient time to perform a more detailed analysis into the underlying reasons that these 110 claims were made to clients after DOD. OMS will complete the in-depth review and then consider if additional updates to procedures are necessary. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: OFI indicates they have enhanced their procedures as of November 2021, implying these will prevent the types of errors identified in the finding. However, of the three clients for whom no DOD was entered into ACES, two occurred after OFI?s November 2021 standard operating procedures update. Though OSA initially identified approximately 600 claims paid after a client?s DOD that were not identified through OMS? procedures, OMS was able to provide additional documentation to remove approximately 500 claims from OSA?s list of exceptions. For the remaining 110 claims, OMS could not provide documentation to support that these claims were identified through OMS? procedures. The finding remains as stated. (State Number: 22-1106-11)
(2022-086) Title: Internal control over deceased client cases and claims analysis needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Office of MaineCare Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Allowable costs/costs principles Eligibility Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Costs must be necessary and reasonable for the performance of the Federal award. Condition: The Office for Family Independence (OFI) is responsible for maintaining complete and accurate client information in the Automated Client Eligibility System (ACES). Information entered into ACES is relied upon by the Office of MaineCare Services (OMS) to approve, deny, process, and analyze claims. OFI relies on numerous data sources for identifying and providing client date of death (DOD) information for input into ACES. In some cases where the exact DOD may not be immediately available, the DOD is entered as the last day of the month so that OFI can close the case of a known deceased client in a timely manner. OFI performs monthly crosswalks to compare the DOD entered in ACES to the reported DOD obtained from the Maine Center for Disease Control & Prevention (MeCDC) vital records. OMS has established procedures to identify claims paid with a service date after DOD. These procedures include staff review of claims and identification of appropriate action for any claim that was improperly paid, as certain claims with service dates after death are allowable. With regards to OMS claims identification procedures, OSA analyzed all claims paid for a client with a DOD in fiscal year 2022 and identified 110 claims paid on behalf of 75 clients that had service dates after death but were not identified by OMS procedures. Claims paid on behalf of these clients after DOD totaled $9,988 in fiscal year 2022. With regards to OFI eligibility procedures, OSA tested a sample of 60 clients with DOD in fiscal year 2022 and identified: ? four clients with a DOD in ACES that did not correspond to the actual DOD provided by MeCDC vital records; and ? one client with no DOD recorded in ACES. OSA selected a non-statistical random sample. Audit procedures also identified that: ? three clients for whom claims were paid after DOD had no DOD recorded in ACES; and ? 13 clients with an incorrect DOD identified by OSA during the fiscal year 2021 audit were still not corrected in ACES. Context: The Medicaid program processed $2.2 billion in paid claims in fiscal year 2022. Cause: ? Lack of adequate procedures to ensure DOD information is entered accurately and appropriately updated in ACES ? Lack of adequate procedures to ensure all claims paid after a client?s DOD are identified Effect: ? Claims paid on behalf of deceased clients may go undetected. ? Potential questioned costs and disallowances Recommendation: We recommend that OFI enhance existing procedures to identify and correct DOD information when a known DOD is not initially provided. We further recommend that OFI implement oversight to ensure DOD information is accurately entered into ACES. We recommend that OMS enhance existing procedures to ensure that all claims with service dates after a client?s DOD are identified for review to detect any claims that are not allowable. Corrective Action Plan: See F-31 Management?s Response: The Department partially agrees with this finding. OFI acknowledges a data mismatch of five clients. Edits were made to the standard operating procedures governing the date of death procedures in November of 2021 including articulation of responsible parties and expected timelines for processing. Additionally, OFI continues to process weekly IEVS discrepancy reports based on death data from our federal partners as well as conduct monthly crosswalks with Maine?s CDC Office of Vital Statistics. OMS worked with OSA to review the original population of over 600 claims that were made after a client?s DOD. The original claims identified by OSA were reduced to 110. OMS did not have sufficient time to perform a more detailed analysis into the underlying reasons that these 110 claims were made to clients after DOD. OMS will complete the in-depth review and then consider if additional updates to procedures are necessary. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: OFI indicates they have enhanced their procedures as of November 2021, implying these will prevent the types of errors identified in the finding. However, of the three clients for whom no DOD was entered into ACES, two occurred after OFI?s November 2021 standard operating procedures update. Though OSA initially identified approximately 600 claims paid after a client?s DOD that were not identified through OMS? procedures, OMS was able to provide additional documentation to remove approximately 500 claims from OSA?s list of exceptions. For the remaining 110 claims, OMS could not provide documentation to support that these claims were identified through OMS? procedures. The finding remains as stated. (State Number: 22-1106-11)
(2022-086) Title: Internal control over deceased client cases and claims analysis needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Office of MaineCare Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Allowable costs/costs principles Eligibility Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Costs must be necessary and reasonable for the performance of the Federal award. Condition: The Office for Family Independence (OFI) is responsible for maintaining complete and accurate client information in the Automated Client Eligibility System (ACES). Information entered into ACES is relied upon by the Office of MaineCare Services (OMS) to approve, deny, process, and analyze claims. OFI relies on numerous data sources for identifying and providing client date of death (DOD) information for input into ACES. In some cases where the exact DOD may not be immediately available, the DOD is entered as the last day of the month so that OFI can close the case of a known deceased client in a timely manner. OFI performs monthly crosswalks to compare the DOD entered in ACES to the reported DOD obtained from the Maine Center for Disease Control & Prevention (MeCDC) vital records. OMS has established procedures to identify claims paid with a service date after DOD. These procedures include staff review of claims and identification of appropriate action for any claim that was improperly paid, as certain claims with service dates after death are allowable. With regards to OMS claims identification procedures, OSA analyzed all claims paid for a client with a DOD in fiscal year 2022 and identified 110 claims paid on behalf of 75 clients that had service dates after death but were not identified by OMS procedures. Claims paid on behalf of these clients after DOD totaled $9,988 in fiscal year 2022. With regards to OFI eligibility procedures, OSA tested a sample of 60 clients with DOD in fiscal year 2022 and identified: ? four clients with a DOD in ACES that did not correspond to the actual DOD provided by MeCDC vital records; and ? one client with no DOD recorded in ACES. OSA selected a non-statistical random sample. Audit procedures also identified that: ? three clients for whom claims were paid after DOD had no DOD recorded in ACES; and ? 13 clients with an incorrect DOD identified by OSA during the fiscal year 2021 audit were still not corrected in ACES. Context: The Medicaid program processed $2.2 billion in paid claims in fiscal year 2022. Cause: ? Lack of adequate procedures to ensure DOD information is entered accurately and appropriately updated in ACES ? Lack of adequate procedures to ensure all claims paid after a client?s DOD are identified Effect: ? Claims paid on behalf of deceased clients may go undetected. ? Potential questioned costs and disallowances Recommendation: We recommend that OFI enhance existing procedures to identify and correct DOD information when a known DOD is not initially provided. We further recommend that OFI implement oversight to ensure DOD information is accurately entered into ACES. We recommend that OMS enhance existing procedures to ensure that all claims with service dates after a client?s DOD are identified for review to detect any claims that are not allowable. Corrective Action Plan: See F-31 Management?s Response: The Department partially agrees with this finding. OFI acknowledges a data mismatch of five clients. Edits were made to the standard operating procedures governing the date of death procedures in November of 2021 including articulation of responsible parties and expected timelines for processing. Additionally, OFI continues to process weekly IEVS discrepancy reports based on death data from our federal partners as well as conduct monthly crosswalks with Maine?s CDC Office of Vital Statistics. OMS worked with OSA to review the original population of over 600 claims that were made after a client?s DOD. The original claims identified by OSA were reduced to 110. OMS did not have sufficient time to perform a more detailed analysis into the underlying reasons that these 110 claims were made to clients after DOD. OMS will complete the in-depth review and then consider if additional updates to procedures are necessary. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: OFI indicates they have enhanced their procedures as of November 2021, implying these will prevent the types of errors identified in the finding. However, of the three clients for whom no DOD was entered into ACES, two occurred after OFI?s November 2021 standard operating procedures update. Though OSA initially identified approximately 600 claims paid after a client?s DOD that were not identified through OMS? procedures, OMS was able to provide additional documentation to remove approximately 500 claims from OSA?s list of exceptions. For the remaining 110 claims, OMS could not provide documentation to support that these claims were identified through OMS? procedures. The finding remains as stated. (State Number: 22-1106-11)
(2022-086) Title: Internal control over deceased client cases and claims analysis needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Office of MaineCare Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Allowable costs/costs principles Eligibility Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Costs must be necessary and reasonable for the performance of the Federal award. Condition: The Office for Family Independence (OFI) is responsible for maintaining complete and accurate client information in the Automated Client Eligibility System (ACES). Information entered into ACES is relied upon by the Office of MaineCare Services (OMS) to approve, deny, process, and analyze claims. OFI relies on numerous data sources for identifying and providing client date of death (DOD) information for input into ACES. In some cases where the exact DOD may not be immediately available, the DOD is entered as the last day of the month so that OFI can close the case of a known deceased client in a timely manner. OFI performs monthly crosswalks to compare the DOD entered in ACES to the reported DOD obtained from the Maine Center for Disease Control & Prevention (MeCDC) vital records. OMS has established procedures to identify claims paid with a service date after DOD. These procedures include staff review of claims and identification of appropriate action for any claim that was improperly paid, as certain claims with service dates after death are allowable. With regards to OMS claims identification procedures, OSA analyzed all claims paid for a client with a DOD in fiscal year 2022 and identified 110 claims paid on behalf of 75 clients that had service dates after death but were not identified by OMS procedures. Claims paid on behalf of these clients after DOD totaled $9,988 in fiscal year 2022. With regards to OFI eligibility procedures, OSA tested a sample of 60 clients with DOD in fiscal year 2022 and identified: ? four clients with a DOD in ACES that did not correspond to the actual DOD provided by MeCDC vital records; and ? one client with no DOD recorded in ACES. OSA selected a non-statistical random sample. Audit procedures also identified that: ? three clients for whom claims were paid after DOD had no DOD recorded in ACES; and ? 13 clients with an incorrect DOD identified by OSA during the fiscal year 2021 audit were still not corrected in ACES. Context: The Medicaid program processed $2.2 billion in paid claims in fiscal year 2022. Cause: ? Lack of adequate procedures to ensure DOD information is entered accurately and appropriately updated in ACES ? Lack of adequate procedures to ensure all claims paid after a client?s DOD are identified Effect: ? Claims paid on behalf of deceased clients may go undetected. ? Potential questioned costs and disallowances Recommendation: We recommend that OFI enhance existing procedures to identify and correct DOD information when a known DOD is not initially provided. We further recommend that OFI implement oversight to ensure DOD information is accurately entered into ACES. We recommend that OMS enhance existing procedures to ensure that all claims with service dates after a client?s DOD are identified for review to detect any claims that are not allowable. Corrective Action Plan: See F-31 Management?s Response: The Department partially agrees with this finding. OFI acknowledges a data mismatch of five clients. Edits were made to the standard operating procedures governing the date of death procedures in November of 2021 including articulation of responsible parties and expected timelines for processing. Additionally, OFI continues to process weekly IEVS discrepancy reports based on death data from our federal partners as well as conduct monthly crosswalks with Maine?s CDC Office of Vital Statistics. OMS worked with OSA to review the original population of over 600 claims that were made after a client?s DOD. The original claims identified by OSA were reduced to 110. OMS did not have sufficient time to perform a more detailed analysis into the underlying reasons that these 110 claims were made to clients after DOD. OMS will complete the in-depth review and then consider if additional updates to procedures are necessary. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: OFI indicates they have enhanced their procedures as of November 2021, implying these will prevent the types of errors identified in the finding. However, of the three clients for whom no DOD was entered into ACES, two occurred after OFI?s November 2021 standard operating procedures update. Though OSA initially identified approximately 600 claims paid after a client?s DOD that were not identified through OMS? procedures, OMS was able to provide additional documentation to remove approximately 500 claims from OSA?s list of exceptions. For the remaining 110 claims, OMS could not provide documentation to support that these claims were identified through OMS? procedures. The finding remains as stated. (State Number: 22-1106-11)
(2022-086) Title: Internal control over deceased client cases and claims analysis needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Office of MaineCare Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Allowable costs/costs principles Eligibility Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Costs must be necessary and reasonable for the performance of the Federal award. Condition: The Office for Family Independence (OFI) is responsible for maintaining complete and accurate client information in the Automated Client Eligibility System (ACES). Information entered into ACES is relied upon by the Office of MaineCare Services (OMS) to approve, deny, process, and analyze claims. OFI relies on numerous data sources for identifying and providing client date of death (DOD) information for input into ACES. In some cases where the exact DOD may not be immediately available, the DOD is entered as the last day of the month so that OFI can close the case of a known deceased client in a timely manner. OFI performs monthly crosswalks to compare the DOD entered in ACES to the reported DOD obtained from the Maine Center for Disease Control & Prevention (MeCDC) vital records. OMS has established procedures to identify claims paid with a service date after DOD. These procedures include staff review of claims and identification of appropriate action for any claim that was improperly paid, as certain claims with service dates after death are allowable. With regards to OMS claims identification procedures, OSA analyzed all claims paid for a client with a DOD in fiscal year 2022 and identified 110 claims paid on behalf of 75 clients that had service dates after death but were not identified by OMS procedures. Claims paid on behalf of these clients after DOD totaled $9,988 in fiscal year 2022. With regards to OFI eligibility procedures, OSA tested a sample of 60 clients with DOD in fiscal year 2022 and identified: ? four clients with a DOD in ACES that did not correspond to the actual DOD provided by MeCDC vital records; and ? one client with no DOD recorded in ACES. OSA selected a non-statistical random sample. Audit procedures also identified that: ? three clients for whom claims were paid after DOD had no DOD recorded in ACES; and ? 13 clients with an incorrect DOD identified by OSA during the fiscal year 2021 audit were still not corrected in ACES. Context: The Medicaid program processed $2.2 billion in paid claims in fiscal year 2022. Cause: ? Lack of adequate procedures to ensure DOD information is entered accurately and appropriately updated in ACES ? Lack of adequate procedures to ensure all claims paid after a client?s DOD are identified Effect: ? Claims paid on behalf of deceased clients may go undetected. ? Potential questioned costs and disallowances Recommendation: We recommend that OFI enhance existing procedures to identify and correct DOD information when a known DOD is not initially provided. We further recommend that OFI implement oversight to ensure DOD information is accurately entered into ACES. We recommend that OMS enhance existing procedures to ensure that all claims with service dates after a client?s DOD are identified for review to detect any claims that are not allowable. Corrective Action Plan: See F-31 Management?s Response: The Department partially agrees with this finding. OFI acknowledges a data mismatch of five clients. Edits were made to the standard operating procedures governing the date of death procedures in November of 2021 including articulation of responsible parties and expected timelines for processing. Additionally, OFI continues to process weekly IEVS discrepancy reports based on death data from our federal partners as well as conduct monthly crosswalks with Maine?s CDC Office of Vital Statistics. OMS worked with OSA to review the original population of over 600 claims that were made after a client?s DOD. The original claims identified by OSA were reduced to 110. OMS did not have sufficient time to perform a more detailed analysis into the underlying reasons that these 110 claims were made to clients after DOD. OMS will complete the in-depth review and then consider if additional updates to procedures are necessary. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: OFI indicates they have enhanced their procedures as of November 2021, implying these will prevent the types of errors identified in the finding. However, of the three clients for whom no DOD was entered into ACES, two occurred after OFI?s November 2021 standard operating procedures update. Though OSA initially identified approximately 600 claims paid after a client?s DOD that were not identified through OMS? procedures, OMS was able to provide additional documentation to remove approximately 500 claims from OSA?s list of exceptions. For the remaining 110 claims, OMS could not provide documentation to support that these claims were identified through OMS? procedures. The finding remains as stated. (State Number: 22-1106-11)
(2022-093) Title: Internal control over expenditure processing needs improvement Prior Year Findings: None State Department: Administrative and Financial Services State Bureau: Security and Employment Service Center Federal Agency: U.S. Department of Homeland Security Assistance Listing Title: Homeland Security Grant Program Emergency Management Performance Grant Assistance Listing Number: 97.067; 97.042 Federal Award Identification Number: EMW2018SS00049S01; EMB2019EP00004 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned costs Known Questioned Costs: $59,759 under ALN 97.067, Homeland Security Grant Program Likely Questioned Costs: Likely questioned costs cannot be determined due to the variety of expenditures within the population. The projection of questioned costs utilizing the error rate related to the known exception and amounts tested would not produce a reasonable estimate of likely questioned costs. Criteria: 2 CFR 200.303; 2 CFR 200.403 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. Condition: The Security and Employment Service Center is responsible for processing invoices for multiple State agencies. The Office of the State Auditor (OSA) tested a sample of 60 Federal expenditure transactions to ensure that the expenditure was accurately recorded. OSA found that one quarterly lease payment totaling $59,759 was processed incorrectly. The coding on the invoice indicated that the expenditure should be split coded utilizing Federal and State funds, and that the Federal share should be paid utilizing funds from the Emergency Management Performance Grant. Instead, Homeland Security Grant Program funds were erroneously charged. OSA selected a non-statistical random sample. Context: In fiscal year 2022, the Department reported expenditures of $2.6 million for the Emergency Management Performance Grant and $4.7 million for the Homeland Security Grant Program. Cause: Lack of supervisory oversight Effect: ? Questioned costs and potential disallowances ? Inaccurate reporting of expenditures Recommendation: We recommend that the Department improve oversight procedures to ensure staff are properly recording expenditures in the correct accounts with the proper utilization of grant funds. Corrective Action Plan: See F-33 Management?s Response: The Department agrees with this finding. The Security and Employment Service Center will continue to provide training for data entry and invoice approval processes. Contact: Marilyn Leimbach, Director, Service and Employment Service Center, DFPS, DAFS, 207-248-2556 (State Number: 22-1000-01
(2022-093) Title: Internal control over expenditure processing needs improvement Prior Year Findings: None State Department: Administrative and Financial Services State Bureau: Security and Employment Service Center Federal Agency: U.S. Department of Homeland Security Assistance Listing Title: Homeland Security Grant Program Emergency Management Performance Grant Assistance Listing Number: 97.067; 97.042 Federal Award Identification Number: EMW2018SS00049S01; EMB2019EP00004 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned costs Known Questioned Costs: $59,759 under ALN 97.067, Homeland Security Grant Program Likely Questioned Costs: Likely questioned costs cannot be determined due to the variety of expenditures within the population. The projection of questioned costs utilizing the error rate related to the known exception and amounts tested would not produce a reasonable estimate of likely questioned costs. Criteria: 2 CFR 200.303; 2 CFR 200.403 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. Condition: The Security and Employment Service Center is responsible for processing invoices for multiple State agencies. The Office of the State Auditor (OSA) tested a sample of 60 Federal expenditure transactions to ensure that the expenditure was accurately recorded. OSA found that one quarterly lease payment totaling $59,759 was processed incorrectly. The coding on the invoice indicated that the expenditure should be split coded utilizing Federal and State funds, and that the Federal share should be paid utilizing funds from the Emergency Management Performance Grant. Instead, Homeland Security Grant Program funds were erroneously charged. OSA selected a non-statistical random sample. Context: In fiscal year 2022, the Department reported expenditures of $2.6 million for the Emergency Management Performance Grant and $4.7 million for the Homeland Security Grant Program. Cause: Lack of supervisory oversight Effect: ? Questioned costs and potential disallowances ? Inaccurate reporting of expenditures Recommendation: We recommend that the Department improve oversight procedures to ensure staff are properly recording expenditures in the correct accounts with the proper utilization of grant funds. Corrective Action Plan: See F-33 Management?s Response: The Department agrees with this finding. The Security and Employment Service Center will continue to provide training for data entry and invoice approval processes. Contact: Marilyn Leimbach, Director, Service and Employment Service Center, DFPS, DAFS, 207-248-2556 (State Number: 22-1000-01
FINDING 2022-004 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): S010A190014, S010A200014, S010A210014 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system was not developed at the School Corporation to ensure compliance with requirements related to the grant agreement and the Allowable Costs/Cost Principles compliance requirement. The School Corporation approved a salary schedule for bus drivers which included additional compensation based on miles driven for bus drivers who transported preschool students. Each pay period, the Director of Transportation calculated a bus driver's daily pay by adding the approved hourly wage rate times hours worked to the per mile rate times miles driven for the preschool route, if applicable. The School Corporation provided approved timesheets for the bus drivers selected for testing; however, the calculation of the daily pay calculation was not provided for audit. The bus drivers' payroll of $113,486 charged to the Title I grants during the audit period were considered questioned costs. 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: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . ." 2 CFR 200.430(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. . . ." Cause Management had not established a system of internal controls that would have ensured compliance with the grant agreement and the Allowable Costs/Cost Principles compliance requirement. Effect The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Allowable Costs/Cost Principles compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs Known questioned costs were $113,486 as identified in the Condition and Context. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the grant agreement and the Allowable Costs/Cost Principles compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-004 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): S010A190014, S010A200014, S010A210014 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system was not developed at the School Corporation to ensure compliance with requirements related to the grant agreement and the Allowable Costs/Cost Principles compliance requirement. The School Corporation approved a salary schedule for bus drivers which included additional compensation based on miles driven for bus drivers who transported preschool students. Each pay period, the Director of Transportation calculated a bus driver's daily pay by adding the approved hourly wage rate times hours worked to the per mile rate times miles driven for the preschool route, if applicable. The School Corporation provided approved timesheets for the bus drivers selected for testing; however, the calculation of the daily pay calculation was not provided for audit. The bus drivers' payroll of $113,486 charged to the Title I grants during the audit period were considered questioned costs. 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: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . ." 2 CFR 200.430(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. . . ." Cause Management had not established a system of internal controls that would have ensured compliance with the grant agreement and the Allowable Costs/Cost Principles compliance requirement. Effect The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Allowable Costs/Cost Principles compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs Known questioned costs were $113,486 as identified in the Condition and Context. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the grant agreement and the Allowable Costs/Cost Principles compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-007 Subject: COVID-19 - Education Stabilization Fund - Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425D Federal Award Number and Year (or Other Identifying Number): S425D200013 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Condition and Context An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the grant agreement and the Activities Allowed or Unallowed and Allowable Costs/Cost Principles compliance requirements. The COVID-19 - Education Stabilization Fund established by the Coronavirus Aid, Relief, and Economic Security (CARES) Act was for the purpose of preventing, preparing for, and responding to Novel Coronavirus (COVID-19). The School Corporation paid Classified Staff and all Administrators and Directors (Superintendent of Schools excluded) School Board approved stipends on December 11, 2020, from the program. The across-the-board stipends were paid without justification or documentation that provided for additional duties or work performed on which to base the stipends. The total amount of stipends paid, $178,800, were considered questioned costs. The lack of internal controls and noncompliance were isolated to the stipend payments made from S425D200013. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. . . . (g) Be adequately documented. . . ." 2 CFR 200.404 states in part: "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. The question of reasonableness is particularly important when the non- Federal entity is predominantly federally funded. In determining reasonableness of a given cost, consideration must be given to: (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. . . ." Public Law 116-136, Section 18003(d) states: "Uses of Funds. - A local educational agency that receives funds under this title may use funds for any of the following: (1) Any activity authorized by the ESEA of 1965, including the Native Hawaiian Education Act and the Alaska Native Educational Equity, Support, and Assistance Act (20 U.S.C. 6301 et seq.), the Individuals with Disabilities Education Act (20 U.S.C. 1400 et seq.) ('IDEA'), the Adult Education and Family Literacy Act (20 U.S.C. 1400 et seq.), the Carl D. Perkins Career and Technical Education Act of 2006 (20 U.S.C. 2301 et seq.) ('the Perkins Act'), or subtitle B of title VII of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11431 et seq.). (2) Coordination of preparedness and response efforts of local educational agencies with State, local, Tribal, and territorial public health departments, and other relevant agencies, to improve coordinated responses among such entities to prevent, prepare for, and respond to coronavirus. (3) Providing principals and others school leaders with the resources necessary to address the needs of their individual schools. (4) Activities to address the unique needs of low-income children or students, children with disabilities, English learners, racial and ethnic minorities, students experiencing homelessness, and foster care youth, including how outreach and service delivery will meet the needs of each population. (5) Developing and implementing procedures and systems to improve the preparedness and response efforts of local educational agencies. (6) Training and professional development for staff of the local educational agency on sanitation and minimizing the spread of infectious diseases. (7) Purchasing supplies to sanitize and clean the facilities of a local educational agency, including buildings operated by such agency. (8) Planning for and coordinating during long-term closures, including for how to provide meals to eligible students, how to provide technology for online learning to all students, how to provide guidance for carrying out requirements under the Individuals with Disabilities Education Act (20 U.S.C. 1401 et seq.) and how to ensure other educational services can continue to be provided consistent with all Federal, State, and local requirements. (9) Purchasing educational technology (including hardware, software, and connectivity) for students who are served by the local educational agency that aids in regular and substantive educational interaction between students and their classroom instructors, including low-income students and students with disabilities, which may include assistive technology or adaptive equipment. (10) Providing mental health services and supports. (11) Planning and implementing activities related to summer learning and supplemental afterschool programs, including providing classroom instruction or online learning during the summer months and addressing the needs of low-income students, students with disabilities, English learners, migrant students, students experiencing homelessness, and children in foster care. (12) Other activities that are necessary to maintain the operation of and continuity of services in local educational H. R. 748?287 agencies and continuing to employ existing staff of the local educational agency." Cause Management had not established a system of internal controls that would have ensured compliance with the Activities Allowed or Unallowed and Allowable Costs/Cost Principles compliance requirements. Effect The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements could result in the loss of future federal funds to the School Corporation. Questioned Costs Known questioned costs in the amount of $178,800 were identified and noted in the Condition and Context. Recommendation We recommended that the School Corporation's management establish internal controls to ensure compliance and comply with the grant agreement and the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-007 Subject: COVID-19 - Education Stabilization Fund - Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425D Federal Award Number and Year (or Other Identifying Number): S425D200013 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Condition and Context An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the grant agreement and the Activities Allowed or Unallowed and Allowable Costs/Cost Principles compliance requirements. The COVID-19 - Education Stabilization Fund established by the Coronavirus Aid, Relief, and Economic Security (CARES) Act was for the purpose of preventing, preparing for, and responding to Novel Coronavirus (COVID-19). The School Corporation paid Classified Staff and all Administrators and Directors (Superintendent of Schools excluded) School Board approved stipends on December 11, 2020, from the program. The across-the-board stipends were paid without justification or documentation that provided for additional duties or work performed on which to base the stipends. The total amount of stipends paid, $178,800, were considered questioned costs. The lack of internal controls and noncompliance were isolated to the stipend payments made from S425D200013. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. . . . (g) Be adequately documented. . . ." 2 CFR 200.404 states in part: "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. The question of reasonableness is particularly important when the non- Federal entity is predominantly federally funded. In determining reasonableness of a given cost, consideration must be given to: (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. . . ." Public Law 116-136, Section 18003(d) states: "Uses of Funds. - A local educational agency that receives funds under this title may use funds for any of the following: (1) Any activity authorized by the ESEA of 1965, including the Native Hawaiian Education Act and the Alaska Native Educational Equity, Support, and Assistance Act (20 U.S.C. 6301 et seq.), the Individuals with Disabilities Education Act (20 U.S.C. 1400 et seq.) ('IDEA'), the Adult Education and Family Literacy Act (20 U.S.C. 1400 et seq.), the Carl D. Perkins Career and Technical Education Act of 2006 (20 U.S.C. 2301 et seq.) ('the Perkins Act'), or subtitle B of title VII of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11431 et seq.). (2) Coordination of preparedness and response efforts of local educational agencies with State, local, Tribal, and territorial public health departments, and other relevant agencies, to improve coordinated responses among such entities to prevent, prepare for, and respond to coronavirus. (3) Providing principals and others school leaders with the resources necessary to address the needs of their individual schools. (4) Activities to address the unique needs of low-income children or students, children with disabilities, English learners, racial and ethnic minorities, students experiencing homelessness, and foster care youth, including how outreach and service delivery will meet the needs of each population. (5) Developing and implementing procedures and systems to improve the preparedness and response efforts of local educational agencies. (6) Training and professional development for staff of the local educational agency on sanitation and minimizing the spread of infectious diseases. (7) Purchasing supplies to sanitize and clean the facilities of a local educational agency, including buildings operated by such agency. (8) Planning for and coordinating during long-term closures, including for how to provide meals to eligible students, how to provide technology for online learning to all students, how to provide guidance for carrying out requirements under the Individuals with Disabilities Education Act (20 U.S.C. 1401 et seq.) and how to ensure other educational services can continue to be provided consistent with all Federal, State, and local requirements. (9) Purchasing educational technology (including hardware, software, and connectivity) for students who are served by the local educational agency that aids in regular and substantive educational interaction between students and their classroom instructors, including low-income students and students with disabilities, which may include assistive technology or adaptive equipment. (10) Providing mental health services and supports. (11) Planning and implementing activities related to summer learning and supplemental afterschool programs, including providing classroom instruction or online learning during the summer months and addressing the needs of low-income students, students with disabilities, English learners, migrant students, students experiencing homelessness, and children in foster care. (12) Other activities that are necessary to maintain the operation of and continuity of services in local educational H. R. 748?287 agencies and continuing to employ existing staff of the local educational agency." Cause Management had not established a system of internal controls that would have ensured compliance with the Activities Allowed or Unallowed and Allowable Costs/Cost Principles compliance requirements. Effect The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements could result in the loss of future federal funds to the School Corporation. Questioned Costs Known questioned costs in the amount of $178,800 were identified and noted in the Condition and Context. Recommendation We recommended that the School Corporation's management establish internal controls to ensure compliance and comply with the grant agreement and the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FA 2022-001 Strengthen Controls over Expenditures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Federal Communications Commission AL Number and Title: COVID-19 ? 32.009 ? Emergency Connectivity Fund Federal Award Number: ECF202105452 (Year: 2022) Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: COVID-19 ? 84.425D ? Elementary and Secondary School Emergency Relief Fund COVID-19 ? 84.425U ? American Rescue Plan Elementary and Secondary School Emergency Relief Fund Federal Award Numbers: S425D210012 (Year: 2021), S425U210012 (Year: 2021) Questioned Costs: $26,460 Description: A review of expenditures charged to the Emergency Connectivity Fund and Elementary and Secondary School Emergency Relief Fund programs revealed that the School District?s internal control procedures were not operating appropriately to ensure that expenditures were allowable. Background: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. Additionally, Congress established the Emergency Connectivity Fund (ECF) through the American Rescue Plan Act and appropriated $7.2 billion for the purchase of eligible equipment, advanced telecommunications, and information services for use by students, school staff, and library patrons at locations that include locations other than at a school or library. The ECF program provides funding to meet the remote learning needs of students, school staff, and library patrons who would otherwise lack access to connected devices and broadband connections sufficient to engage in remote learning during the COVID-19 emergency period. ECF funds totaling $956,562 and ESSER funds totaling $10,418,254 were expended and reported on the Baldwin County Board of Education?s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. 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. Additionally, 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? (f) Not be included as a cost or used to meet the cost sharing or matching requirements of any other federally-financed program in either the current or a prior period, (g) Be adequately documented?? Furthermore, provisions included in Title 47 CFR Section 54.1712 ? Duplicate Support state that ?Entities participating in the Emergency Connectivity Fund may not seek Emergency Connectivity Fund support or reimbursement for eligible equipment or services that have been purchased with or reimbursed in full from other Federal pandemic-relief funding, targeted state funding, other external sources of targeted funding or targeted gifts, or eligible for discounts from the schools and libraries universal service support mechanism or other universal service support mechanisms.? Condition: All expenditures related to the ECF program were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. It was noted that expenditures for wireless service totaling $26,460 were approved through the budget process and recorded under both the ECF program and the ESSER program. Upon further review, it was noted that reimbursement was requested and received through the ESSER program during fiscal year 2022 and the ECF program after year-end. Additionally, a refund of such funding had not been processed for either of the programs as of the end of audit fieldwork. Therefore, duplicate federal funding was received for the same expenditure. Questioned Costs: Known questioned costs of $26,460 were identified for expenditures that were reimbursed through both the ECF and ESSER programs. These known questioned costs related to expenditures that were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs. Cause: In discussing these deficiencies with management, they stated that these expenditures were allowable and reimbursed through the ESSER program during the fiscal year. However, the director over ECF funding was unaware that these funds had already been requested through ESSER funding and requested and received reimbursement through the ECF program, as well. Effect: The School District is not in compliance with the Uniform Guidance, the U.S. Federal Communications Commission guidance related to the ECF program, and the U.S. Department of Education (ED) guidance related to the ESSER program. Failure to ensure that appropriate controls exist to support the allowability of payments from federal programs may expose the School District to unnecessary financial strains and shortages as the grantor and/or pass-through entity may require the School District to return funds associated with the unallowable expenditures. Recommendation: The School District should review current internal control procedures related to federal program expenditures. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that duplicate reimbursements are not sought from multiple federal programs for the same expenditure. Additionally, the School District should initiate a refund in the amount of $26,460 to either the ECF or ESSER program. Views of Responsible Officials: We concur with this finding.
FA 2022-001 Strengthen Controls over Expenditures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Federal Communications Commission AL Number and Title: COVID-19 ? 32.009 ? Emergency Connectivity Fund Federal Award Number: ECF202105452 (Year: 2022) Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: COVID-19 ? 84.425D ? Elementary and Secondary School Emergency Relief Fund COVID-19 ? 84.425U ? American Rescue Plan Elementary and Secondary School Emergency Relief Fund Federal Award Numbers: S425D210012 (Year: 2021), S425U210012 (Year: 2021) Questioned Costs: $26,460 Description: A review of expenditures charged to the Emergency Connectivity Fund and Elementary and Secondary School Emergency Relief Fund programs revealed that the School District?s internal control procedures were not operating appropriately to ensure that expenditures were allowable. Background: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. Additionally, Congress established the Emergency Connectivity Fund (ECF) through the American Rescue Plan Act and appropriated $7.2 billion for the purchase of eligible equipment, advanced telecommunications, and information services for use by students, school staff, and library patrons at locations that include locations other than at a school or library. The ECF program provides funding to meet the remote learning needs of students, school staff, and library patrons who would otherwise lack access to connected devices and broadband connections sufficient to engage in remote learning during the COVID-19 emergency period. ECF funds totaling $956,562 and ESSER funds totaling $10,418,254 were expended and reported on the Baldwin County Board of Education?s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. 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. Additionally, 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? (f) Not be included as a cost or used to meet the cost sharing or matching requirements of any other federally-financed program in either the current or a prior period, (g) Be adequately documented?? Furthermore, provisions included in Title 47 CFR Section 54.1712 ? Duplicate Support state that ?Entities participating in the Emergency Connectivity Fund may not seek Emergency Connectivity Fund support or reimbursement for eligible equipment or services that have been purchased with or reimbursed in full from other Federal pandemic-relief funding, targeted state funding, other external sources of targeted funding or targeted gifts, or eligible for discounts from the schools and libraries universal service support mechanism or other universal service support mechanisms.? Condition: All expenditures related to the ECF program were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. It was noted that expenditures for wireless service totaling $26,460 were approved through the budget process and recorded under both the ECF program and the ESSER program. Upon further review, it was noted that reimbursement was requested and received through the ESSER program during fiscal year 2022 and the ECF program after year-end. Additionally, a refund of such funding had not been processed for either of the programs as of the end of audit fieldwork. Therefore, duplicate federal funding was received for the same expenditure. Questioned Costs: Known questioned costs of $26,460 were identified for expenditures that were reimbursed through both the ECF and ESSER programs. These known questioned costs related to expenditures that were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs. Cause: In discussing these deficiencies with management, they stated that these expenditures were allowable and reimbursed through the ESSER program during the fiscal year. However, the director over ECF funding was unaware that these funds had already been requested through ESSER funding and requested and received reimbursement through the ECF program, as well. Effect: The School District is not in compliance with the Uniform Guidance, the U.S. Federal Communications Commission guidance related to the ECF program, and the U.S. Department of Education (ED) guidance related to the ESSER program. Failure to ensure that appropriate controls exist to support the allowability of payments from federal programs may expose the School District to unnecessary financial strains and shortages as the grantor and/or pass-through entity may require the School District to return funds associated with the unallowable expenditures. Recommendation: The School District should review current internal control procedures related to federal program expenditures. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that duplicate reimbursements are not sought from multiple federal programs for the same expenditure. Additionally, the School District should initiate a refund in the amount of $26,460 to either the ECF or ESSER program. Views of Responsible Officials: We concur with this finding.
Cluster name: WIOA Cluster Assistance Listings numbers and names: 17.258 WIOA Adult Program 17.259 WIOA Youth Activities 17.278 WIOA Dislocated Worker Formula Grants Award number and year: DI21-002285 A1, April 1, 2020 through June 30, 2022 Federal agency: U.S. Department of Labor Pass-through grantor: Arizona Department of Economic Security Compliance requirements: Activities allowed or unallowed and allowable costs/cost principles Questioned costs: $25,761 Condition?Contrary to federal regulations and grantor and County policies and procedures, the County?s Workforce Innovation and Opportunity Act (WIOA) Department (Department) spent $25,761 of WIOA program monies for unallowable purposes. Specifically, we found that the Department paid for unallowable purchases and invoices of a third-party nonprofit organization that the Department?s former director helped create while employed by the County and that the County had contracted with to increase the capacity of the local workforce system. Despite the contract between the County and the nonprofit organization not authorizing the nonprofit organization to obligate the County for its expenses or enter into agreements on the County?s behalf, both occurred. The $25,761 of unallowable purchases included: ? $25,431 for the nonprofit organization?s leased building ($18,700), electronic data services ($3,545), utilities invoices ($2,951), and a storage unit ($235). ? $260 for purchases made using County purchasing cards, consisting of gift cards, food and beverages, and board games, $245 of which were for the nonprofit organization?s program outreach activities but not allowed by the program?s requirements or the County?s purchasing card policies and procedures. ? $70 for other purchases made using County purchasing cards that the Department charged to the program but did not have documentation to support their allowability. Effect?The Department received federal reimbursement for $25,761 in unallowable charges it made to the program that it was not eligible to receive and, therefore, is at risk of having to return these monies to the pass-through grantor.1 Further, the Department made $25,761 of grant monies unavailable for their intended purpose. Cause?The County?s lack of internal controls and former WIOA director?s inadequate oversight of the WIOA program contributed to the Department?s spending of WIOA program monies for unallowable purposes. Specifically, the County?s policies and procedures did not include detailed instructions for departments to follow for initiating new vendors with the County and processing vendor invoices using its established accounts payable process through the Finance Department. This, combined with the former WIOA director?s comingling of the nonprofit organization?s financial activities, contributed to the Department directly paying for purchases and invoices belonging to the nonprofit organization despite them not being invoiced to or addressed to the County. In addition, Department staff reported that they believed the nonprofit organization?s purchases and invoices were allowable for the County to pay for and charge to the program; however, they did not maintain documentation to support this justification. Further, the former WIOA director did not provide proper oversight and ensure that the Department followed federal regulations and grantor and County policies and procedures to incur and pay for or reimburse only authorized federal program costs and to maintain documentation to support that the County?s program costs were allowable. Criteria?Federal regulations require the Department to reimburse only those federal program costs that are necessary and reasonable for the federal award?s performance, adequately documented, and allowed by the federal program?s requirements (2 CFR 200.403). The grantor and County policies and procedures contain similar requirements and also require the Department to retain records and other documentation supporting the County?s administration of federal awards for at least 3 years (Navajo County. [2019]. Fiscal Policy Manual, Section 4.4 ).2 Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR ?200.303). Recommendations?The County should: 1. Improve its accounts payable policies and procedures to include detailed instructions for departments to follow for initiating new vendors with the County and processing vendor invoices using its established accounts payable process through the Finance Department. 2. Follow federal regulations and grantor and County policies and procedures requiring it to: a. Incur and pay for or reimburse only authorized federal program costs that are necessary and reasonable for the federal award?s performance, adequately documented, and allowed by the federal program?s requirements. b. Maintain documentation to support that federal program costs it incurs and pays for or reimburses are allowable. 3. Verify all invoices belong to and are addressed to the County prior to payment. 4. Ensure that the Department establishes clear contractual arrangements with entities the Department plans to use to help administer the federal program that comply with County policies and procedures and the program?s requirements. 5. Coordinate with the pass-through grantor to adjust future federal reimbursements requests or repay the pass-through grantor for the unallowable costs the Department charged to the program. The County?s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 Arizona Department of Economic Security. (n.d.). Workforce Innovation and Opportunity Act Policy Manual. Retrieved on 3/1/2023 from https://des.az.gov/services/employment/workforce-innovation-and-opportunity-act-wioa/title-i-b-policy-and-procedure 2 Federal Uniform Guidance requires the pass-through entities to follow up, issue management decisions, and resolve subrecipients single audit findings as part of their monitoring responsibilities for ensuring that subawards are used for authorized purposes, in compliance with federal laws and regulations and the award terms, and that the program?s performance goals are achieved (2 CFR ?200.332[d]).
Cluster name: WIOA Cluster Assistance Listings numbers and names: 17.258 WIOA Adult Program 17.259 WIOA Youth Activities 17.278 WIOA Dislocated Worker Formula Grants Award number and year: DI21-002285 A1, April 1, 2020 through June 30, 2022 Federal agency: U.S. Department of Labor Pass-through grantor: Arizona Department of Economic Security Compliance requirements: Activities allowed or unallowed and allowable costs/cost principles Questioned costs: $25,761 Condition?Contrary to federal regulations and grantor and County policies and procedures, the County?s Workforce Innovation and Opportunity Act (WIOA) Department (Department) spent $25,761 of WIOA program monies for unallowable purposes. Specifically, we found that the Department paid for unallowable purchases and invoices of a third-party nonprofit organization that the Department?s former director helped create while employed by the County and that the County had contracted with to increase the capacity of the local workforce system. Despite the contract between the County and the nonprofit organization not authorizing the nonprofit organization to obligate the County for its expenses or enter into agreements on the County?s behalf, both occurred. The $25,761 of unallowable purchases included: ? $25,431 for the nonprofit organization?s leased building ($18,700), electronic data services ($3,545), utilities invoices ($2,951), and a storage unit ($235). ? $260 for purchases made using County purchasing cards, consisting of gift cards, food and beverages, and board games, $245 of which were for the nonprofit organization?s program outreach activities but not allowed by the program?s requirements or the County?s purchasing card policies and procedures. ? $70 for other purchases made using County purchasing cards that the Department charged to the program but did not have documentation to support their allowability. Effect?The Department received federal reimbursement for $25,761 in unallowable charges it made to the program that it was not eligible to receive and, therefore, is at risk of having to return these monies to the pass-through grantor.1 Further, the Department made $25,761 of grant monies unavailable for their intended purpose. Cause?The County?s lack of internal controls and former WIOA director?s inadequate oversight of the WIOA program contributed to the Department?s spending of WIOA program monies for unallowable purposes. Specifically, the County?s policies and procedures did not include detailed instructions for departments to follow for initiating new vendors with the County and processing vendor invoices using its established accounts payable process through the Finance Department. This, combined with the former WIOA director?s comingling of the nonprofit organization?s financial activities, contributed to the Department directly paying for purchases and invoices belonging to the nonprofit organization despite them not being invoiced to or addressed to the County. In addition, Department staff reported that they believed the nonprofit organization?s purchases and invoices were allowable for the County to pay for and charge to the program; however, they did not maintain documentation to support this justification. Further, the former WIOA director did not provide proper oversight and ensure that the Department followed federal regulations and grantor and County policies and procedures to incur and pay for or reimburse only authorized federal program costs and to maintain documentation to support that the County?s program costs were allowable. Criteria?Federal regulations require the Department to reimburse only those federal program costs that are necessary and reasonable for the federal award?s performance, adequately documented, and allowed by the federal program?s requirements (2 CFR 200.403). The grantor and County policies and procedures contain similar requirements and also require the Department to retain records and other documentation supporting the County?s administration of federal awards for at least 3 years (Navajo County. [2019]. Fiscal Policy Manual, Section 4.4 ).2 Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR ?200.303). Recommendations?The County should: 1. Improve its accounts payable policies and procedures to include detailed instructions for departments to follow for initiating new vendors with the County and processing vendor invoices using its established accounts payable process through the Finance Department. 2. Follow federal regulations and grantor and County policies and procedures requiring it to: a. Incur and pay for or reimburse only authorized federal program costs that are necessary and reasonable for the federal award?s performance, adequately documented, and allowed by the federal program?s requirements. b. Maintain documentation to support that federal program costs it incurs and pays for or reimburses are allowable. 3. Verify all invoices belong to and are addressed to the County prior to payment. 4. Ensure that the Department establishes clear contractual arrangements with entities the Department plans to use to help administer the federal program that comply with County policies and procedures and the program?s requirements. 5. Coordinate with the pass-through grantor to adjust future federal reimbursements requests or repay the pass-through grantor for the unallowable costs the Department charged to the program. The County?s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 Arizona Department of Economic Security. (n.d.). Workforce Innovation and Opportunity Act Policy Manual. Retrieved on 3/1/2023 from https://des.az.gov/services/employment/workforce-innovation-and-opportunity-act-wioa/title-i-b-policy-and-procedure 2 Federal Uniform Guidance requires the pass-through entities to follow up, issue management decisions, and resolve subrecipients single audit findings as part of their monitoring responsibilities for ensuring that subawards are used for authorized purposes, in compliance with federal laws and regulations and the award terms, and that the program?s performance goals are achieved (2 CFR ?200.332[d]).
Cluster name: WIOA Cluster Assistance Listings numbers and names: 17.258 WIOA Adult Program 17.259 WIOA Youth Activities 17.278 WIOA Dislocated Worker Formula Grants Award number and year: DI21-002285 A1, April 1, 2020 through June 30, 2022 Federal agency: U.S. Department of Labor Pass-through grantor: Arizona Department of Economic Security Compliance requirements: Activities allowed or unallowed and allowable costs/cost principles Questioned costs: $25,761 Condition?Contrary to federal regulations and grantor and County policies and procedures, the County?s Workforce Innovation and Opportunity Act (WIOA) Department (Department) spent $25,761 of WIOA program monies for unallowable purposes. Specifically, we found that the Department paid for unallowable purchases and invoices of a third-party nonprofit organization that the Department?s former director helped create while employed by the County and that the County had contracted with to increase the capacity of the local workforce system. Despite the contract between the County and the nonprofit organization not authorizing the nonprofit organization to obligate the County for its expenses or enter into agreements on the County?s behalf, both occurred. The $25,761 of unallowable purchases included: ? $25,431 for the nonprofit organization?s leased building ($18,700), electronic data services ($3,545), utilities invoices ($2,951), and a storage unit ($235). ? $260 for purchases made using County purchasing cards, consisting of gift cards, food and beverages, and board games, $245 of which were for the nonprofit organization?s program outreach activities but not allowed by the program?s requirements or the County?s purchasing card policies and procedures. ? $70 for other purchases made using County purchasing cards that the Department charged to the program but did not have documentation to support their allowability. Effect?The Department received federal reimbursement for $25,761 in unallowable charges it made to the program that it was not eligible to receive and, therefore, is at risk of having to return these monies to the pass-through grantor.1 Further, the Department made $25,761 of grant monies unavailable for their intended purpose. Cause?The County?s lack of internal controls and former WIOA director?s inadequate oversight of the WIOA program contributed to the Department?s spending of WIOA program monies for unallowable purposes. Specifically, the County?s policies and procedures did not include detailed instructions for departments to follow for initiating new vendors with the County and processing vendor invoices using its established accounts payable process through the Finance Department. This, combined with the former WIOA director?s comingling of the nonprofit organization?s financial activities, contributed to the Department directly paying for purchases and invoices belonging to the nonprofit organization despite them not being invoiced to or addressed to the County. In addition, Department staff reported that they believed the nonprofit organization?s purchases and invoices were allowable for the County to pay for and charge to the program; however, they did not maintain documentation to support this justification. Further, the former WIOA director did not provide proper oversight and ensure that the Department followed federal regulations and grantor and County policies and procedures to incur and pay for or reimburse only authorized federal program costs and to maintain documentation to support that the County?s program costs were allowable. Criteria?Federal regulations require the Department to reimburse only those federal program costs that are necessary and reasonable for the federal award?s performance, adequately documented, and allowed by the federal program?s requirements (2 CFR 200.403). The grantor and County policies and procedures contain similar requirements and also require the Department to retain records and other documentation supporting the County?s administration of federal awards for at least 3 years (Navajo County. [2019]. Fiscal Policy Manual, Section 4.4 ).2 Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR ?200.303). Recommendations?The County should: 1. Improve its accounts payable policies and procedures to include detailed instructions for departments to follow for initiating new vendors with the County and processing vendor invoices using its established accounts payable process through the Finance Department. 2. Follow federal regulations and grantor and County policies and procedures requiring it to: a. Incur and pay for or reimburse only authorized federal program costs that are necessary and reasonable for the federal award?s performance, adequately documented, and allowed by the federal program?s requirements. b. Maintain documentation to support that federal program costs it incurs and pays for or reimburses are allowable. 3. Verify all invoices belong to and are addressed to the County prior to payment. 4. Ensure that the Department establishes clear contractual arrangements with entities the Department plans to use to help administer the federal program that comply with County policies and procedures and the program?s requirements. 5. Coordinate with the pass-through grantor to adjust future federal reimbursements requests or repay the pass-through grantor for the unallowable costs the Department charged to the program. The County?s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 Arizona Department of Economic Security. (n.d.). Workforce Innovation and Opportunity Act Policy Manual. Retrieved on 3/1/2023 from https://des.az.gov/services/employment/workforce-innovation-and-opportunity-act-wioa/title-i-b-policy-and-procedure 2 Federal Uniform Guidance requires the pass-through entities to follow up, issue management decisions, and resolve subrecipients single audit findings as part of their monitoring responsibilities for ensuring that subawards are used for authorized purposes, in compliance with federal laws and regulations and the award terms, and that the program?s performance goals are achieved (2 CFR ?200.332[d]).
FINDING 2022-001 Information on the federal program: Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Program: Special Education Grants to States Assistance Listing Number: 84.027 Federal Award Number: 20611-001-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Significant Deficiency Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)...." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards:? (g) Be adequately documented.... " 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed..." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range Condition: The School Corporation is a member of the Adams Wells Special Services Cooperative (Cooperative). During fiscal year 2021-2022, the Cooperative operated the special education programs and spent the federal money on behalf of all its member schools. As the grant agreements were between the Indiana Department of Education (IDOE) and each member school, the school corporation was responsible for ensuring and providing oversight of the Cooperative. There was inadequate oversight performed by the School Corporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for non-public school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure non-public school expenditures were appropriately identified and reported. Cause: The School Corporation's management had not developed an effective system of internal controls that would have ensured compliance with the grant agreements and the earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement. Effect: The failure to establish an effective internal control system, as well as adequately document costs of federal awards, prevented the determination of the School Corporation's compliance with the earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement. Questioned Costs: There were no questioned costs identified. Context: The Non-Public Proportionate Share expenditures for the 20611-001-PN01 grant award could not be verified for the individual member schools. Total non-public expenditures were posted as expended. The member school proportionate share expenditures were then determined by applying a budgeted percentage to the total non-public expenditures. These were the amounts reported to IDOE. As such, we were unable to identify if the minimum amount per member school was expended and properly reported to IDOE as required. The School Corporation?s Non-Public Proportionate Share for the 20611-001-PN01 grant application was $10,523. Identification as a repeat finding, if applicable: Yes. Identified as Finding 2020-002 in the prior audit report. Recommendation: We recommended that the School Corporation's management establish an effective system of internal controls, as well as appropriately document and identify federal award expenditures to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2022-001 Information on the federal program: Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Program: Special Education Grants to States Assistance Listing Number: 84.027 Federal Award Number: 20611-001-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Significant Deficiency Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)...." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards:? (g) Be adequately documented.... " 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed..." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range Condition: The School Corporation is a member of the Adams Wells Special Services Cooperative (Cooperative). During fiscal year 2021-2022, the Cooperative operated the special education programs and spent the federal money on behalf of all its member schools. As the grant agreements were between the Indiana Department of Education (IDOE) and each member school, the school corporation was responsible for ensuring and providing oversight of the Cooperative. There was inadequate oversight performed by the School Corporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for non-public school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure non-public school expenditures were appropriately identified and reported. Cause: The School Corporation's management had not developed an effective system of internal controls that would have ensured compliance with the grant agreements and the earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement. Effect: The failure to establish an effective internal control system, as well as adequately document costs of federal awards, prevented the determination of the School Corporation's compliance with the earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement. Questioned Costs: There were no questioned costs identified. Context: The Non-Public Proportionate Share expenditures for the 20611-001-PN01 grant award could not be verified for the individual member schools. Total non-public expenditures were posted as expended. The member school proportionate share expenditures were then determined by applying a budgeted percentage to the total non-public expenditures. These were the amounts reported to IDOE. As such, we were unable to identify if the minimum amount per member school was expended and properly reported to IDOE as required. The School Corporation?s Non-Public Proportionate Share for the 20611-001-PN01 grant application was $10,523. Identification as a repeat finding, if applicable: Yes. Identified as Finding 2020-002 in the prior audit report. Recommendation: We recommended that the School Corporation's management establish an effective system of internal controls, as well as appropriately document and identify federal award expenditures to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2022-001 Information on the federal program: Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Program: Special Education Grants to States Assistance Listing Number: 84.027 Federal Award Number: 20611-001-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Significant Deficiency Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)...." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards:? (g) Be adequately documented.... " 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed..." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range Condition: The School Corporation is a member of the Adams Wells Special Services Cooperative (Cooperative). During fiscal year 2021-2022, the Cooperative operated the special education programs and spent the federal money on behalf of all its member schools. As the grant agreements were between the Indiana Department of Education (IDOE) and each member school, the school corporation was responsible for ensuring and providing oversight of the Cooperative. There was inadequate oversight performed by the School Corporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for non-public school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure non-public school expenditures were appropriately identified and reported. Cause: The School Corporation's management had not developed an effective system of internal controls that would have ensured compliance with the grant agreements and the earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement. Effect: The failure to establish an effective internal control system, as well as adequately document costs of federal awards, prevented the determination of the School Corporation's compliance with the earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement. Questioned Costs: There were no questioned costs identified. Context: The Non-Public Proportionate Share expenditures for the 20611-001-PN01 grant award could not be verified for the individual member schools. Total non-public expenditures were posted as expended. The member school proportionate share expenditures were then determined by applying a budgeted percentage to the total non-public expenditures. These were the amounts reported to IDOE. As such, we were unable to identify if the minimum amount per member school was expended and properly reported to IDOE as required. The School Corporation?s Non-Public Proportionate Share for the 20611-001-PN01 grant application was $10,523. Identification as a repeat finding, if applicable: Yes. Identified as Finding 2020-002 in the prior audit report. Recommendation: We recommended that the School Corporation's management establish an effective system of internal controls, as well as appropriately document and identify federal award expenditures to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2022-001 Information on the federal program: Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Program: Special Education Grants to States Assistance Listing Number: 84.027 Federal Award Number: 20611-001-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Significant Deficiency Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)...." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards:? (g) Be adequately documented.... " 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed..." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range Condition: The School Corporation is a member of the Adams Wells Special Services Cooperative (Cooperative). During fiscal year 2021-2022, the Cooperative operated the special education programs and spent the federal money on behalf of all its member schools. As the grant agreements were between the Indiana Department of Education (IDOE) and each member school, the school corporation was responsible for ensuring and providing oversight of the Cooperative. There was inadequate oversight performed by the School Corporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for non-public school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure non-public school expenditures were appropriately identified and reported. Cause: The School Corporation's management had not developed an effective system of internal controls that would have ensured compliance with the grant agreements and the earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement. Effect: The failure to establish an effective internal control system, as well as adequately document costs of federal awards, prevented the determination of the School Corporation's compliance with the earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement. Questioned Costs: There were no questioned costs identified. Context: The Non-Public Proportionate Share expenditures for the 20611-001-PN01 grant award could not be verified for the individual member schools. Total non-public expenditures were posted as expended. The member school proportionate share expenditures were then determined by applying a budgeted percentage to the total non-public expenditures. These were the amounts reported to IDOE. As such, we were unable to identify if the minimum amount per member school was expended and properly reported to IDOE as required. The School Corporation?s Non-Public Proportionate Share for the 20611-001-PN01 grant application was $10,523. Identification as a repeat finding, if applicable: Yes. Identified as Finding 2020-002 in the prior audit report. Recommendation: We recommended that the School Corporation's management establish an effective system of internal controls, as well as appropriately document and identify federal award expenditures to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2022-001 Information on the federal program: Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Program: Special Education Grants to States Assistance Listing Number: 84.027 Federal Award Number: 20611-001-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Significant Deficiency Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)...." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards:? (g) Be adequately documented.... " 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed..." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range Condition: The School Corporation is a member of the Adams Wells Special Services Cooperative (Cooperative). During fiscal year 2021-2022, the Cooperative operated the special education programs and spent the federal money on behalf of all its member schools. As the grant agreements were between the Indiana Department of Education (IDOE) and each member school, the school corporation was responsible for ensuring and providing oversight of the Cooperative. There was inadequate oversight performed by the School Corporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for non-public school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure non-public school expenditures were appropriately identified and reported. Cause: The School Corporation's management had not developed an effective system of internal controls that would have ensured compliance with the grant agreements and the earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement. Effect: The failure to establish an effective internal control system, as well as adequately document costs of federal awards, prevented the determination of the School Corporation's compliance with the earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement. Questioned Costs: There were no questioned costs identified. Context: The Non-Public Proportionate Share expenditures for the 20611-001-PN01 grant award could not be verified for the individual member schools. Total non-public expenditures were posted as expended. The member school proportionate share expenditures were then determined by applying a budgeted percentage to the total non-public expenditures. These were the amounts reported to IDOE. As such, we were unable to identify if the minimum amount per member school was expended and properly reported to IDOE as required. The School Corporation?s Non-Public Proportionate Share for the 20611-001-PN01 grant application was $10,523. Identification as a repeat finding, if applicable: Yes. Identified as Finding 2020-002 in the prior audit report. Recommendation: We recommended that the School Corporation's management establish an effective system of internal controls, as well as appropriately document and identify federal award expenditures to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Assistance Listing Number, Federal Agency, and Program Name - ALN 17.258, 17.259, and 17.278 U.S. Department of Labor - WIOA Cluster Federal Award Identification Number and Year - AA332361955A26 and AA347752055A26 2020, 2021 and 2022 Pass-through Entity - Michigan Department of Labor and Economic Opportunity - Workforce Development Agency Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - 2 CFR 200.403(g) indicates that costs must be adequately documented in order to be allowable under federal awards. Condition - DESC transferred $70,590 of expenditures to the WIOA cluster from another grant. There was no support to document the rationale for the transfer or to support allowability. Questioned Costs - $70,590 Identification of How Questioned Costs Were Computed - The questioned cost is made up of the total amount that was transferred. Context - There was only one journal entry transferring expenditures from another grant activity into the WIOA cluster. Cause and Effect - The journal entry was made by a departed staff member, and DESC was unable to locate support for the transfer of expenditures to the WIOA grant. Since there is not adequate documentation to support the transfer, there are questioned costs. In addition, the pass-through agency could disallow the unsupported cost and require a return of funds. Recommendation - DESC should ensure there is adequate support for each cost charged to a federal award. Views of Responsible Officials and Corrective Action Plan - DESC has updated fiscal policies and procedures, requiring supporting documentation for all journal entries that has been reviewed with all fiscal staff. Additionally, a review of the supervisor requirements to review the support documentation prior to approval has been completed. Additionally, the Abila MIP financial accounting system has been updated to allow for supporting documentation to be attached to each individual journal entry. Finally, a SharePoint site has been created for all supporting documentation to be stored for access by the appropriate staff members.
Assistance Listing Number, Federal Agency, and Program Name - ALN 17.258, 17.259, and 17.278 U.S. Department of Labor - WIOA Cluster Federal Award Identification Number and Year - AA332361955A26 and AA347752055A26 2020, 2021 and 2022 Pass-through Entity - Michigan Department of Labor and Economic Opportunity - Workforce Development Agency Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - 2 CFR 200.403(g) indicates that costs must be adequately documented in order to be allowable under federal awards. Condition - DESC transferred $70,590 of expenditures to the WIOA cluster from another grant. There was no support to document the rationale for the transfer or to support allowability. Questioned Costs - $70,590 Identification of How Questioned Costs Were Computed - The questioned cost is made up of the total amount that was transferred. Context - There was only one journal entry transferring expenditures from another grant activity into the WIOA cluster. Cause and Effect - The journal entry was made by a departed staff member, and DESC was unable to locate support for the transfer of expenditures to the WIOA grant. Since there is not adequate documentation to support the transfer, there are questioned costs. In addition, the pass-through agency could disallow the unsupported cost and require a return of funds. Recommendation - DESC should ensure there is adequate support for each cost charged to a federal award. Views of Responsible Officials and Corrective Action Plan - DESC has updated fiscal policies and procedures, requiring supporting documentation for all journal entries that has been reviewed with all fiscal staff. Additionally, a review of the supervisor requirements to review the support documentation prior to approval has been completed. Additionally, the Abila MIP financial accounting system has been updated to allow for supporting documentation to be attached to each individual journal entry. Finally, a SharePoint site has been created for all supporting documentation to be stored for access by the appropriate staff members.
Assistance Listing Number, Federal Agency, and Program Name - ALN 17.258, 17.259, and 17.278 U.S. Department of Labor - WIOA Cluster Federal Award Identification Number and Year - AA332361955A26 and AA347752055A26 2020, 2021 and 2022 Pass-through Entity - Michigan Department of Labor and Economic Opportunity - Workforce Development Agency Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - 2 CFR 200.403(g) indicates that costs must be adequately documented in order to be allowable under federal awards. Condition - DESC transferred $70,590 of expenditures to the WIOA cluster from another grant. There was no support to document the rationale for the transfer or to support allowability. Questioned Costs - $70,590 Identification of How Questioned Costs Were Computed - The questioned cost is made up of the total amount that was transferred. Context - There was only one journal entry transferring expenditures from another grant activity into the WIOA cluster. Cause and Effect - The journal entry was made by a departed staff member, and DESC was unable to locate support for the transfer of expenditures to the WIOA grant. Since there is not adequate documentation to support the transfer, there are questioned costs. In addition, the pass-through agency could disallow the unsupported cost and require a return of funds. Recommendation - DESC should ensure there is adequate support for each cost charged to a federal award. Views of Responsible Officials and Corrective Action Plan - DESC has updated fiscal policies and procedures, requiring supporting documentation for all journal entries that has been reviewed with all fiscal staff. Additionally, a review of the supervisor requirements to review the support documentation prior to approval has been completed. Additionally, the Abila MIP financial accounting system has been updated to allow for supporting documentation to be attached to each individual journal entry. Finally, a SharePoint site has been created for all supporting documentation to be stored for access by the appropriate staff members.
Assistance Listing Number, Federal Agency, and Program Name - ALN 17.258, 17.259, and 17.278 U.S. Department of Labor - WIOA Cluster Federal Award Identification Number and Year - AA332361955A26 and AA347752055A26 2020, 2021 and 2022 Pass-through Entity - Michigan Department of Labor and Economic Opportunity - Workforce Development Agency Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - 2 CFR 200.403(g) indicates that costs must be adequately documented in order to be allowable under federal awards. Condition - DESC transferred $70,590 of expenditures to the WIOA cluster from another grant. There was no support to document the rationale for the transfer or to support allowability. Questioned Costs - $70,590 Identification of How Questioned Costs Were Computed - The questioned cost is made up of the total amount that was transferred. Context - There was only one journal entry transferring expenditures from another grant activity into the WIOA cluster. Cause and Effect - The journal entry was made by a departed staff member, and DESC was unable to locate support for the transfer of expenditures to the WIOA grant. Since there is not adequate documentation to support the transfer, there are questioned costs. In addition, the pass-through agency could disallow the unsupported cost and require a return of funds. Recommendation - DESC should ensure there is adequate support for each cost charged to a federal award. Views of Responsible Officials and Corrective Action Plan - DESC has updated fiscal policies and procedures, requiring supporting documentation for all journal entries that has been reviewed with all fiscal staff. Additionally, a review of the supervisor requirements to review the support documentation prior to approval has been completed. Additionally, the Abila MIP financial accounting system has been updated to allow for supporting documentation to be attached to each individual journal entry. Finally, a SharePoint site has been created for all supporting documentation to be stored for access by the appropriate staff members.
Assistance Listing Number, Federal Agency, and Program Name - ALN 17.258, 17.259, and 17.278 U.S. Department of Labor - WIOA Cluster Federal Award Identification Number and Year - AA332361955A26 and AA347752055A26 2020, 2021 and 2022 Pass-through Entity - Michigan Department of Labor and Economic Opportunity - Workforce Development Agency Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - 2 CFR 200.403(g) indicates that costs must be adequately documented in order to be allowable under federal awards. Condition - DESC transferred $70,590 of expenditures to the WIOA cluster from another grant. There was no support to document the rationale for the transfer or to support allowability. Questioned Costs - $70,590 Identification of How Questioned Costs Were Computed - The questioned cost is made up of the total amount that was transferred. Context - There was only one journal entry transferring expenditures from another grant activity into the WIOA cluster. Cause and Effect - The journal entry was made by a departed staff member, and DESC was unable to locate support for the transfer of expenditures to the WIOA grant. Since there is not adequate documentation to support the transfer, there are questioned costs. In addition, the pass-through agency could disallow the unsupported cost and require a return of funds. Recommendation - DESC should ensure there is adequate support for each cost charged to a federal award. Views of Responsible Officials and Corrective Action Plan - DESC has updated fiscal policies and procedures, requiring supporting documentation for all journal entries that has been reviewed with all fiscal staff. Additionally, a review of the supervisor requirements to review the support documentation prior to approval has been completed. Additionally, the Abila MIP financial accounting system has been updated to allow for supporting documentation to be attached to each individual journal entry. Finally, a SharePoint site has been created for all supporting documentation to be stored for access by the appropriate staff members.
Assistance Listing Number, Federal Agency, and Program Name - ALN 17.258, 17.259, and 17.278 U.S. Department of Labor - WIOA Cluster Federal Award Identification Number and Year - AA332361955A26 and AA347752055A26 2020, 2021 and 2022 Pass-through Entity - Michigan Department of Labor and Economic Opportunity - Workforce Development Agency Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - 2 CFR 200.403(g) indicates that costs must be adequately documented in order to be allowable under federal awards. Condition - DESC transferred $70,590 of expenditures to the WIOA cluster from another grant. There was no support to document the rationale for the transfer or to support allowability. Questioned Costs - $70,590 Identification of How Questioned Costs Were Computed - The questioned cost is made up of the total amount that was transferred. Context - There was only one journal entry transferring expenditures from another grant activity into the WIOA cluster. Cause and Effect - The journal entry was made by a departed staff member, and DESC was unable to locate support for the transfer of expenditures to the WIOA grant. Since there is not adequate documentation to support the transfer, there are questioned costs. In addition, the pass-through agency could disallow the unsupported cost and require a return of funds. Recommendation - DESC should ensure there is adequate support for each cost charged to a federal award. Views of Responsible Officials and Corrective Action Plan - DESC has updated fiscal policies and procedures, requiring supporting documentation for all journal entries that has been reviewed with all fiscal staff. Additionally, a review of the supervisor requirements to review the support documentation prior to approval has been completed. Additionally, the Abila MIP financial accounting system has been updated to allow for supporting documentation to be attached to each individual journal entry. Finally, a SharePoint site has been created for all supporting documentation to be stored for access by the appropriate staff members.
Assistance Listing Number, Federal Agency, and Program Name - ALN 17.258, 17.259, and 17.278 U.S. Department of Labor - WIOA Cluster Federal Award Identification Number and Year - AA332361955A26 and AA347752055A26 2020, 2021 and 2022 Pass-through Entity - Michigan Department of Labor and Economic Opportunity - Workforce Development Agency Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - 2 CFR 200.403(g) indicates that costs must be adequately documented in order to be allowable under federal awards. Condition - DESC transferred $70,590 of expenditures to the WIOA cluster from another grant. There was no support to document the rationale for the transfer or to support allowability. Questioned Costs - $70,590 Identification of How Questioned Costs Were Computed - The questioned cost is made up of the total amount that was transferred. Context - There was only one journal entry transferring expenditures from another grant activity into the WIOA cluster. Cause and Effect - The journal entry was made by a departed staff member, and DESC was unable to locate support for the transfer of expenditures to the WIOA grant. Since there is not adequate documentation to support the transfer, there are questioned costs. In addition, the pass-through agency could disallow the unsupported cost and require a return of funds. Recommendation - DESC should ensure there is adequate support for each cost charged to a federal award. Views of Responsible Officials and Corrective Action Plan - DESC has updated fiscal policies and procedures, requiring supporting documentation for all journal entries that has been reviewed with all fiscal staff. Additionally, a review of the supervisor requirements to review the support documentation prior to approval has been completed. Additionally, the Abila MIP financial accounting system has been updated to allow for supporting documentation to be attached to each individual journal entry. Finally, a SharePoint site has been created for all supporting documentation to be stored for access by the appropriate staff members.
Assistance Listing Number, Federal Agency, and Program Name - ALN 17.258, 17.259, and 17.278 U.S. Department of Labor - WIOA Cluster Federal Award Identification Number and Year - AA332361955A26 and AA347752055A26 2020, 2021 and 2022 Pass-through Entity - Michigan Department of Labor and Economic Opportunity - Workforce Development Agency Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - 2 CFR 200.403(g) indicates that costs must be adequately documented in order to be allowable under federal awards. Condition - DESC transferred $70,590 of expenditures to the WIOA cluster from another grant. There was no support to document the rationale for the transfer or to support allowability. Questioned Costs - $70,590 Identification of How Questioned Costs Were Computed - The questioned cost is made up of the total amount that was transferred. Context - There was only one journal entry transferring expenditures from another grant activity into the WIOA cluster. Cause and Effect - The journal entry was made by a departed staff member, and DESC was unable to locate support for the transfer of expenditures to the WIOA grant. Since there is not adequate documentation to support the transfer, there are questioned costs. In addition, the pass-through agency could disallow the unsupported cost and require a return of funds. Recommendation - DESC should ensure there is adequate support for each cost charged to a federal award. Views of Responsible Officials and Corrective Action Plan - DESC has updated fiscal policies and procedures, requiring supporting documentation for all journal entries that has been reviewed with all fiscal staff. Additionally, a review of the supervisor requirements to review the support documentation prior to approval has been completed. Additionally, the Abila MIP financial accounting system has been updated to allow for supporting documentation to be attached to each individual journal entry. Finally, a SharePoint site has been created for all supporting documentation to be stored for access by the appropriate staff members.
Assistance Listing Number, Federal Agency, and Program Name - ALN 17.258, 17.259, and 17.278 U.S. Department of Labor - WIOA Cluster Federal Award Identification Number and Year - AA332361955A26 and AA347752055A26 2020, 2021 and 2022 Pass-through Entity - Michigan Department of Labor and Economic Opportunity - Workforce Development Agency Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - 2 CFR 200.403(g) indicates that costs must be adequately documented in order to be allowable under federal awards. Condition - DESC transferred $70,590 of expenditures to the WIOA cluster from another grant. There was no support to document the rationale for the transfer or to support allowability. Questioned Costs - $70,590 Identification of How Questioned Costs Were Computed - The questioned cost is made up of the total amount that was transferred. Context - There was only one journal entry transferring expenditures from another grant activity into the WIOA cluster. Cause and Effect - The journal entry was made by a departed staff member, and DESC was unable to locate support for the transfer of expenditures to the WIOA grant. Since there is not adequate documentation to support the transfer, there are questioned costs. In addition, the pass-through agency could disallow the unsupported cost and require a return of funds. Recommendation - DESC should ensure there is adequate support for each cost charged to a federal award. Views of Responsible Officials and Corrective Action Plan - DESC has updated fiscal policies and procedures, requiring supporting documentation for all journal entries that has been reviewed with all fiscal staff. Additionally, a review of the supervisor requirements to review the support documentation prior to approval has been completed. Additionally, the Abila MIP financial accounting system has been updated to allow for supporting documentation to be attached to each individual journal entry. Finally, a SharePoint site has been created for all supporting documentation to be stored for access by the appropriate staff members.
Assistance Listing Number, Federal Agency, and Program Name - ALN 17.258, 17.259, and 17.278 U.S. Department of Labor - WIOA Cluster Federal Award Identification Number and Year - AA332361955A26 and AA347752055A26 2020, 2021 and 2022 Pass-through Entity - Michigan Department of Labor and Economic Opportunity - Workforce Development Agency Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - 2 CFR 200.403(g) indicates that costs must be adequately documented in order to be allowable under federal awards. Condition - DESC transferred $70,590 of expenditures to the WIOA cluster from another grant. There was no support to document the rationale for the transfer or to support allowability. Questioned Costs - $70,590 Identification of How Questioned Costs Were Computed - The questioned cost is made up of the total amount that was transferred. Context - There was only one journal entry transferring expenditures from another grant activity into the WIOA cluster. Cause and Effect - The journal entry was made by a departed staff member, and DESC was unable to locate support for the transfer of expenditures to the WIOA grant. Since there is not adequate documentation to support the transfer, there are questioned costs. In addition, the pass-through agency could disallow the unsupported cost and require a return of funds. Recommendation - DESC should ensure there is adequate support for each cost charged to a federal award. Views of Responsible Officials and Corrective Action Plan - DESC has updated fiscal policies and procedures, requiring supporting documentation for all journal entries that has been reviewed with all fiscal staff. Additionally, a review of the supervisor requirements to review the support documentation prior to approval has been completed. Additionally, the Abila MIP financial accounting system has been updated to allow for supporting documentation to be attached to each individual journal entry. Finally, a SharePoint site has been created for all supporting documentation to be stored for access by the appropriate staff members.