(2024-047) Title: Internal control over Special Education period of performance needs improvement Prior Year Findings: See schedule of Findings and Questioned costs for chart/table State Department: Education Administrative and Financial Services State Bureau: Special Services & Inclusive Education General Government Service Center Federal Agency: U.S. Department of Education Assistance Listing Title: Special Education Cluster (IDEA) (COVID-19) Assistance Listing Number: 84.027, 84.173 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Allowable costs/cost principles Period of performance Type of Finding: Significant deficiency Questioned costs Known Questioned Costs: ALN 84.027 $7,303 Likely Questioned Costs: ALN 84.027 $31,768; likely questioned costs were projected by dividing the known questioned costs identified in the sample by total Federal fiscal year 2022 grant award expenditures tested to establish an error rate, then applying that error rate to total Federal fiscal year 2022 grant award expenditures paid in fiscal year 2024. Criteria: 2 CFR 200.303; 2 CFR 200.403; 34 CFR 76.703 and .709 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. The Department must obligate Federal award funds during the 27-month period of performance, extending from July 1 of the fiscal year for which the funds were appropriated through September 30 of the second following fiscal year. Condition: The Department of Education’s (DOE) Office of Special Services & Inclusive Education, in conjunction with the Department of Administrative and Financial Services’ General Government Service Center (GGSC), administers Federal funding received through the Special Education Cluster (SEC) program. The SEC program provides grants to states, and through them to Local Education Agencies (LEAs), to assist in providing special education and related services to eligible children. DOE and GGSC procedures include review and approval of requests for reimbursement from LEAs and other programmatic costs including payroll, administrative expenditures, and awards to subrecipients of State-level activities. This review includes a determination of whether the costs are obligated within the applicable Federal award’s period of performance through a comparison of billing dates and billing periods to grant award terms. Period of performance Federal regulations applicable to the SEC program in fiscal year 2024 relate to the Federal fiscal year 2022 grant award. The award’s obligation period ended September 30, 2023, and the liquidation period ended 120 calendar days following, on January 28, 2024. The Office of the State Auditor (OSA) tested 60 expenditure transactions that occurred during the Federal fiscal year 2022 grant award’s liquidation period to ensure that the expenditures were obligated and liquidated in accordance with Federal regulations. OSA identified five transactions totaling $7,303 where obligations occurred after September 30, 2023. Therefore, these transactions did not meet Federal fiscal year 2022 grant award’s period of performance requirements and are not allowable under the terms of the award. As a result, OSA identified questioned costs totaling $7,303. OSA selected a non-statistical random sample. Context: In fiscal year 2024, the Department expended $68.2 million in SEC program funds. Of this total, $5.8 million of Federal fiscal year 2022 grant funds was expended during the award’s liquidation period which occurred during fiscal year 2024. 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 enhance procedures and increase oversight to ensure that obligation of grant funds is made within period of performance requirements established in the terms and conditions of Federal grant awards. Corrective Action Plan: See F-21 Management’s Response: The Department agrees with this finding. The Office of Special Services & Inclusive Education has developed and will implement a corrective action plan to address the issue identified. Contact: Barbara McGowen, Director of Financial Management, Office of Special Services & Inclusive Education, DOE, 207-624-6645 (State Number: 24-1201-01)
(2024-047) Title: Internal control over Special Education period of performance needs improvement Prior Year Findings: See schedule of Findings and Questioned costs for chart/table State Department: Education Administrative and Financial Services State Bureau: Special Services & Inclusive Education General Government Service Center Federal Agency: U.S. Department of Education Assistance Listing Title: Special Education Cluster (IDEA) (COVID-19) Assistance Listing Number: 84.027, 84.173 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Allowable costs/cost principles Period of performance Type of Finding: Significant deficiency Questioned costs Known Questioned Costs: ALN 84.027 $7,303 Likely Questioned Costs: ALN 84.027 $31,768; likely questioned costs were projected by dividing the known questioned costs identified in the sample by total Federal fiscal year 2022 grant award expenditures tested to establish an error rate, then applying that error rate to total Federal fiscal year 2022 grant award expenditures paid in fiscal year 2024. Criteria: 2 CFR 200.303; 2 CFR 200.403; 34 CFR 76.703 and .709 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. The Department must obligate Federal award funds during the 27-month period of performance, extending from July 1 of the fiscal year for which the funds were appropriated through September 30 of the second following fiscal year. Condition: The Department of Education’s (DOE) Office of Special Services & Inclusive Education, in conjunction with the Department of Administrative and Financial Services’ General Government Service Center (GGSC), administers Federal funding received through the Special Education Cluster (SEC) program. The SEC program provides grants to states, and through them to Local Education Agencies (LEAs), to assist in providing special education and related services to eligible children. DOE and GGSC procedures include review and approval of requests for reimbursement from LEAs and other programmatic costs including payroll, administrative expenditures, and awards to subrecipients of State-level activities. This review includes a determination of whether the costs are obligated within the applicable Federal award’s period of performance through a comparison of billing dates and billing periods to grant award terms. Period of performance Federal regulations applicable to the SEC program in fiscal year 2024 relate to the Federal fiscal year 2022 grant award. The award’s obligation period ended September 30, 2023, and the liquidation period ended 120 calendar days following, on January 28, 2024. The Office of the State Auditor (OSA) tested 60 expenditure transactions that occurred during the Federal fiscal year 2022 grant award’s liquidation period to ensure that the expenditures were obligated and liquidated in accordance with Federal regulations. OSA identified five transactions totaling $7,303 where obligations occurred after September 30, 2023. Therefore, these transactions did not meet Federal fiscal year 2022 grant award’s period of performance requirements and are not allowable under the terms of the award. As a result, OSA identified questioned costs totaling $7,303. OSA selected a non-statistical random sample. Context: In fiscal year 2024, the Department expended $68.2 million in SEC program funds. Of this total, $5.8 million of Federal fiscal year 2022 grant funds was expended during the award’s liquidation period which occurred during fiscal year 2024. 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 enhance procedures and increase oversight to ensure that obligation of grant funds is made within period of performance requirements established in the terms and conditions of Federal grant awards. Corrective Action Plan: See F-21 Management’s Response: The Department agrees with this finding. The Office of Special Services & Inclusive Education has developed and will implement a corrective action plan to address the issue identified. Contact: Barbara McGowen, Director of Financial Management, Office of Special Services & Inclusive Education, DOE, 207-624-6645 (State Number: 24-1201-01)
(2024-047) Title: Internal control over Special Education period of performance needs improvement Prior Year Findings: See schedule of Findings and Questioned costs for chart/table State Department: Education Administrative and Financial Services State Bureau: Special Services & Inclusive Education General Government Service Center Federal Agency: U.S. Department of Education Assistance Listing Title: Special Education Cluster (IDEA) (COVID-19) Assistance Listing Number: 84.027, 84.173 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Allowable costs/cost principles Period of performance Type of Finding: Significant deficiency Questioned costs Known Questioned Costs: ALN 84.027 $7,303 Likely Questioned Costs: ALN 84.027 $31,768; likely questioned costs were projected by dividing the known questioned costs identified in the sample by total Federal fiscal year 2022 grant award expenditures tested to establish an error rate, then applying that error rate to total Federal fiscal year 2022 grant award expenditures paid in fiscal year 2024. Criteria: 2 CFR 200.303; 2 CFR 200.403; 34 CFR 76.703 and .709 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. The Department must obligate Federal award funds during the 27-month period of performance, extending from July 1 of the fiscal year for which the funds were appropriated through September 30 of the second following fiscal year. Condition: The Department of Education’s (DOE) Office of Special Services & Inclusive Education, in conjunction with the Department of Administrative and Financial Services’ General Government Service Center (GGSC), administers Federal funding received through the Special Education Cluster (SEC) program. The SEC program provides grants to states, and through them to Local Education Agencies (LEAs), to assist in providing special education and related services to eligible children. DOE and GGSC procedures include review and approval of requests for reimbursement from LEAs and other programmatic costs including payroll, administrative expenditures, and awards to subrecipients of State-level activities. This review includes a determination of whether the costs are obligated within the applicable Federal award’s period of performance through a comparison of billing dates and billing periods to grant award terms. Period of performance Federal regulations applicable to the SEC program in fiscal year 2024 relate to the Federal fiscal year 2022 grant award. The award’s obligation period ended September 30, 2023, and the liquidation period ended 120 calendar days following, on January 28, 2024. The Office of the State Auditor (OSA) tested 60 expenditure transactions that occurred during the Federal fiscal year 2022 grant award’s liquidation period to ensure that the expenditures were obligated and liquidated in accordance with Federal regulations. OSA identified five transactions totaling $7,303 where obligations occurred after September 30, 2023. Therefore, these transactions did not meet Federal fiscal year 2022 grant award’s period of performance requirements and are not allowable under the terms of the award. As a result, OSA identified questioned costs totaling $7,303. OSA selected a non-statistical random sample. Context: In fiscal year 2024, the Department expended $68.2 million in SEC program funds. Of this total, $5.8 million of Federal fiscal year 2022 grant funds was expended during the award’s liquidation period which occurred during fiscal year 2024. 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 enhance procedures and increase oversight to ensure that obligation of grant funds is made within period of performance requirements established in the terms and conditions of Federal grant awards. Corrective Action Plan: See F-21 Management’s Response: The Department agrees with this finding. The Office of Special Services & Inclusive Education has developed and will implement a corrective action plan to address the issue identified. Contact: Barbara McGowen, Director of Financial Management, Office of Special Services & Inclusive Education, DOE, 207-624-6645 (State Number: 24-1201-01)
(2024-052) Title: Internal control over payments made to TANF clients needs improvement Prior Year Findings: See schedule of Findings and Questioned costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Temporary Assistance for Needy Families (TANF) Assistance Listing Number: 93.558 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Activities allowed or unallowed Allowable costs/cost principles Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: ALN 93.558 $1,014 Likely Questioned Costs: Undeterminable; incorrectly calculating Temporary Assistance for Needy Families (TANF) benefits may result in overpayments or underpayments to clients. Since there are known overpayments and underpayments in our sample, a projection of questioned costs cannot be reasonably estimated. Criteria: 2 CFR 200.303; 2 CFR 200.403; 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 TANF clients for various items and services, and 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 July 2023 overpaid a TANF client a total of $200 for clothing. An advance allowance of $200 was issued to the TANF client; however, the TANF client did not submit a receipt substantiating the purchase as required. OSA is questioning costs totaling $200. • four payments issued for transportation were calculated by the Department using a distance other than the most direct route as required. The payments include: o one payment issued in August 2023 that overpaid a TANF client a total of $87. Upon further review, OSA found an additional $524 that was overpaid to the client during fiscal year 2024. OSA is questioning costs totaling $611. o one payment issued in August 2023 that overpaid a TANF client a total of $8. Upon further review, OSA found an additional $107 was overpaid to the client during fiscal year 2024. OSA is questioning costs totaling $115. o one payment issued in March 2024 that overpaid a TANF client a total of $1. Upon further review, OSA found an additional $15 that was overpaid to the client during fiscal year 2024. OSA is questioning costs totaling $16. o one payment issued in October 2023 that underpaid a TANF client a total of $2. Upon further review, OSA found an additional $17 that was underpaid to the client during fiscal year 2024. • two payments issued in June 2024 overpaid a TANF household a total of $72 for transportation. Two $36 bus passes were paid for two clients in the same household, prior to determining program eligibility. OSA is questioning costs totaling $72. OSA selected a non-statistical random sample. Context: In fiscal year 2024, payments to TANF clients for services other than direct cash benefits totaled $2.3 million. Cause: • Lack of adequate procedures • Lack of supervisory oversight Effect: • Known questioned costs • Potential future questioned costs and disallowances • Noncompliance with Federal regulations Recommendation: We recommend that the Department: • implement additional procedures to ensure that payments made to TANF clients are accurate, allowable, and adequately documented; • increase monitoring procedures over these payments; and • establish recoupments for the identified overpayments. Corrective Action Plan: See F-22 Management’s Response: The Department partially agrees with this finding. The Department agrees with and acknowledges both the Condition Statement and the first two Recommendations contained in this finding as reflected in the Departments corrective action plan. The third Recommendation, establish recoupments for the identified overpayments, is already a business process within the OFI Overpayments Team. For clarity, the TANF team ‘refers’ as per policies established in Rule and the Overpayments Team ‘establishes recoupments’. Contact: Ian Yaffe, Director, Office for Family Independence, DHHS, 207-592-1481 Auditor’s Concluding Remarks: OSA acknowledges the Department’s assertion that the establishment of recoupments for identified overpayments is an existing business process; however, current procedures are not adequate. This is evidenced by the six overpayments identified in the Condition for which recoupments had not yet been established as of audit testing. The finding remains as stated. (State Number: 24-1111-05)
(2024-061) Title: Internal control over CCDF period of performance needs improvement Prior Year Findings: None State Department: Health and Human Services Administrative and Financial Services State Bureau: Office of Child and Family Services Health and Human Services Service Center Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: CCDF Cluster (COVID-19) Assistance Listing Number: 93.489, 93.575, 93.596 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Allowable costs/cost principles Period of performance Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403; 45 CFR 98.60; American Rescue Plan (ARP) Act, Section 2201(a) 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. Child Care and Development Fund (CCDF) Discretionary liquidation period regulations require the Department to liquidate grant funds within one year of the required obligation date. Section 2201(a) of the ARP Act requires CCDF Discretionary supplemental funds to be obligated in Federal fiscal year 2021 or the succeeding two fiscal years. The Department must obligate supplemental funds by September 30, 2023. Condition: The CCDF program is administered by the Office of Child and Family Services (OCFS) and provides funding to increase the availability, affordability, and quality of childcare services in the State. OCFS utilizes the Department of Health and Human Services’ (DHHS) Service Center to collaboratively process CCDF expenditures, which includes dual review and approval of program grant coding and periods of performance. The Departments are required to ensure expenditures are obligated and liquidated within the required timeframes for each grant. The Office of the State Auditor (OSA) identified 11 significant CCDF expenditure transactions for grants that had obligation and liquidation periods ending during fiscal year 2024. OSA found four payroll transactions charged to CCDF ARP Discretionary supplemental funds totaling $5,321, for payroll costs incurred, and thus obligated, subsequent to the required obligation date; therefore, the costs are deemed unallowable. OSA tested 37 CCDF expenditure adjustments in fiscal year 2024 and found two adjustments totaling $2,952, charged to CCDF ARP Discretionary supplemental funds during the liquidation period that represented expenditures incurred subsequent to the required obligation date; therefore, the costs are deemed unallowable. OSA selected a non-statistical random sample. OSA performed analytical procedures over all fiscal year 2024 expenditure adjustments and found 14 additional adjustments totaling $4,492, all allocated to CCDF ARP Discretionary supplemental funds, for expenditures that were incurred subsequent to the required obligation date; therefore, the costs are deemed unallowable. OCFS’ and DHHS Service Center’s existing review and approval procedures are not adequate, as unallowable costs totaling $12,765 for expenditures outside of the required period of performance were charged to CCDF ARP Discretionary supplemental funds. Context: In fiscal year 2024, the Department expended approximately $52 million in CCDF program funds. Approximately $6 million of total CCDF program expenditures were CCDF ARP Discretionary supplemental funds with a required obligation date of September 30, 2023. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Potential questioned costs and disallowances • Noncompliance with Federal regulations Recommendation: We recommend that the Departments enhance policies and procedures and increase supervisory oversight to ensure that obligations of grant funds are made within period of performance requirements established in the terms and conditions of Federal grant awards. Corrective Action Plan: See F-25 Management’s Response: The Department and the DHHS Financial Service Center agree with this finding. The DHHS Financial Service Center will enhance policies and procedures for the CCDF grant by modifying the FSR Reviewer Checklist by April 30, 2025. Contact: Sarah Gove, Director, DHHS Service Center, DAFS, 207-458-6626 (State Number: 24-1114-03)
(2024-061) Title: Internal control over CCDF period of performance needs improvement Prior Year Findings: None State Department: Health and Human Services Administrative and Financial Services State Bureau: Office of Child and Family Services Health and Human Services Service Center Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: CCDF Cluster (COVID-19) Assistance Listing Number: 93.489, 93.575, 93.596 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Allowable costs/cost principles Period of performance Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403; 45 CFR 98.60; American Rescue Plan (ARP) Act, Section 2201(a) 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. Child Care and Development Fund (CCDF) Discretionary liquidation period regulations require the Department to liquidate grant funds within one year of the required obligation date. Section 2201(a) of the ARP Act requires CCDF Discretionary supplemental funds to be obligated in Federal fiscal year 2021 or the succeeding two fiscal years. The Department must obligate supplemental funds by September 30, 2023. Condition: The CCDF program is administered by the Office of Child and Family Services (OCFS) and provides funding to increase the availability, affordability, and quality of childcare services in the State. OCFS utilizes the Department of Health and Human Services’ (DHHS) Service Center to collaboratively process CCDF expenditures, which includes dual review and approval of program grant coding and periods of performance. The Departments are required to ensure expenditures are obligated and liquidated within the required timeframes for each grant. The Office of the State Auditor (OSA) identified 11 significant CCDF expenditure transactions for grants that had obligation and liquidation periods ending during fiscal year 2024. OSA found four payroll transactions charged to CCDF ARP Discretionary supplemental funds totaling $5,321, for payroll costs incurred, and thus obligated, subsequent to the required obligation date; therefore, the costs are deemed unallowable. OSA tested 37 CCDF expenditure adjustments in fiscal year 2024 and found two adjustments totaling $2,952, charged to CCDF ARP Discretionary supplemental funds during the liquidation period that represented expenditures incurred subsequent to the required obligation date; therefore, the costs are deemed unallowable. OSA selected a non-statistical random sample. OSA performed analytical procedures over all fiscal year 2024 expenditure adjustments and found 14 additional adjustments totaling $4,492, all allocated to CCDF ARP Discretionary supplemental funds, for expenditures that were incurred subsequent to the required obligation date; therefore, the costs are deemed unallowable. OCFS’ and DHHS Service Center’s existing review and approval procedures are not adequate, as unallowable costs totaling $12,765 for expenditures outside of the required period of performance were charged to CCDF ARP Discretionary supplemental funds. Context: In fiscal year 2024, the Department expended approximately $52 million in CCDF program funds. Approximately $6 million of total CCDF program expenditures were CCDF ARP Discretionary supplemental funds with a required obligation date of September 30, 2023. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Potential questioned costs and disallowances • Noncompliance with Federal regulations Recommendation: We recommend that the Departments enhance policies and procedures and increase supervisory oversight to ensure that obligations of grant funds are made within period of performance requirements established in the terms and conditions of Federal grant awards. Corrective Action Plan: See F-25 Management’s Response: The Department and the DHHS Financial Service Center agree with this finding. The DHHS Financial Service Center will enhance policies and procedures for the CCDF grant by modifying the FSR Reviewer Checklist by April 30, 2025. Contact: Sarah Gove, Director, DHHS Service Center, DAFS, 207-458-6626 (State Number: 24-1114-03)
(2024-063) Title: Internal control over the Foster Care – Title IV-E and Adoption Assistance – Title IV-E eligibility and benefit determination process needs improvement Prior Year Findings: See schedule of Findings and Questioned costs for chart/table State Department: Health and Human Services State Bureau: Office of Child and Family Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Foster Care – Title IV-E (COVID-19) Adoption Assistance – Title IV-E (COVID-19) Assistance Listing Number: 93.658; 93.659 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: ALN 93.658 $4,647 ALN 93.659 $9,367 Likely Questioned Costs: Undeterminable; the Office of the State Auditor (OSA) selected a sample of clients who received Title IV-E benefits during the fiscal year and identified known questioned costs associated with seven clients based on various eligibility attributes. Since each exception is unique to the client, a projection of questioned costs cannot be reasonably estimated. Criteria: 2 CFR 200.303; 2 CFR 200.403; 45 CFR 1356.21 and .40; 42 USC 671 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. 45 CFR 1356.21 outlines eligibility criteria which, if met, allows the State to pay foster care maintenance payments on behalf of eligible children, in accordance with the Title IV-E agency’s foster care maintenance payment rate schedule, to individuals serving as foster family homes, to childcare institutions, or to public or private child-placement or childcare agencies. 45 CFR 1356.40 outlines eligibility criteria which, if met, allows the State to pay a portion of the Federal Adoption Assistance maintenance payments and claim Federal financial participation for the payment. 42 USC 671 requires that prospective foster parents and any other adult living in the home who has resided in the provider home in the preceding five years satisfactorily meet a child abuse and neglect registry check. The requirement applies to foster care maintenance payments made on behalf of the foster child. Condition: The Office of Child and Family Services (OCFS) administers the Foster Care – Title IV-E (Foster Care) and Adoption Assistance – Title IV-E (Adoption Assistance) programs for the State, outlined below: • The Foster Care program is designed to help states provide safe and stable out-of-home care for children under its jurisdiction until the children are returned home safely, placed with adoptive families, or placed in other planned arrangements for permanency. • The Adoption Assistance program provides Federal funds to states to facilitate the timely placement of children, whose special needs or circumstances would otherwise make them difficult to place, with adoptive families. Funds are available for a one-time payment to assist with the costs of adopting a child as well as for subsidies to adoptive families to assist with the care of the eligible child on an ongoing basis. A financial resources specialist (FRS) determines program eligibility and initiates benefits through completion of a determination checklist. The FRS reviews program eligibility factors, gathers required supporting documentation, and documents the certification decision on the checklist. The FRS enters the information into the child welfare information system for processing. Once the client is determined eligible in the child welfare information system, a level of benefits is assigned. OCFS relies on this information and the related system coding to ensure that benefits are accurately provided to eligible clients. OSA tested 60 client eligibility determinations and found: • three determination checklists did not include a certification decision; • three determination checklists were signed by a FRS who did not perform the eligibility determination; and • one determination checklist did not initially include a certification decision. The determination checklist was signed subsequent to OSA’s request for review by a FRS who did not perform the eligibility determination. Additionally, one client’s prospective foster parent did not satisfactorily meet a child abuse and neglect registry check in accordance with 42 USC 671. A second family was residing in the Resource Family Home (RFH), and child abuse and neglect registry checks were not completed or satisfactorily met for the additional adults. Additionally, the Home Study to evaluate the home and safety environment related to the RFH license for the family was completed without disclosing all individuals residing in the home. Upon further review, OSA determined two additional clients were in custody of the RFH and receiving Foster Care or Adoption Assistance benefits during fiscal year 2024. The RFH received $10,701 in benefits from both Federal programs on behalf of three clients, resulting in questioned costs of the entire amount. OSA tested 60 clients and 60 benefit payments and found: • one client received Foster Care childcare benefits after the date the client was adopted, resulting in questioned costs of $1,338. • one client received Foster Care benefit payments while in an unlicensed placement for one month, resulting in questioned costs of $783. • one client determined to be ineligible continued to receive Foster Care benefit payments during the fiscal year, resulting in questioned costs of $594. • one client changed placements during the fiscal year and two separate Foster Family Homes received benefit payments for the same time period on behalf of the client, resulting in questioned costs of $529. The Department recorded the overpayments in the child welfare information system but did not recoup the funds during the fiscal year. • one client received Foster Care benefit payments during the same time period that they received Adoption Assistance benefit payments, resulting in questioned costs of $69 to the RFH. • benefits for one client were paid with State funds and should have been paid with Federal funds for five months of the fiscal year. • one client’s eligibility record included an incorrect end date for benefits within the child welfare information system, resulting in the client being paid with State funds instead of claiming Federal funds for three months of the fiscal year. OSA selected non-statistical random samples. Context: In fiscal year 2024, the State provided approximately: • 900 Foster Care clients with $5.4 million in Federal benefits; and • 4,200 Adoption Assistance clients with $24.7 million in Federal benefits. Cause: • Lack of appropriate oversight over eligibility and benefit determinations • Lack of adequate policies and procedures and supervisory oversight of the child welfare information system. The system was implemented in fiscal year 2023 and policies and procedures were not designed to properly test system coding for all eligibility change circumstances that could occur. Effect: • Known questioned costs • Potential future questioned costs and disallowances • Benefits were provided to ineligible clients. • Noncompliance with Federal regulations Recommendation: We recommend that the Department: • enhance policies and procedures to ensure that eligibility determination checklists include certification decisions by the FRS completing the determination; • implement additional procedures to ensure that payments made on behalf of clients are accurate and allowable in accordance with program regulations; • establish recoupments for the overpayments identified; and • strengthen licensing practices for background screening of potential and current RFHs. Corrective Action Plan: See F-26 Management’s Response: The Department partially agrees with this finding. OCFS agrees with the finding in that the checklist was not appropriately signed at the time of completion. OCFS would like to note that the checklist is not part of any state or federal policy or requirement. It is our own internal process and was only added to our FRS manual as a plan of correction (POC) because of last year’s finding re: some checklists not being signed. When an FRS worker completes an Initial determination in the system, the determination is printed out for our files and the document includes a timestamp when it was completed as well as the FRS assigned. Due to this POC just being added last year, this would be expected to be an ongoing finding for the foreseeable future since we cannot retroactively sign the completed checklists in the past. OCFS agrees there is a need to formalize the overpayment collection process. We believe that there are both programmatic and technical solutions to be explored. OCFS will develop a workgroup of subject matter experts to explore and understand the challenges of managing overpayments and develop a solution for implementation over the next year. OCFS disagrees with the finding that OCFS needs to strengthen its licensing practices for background screening of Resource Families. The finding is based on additional occupants in the home that were not subject to background checks and were not listed in the renewal home study completed in 2023. The home study referenced above described the home and all occupants as presented by the family. The Community Care Worker completed a safety inspection/walk through of the home and found no evidence of additional occupants. OCFS conducts background checks on the adults in the home in accordance with policy and rules, at initial licensure as well as renewal of licensure every two years. OCFS does not conduct unannounced licensing visits and relies on resource families to report changes in family composition and occupancy. In the event there are not any children in the custody of the state in the home, OCFS would not have reason or cause to inspect who is residing in the home or conduct face-to-face visits with resource families. Because this specific finding does not describe a failure to adhere to policy and rules, no correction action plan will be identified. Contact: Robert Blanchard, Associate Director, OCFS, DHHS, 207-624-7955 Auditor’s Concluding Remarks: For the exceptions identified over the eligibility determination checklists, the use of the checklist was identified to OSA by the Department as the established control to ensure compliance over determinations of Title IV-E eligibility for all clients entering Foster Care. While there is no Federal requirement for a checklist, the Department is required to establish and maintain internal controls over Federal awards in accordance with 2 CFR 200.303. OSA performed testing over the Department’s established internal control. Regarding the need to strengthen its licensing practices for background screening of Resource Families, the child welfare information system listed the additional occupants residing in the home as early as 2020, including within several family investigations and reports of alleged abuse occurring in the home. While OSA recognizes that OCFS does not conduct unannounced licensing visits, the information surrounding resource families is obtainable through review of the child welfare information system. A cross-check of associated intakes, cases, family investigations, or reports of alleged abuse within the child welfare information system would have identified the second family residing in the home. The adults residing in the home did not satisfactorily meet a child abuse and neglect registry check in accordance with 42 USC 671, and the RFH remained licensed and continued to inappropriately receive Title IV-E benefits. Therefore, this finding does describe a failure to adhere to policy and rules, and a corrective action plan is necessary. The finding remains as stated. (State Number: 24-1109-01)
(2024-063) Title: Internal control over the Foster Care – Title IV-E and Adoption Assistance – Title IV-E eligibility and benefit determination process needs improvement Prior Year Findings: See schedule of Findings and Questioned costs for chart/table State Department: Health and Human Services State Bureau: Office of Child and Family Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Foster Care – Title IV-E (COVID-19) Adoption Assistance – Title IV-E (COVID-19) Assistance Listing Number: 93.658; 93.659 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: ALN 93.658 $4,647 ALN 93.659 $9,367 Likely Questioned Costs: Undeterminable; the Office of the State Auditor (OSA) selected a sample of clients who received Title IV-E benefits during the fiscal year and identified known questioned costs associated with seven clients based on various eligibility attributes. Since each exception is unique to the client, a projection of questioned costs cannot be reasonably estimated. Criteria: 2 CFR 200.303; 2 CFR 200.403; 45 CFR 1356.21 and .40; 42 USC 671 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. 45 CFR 1356.21 outlines eligibility criteria which, if met, allows the State to pay foster care maintenance payments on behalf of eligible children, in accordance with the Title IV-E agency’s foster care maintenance payment rate schedule, to individuals serving as foster family homes, to childcare institutions, or to public or private child-placement or childcare agencies. 45 CFR 1356.40 outlines eligibility criteria which, if met, allows the State to pay a portion of the Federal Adoption Assistance maintenance payments and claim Federal financial participation for the payment. 42 USC 671 requires that prospective foster parents and any other adult living in the home who has resided in the provider home in the preceding five years satisfactorily meet a child abuse and neglect registry check. The requirement applies to foster care maintenance payments made on behalf of the foster child. Condition: The Office of Child and Family Services (OCFS) administers the Foster Care – Title IV-E (Foster Care) and Adoption Assistance – Title IV-E (Adoption Assistance) programs for the State, outlined below: • The Foster Care program is designed to help states provide safe and stable out-of-home care for children under its jurisdiction until the children are returned home safely, placed with adoptive families, or placed in other planned arrangements for permanency. • The Adoption Assistance program provides Federal funds to states to facilitate the timely placement of children, whose special needs or circumstances would otherwise make them difficult to place, with adoptive families. Funds are available for a one-time payment to assist with the costs of adopting a child as well as for subsidies to adoptive families to assist with the care of the eligible child on an ongoing basis. A financial resources specialist (FRS) determines program eligibility and initiates benefits through completion of a determination checklist. The FRS reviews program eligibility factors, gathers required supporting documentation, and documents the certification decision on the checklist. The FRS enters the information into the child welfare information system for processing. Once the client is determined eligible in the child welfare information system, a level of benefits is assigned. OCFS relies on this information and the related system coding to ensure that benefits are accurately provided to eligible clients. OSA tested 60 client eligibility determinations and found: • three determination checklists did not include a certification decision; • three determination checklists were signed by a FRS who did not perform the eligibility determination; and • one determination checklist did not initially include a certification decision. The determination checklist was signed subsequent to OSA’s request for review by a FRS who did not perform the eligibility determination. Additionally, one client’s prospective foster parent did not satisfactorily meet a child abuse and neglect registry check in accordance with 42 USC 671. A second family was residing in the Resource Family Home (RFH), and child abuse and neglect registry checks were not completed or satisfactorily met for the additional adults. Additionally, the Home Study to evaluate the home and safety environment related to the RFH license for the family was completed without disclosing all individuals residing in the home. Upon further review, OSA determined two additional clients were in custody of the RFH and receiving Foster Care or Adoption Assistance benefits during fiscal year 2024. The RFH received $10,701 in benefits from both Federal programs on behalf of three clients, resulting in questioned costs of the entire amount. OSA tested 60 clients and 60 benefit payments and found: • one client received Foster Care childcare benefits after the date the client was adopted, resulting in questioned costs of $1,338. • one client received Foster Care benefit payments while in an unlicensed placement for one month, resulting in questioned costs of $783. • one client determined to be ineligible continued to receive Foster Care benefit payments during the fiscal year, resulting in questioned costs of $594. • one client changed placements during the fiscal year and two separate Foster Family Homes received benefit payments for the same time period on behalf of the client, resulting in questioned costs of $529. The Department recorded the overpayments in the child welfare information system but did not recoup the funds during the fiscal year. • one client received Foster Care benefit payments during the same time period that they received Adoption Assistance benefit payments, resulting in questioned costs of $69 to the RFH. • benefits for one client were paid with State funds and should have been paid with Federal funds for five months of the fiscal year. • one client’s eligibility record included an incorrect end date for benefits within the child welfare information system, resulting in the client being paid with State funds instead of claiming Federal funds for three months of the fiscal year. OSA selected non-statistical random samples. Context: In fiscal year 2024, the State provided approximately: • 900 Foster Care clients with $5.4 million in Federal benefits; and • 4,200 Adoption Assistance clients with $24.7 million in Federal benefits. Cause: • Lack of appropriate oversight over eligibility and benefit determinations • Lack of adequate policies and procedures and supervisory oversight of the child welfare information system. The system was implemented in fiscal year 2023 and policies and procedures were not designed to properly test system coding for all eligibility change circumstances that could occur. Effect: • Known questioned costs • Potential future questioned costs and disallowances • Benefits were provided to ineligible clients. • Noncompliance with Federal regulations Recommendation: We recommend that the Department: • enhance policies and procedures to ensure that eligibility determination checklists include certification decisions by the FRS completing the determination; • implement additional procedures to ensure that payments made on behalf of clients are accurate and allowable in accordance with program regulations; • establish recoupments for the overpayments identified; and • strengthen licensing practices for background screening of potential and current RFHs. Corrective Action Plan: See F-26 Management’s Response: The Department partially agrees with this finding. OCFS agrees with the finding in that the checklist was not appropriately signed at the time of completion. OCFS would like to note that the checklist is not part of any state or federal policy or requirement. It is our own internal process and was only added to our FRS manual as a plan of correction (POC) because of last year’s finding re: some checklists not being signed. When an FRS worker completes an Initial determination in the system, the determination is printed out for our files and the document includes a timestamp when it was completed as well as the FRS assigned. Due to this POC just being added last year, this would be expected to be an ongoing finding for the foreseeable future since we cannot retroactively sign the completed checklists in the past. OCFS agrees there is a need to formalize the overpayment collection process. We believe that there are both programmatic and technical solutions to be explored. OCFS will develop a workgroup of subject matter experts to explore and understand the challenges of managing overpayments and develop a solution for implementation over the next year. OCFS disagrees with the finding that OCFS needs to strengthen its licensing practices for background screening of Resource Families. The finding is based on additional occupants in the home that were not subject to background checks and were not listed in the renewal home study completed in 2023. The home study referenced above described the home and all occupants as presented by the family. The Community Care Worker completed a safety inspection/walk through of the home and found no evidence of additional occupants. OCFS conducts background checks on the adults in the home in accordance with policy and rules, at initial licensure as well as renewal of licensure every two years. OCFS does not conduct unannounced licensing visits and relies on resource families to report changes in family composition and occupancy. In the event there are not any children in the custody of the state in the home, OCFS would not have reason or cause to inspect who is residing in the home or conduct face-to-face visits with resource families. Because this specific finding does not describe a failure to adhere to policy and rules, no correction action plan will be identified. Contact: Robert Blanchard, Associate Director, OCFS, DHHS, 207-624-7955 Auditor’s Concluding Remarks: For the exceptions identified over the eligibility determination checklists, the use of the checklist was identified to OSA by the Department as the established control to ensure compliance over determinations of Title IV-E eligibility for all clients entering Foster Care. While there is no Federal requirement for a checklist, the Department is required to establish and maintain internal controls over Federal awards in accordance with 2 CFR 200.303. OSA performed testing over the Department’s established internal control. Regarding the need to strengthen its licensing practices for background screening of Resource Families, the child welfare information system listed the additional occupants residing in the home as early as 2020, including within several family investigations and reports of alleged abuse occurring in the home. While OSA recognizes that OCFS does not conduct unannounced licensing visits, the information surrounding resource families is obtainable through review of the child welfare information system. A cross-check of associated intakes, cases, family investigations, or reports of alleged abuse within the child welfare information system would have identified the second family residing in the home. The adults residing in the home did not satisfactorily meet a child abuse and neglect registry check in accordance with 42 USC 671, and the RFH remained licensed and continued to inappropriately receive Title IV-E benefits. Therefore, this finding does describe a failure to adhere to policy and rules, and a corrective action plan is necessary. The finding remains as stated. (State Number: 24-1109-01)
(2024-064) Title: Internal control over the Adoption Assistance – Title IV-E eligibility and benefit determination process needs improvement Prior Year Findings: See schedule of Findings and Questioned costs for chart/table State Department: Health and Human Services State Bureau: Office of Child and Family Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Adoption Assistance – Title IV-E (COVID-19) Assistance Listing Number: 93.659 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: ALN 93.659 $10,860 Likely Questioned Costs: Undeterminable; the Office of the State Auditor (OSA) selected a sample of clients who received Title IV-E benefits during fiscal year 2024 and identified known questioned costs for three clients based on review of Adoption Agreements signed in 2008, 2012, and 2016. Since each Adoption Agreement is unique to the client, a projection of questioned costs cannot be reasonably estimated. Criteria: 2 CFR 200.303; 2 CFR 200.403; 45 CFR 1356.40 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. The State is allowed to pay a portion of the Federal Adoption Assistance maintenance payments and claim Federal financial participation for Title IV-E eligible clients. Condition: The Adoption Assistance – Title IV-E (Adoption Assistance) program provides Federal funds to states to facilitate the timely placement of children, whose special needs or circumstances would otherwise make them difficult to place, with adoptive families. Funds are available for a one-time payment to assist with the costs of adopting a child as well as for subsidies to adoptive families to assist with the care of the eligible child on an ongoing basis. The Office of Child and Family Services (OCFS) administers the Adoption Assistance program for the State. OCFS financial resource specialists (FRS) are responsible for determining program eligibility and initiating benefits. The FRS uses the Adoption Assistance Checklist to ensure that program eligibility factors, required supporting information, and final determination for Federal Adoption Assistance benefits are obtained and documented. Once the client is determined eligible in the child welfare information system, a daily rate is negotiated by OCFS and the adoptive parents at a rate that does not exceed what the client would qualify for under the Foster Care – Title IV-E program. OSA tested 60 client benefit payments and identified that: • one client received Social Security Administration benefits, and therefore, was not eligible for Adoption Assistance benefits. The client received a daily Adoption Assistance rate of $16.50, resulting in questioned costs of $6,023 during fiscal year 2024. • one client received a higher daily Adoption Assistance rate than what they qualified for under the Foster Care – Title IV-E program. The client received a $26.25 daily rate instead of $16.50, resulting in questioned costs of $3,559 during fiscal year 2024. • one client received a higher daily Adoption Assistance rate than what they qualified for under the Foster Care – Title IV-E program. The client received a $20 daily rate instead of $16.50, resulting in questioned costs of $1,278 during fiscal year 2024. OSA selected a non-statistical random sample. Context: In fiscal year 2024, the State provided approximately 4,200 Adoption Assistance clients with $24.7 million in Federal benefits. Cause: Lack of adequate policies and procedures over verification and accuracy of benefit determinations and associated Adoption Assistance payments Effect: • Known questioned costs • Potential future questioned costs and disallowances • Noncompliance with Federal regulations • Individuals not eligible for services could receive benefits. Recommendation: We recommend that the Department enhance policies and procedures to ensure the accuracy of eligibility and benefit determinations, and verify that benefit payments are made in accordance with Federal regulations. Corrective Action Plan: See F-26 Management’s Response: The Department agrees with this finding. Completion of the Adoption Assistance Checklist has not been universally understood to be used as the internal control for documentation of certification decisions, but as a guide for staff to use in preparing and organizing the Application for Adoption Assistance Packets. We agree that this is an effective tool to ensure certification decisions regarding IVE and consistent documentation in case files. Contact: Karen Benson, Adoption Program Manager, OCFS, DHHS, 207-561-4208 (State Number: 24-1110-01)
(2024-065) Title: Internal control over the Foster Care – Title IV-E and Adoption Assistance – Title IV-E programs FMAP rates needs improvement Prior Year Findings: None State Department: Health and Human Services Administrative and Financial Services State Bureau: Office of Child and Family Services Health and Human Services Service Center Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Foster Care – Title IV-E (COVID-19) Adoption Assistance – Title IV-E (COVID-19) Assistance Listing Number: 93.658; 93.659 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Allowable costs/cost principles Matching, level of effort, earmarking Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403; 45 CFR 1356.21, .40, and .60; Public Law No. 117-328, Section 5131 of Division FF of the Consolidated Appropriations Act, 2023 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. 45 CFR 1356.21 outlines eligible criteria which, if met, allows the State to pay foster care maintenance payments on behalf of eligible children, in accordance with the Title IV-E agency’s foster care maintenance payment rate schedule, to individuals serving as foster family homes, to childcare institutions, or to public or private child-placement or childcare agencies. 45 CFR 1356.40 outlines eligibility criteria which, if met, allows the State to pay a portion of the Federal Adoption Assistance maintenance payments and claim Federal financial participation for the payment. 45 CFR 1356.60 outlines the matching percentage of Title IV-E funding in Adoption Assistance subsidy payments and is based on the Federal Medical Assistance Program (FMAP) percentage. As a result of the COVID-19 public health emergency, the U.S. Department of Health and Human Services granted a temporary increase to the FMAP rate that is used in determining the Federal share of expenditures for assistance payments under the Title IV-E Foster Care and Adoption Assistance programs. This was permitted for each calendar quarter occurring during the period beginning on January 1, 2020. Under the Consolidated Appropriations Act enacted on December 29, 2022, the enhanced FMAP rate was required to be phased out and end completely on December 31, 2023. Condition: The Office of Child and Family Services (OCFS) administers the Foster Care – Title IV-E (Foster Care) and Adoption Assistance – Title IV-E (Adoption Assistance) programs for the State, outlined below: • The Foster Care program is designed to help states provide safe and stable out-of-home care for children under its jurisdiction until the children are returned home safely, placed with adoptive families, or placed in other planned arrangements for permanency. • The Adoption Assistance program provides Federal funds to states to facilitate the timely placement of children, whose special needs or circumstances would otherwise make them difficult to place, with adoptive families. Funds are available for a one-time payment to assist with the costs of adopting a child as well as for subsidies to adoptive families to assist with the care of the eligible child on an ongoing basis. The State is allowed to pay a portion of the Foster Care and Adoption Assistance maintenance payments and claim Federal financial participation for eligible clients. The FMAP rate is programmed into the child welfare information system by OCFS to apply the correct allocation between Federal and State funds to each transaction for eligible Foster Care and Adoption Assistance eligible clients. The Department of Health and Human Services’ Service Center (DHHS SC) submits quarterly financial reports that detail the allocation between Federal and State funds, based on the FMAP programmed into the report template obtained from the Federal agency. When discrepancies are identified, DHHS SC will correct the fund allocation in the State’s accounting system and report the benefit amounts using the correct FMAP rates. The Office of the State Auditor (OSA) tested 60 Foster Care benefit payments and 60 Adoption Assistance benefit payments and found that OCFS program personnel did not reduce the FMAP rate from January 1, 2024, through May 3, 2024. For 17 Foster Care and 29 Adoption Assistance benefit payments, OCFS continued to claim the enhanced rate of 64.15 percent for both programs, instead of the required 62.65 percent rate. While the incorrect rate was applied to individual client benefit payments, DHHS SC reported the correct FMAP rate and Federal participation amounts in the quarterly financial reports and drew Federal funds based on the correct FMAP rate for that period. DHHS SC and OCFS did not confirm that the correct rates were applied within the child welfare information system. OSA selected non-statistical random samples. Context: In fiscal year 2024, the State provided approximately: • 900 Foster Care clients with $5.4 million in Federal benefits; and • 4,200 Adoption Assistance clients with $24.7 million in Federal benefits. Cause: Lack of central oversight over communication of FMAP rate changes between DHHS SC and OCFS personnel Effect: • Inaccurate Federal and State allocation for client benefit payments within the child welfare information system, resulting in discrepancies between the State’s accounting system and the child welfare information system. • Potential future questioned costs and disallowances • Noncompliance with Federal regulations Recommendation: We recommend that the Departments enhance policies and procedures to ensure the appropriate FMAP rates are communicated and entered into the child welfare information system accurately and timely. This will ensure that client benefit information is accurately reflected in the child welfare information system and agrees to the client benefit amounts in the State’s accounting system. Corrective Action Plan: See F-27 Management’s Response: The Department agrees with this finding. OCFS agrees there was a failure in the timely communication process of the step down FMAP rate to OCFS. OCFS has developed and will implement a corrective action plan to address the issue identified. Contact: Robert Blanchard, Associate Director, OCFS, DHHS, 207-624-7955 (State Number: 24-1110-02)
(2024-065) Title: Internal control over the Foster Care – Title IV-E and Adoption Assistance – Title IV-E programs FMAP rates needs improvement Prior Year Findings: None State Department: Health and Human Services Administrative and Financial Services State Bureau: Office of Child and Family Services Health and Human Services Service Center Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Foster Care – Title IV-E (COVID-19) Adoption Assistance – Title IV-E (COVID-19) Assistance Listing Number: 93.658; 93.659 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Allowable costs/cost principles Matching, level of effort, earmarking Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403; 45 CFR 1356.21, .40, and .60; Public Law No. 117-328, Section 5131 of Division FF of the Consolidated Appropriations Act, 2023 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. 45 CFR 1356.21 outlines eligible criteria which, if met, allows the State to pay foster care maintenance payments on behalf of eligible children, in accordance with the Title IV-E agency’s foster care maintenance payment rate schedule, to individuals serving as foster family homes, to childcare institutions, or to public or private child-placement or childcare agencies. 45 CFR 1356.40 outlines eligibility criteria which, if met, allows the State to pay a portion of the Federal Adoption Assistance maintenance payments and claim Federal financial participation for the payment. 45 CFR 1356.60 outlines the matching percentage of Title IV-E funding in Adoption Assistance subsidy payments and is based on the Federal Medical Assistance Program (FMAP) percentage. As a result of the COVID-19 public health emergency, the U.S. Department of Health and Human Services granted a temporary increase to the FMAP rate that is used in determining the Federal share of expenditures for assistance payments under the Title IV-E Foster Care and Adoption Assistance programs. This was permitted for each calendar quarter occurring during the period beginning on January 1, 2020. Under the Consolidated Appropriations Act enacted on December 29, 2022, the enhanced FMAP rate was required to be phased out and end completely on December 31, 2023. Condition: The Office of Child and Family Services (OCFS) administers the Foster Care – Title IV-E (Foster Care) and Adoption Assistance – Title IV-E (Adoption Assistance) programs for the State, outlined below: • The Foster Care program is designed to help states provide safe and stable out-of-home care for children under its jurisdiction until the children are returned home safely, placed with adoptive families, or placed in other planned arrangements for permanency. • The Adoption Assistance program provides Federal funds to states to facilitate the timely placement of children, whose special needs or circumstances would otherwise make them difficult to place, with adoptive families. Funds are available for a one-time payment to assist with the costs of adopting a child as well as for subsidies to adoptive families to assist with the care of the eligible child on an ongoing basis. The State is allowed to pay a portion of the Foster Care and Adoption Assistance maintenance payments and claim Federal financial participation for eligible clients. The FMAP rate is programmed into the child welfare information system by OCFS to apply the correct allocation between Federal and State funds to each transaction for eligible Foster Care and Adoption Assistance eligible clients. The Department of Health and Human Services’ Service Center (DHHS SC) submits quarterly financial reports that detail the allocation between Federal and State funds, based on the FMAP programmed into the report template obtained from the Federal agency. When discrepancies are identified, DHHS SC will correct the fund allocation in the State’s accounting system and report the benefit amounts using the correct FMAP rates. The Office of the State Auditor (OSA) tested 60 Foster Care benefit payments and 60 Adoption Assistance benefit payments and found that OCFS program personnel did not reduce the FMAP rate from January 1, 2024, through May 3, 2024. For 17 Foster Care and 29 Adoption Assistance benefit payments, OCFS continued to claim the enhanced rate of 64.15 percent for both programs, instead of the required 62.65 percent rate. While the incorrect rate was applied to individual client benefit payments, DHHS SC reported the correct FMAP rate and Federal participation amounts in the quarterly financial reports and drew Federal funds based on the correct FMAP rate for that period. DHHS SC and OCFS did not confirm that the correct rates were applied within the child welfare information system. OSA selected non-statistical random samples. Context: In fiscal year 2024, the State provided approximately: • 900 Foster Care clients with $5.4 million in Federal benefits; and • 4,200 Adoption Assistance clients with $24.7 million in Federal benefits. Cause: Lack of central oversight over communication of FMAP rate changes between DHHS SC and OCFS personnel Effect: • Inaccurate Federal and State allocation for client benefit payments within the child welfare information system, resulting in discrepancies between the State’s accounting system and the child welfare information system. • Potential future questioned costs and disallowances • Noncompliance with Federal regulations Recommendation: We recommend that the Departments enhance policies and procedures to ensure the appropriate FMAP rates are communicated and entered into the child welfare information system accurately and timely. This will ensure that client benefit information is accurately reflected in the child welfare information system and agrees to the client benefit amounts in the State’s accounting system. Corrective Action Plan: See F-27 Management’s Response: The Department agrees with this finding. OCFS agrees there was a failure in the timely communication process of the step down FMAP rate to OCFS. OCFS has developed and will implement a corrective action plan to address the issue identified. Contact: Robert Blanchard, Associate Director, OCFS, DHHS, 207-624-7955 (State Number: 24-1110-02)
(2024-069) Title: Internal control over Medicaid cost of care assessments and deductions needs improvement Prior Year Findings: See scheduleof 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: See E-77 to E-78 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403; 42 CFR 435.725; MaineCare Eligibility Manual, Part 14, Section 6 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. The Department must reduce its payment to an institution for services provided to an individual by the amount that remains after deducting certain amounts from the member’s total income. This remaining amount is the member’s maximum share of the cost, known as cost of care (COC). Condition: A COC assessment represents the required contribution that a MaineCare recipient must pay toward care in a Long Term Care Facility (LTCF). The Office for Family Independence (OFI) is responsible for COC assessments for all Medicaid members in the State. COC assessments are either calculated by the Automated Client Eligibility System or calculated manually by eligibility specialists. System-generated COC assessments are not subject to secondary review. A COC deduction represents the amount of assessment that was deducted from a paid claim. Members may have an assessment calculated but may never have a claim with a deduction utilizing that assessment. The Office of MaineCare Services (OMS) is responsible for applying assessments to submitted claims prior to payment. The Office of the State Auditor (OSA) tested 60 COC assessments and related deductions from paid claims. OSA identified: • one COC assessment was not calculated correctly or retroactively adjusted. The COC was higher than it should have been by $10. The assessment was $1,099 and should have been $1,089 for six months during the fiscal year. This member had six claims where the incorrect COC was applied. • one COC deduction was not deducted correctly from the paid claim. The COC deducted was lower than it should have been by $22. The assessment was $1,713 for two months during the fiscal year and the amount that was deducted was $1,691. This member had two claims where the incorrect COC deduction was applied. OSA selected a non-statistical random sample. Context: In fiscal year 2024, approximately: • 18,000 COC assessments were calculated by OFI; • 8,500 members had COC assessments; and • $627 million was paid to LTCFs. Cause: • Lack of supervisory oversight • Lack of adequate procedures to ensure COC assessments are calculated correctly • Lack of adequate procedures to ensure system exception reports are complete and accurate Effect: • Inaccurate COC assessments, deductions, and retroactive changes may result in overpayments or underpayments for members or the State. • Potential questioned costs and disallowances Recommendation: We recommend that: • OFI enhance oversight procedures to ensure that COC assessments are calculated and deducted correctly. • OMS collaborate with OFI to ensure that system exception reports capture all COC-related claims which require adjustments. Corrective Action Plan: See F-28 Management’s Response: The Department partially agrees with this finding. The Department agrees with the two exceptions found by the Office of the State Auditor. However, we believe that the Department has reasonable assurance with the controls in place that results in a 97% compliance with the COC calculations, which has not decreased from previous findings. No corrective action is necessary as a result of an error rate of only 3%. The Department will continue to actively manage and monitor the Cost of Care system in compliance with federal regulations. In response to the first of two errors identified by OSA, OMS will request an update to an existing Cost of Care report supplied by a third-party vendor. Changes to cost of care are contained in the Retroactive Cost of Care Report, however if there is a second determination of cost of care in a month and the result is identical to the first change in the month, neither is included in the report. This is an error in the report logic that must be corrected. A Change Request will be created to modify and correct the report so that the latest change in the month will be reported to be acted on by OMS. Contact: Ian Yaffe, Director, Office for Family Independence, DHHS, 207-592-1481 Auditor’s Concluding Remarks: The Department agrees with the exceptions identified in the Condition. The Department’s disagreement is derived from the three percent sample payment error rate. The Department asserts that the error rate is acceptable and thus, no corrective action is necessary; however, for the two exceptions OSA identified, existing control procedures resulted in inaccurate claim payments. While OSA recognizes that achieving 100 percent accuracy in calculating COC assessments and applying COC deductions would likely not be feasible, the identified control deficiencies indicate that a review of operating procedures and implementation of improvements is necessary. The finding remains as stated. (State Number: 24-1106-05)
(2024-069) Title: Internal control over Medicaid cost of care assessments and deductions needs improvement Prior Year Findings: See scheduleof 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: See E-77 to E-78 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403; 42 CFR 435.725; MaineCare Eligibility Manual, Part 14, Section 6 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. The Department must reduce its payment to an institution for services provided to an individual by the amount that remains after deducting certain amounts from the member’s total income. This remaining amount is the member’s maximum share of the cost, known as cost of care (COC). Condition: A COC assessment represents the required contribution that a MaineCare recipient must pay toward care in a Long Term Care Facility (LTCF). The Office for Family Independence (OFI) is responsible for COC assessments for all Medicaid members in the State. COC assessments are either calculated by the Automated Client Eligibility System or calculated manually by eligibility specialists. System-generated COC assessments are not subject to secondary review. A COC deduction represents the amount of assessment that was deducted from a paid claim. Members may have an assessment calculated but may never have a claim with a deduction utilizing that assessment. The Office of MaineCare Services (OMS) is responsible for applying assessments to submitted claims prior to payment. The Office of the State Auditor (OSA) tested 60 COC assessments and related deductions from paid claims. OSA identified: • one COC assessment was not calculated correctly or retroactively adjusted. The COC was higher than it should have been by $10. The assessment was $1,099 and should have been $1,089 for six months during the fiscal year. This member had six claims where the incorrect COC was applied. • one COC deduction was not deducted correctly from the paid claim. The COC deducted was lower than it should have been by $22. The assessment was $1,713 for two months during the fiscal year and the amount that was deducted was $1,691. This member had two claims where the incorrect COC deduction was applied. OSA selected a non-statistical random sample. Context: In fiscal year 2024, approximately: • 18,000 COC assessments were calculated by OFI; • 8,500 members had COC assessments; and • $627 million was paid to LTCFs. Cause: • Lack of supervisory oversight • Lack of adequate procedures to ensure COC assessments are calculated correctly • Lack of adequate procedures to ensure system exception reports are complete and accurate Effect: • Inaccurate COC assessments, deductions, and retroactive changes may result in overpayments or underpayments for members or the State. • Potential questioned costs and disallowances Recommendation: We recommend that: • OFI enhance oversight procedures to ensure that COC assessments are calculated and deducted correctly. • OMS collaborate with OFI to ensure that system exception reports capture all COC-related claims which require adjustments. Corrective Action Plan: See F-28 Management’s Response: The Department partially agrees with this finding. The Department agrees with the two exceptions found by the Office of the State Auditor. However, we believe that the Department has reasonable assurance with the controls in place that results in a 97% compliance with the COC calculations, which has not decreased from previous findings. No corrective action is necessary as a result of an error rate of only 3%. The Department will continue to actively manage and monitor the Cost of Care system in compliance with federal regulations. In response to the first of two errors identified by OSA, OMS will request an update to an existing Cost of Care report supplied by a third-party vendor. Changes to cost of care are contained in the Retroactive Cost of Care Report, however if there is a second determination of cost of care in a month and the result is identical to the first change in the month, neither is included in the report. This is an error in the report logic that must be corrected. A Change Request will be created to modify and correct the report so that the latest change in the month will be reported to be acted on by OMS. Contact: Ian Yaffe, Director, Office for Family Independence, DHHS, 207-592-1481 Auditor’s Concluding Remarks: The Department agrees with the exceptions identified in the Condition. The Department’s disagreement is derived from the three percent sample payment error rate. The Department asserts that the error rate is acceptable and thus, no corrective action is necessary; however, for the two exceptions OSA identified, existing control procedures resulted in inaccurate claim payments. While OSA recognizes that achieving 100 percent accuracy in calculating COC assessments and applying COC deductions would likely not be feasible, the identified control deficiencies indicate that a review of operating procedures and implementation of improvements is necessary. The finding remains as stated. (State Number: 24-1106-05)
(2024-069) Title: Internal control over Medicaid cost of care assessments and deductions needs improvement Prior Year Findings: See scheduleof 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: See E-77 to E-78 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403; 42 CFR 435.725; MaineCare Eligibility Manual, Part 14, Section 6 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. The Department must reduce its payment to an institution for services provided to an individual by the amount that remains after deducting certain amounts from the member’s total income. This remaining amount is the member’s maximum share of the cost, known as cost of care (COC). Condition: A COC assessment represents the required contribution that a MaineCare recipient must pay toward care in a Long Term Care Facility (LTCF). The Office for Family Independence (OFI) is responsible for COC assessments for all Medicaid members in the State. COC assessments are either calculated by the Automated Client Eligibility System or calculated manually by eligibility specialists. System-generated COC assessments are not subject to secondary review. A COC deduction represents the amount of assessment that was deducted from a paid claim. Members may have an assessment calculated but may never have a claim with a deduction utilizing that assessment. The Office of MaineCare Services (OMS) is responsible for applying assessments to submitted claims prior to payment. The Office of the State Auditor (OSA) tested 60 COC assessments and related deductions from paid claims. OSA identified: • one COC assessment was not calculated correctly or retroactively adjusted. The COC was higher than it should have been by $10. The assessment was $1,099 and should have been $1,089 for six months during the fiscal year. This member had six claims where the incorrect COC was applied. • one COC deduction was not deducted correctly from the paid claim. The COC deducted was lower than it should have been by $22. The assessment was $1,713 for two months during the fiscal year and the amount that was deducted was $1,691. This member had two claims where the incorrect COC deduction was applied. OSA selected a non-statistical random sample. Context: In fiscal year 2024, approximately: • 18,000 COC assessments were calculated by OFI; • 8,500 members had COC assessments; and • $627 million was paid to LTCFs. Cause: • Lack of supervisory oversight • Lack of adequate procedures to ensure COC assessments are calculated correctly • Lack of adequate procedures to ensure system exception reports are complete and accurate Effect: • Inaccurate COC assessments, deductions, and retroactive changes may result in overpayments or underpayments for members or the State. • Potential questioned costs and disallowances Recommendation: We recommend that: • OFI enhance oversight procedures to ensure that COC assessments are calculated and deducted correctly. • OMS collaborate with OFI to ensure that system exception reports capture all COC-related claims which require adjustments. Corrective Action Plan: See F-28 Management’s Response: The Department partially agrees with this finding. The Department agrees with the two exceptions found by the Office of the State Auditor. However, we believe that the Department has reasonable assurance with the controls in place that results in a 97% compliance with the COC calculations, which has not decreased from previous findings. No corrective action is necessary as a result of an error rate of only 3%. The Department will continue to actively manage and monitor the Cost of Care system in compliance with federal regulations. In response to the first of two errors identified by OSA, OMS will request an update to an existing Cost of Care report supplied by a third-party vendor. Changes to cost of care are contained in the Retroactive Cost of Care Report, however if there is a second determination of cost of care in a month and the result is identical to the first change in the month, neither is included in the report. This is an error in the report logic that must be corrected. A Change Request will be created to modify and correct the report so that the latest change in the month will be reported to be acted on by OMS. Contact: Ian Yaffe, Director, Office for Family Independence, DHHS, 207-592-1481 Auditor’s Concluding Remarks: The Department agrees with the exceptions identified in the Condition. The Department’s disagreement is derived from the three percent sample payment error rate. The Department asserts that the error rate is acceptable and thus, no corrective action is necessary; however, for the two exceptions OSA identified, existing control procedures resulted in inaccurate claim payments. While OSA recognizes that achieving 100 percent accuracy in calculating COC assessments and applying COC deductions would likely not be feasible, the identified control deficiencies indicate that a review of operating procedures and implementation of improvements is necessary. The finding remains as stated. (State Number: 24-1106-05)
(2024-069) Title: Internal control over Medicaid cost of care assessments and deductions needs improvement Prior Year Findings: See scheduleof 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: See E-77 to E-78 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403; 42 CFR 435.725; MaineCare Eligibility Manual, Part 14, Section 6 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. The Department must reduce its payment to an institution for services provided to an individual by the amount that remains after deducting certain amounts from the member’s total income. This remaining amount is the member’s maximum share of the cost, known as cost of care (COC). Condition: A COC assessment represents the required contribution that a MaineCare recipient must pay toward care in a Long Term Care Facility (LTCF). The Office for Family Independence (OFI) is responsible for COC assessments for all Medicaid members in the State. COC assessments are either calculated by the Automated Client Eligibility System or calculated manually by eligibility specialists. System-generated COC assessments are not subject to secondary review. A COC deduction represents the amount of assessment that was deducted from a paid claim. Members may have an assessment calculated but may never have a claim with a deduction utilizing that assessment. The Office of MaineCare Services (OMS) is responsible for applying assessments to submitted claims prior to payment. The Office of the State Auditor (OSA) tested 60 COC assessments and related deductions from paid claims. OSA identified: • one COC assessment was not calculated correctly or retroactively adjusted. The COC was higher than it should have been by $10. The assessment was $1,099 and should have been $1,089 for six months during the fiscal year. This member had six claims where the incorrect COC was applied. • one COC deduction was not deducted correctly from the paid claim. The COC deducted was lower than it should have been by $22. The assessment was $1,713 for two months during the fiscal year and the amount that was deducted was $1,691. This member had two claims where the incorrect COC deduction was applied. OSA selected a non-statistical random sample. Context: In fiscal year 2024, approximately: • 18,000 COC assessments were calculated by OFI; • 8,500 members had COC assessments; and • $627 million was paid to LTCFs. Cause: • Lack of supervisory oversight • Lack of adequate procedures to ensure COC assessments are calculated correctly • Lack of adequate procedures to ensure system exception reports are complete and accurate Effect: • Inaccurate COC assessments, deductions, and retroactive changes may result in overpayments or underpayments for members or the State. • Potential questioned costs and disallowances Recommendation: We recommend that: • OFI enhance oversight procedures to ensure that COC assessments are calculated and deducted correctly. • OMS collaborate with OFI to ensure that system exception reports capture all COC-related claims which require adjustments. Corrective Action Plan: See F-28 Management’s Response: The Department partially agrees with this finding. The Department agrees with the two exceptions found by the Office of the State Auditor. However, we believe that the Department has reasonable assurance with the controls in place that results in a 97% compliance with the COC calculations, which has not decreased from previous findings. No corrective action is necessary as a result of an error rate of only 3%. The Department will continue to actively manage and monitor the Cost of Care system in compliance with federal regulations. In response to the first of two errors identified by OSA, OMS will request an update to an existing Cost of Care report supplied by a third-party vendor. Changes to cost of care are contained in the Retroactive Cost of Care Report, however if there is a second determination of cost of care in a month and the result is identical to the first change in the month, neither is included in the report. This is an error in the report logic that must be corrected. A Change Request will be created to modify and correct the report so that the latest change in the month will be reported to be acted on by OMS. Contact: Ian Yaffe, Director, Office for Family Independence, DHHS, 207-592-1481 Auditor’s Concluding Remarks: The Department agrees with the exceptions identified in the Condition. The Department’s disagreement is derived from the three percent sample payment error rate. The Department asserts that the error rate is acceptable and thus, no corrective action is necessary; however, for the two exceptions OSA identified, existing control procedures resulted in inaccurate claim payments. While OSA recognizes that achieving 100 percent accuracy in calculating COC assessments and applying COC deductions would likely not be feasible, the identified control deficiencies indicate that a review of operating procedures and implementation of improvements is necessary. The finding remains as stated. (State Number: 24-1106-05)
(2024-071) Title: Internal control over Medicaid paid medical claims needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office of MaineCare Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403; MaineCare Benefits Manual, Chapter 101, Section 90 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 MaineCare Benefits Manual states that the Medicaid program will reimburse at the lowest applicable rate for covered physician services. Condition: The Department’s Office of MaineCare Services (OMS) is billed by medical providers for services provided to Medicaid members. Provider reimbursement rates for certain medical services increased January 1, 2024; however, providers continued to bill OMS utilizing outdated rates until a retroactive adjustment was processed by OMS in March 2024 for certain medical services reimbursed in January and February. The Office of the State Auditor (OSA) tested 60 paid medical claims and identified one claim that was reimbursed at a higher than authorized rate. As a result, OMS overpaid the provider by $5. To determine the pervasiveness of the error, OSA reviewed all claims for the same medical service paid between January 1 and the March 2024 retroactive adjustment and found 510 claims that were never retroactively adjusted. A total of $3,300 was identified as overpaid to providers. OSA selected a non-statistical random sample. Context: In fiscal year 2024, $2.2 billion was paid to providers for medical claims. Cause: • Lack of supervisory oversight • Lack of adequate procedures to ensure all medical claims are paid correctly Effect: • Inaccurate paid claims resulted in overpayments and may also result in underpayments to providers. • Potential questioned costs and disallowances Recommendation: We recommend that the Department enhance oversight procedures to ensure that authorized provider reimbursement rates are utilized, and any retroactive adjustments are applied to all affected paid claims accurately and completely. This will ensure that Medicaid claims are not overpaid or underpaid to providers. Corrective Action Plan: See F-29 Management’s Response: The Department agrees with this finding. OMS has determined that there is an issue with the manual intervention taken by the third-party vendor to prepare this report. This caused some claims that required adjustment to be excluded from the report. Through discussion with the vendor, OMS has determined that the vendor does not have a standardized procedure to prepare this report for OMS. Maine will require the vendor to prepare a Desk Level Procedure (DLP) for the preparation of this report. This DLP will be reviewed by the State and the report will go through testing and validation, as necessary, before the report is used again. Contact: Michelle Probert, Director, Office of MaineCare Services, DHHS, 207-287-2093 (State Number: 24-1106-06)
(2024-071) Title: Internal control over Medicaid paid medical claims needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office of MaineCare Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403; MaineCare Benefits Manual, Chapter 101, Section 90 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 MaineCare Benefits Manual states that the Medicaid program will reimburse at the lowest applicable rate for covered physician services. Condition: The Department’s Office of MaineCare Services (OMS) is billed by medical providers for services provided to Medicaid members. Provider reimbursement rates for certain medical services increased January 1, 2024; however, providers continued to bill OMS utilizing outdated rates until a retroactive adjustment was processed by OMS in March 2024 for certain medical services reimbursed in January and February. The Office of the State Auditor (OSA) tested 60 paid medical claims and identified one claim that was reimbursed at a higher than authorized rate. As a result, OMS overpaid the provider by $5. To determine the pervasiveness of the error, OSA reviewed all claims for the same medical service paid between January 1 and the March 2024 retroactive adjustment and found 510 claims that were never retroactively adjusted. A total of $3,300 was identified as overpaid to providers. OSA selected a non-statistical random sample. Context: In fiscal year 2024, $2.2 billion was paid to providers for medical claims. Cause: • Lack of supervisory oversight • Lack of adequate procedures to ensure all medical claims are paid correctly Effect: • Inaccurate paid claims resulted in overpayments and may also result in underpayments to providers. • Potential questioned costs and disallowances Recommendation: We recommend that the Department enhance oversight procedures to ensure that authorized provider reimbursement rates are utilized, and any retroactive adjustments are applied to all affected paid claims accurately and completely. This will ensure that Medicaid claims are not overpaid or underpaid to providers. Corrective Action Plan: See F-29 Management’s Response: The Department agrees with this finding. OMS has determined that there is an issue with the manual intervention taken by the third-party vendor to prepare this report. This caused some claims that required adjustment to be excluded from the report. Through discussion with the vendor, OMS has determined that the vendor does not have a standardized procedure to prepare this report for OMS. Maine will require the vendor to prepare a Desk Level Procedure (DLP) for the preparation of this report. This DLP will be reviewed by the State and the report will go through testing and validation, as necessary, before the report is used again. Contact: Michelle Probert, Director, Office of MaineCare Services, DHHS, 207-287-2093 (State Number: 24-1106-06)
(2024-071) Title: Internal control over Medicaid paid medical claims needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office of MaineCare Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403; MaineCare Benefits Manual, Chapter 101, Section 90 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 MaineCare Benefits Manual states that the Medicaid program will reimburse at the lowest applicable rate for covered physician services. Condition: The Department’s Office of MaineCare Services (OMS) is billed by medical providers for services provided to Medicaid members. Provider reimbursement rates for certain medical services increased January 1, 2024; however, providers continued to bill OMS utilizing outdated rates until a retroactive adjustment was processed by OMS in March 2024 for certain medical services reimbursed in January and February. The Office of the State Auditor (OSA) tested 60 paid medical claims and identified one claim that was reimbursed at a higher than authorized rate. As a result, OMS overpaid the provider by $5. To determine the pervasiveness of the error, OSA reviewed all claims for the same medical service paid between January 1 and the March 2024 retroactive adjustment and found 510 claims that were never retroactively adjusted. A total of $3,300 was identified as overpaid to providers. OSA selected a non-statistical random sample. Context: In fiscal year 2024, $2.2 billion was paid to providers for medical claims. Cause: • Lack of supervisory oversight • Lack of adequate procedures to ensure all medical claims are paid correctly Effect: • Inaccurate paid claims resulted in overpayments and may also result in underpayments to providers. • Potential questioned costs and disallowances Recommendation: We recommend that the Department enhance oversight procedures to ensure that authorized provider reimbursement rates are utilized, and any retroactive adjustments are applied to all affected paid claims accurately and completely. This will ensure that Medicaid claims are not overpaid or underpaid to providers. Corrective Action Plan: See F-29 Management’s Response: The Department agrees with this finding. OMS has determined that there is an issue with the manual intervention taken by the third-party vendor to prepare this report. This caused some claims that required adjustment to be excluded from the report. Through discussion with the vendor, OMS has determined that the vendor does not have a standardized procedure to prepare this report for OMS. Maine will require the vendor to prepare a Desk Level Procedure (DLP) for the preparation of this report. This DLP will be reviewed by the State and the report will go through testing and validation, as necessary, before the report is used again. Contact: Michelle Probert, Director, Office of MaineCare Services, DHHS, 207-287-2093 (State Number: 24-1106-06)
(2024-071) Title: Internal control over Medicaid paid medical claims needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office of MaineCare Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403; MaineCare Benefits Manual, Chapter 101, Section 90 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 MaineCare Benefits Manual states that the Medicaid program will reimburse at the lowest applicable rate for covered physician services. Condition: The Department’s Office of MaineCare Services (OMS) is billed by medical providers for services provided to Medicaid members. Provider reimbursement rates for certain medical services increased January 1, 2024; however, providers continued to bill OMS utilizing outdated rates until a retroactive adjustment was processed by OMS in March 2024 for certain medical services reimbursed in January and February. The Office of the State Auditor (OSA) tested 60 paid medical claims and identified one claim that was reimbursed at a higher than authorized rate. As a result, OMS overpaid the provider by $5. To determine the pervasiveness of the error, OSA reviewed all claims for the same medical service paid between January 1 and the March 2024 retroactive adjustment and found 510 claims that were never retroactively adjusted. A total of $3,300 was identified as overpaid to providers. OSA selected a non-statistical random sample. Context: In fiscal year 2024, $2.2 billion was paid to providers for medical claims. Cause: • Lack of supervisory oversight • Lack of adequate procedures to ensure all medical claims are paid correctly Effect: • Inaccurate paid claims resulted in overpayments and may also result in underpayments to providers. • Potential questioned costs and disallowances Recommendation: We recommend that the Department enhance oversight procedures to ensure that authorized provider reimbursement rates are utilized, and any retroactive adjustments are applied to all affected paid claims accurately and completely. This will ensure that Medicaid claims are not overpaid or underpaid to providers. Corrective Action Plan: See F-29 Management’s Response: The Department agrees with this finding. OMS has determined that there is an issue with the manual intervention taken by the third-party vendor to prepare this report. This caused some claims that required adjustment to be excluded from the report. Through discussion with the vendor, OMS has determined that the vendor does not have a standardized procedure to prepare this report for OMS. Maine will require the vendor to prepare a Desk Level Procedure (DLP) for the preparation of this report. This DLP will be reviewed by the State and the report will go through testing and validation, as necessary, before the report is used again. Contact: Michelle Probert, Director, Office of MaineCare Services, DHHS, 207-287-2093 (State Number: 24-1106-06)
Finding 2024-003, Unallowable Expense (Assistance Listing 93.696) Criteria: Per 2 CFR § 200.403, costs charged to a federal award must be necessary, reasonable, and allocable to the program. Assistance Listing Number 93.696, Certified Community Behavioral Health Clinic, requires that costs allocated to the program meet these criteria to ensure compliance with federal regulations. Condition and Context: During our testing of the Agency’s expenses charged to the program, we noted one item out of ten items tested that did not relate to the federal program. Cause: The expense was incorrectly allocated to the program due to misclassification or inadequate review during the allocation process. Internal controls designed to ensure proper expense classification were either insufficient or not effectively implemented, leading to the incorrect charge. Effect: Although the expense was charged to the federal program, it was not allowable under the program’s cost principles, resulting in noncompliance with federal regulations. If not addressed, this could lead to inaccurate financial reporting and potential disallowance of costs. Identification as a Repeat Finding: No. Questioned Costs: None. Recommendation: We recommend that the Agency enhance its internal controls over expense allocation by implementing a more structured review and approval process. This should include enhanced staff training on cost allowability, periodic reconciliations of expenses to program requirements, and management oversight to ensure compliance with federal regulations. Additionally, the Agency should establish clear documentation procedures to verify and support the appropriateness of charges to the program before expenses are recorded.
FINDING 2024-002 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): H027X210084, H173X210104, H173A210104, H027A220084, H027A230084 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 17 ANDERSON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The School Corporation did not have internal controls in place to ensure that the School Corporation complied with the earmarking requirements. The School Corporation did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met and to ensure nonpublic school expenditures were appropriately identified and reported. The Special Education Director allocated a portion of the salaries of the teachers that provided services to nonpublic schools and requested reimbursement based on this calculation. There was no documentation of how the calculation was performed or that a review of that calculation by another individual occurred. 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 The Special Education Director is responsible for reporting and tracking funds spent related to the required proportionate share amounts for each grant. The Special Education Director had a procedure in place to request nonpublic school expenditures related to each grant; however, the procedure was not properly documented to allow examiners to verify amounts reimbursed. Examiners were also not able to confirm a secondary review was in place over this procedure, other than the preparation and review by the Special Education Director. INDIANA STATE BOARD OF ACCOUNTS 18 ANDERSON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As such, the earmarking requirements could not be verified as having been met. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure nonpublic proportionate share funds are appropriately allocated to the member school based on expenses charged directly on behalf of the member school and that the calculated expenditures are reviewed by another individual. Supporting documentation for these expenses should be retained for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-002 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): H027X210084, H173X210104, H173A210104, H027A220084, H027A230084 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 17 ANDERSON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The School Corporation did not have internal controls in place to ensure that the School Corporation complied with the earmarking requirements. The School Corporation did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met and to ensure nonpublic school expenditures were appropriately identified and reported. The Special Education Director allocated a portion of the salaries of the teachers that provided services to nonpublic schools and requested reimbursement based on this calculation. There was no documentation of how the calculation was performed or that a review of that calculation by another individual occurred. 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 The Special Education Director is responsible for reporting and tracking funds spent related to the required proportionate share amounts for each grant. The Special Education Director had a procedure in place to request nonpublic school expenditures related to each grant; however, the procedure was not properly documented to allow examiners to verify amounts reimbursed. Examiners were also not able to confirm a secondary review was in place over this procedure, other than the preparation and review by the Special Education Director. INDIANA STATE BOARD OF ACCOUNTS 18 ANDERSON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As such, the earmarking requirements could not be verified as having been met. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure nonpublic proportionate share funds are appropriately allocated to the member school based on expenses charged directly on behalf of the member school and that the calculated expenditures are reviewed by another individual. Supporting documentation for these expenses should be retained for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-002 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): H027X210084, H173X210104, H173A210104, H027A220084, H027A230084 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 17 ANDERSON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The School Corporation did not have internal controls in place to ensure that the School Corporation complied with the earmarking requirements. The School Corporation did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met and to ensure nonpublic school expenditures were appropriately identified and reported. The Special Education Director allocated a portion of the salaries of the teachers that provided services to nonpublic schools and requested reimbursement based on this calculation. There was no documentation of how the calculation was performed or that a review of that calculation by another individual occurred. 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 The Special Education Director is responsible for reporting and tracking funds spent related to the required proportionate share amounts for each grant. The Special Education Director had a procedure in place to request nonpublic school expenditures related to each grant; however, the procedure was not properly documented to allow examiners to verify amounts reimbursed. Examiners were also not able to confirm a secondary review was in place over this procedure, other than the preparation and review by the Special Education Director. INDIANA STATE BOARD OF ACCOUNTS 18 ANDERSON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As such, the earmarking requirements could not be verified as having been met. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure nonpublic proportionate share funds are appropriately allocated to the member school based on expenses charged directly on behalf of the member school and that the calculated expenditures are reviewed by another individual. Supporting documentation for these expenses should be retained for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-002 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): H027X210084, H173X210104, H173A210104, H027A220084, H027A230084 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 17 ANDERSON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The School Corporation did not have internal controls in place to ensure that the School Corporation complied with the earmarking requirements. The School Corporation did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met and to ensure nonpublic school expenditures were appropriately identified and reported. The Special Education Director allocated a portion of the salaries of the teachers that provided services to nonpublic schools and requested reimbursement based on this calculation. There was no documentation of how the calculation was performed or that a review of that calculation by another individual occurred. 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 The Special Education Director is responsible for reporting and tracking funds spent related to the required proportionate share amounts for each grant. The Special Education Director had a procedure in place to request nonpublic school expenditures related to each grant; however, the procedure was not properly documented to allow examiners to verify amounts reimbursed. Examiners were also not able to confirm a secondary review was in place over this procedure, other than the preparation and review by the Special Education Director. INDIANA STATE BOARD OF ACCOUNTS 18 ANDERSON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As such, the earmarking requirements could not be verified as having been met. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure nonpublic proportionate share funds are appropriately allocated to the member school based on expenses charged directly on behalf of the member school and that the calculated expenditures are reviewed by another individual. Supporting documentation for these expenses should be retained for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-002 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): H027X210084, H173X210104, H173A210104, H027A220084, H027A230084 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 17 ANDERSON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The School Corporation did not have internal controls in place to ensure that the School Corporation complied with the earmarking requirements. The School Corporation did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met and to ensure nonpublic school expenditures were appropriately identified and reported. The Special Education Director allocated a portion of the salaries of the teachers that provided services to nonpublic schools and requested reimbursement based on this calculation. There was no documentation of how the calculation was performed or that a review of that calculation by another individual occurred. 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 The Special Education Director is responsible for reporting and tracking funds spent related to the required proportionate share amounts for each grant. The Special Education Director had a procedure in place to request nonpublic school expenditures related to each grant; however, the procedure was not properly documented to allow examiners to verify amounts reimbursed. Examiners were also not able to confirm a secondary review was in place over this procedure, other than the preparation and review by the Special Education Director. INDIANA STATE BOARD OF ACCOUNTS 18 ANDERSON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As such, the earmarking requirements could not be verified as having been met. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure nonpublic proportionate share funds are appropriately allocated to the member school based on expenses charged directly on behalf of the member school and that the calculated expenditures are reviewed by another individual. Supporting documentation for these expenses should be retained for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-002 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): H027X210084, H173X210104, H173A210104, H027A220084, H027A230084 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 17 ANDERSON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The School Corporation did not have internal controls in place to ensure that the School Corporation complied with the earmarking requirements. The School Corporation did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met and to ensure nonpublic school expenditures were appropriately identified and reported. The Special Education Director allocated a portion of the salaries of the teachers that provided services to nonpublic schools and requested reimbursement based on this calculation. There was no documentation of how the calculation was performed or that a review of that calculation by another individual occurred. 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 The Special Education Director is responsible for reporting and tracking funds spent related to the required proportionate share amounts for each grant. The Special Education Director had a procedure in place to request nonpublic school expenditures related to each grant; however, the procedure was not properly documented to allow examiners to verify amounts reimbursed. Examiners were also not able to confirm a secondary review was in place over this procedure, other than the preparation and review by the Special Education Director. INDIANA STATE BOARD OF ACCOUNTS 18 ANDERSON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As such, the earmarking requirements could not be verified as having been met. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure nonpublic proportionate share funds are appropriately allocated to the member school based on expenses charged directly on behalf of the member school and that the calculated expenditures are reviewed by another individual. Supporting documentation for these expenses should be retained for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-002 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): H027X210084, H173X210104, H173A210104, H027A220084, H027A230084 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 17 ANDERSON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The School Corporation did not have internal controls in place to ensure that the School Corporation complied with the earmarking requirements. The School Corporation did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met and to ensure nonpublic school expenditures were appropriately identified and reported. The Special Education Director allocated a portion of the salaries of the teachers that provided services to nonpublic schools and requested reimbursement based on this calculation. There was no documentation of how the calculation was performed or that a review of that calculation by another individual occurred. 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 The Special Education Director is responsible for reporting and tracking funds spent related to the required proportionate share amounts for each grant. The Special Education Director had a procedure in place to request nonpublic school expenditures related to each grant; however, the procedure was not properly documented to allow examiners to verify amounts reimbursed. Examiners were also not able to confirm a secondary review was in place over this procedure, other than the preparation and review by the Special Education Director. INDIANA STATE BOARD OF ACCOUNTS 18 ANDERSON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As such, the earmarking requirements could not be verified as having been met. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure nonpublic proportionate share funds are appropriately allocated to the member school based on expenses charged directly on behalf of the member school and that the calculated expenditures are reviewed by another individual. Supporting documentation for these expenses should be retained for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-002 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): H027X210084, H173X210104, H173A210104, H027A220084, H027A230084 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 17 ANDERSON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The School Corporation did not have internal controls in place to ensure that the School Corporation complied with the earmarking requirements. The School Corporation did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met and to ensure nonpublic school expenditures were appropriately identified and reported. The Special Education Director allocated a portion of the salaries of the teachers that provided services to nonpublic schools and requested reimbursement based on this calculation. There was no documentation of how the calculation was performed or that a review of that calculation by another individual occurred. 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 The Special Education Director is responsible for reporting and tracking funds spent related to the required proportionate share amounts for each grant. The Special Education Director had a procedure in place to request nonpublic school expenditures related to each grant; however, the procedure was not properly documented to allow examiners to verify amounts reimbursed. Examiners were also not able to confirm a secondary review was in place over this procedure, other than the preparation and review by the Special Education Director. INDIANA STATE BOARD OF ACCOUNTS 18 ANDERSON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As such, the earmarking requirements could not be verified as having been met. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure nonpublic proportionate share funds are appropriately allocated to the member school based on expenses charged directly on behalf of the member school and that the calculated expenditures are reviewed by another individual. Supporting documentation for these expenses should be retained for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Subject: Child Nutrition Cluster – Allowable Costs/Cost Principles Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program AL Numbers: 10.533, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY2023, FY2024 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Qualified Opinion Criteria: 2 CFR 200.403 establishes principles and standards for determining costs for federal awards carried out through grants, cost reimbursement contracts, and other agreements with state and local governments. To be allowable, under federal awards, cost must meet certain criteria: a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period. g) Be adequately documented. h) Cost must be incurred during the approved budget period. Additionally, 2 CFR 200.303 indicates that non-Federal Entities receiving Federal awards must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations and terms and conditions of the Federal award. Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the allowable costs/cost principles compliance requirements. Cause: After June 30, 2024, the School Corporation changed systems used to track time worked for the food service department and is unable to obtain archived records or time sheets to support the hours worked by the food service department personnel. A system of internal controls was not in place to ensure there were appropriate records or audit trails to support time charged to the federal program. Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: There were $19,714 of questioned costs identified. Context: During the testing of internal controls over allowable costs/cost principles, the School Corporation had a system conversion for time entry during the audit period and did not retain copies of the adequate documentation to corroborate the hours worked for food service employees tested. The School Corporation was unable to provide timesheets or records supporting the number of hours charged by each employee for 35 of 35 selections related to hourly employees. Identification as a repeat finding, if applicable: No. Recommendation: We recommend that the School Corporation's management establish an internal control process to ensure that detailed records are maintained and an audit trail is evident to comply with federal compliance requirements. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Subject: Child Nutrition Cluster – Allowable Costs/Cost Principles Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program AL Numbers: 10.533, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY2023, FY2024 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Qualified Opinion Criteria: 2 CFR 200.403 establishes principles and standards for determining costs for federal awards carried out through grants, cost reimbursement contracts, and other agreements with state and local governments. To be allowable, under federal awards, cost must meet certain criteria: a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period. g) Be adequately documented. h) Cost must be incurred during the approved budget period. Additionally, 2 CFR 200.303 indicates that non-Federal Entities receiving Federal awards must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations and terms and conditions of the Federal award. Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the allowable costs/cost principles compliance requirements. Cause: After June 30, 2024, the School Corporation changed systems used to track time worked for the food service department and is unable to obtain archived records or time sheets to support the hours worked by the food service department personnel. A system of internal controls was not in place to ensure there were appropriate records or audit trails to support time charged to the federal program. Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: There were $19,714 of questioned costs identified. Context: During the testing of internal controls over allowable costs/cost principles, the School Corporation had a system conversion for time entry during the audit period and did not retain copies of the adequate documentation to corroborate the hours worked for food service employees tested. The School Corporation was unable to provide timesheets or records supporting the number of hours charged by each employee for 35 of 35 selections related to hourly employees. Identification as a repeat finding, if applicable: No. Recommendation: We recommend that the School Corporation's management establish an internal control process to ensure that detailed records are maintained and an audit trail is evident to comply with federal compliance requirements. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Subject: Child Nutrition Cluster – Allowable Costs/Cost Principles Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program AL Numbers: 10.533, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY2023, FY2024 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Qualified Opinion Criteria: 2 CFR 200.403 establishes principles and standards for determining costs for federal awards carried out through grants, cost reimbursement contracts, and other agreements with state and local governments. To be allowable, under federal awards, cost must meet certain criteria: a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period. g) Be adequately documented. h) Cost must be incurred during the approved budget period. Additionally, 2 CFR 200.303 indicates that non-Federal Entities receiving Federal awards must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations and terms and conditions of the Federal award. Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the allowable costs/cost principles compliance requirements. Cause: After June 30, 2024, the School Corporation changed systems used to track time worked for the food service department and is unable to obtain archived records or time sheets to support the hours worked by the food service department personnel. A system of internal controls was not in place to ensure there were appropriate records or audit trails to support time charged to the federal program. Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: There were $19,714 of questioned costs identified. Context: During the testing of internal controls over allowable costs/cost principles, the School Corporation had a system conversion for time entry during the audit period and did not retain copies of the adequate documentation to corroborate the hours worked for food service employees tested. The School Corporation was unable to provide timesheets or records supporting the number of hours charged by each employee for 35 of 35 selections related to hourly employees. Identification as a repeat finding, if applicable: No. Recommendation: We recommend that the School Corporation's management establish an internal control process to ensure that detailed records are maintained and an audit trail is evident to comply with federal compliance requirements. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Subject: Child Nutrition Cluster – Allowable Costs/Cost Principles Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program AL Numbers: 10.533, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY2023, FY2024 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Qualified Opinion Criteria: 2 CFR 200.403 establishes principles and standards for determining costs for federal awards carried out through grants, cost reimbursement contracts, and other agreements with state and local governments. To be allowable, under federal awards, cost must meet certain criteria: a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period. g) Be adequately documented. h) Cost must be incurred during the approved budget period. Additionally, 2 CFR 200.303 indicates that non-Federal Entities receiving Federal awards must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations and terms and conditions of the Federal award. Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the allowable costs/cost principles compliance requirements. Cause: After June 30, 2024, the School Corporation changed systems used to track time worked for the food service department and is unable to obtain archived records or time sheets to support the hours worked by the food service department personnel. A system of internal controls was not in place to ensure there were appropriate records or audit trails to support time charged to the federal program. Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: There were $19,714 of questioned costs identified. Context: During the testing of internal controls over allowable costs/cost principles, the School Corporation had a system conversion for time entry during the audit period and did not retain copies of the adequate documentation to corroborate the hours worked for food service employees tested. The School Corporation was unable to provide timesheets or records supporting the number of hours charged by each employee for 35 of 35 selections related to hourly employees. Identification as a repeat finding, if applicable: No. Recommendation: We recommend that the School Corporation's management establish an internal control process to ensure that detailed records are maintained and an audit trail is evident to comply with federal compliance requirements. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Federal Agency: U. S. Department of Health and Human Services Federal Program Name: Research and Development Cluster Assistance Listing Number: 93.323, 93.847 Federal Award Identification Number and Year: G231006 (23/24), R01DK108054 (23/24) Pass-Through Agency: WV Department of Health and Human Resources Pass-Through Number(s): G231006 Award Period: July 1, 2023, to June 30, 2024 Type of Finding: Significant Deficiency in Internal Control Over Compliance Other Matters Criteria or specific requirement: A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal awards period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308, 200.309, and 200.403(h)). A period of performance may contain one or more budget periods. Condition: In a sample of transactions that were in the expense detail supporting the total federal expenditures on the Schedule of Expenditures of Federal Awards (SEFA), transactions were identified as being incurred after the end date of the period of availability. Questioned costs: $3,320 Context: In a sample size of twenty-eight expenditure transactions, five were incurred after the end date of the period of availability. Cause: Four of the exceptions were the result of the department administering the grant not submitting a revised internal form to update the funding source. These transactions were not included on the final invoice to the awarding agency but were included in the SEFA. One of the exceptions was the result of clerical entry error. • • Effect: Amounts are included on the SEFA for the fiscal period ended June 30, 2024, that were incurred after the end date of the period of performance. Repeat finding: No. Recommendation: Perform a review policies and procedures regarding proper monitoring of period of performance related to grant end dates. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: U. S. Department of Health and Human Services Federal Program Name: Research and Development Cluster Assistance Listing Number: 93.323, 93.847 Federal Award Identification Number and Year: G231006 (23/24), R01DK108054 (23/24) Pass-Through Agency: WV Department of Health and Human Resources Pass-Through Number(s): G231006 Award Period: July 1, 2023, to June 30, 2024 Type of Finding: Significant Deficiency in Internal Control Over Compliance Other Matters Criteria or specific requirement: A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal awards period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308, 200.309, and 200.403(h)). A period of performance may contain one or more budget periods. Condition: In a sample of transactions that were in the expense detail supporting the total federal expenditures on the Schedule of Expenditures of Federal Awards (SEFA), transactions were identified as being incurred after the end date of the period of availability. Questioned costs: $3,320 Context: In a sample size of twenty-eight expenditure transactions, five were incurred after the end date of the period of availability. Cause: Four of the exceptions were the result of the department administering the grant not submitting a revised internal form to update the funding source. These transactions were not included on the final invoice to the awarding agency but were included in the SEFA. One of the exceptions was the result of clerical entry error. • • Effect: Amounts are included on the SEFA for the fiscal period ended June 30, 2024, that were incurred after the end date of the period of performance. Repeat finding: No. Recommendation: Perform a review policies and procedures regarding proper monitoring of period of performance related to grant end dates. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: U. S. Department of Health and Human Services Federal Program Name: Research and Development Cluster Assistance Listing Number: 93.323, 93.847 Federal Award Identification Number and Year: G231006 (23/24), R01DK108054 (23/24) Pass-Through Agency: WV Department of Health and Human Resources Pass-Through Number(s): G231006 Award Period: July 1, 2023, to June 30, 2024 Type of Finding: Significant Deficiency in Internal Control Over Compliance Other Matters Criteria or specific requirement: A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal awards period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308, 200.309, and 200.403(h)). A period of performance may contain one or more budget periods. Condition: In a sample of transactions that were in the expense detail supporting the total federal expenditures on the Schedule of Expenditures of Federal Awards (SEFA), transactions were identified as being incurred after the end date of the period of availability. Questioned costs: $3,320 Context: In a sample size of twenty-eight expenditure transactions, five were incurred after the end date of the period of availability. Cause: Four of the exceptions were the result of the department administering the grant not submitting a revised internal form to update the funding source. These transactions were not included on the final invoice to the awarding agency but were included in the SEFA. One of the exceptions was the result of clerical entry error. • • Effect: Amounts are included on the SEFA for the fiscal period ended June 30, 2024, that were incurred after the end date of the period of performance. Repeat finding: No. Recommendation: Perform a review policies and procedures regarding proper monitoring of period of performance related to grant end dates. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: U. S. Department of Health and Human Services Federal Program Name: Research and Development Cluster Assistance Listing Number: 93.323, 93.847 Federal Award Identification Number and Year: G231006 (23/24), R01DK108054 (23/24) Pass-Through Agency: WV Department of Health and Human Resources Pass-Through Number(s): G231006 Award Period: July 1, 2023, to June 30, 2024 Type of Finding: Significant Deficiency in Internal Control Over Compliance Other Matters Criteria or specific requirement: A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal awards period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308, 200.309, and 200.403(h)). A period of performance may contain one or more budget periods. Condition: In a sample of transactions that were in the expense detail supporting the total federal expenditures on the Schedule of Expenditures of Federal Awards (SEFA), transactions were identified as being incurred after the end date of the period of availability. Questioned costs: $3,320 Context: In a sample size of twenty-eight expenditure transactions, five were incurred after the end date of the period of availability. Cause: Four of the exceptions were the result of the department administering the grant not submitting a revised internal form to update the funding source. These transactions were not included on the final invoice to the awarding agency but were included in the SEFA. One of the exceptions was the result of clerical entry error. • • Effect: Amounts are included on the SEFA for the fiscal period ended June 30, 2024, that were incurred after the end date of the period of performance. Repeat finding: No. Recommendation: Perform a review policies and procedures regarding proper monitoring of period of performance related to grant end dates. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: U. S. Department of Health and Human Services Federal Program Name: Research and Development Cluster Assistance Listing Number: 93.323, 93.847 Federal Award Identification Number and Year: G231006 (23/24), R01DK108054 (23/24) Pass-Through Agency: WV Department of Health and Human Resources Pass-Through Number(s): G231006 Award Period: July 1, 2023, to June 30, 2024 Type of Finding: Significant Deficiency in Internal Control Over Compliance Other Matters Criteria or specific requirement: A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal awards period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308, 200.309, and 200.403(h)). A period of performance may contain one or more budget periods. Condition: In a sample of transactions that were in the expense detail supporting the total federal expenditures on the Schedule of Expenditures of Federal Awards (SEFA), transactions were identified as being incurred after the end date of the period of availability. Questioned costs: $3,320 Context: In a sample size of twenty-eight expenditure transactions, five were incurred after the end date of the period of availability. Cause: Four of the exceptions were the result of the department administering the grant not submitting a revised internal form to update the funding source. These transactions were not included on the final invoice to the awarding agency but were included in the SEFA. One of the exceptions was the result of clerical entry error. • • Effect: Amounts are included on the SEFA for the fiscal period ended June 30, 2024, that were incurred after the end date of the period of performance. Repeat finding: No. Recommendation: Perform a review policies and procedures regarding proper monitoring of period of performance related to grant end dates. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: U. S. Department of Health and Human Services Federal Program Name: Substance Abuse and Mental Health Services Projects Assistance Listing Number: 93.243 Federal Award Identification Number and Year: H79TI080332 (23/24) Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: July 1, 2023, to June 30, 2024 Type of Finding: Significant Deficiency in Internal Control Over Compliance Other Matters Criteria or specific requirement: A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal awards period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308, 200.309, and 200.403(h)). A period of performance may contain one or more budget periods. Condition: In a sample of transactions that were in the expense detail supporting the total federal expenditures on the Schedule of Expenditures of Federal Awards (SEFA), transactions were identified as being incurred after the end date of the period of availability. Questioned costs: N/A Context: In a sample size of fourteen expenditure transactions, one was incurred after the end date of the period of availability. • • Cause: Transaction was related to a payroll period that began prior to the end date of the period of performance and ended after said date. Effect: Amounts are included on the SEFA for the fiscal period ended June 30, 2024, that were incurred after the end date of the period of performance. Repeat finding: No. Recommendation: Perform a review policies and procedures regarding proper monitoring of period of performance related to grant end dates. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: U. S. Department of Health and Human Services Federal Program Name: Substance Abuse and Mental Health Services Projects Assistance Listing Number: 93.243 Federal Award Identification Number and Year: H79TI080332 (23/24) Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: July 1, 2023, to June 30, 2024 Type of Finding: Significant Deficiency in Internal Control Over Compliance Other Matters Criteria or specific requirement: A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal awards period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308, 200.309, and 200.403(h)). A period of performance may contain one or more budget periods. Condition: In a sample of transactions that were in the expense detail supporting the total federal expenditures on the Schedule of Expenditures of Federal Awards (SEFA), transactions were identified as being incurred after the end date of the period of availability. Questioned costs: N/A Context: In a sample size of fourteen expenditure transactions, one was incurred after the end date of the period of availability. • • Cause: Transaction was related to a payroll period that began prior to the end date of the period of performance and ended after said date. Effect: Amounts are included on the SEFA for the fiscal period ended June 30, 2024, that were incurred after the end date of the period of performance. Repeat finding: No. Recommendation: Perform a review policies and procedures regarding proper monitoring of period of performance related to grant end dates. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: U. S. Department of Health and Human Services Federal Program Name: Substance Abuse and Mental Health Services Projects Assistance Listing Number: 93.243 Federal Award Identification Number and Year: H79TI080332 (23/24) Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: July 1, 2023, to June 30, 2024 Type of Finding: Significant Deficiency in Internal Control Over Compliance Other Matters Criteria or specific requirement: A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal awards period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308, 200.309, and 200.403(h)). A period of performance may contain one or more budget periods. Condition: In a sample of transactions that were in the expense detail supporting the total federal expenditures on the Schedule of Expenditures of Federal Awards (SEFA), transactions were identified as being incurred after the end date of the period of availability. Questioned costs: N/A Context: In a sample size of fourteen expenditure transactions, one was incurred after the end date of the period of availability. • • Cause: Transaction was related to a payroll period that began prior to the end date of the period of performance and ended after said date. Effect: Amounts are included on the SEFA for the fiscal period ended June 30, 2024, that were incurred after the end date of the period of performance. Repeat finding: No. Recommendation: Perform a review policies and procedures regarding proper monitoring of period of performance related to grant end dates. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: U. S. Department of Health and Human Services Federal Program Name: Substance Abuse and Mental Health Services Projects Assistance Listing Number: 93.243 Federal Award Identification Number and Year: H79TI080332 (23/24) Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: July 1, 2023, to June 30, 2024 Type of Finding: Significant Deficiency in Internal Control Over Compliance Other Matters Criteria or specific requirement: A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal awards period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308, 200.309, and 200.403(h)). A period of performance may contain one or more budget periods. Condition: In a sample of transactions that were in the expense detail supporting the total federal expenditures on the Schedule of Expenditures of Federal Awards (SEFA), transactions were identified as being incurred after the end date of the period of availability. Questioned costs: N/A Context: In a sample size of fourteen expenditure transactions, one was incurred after the end date of the period of availability. • • Cause: Transaction was related to a payroll period that began prior to the end date of the period of performance and ended after said date. Effect: Amounts are included on the SEFA for the fiscal period ended June 30, 2024, that were incurred after the end date of the period of performance. Repeat finding: No. Recommendation: Perform a review policies and procedures regarding proper monitoring of period of performance related to grant end dates. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: U. S. Department of Health and Human Services Federal Program Name: Substance Abuse and Mental Health Services Projects Assistance Listing Number: 93.243 Federal Award Identification Number and Year: H79TI080332 (23/24) Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: July 1, 2023, to June 30, 2024 Type of Finding: Significant Deficiency in Internal Control Over Compliance Other Matters Criteria or specific requirement: A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal awards period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308, 200.309, and 200.403(h)). A period of performance may contain one or more budget periods. Condition: In a sample of transactions that were in the expense detail supporting the total federal expenditures on the Schedule of Expenditures of Federal Awards (SEFA), transactions were identified as being incurred after the end date of the period of availability. Questioned costs: N/A Context: In a sample size of fourteen expenditure transactions, one was incurred after the end date of the period of availability. • • Cause: Transaction was related to a payroll period that began prior to the end date of the period of performance and ended after said date. Effect: Amounts are included on the SEFA for the fiscal period ended June 30, 2024, that were incurred after the end date of the period of performance. Repeat finding: No. Recommendation: Perform a review policies and procedures regarding proper monitoring of period of performance related to grant end dates. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: U. S. Department of Health and Human Services Federal Program Name: Research and Development Cluster Assistance Listing Number: 93.323, 93.847 Federal Award Identification Number and Year: G231006 (23/24), R01DK108054 (23/24) Pass-Through Agency: WV Department of Health and Human Resources Pass-Through Number(s): G231006 Award Period: July 1, 2023, to June 30, 2024 Type of Finding: Significant Deficiency in Internal Control Over Compliance Other Matters Criteria or specific requirement: A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal awards period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308, 200.309, and 200.403(h)). A period of performance may contain one or more budget periods. Condition: In a sample of transactions that were in the expense detail supporting the total federal expenditures on the Schedule of Expenditures of Federal Awards (SEFA), transactions were identified as being incurred after the end date of the period of availability. Questioned costs: $3,320 Context: In a sample size of twenty-eight expenditure transactions, five were incurred after the end date of the period of availability. Cause: Four of the exceptions were the result of the department administering the grant not submitting a revised internal form to update the funding source. These transactions were not included on the final invoice to the awarding agency but were included in the SEFA. One of the exceptions was the result of clerical entry error. • • Effect: Amounts are included on the SEFA for the fiscal period ended June 30, 2024, that were incurred after the end date of the period of performance. Repeat finding: No. Recommendation: Perform a review policies and procedures regarding proper monitoring of period of performance related to grant end dates. Views of responsible officials: There is no disagreement with the audit finding.
Information on the federal program: Subject: COVID-19 – Education Stabilization Fund – Activities Allowed or Unallowed/Allowable Costs Federal Agency: Department of Education Federal Program: COVID-19 – Education Stabilization Fund Assistance Listing Number: 84.425C, 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425C200018, S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Finding: Material Weakness, Other Matters Criteria: 2 CFR 200.403 establishes principles and standards for determining costs for federal awards carried out through grants, cost reimbursement contracts, and other agreements with state and local governments. To be allowable, under federal awards, cost must meet certain criteria: a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period. g) Be adequately documented. h) Cost must be incurred during the approved budget period. Additionally, 2 CFR 200.303 indicates that non-Federal Entities receiving Federal awards must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations and terms and conditions of the Federal award. Condition: An effective internal control system was not in place at the School District to ensure compliance with requirements related to the Education Stabilization Fund and Activities Allowed or Unallowed. Cause: The School District's management had not developed a system of internal controls that would have ensured compliance with the Activities Allowed or Unallowed compliance requirement. Effect: The failure to establish an effective internal control system placed the School District at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: $5,651 (Known questioned costs). Context: During the testing of vendor and payroll disbursements charged to Education Stabilization Fund grant awards during the audit period, the following exceptions were noted: Management was unable to provide an approved accounts payable voucher and supporting invoice for one vendor disbursement in a sample of 12 vendor disbursements. For one salaried employee selected out of a sample of 40 payroll disbursements, the employee was charged to Education Stabilization Fund grants for 50% of their time worked in a pay period. The School Corporation did not maintain any time-and-effort logs to support the employee’s partial allocation to Education Stabilization Fund grants. Identification as a repeat finding, if applicable: No. Recommendation: We recommended that the School District maintain supporting documentation for vendor and payroll disbursements to support costs charged to the federal grant awards. For payroll disbursements charged to Federal awards, management should maintain time and effort records to support payroll costs allocated to Education Stabilization Grant funds to verify they are allowable and supported by documentation for work performed under the award. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Information on the federal program: Subject: COVID-19 – Education Stabilization Fund – Activities Allowed or Unallowed/Allowable Costs Federal Agency: Department of Education Federal Program: COVID-19 – Education Stabilization Fund Assistance Listing Number: 84.425C, 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425C200018, S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Finding: Material Weakness, Other Matters Criteria: 2 CFR 200.403 establishes principles and standards for determining costs for federal awards carried out through grants, cost reimbursement contracts, and other agreements with state and local governments. To be allowable, under federal awards, cost must meet certain criteria: a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period. g) Be adequately documented. h) Cost must be incurred during the approved budget period. Additionally, 2 CFR 200.303 indicates that non-Federal Entities receiving Federal awards must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations and terms and conditions of the Federal award. Condition: An effective internal control system was not in place at the School District to ensure compliance with requirements related to the Education Stabilization Fund and Activities Allowed or Unallowed. Cause: The School District's management had not developed a system of internal controls that would have ensured compliance with the Activities Allowed or Unallowed compliance requirement. Effect: The failure to establish an effective internal control system placed the School District at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: $5,651 (Known questioned costs). Context: During the testing of vendor and payroll disbursements charged to Education Stabilization Fund grant awards during the audit period, the following exceptions were noted: Management was unable to provide an approved accounts payable voucher and supporting invoice for one vendor disbursement in a sample of 12 vendor disbursements. For one salaried employee selected out of a sample of 40 payroll disbursements, the employee was charged to Education Stabilization Fund grants for 50% of their time worked in a pay period. The School Corporation did not maintain any time-and-effort logs to support the employee’s partial allocation to Education Stabilization Fund grants. Identification as a repeat finding, if applicable: No. Recommendation: We recommended that the School District maintain supporting documentation for vendor and payroll disbursements to support costs charged to the federal grant awards. For payroll disbursements charged to Federal awards, management should maintain time and effort records to support payroll costs allocated to Education Stabilization Grant funds to verify they are allowable and supported by documentation for work performed under the award. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Information on the federal program: Subject: COVID-19 – Education Stabilization Fund – Activities Allowed or Unallowed/Allowable Costs Federal Agency: Department of Education Federal Program: COVID-19 – Education Stabilization Fund Assistance Listing Number: 84.425C, 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425C200018, S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Finding: Material Weakness, Other Matters Criteria: 2 CFR 200.403 establishes principles and standards for determining costs for federal awards carried out through grants, cost reimbursement contracts, and other agreements with state and local governments. To be allowable, under federal awards, cost must meet certain criteria: a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period. g) Be adequately documented. h) Cost must be incurred during the approved budget period. Additionally, 2 CFR 200.303 indicates that non-Federal Entities receiving Federal awards must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations and terms and conditions of the Federal award. Condition: An effective internal control system was not in place at the School District to ensure compliance with requirements related to the Education Stabilization Fund and Activities Allowed or Unallowed. Cause: The School District's management had not developed a system of internal controls that would have ensured compliance with the Activities Allowed or Unallowed compliance requirement. Effect: The failure to establish an effective internal control system placed the School District at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: $5,651 (Known questioned costs). Context: During the testing of vendor and payroll disbursements charged to Education Stabilization Fund grant awards during the audit period, the following exceptions were noted: Management was unable to provide an approved accounts payable voucher and supporting invoice for one vendor disbursement in a sample of 12 vendor disbursements. For one salaried employee selected out of a sample of 40 payroll disbursements, the employee was charged to Education Stabilization Fund grants for 50% of their time worked in a pay period. The School Corporation did not maintain any time-and-effort logs to support the employee’s partial allocation to Education Stabilization Fund grants. Identification as a repeat finding, if applicable: No. Recommendation: We recommended that the School District maintain supporting documentation for vendor and payroll disbursements to support costs charged to the federal grant awards. For payroll disbursements charged to Federal awards, management should maintain time and effort records to support payroll costs allocated to Education Stabilization Grant funds to verify they are allowable and supported by documentation for work performed under the award. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Information on the federal program: Subject: COVID-19 – Education Stabilization Fund – Activities Allowed or Unallowed/Allowable Costs Federal Agency: Department of Education Federal Program: COVID-19 – Education Stabilization Fund Assistance Listing Number: 84.425C, 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425C200018, S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Finding: Material Weakness, Other Matters Criteria: 2 CFR 200.403 establishes principles and standards for determining costs for federal awards carried out through grants, cost reimbursement contracts, and other agreements with state and local governments. To be allowable, under federal awards, cost must meet certain criteria: a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period. g) Be adequately documented. h) Cost must be incurred during the approved budget period. Additionally, 2 CFR 200.303 indicates that non-Federal Entities receiving Federal awards must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations and terms and conditions of the Federal award. Condition: An effective internal control system was not in place at the School District to ensure compliance with requirements related to the Education Stabilization Fund and Activities Allowed or Unallowed. Cause: The School District's management had not developed a system of internal controls that would have ensured compliance with the Activities Allowed or Unallowed compliance requirement. Effect: The failure to establish an effective internal control system placed the School District at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: $5,651 (Known questioned costs). Context: During the testing of vendor and payroll disbursements charged to Education Stabilization Fund grant awards during the audit period, the following exceptions were noted: Management was unable to provide an approved accounts payable voucher and supporting invoice for one vendor disbursement in a sample of 12 vendor disbursements. For one salaried employee selected out of a sample of 40 payroll disbursements, the employee was charged to Education Stabilization Fund grants for 50% of their time worked in a pay period. The School Corporation did not maintain any time-and-effort logs to support the employee’s partial allocation to Education Stabilization Fund grants. Identification as a repeat finding, if applicable: No. Recommendation: We recommended that the School District maintain supporting documentation for vendor and payroll disbursements to support costs charged to the federal grant awards. For payroll disbursements charged to Federal awards, management should maintain time and effort records to support payroll costs allocated to Education Stabilization Grant funds to verify they are allowable and supported by documentation for work performed under the award. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Information on the federal program: Subject: COVID-19 – Education Stabilization Fund – Activities Allowed or Unallowed/Allowable Costs Federal Agency: Department of Education Federal Program: COVID-19 – Education Stabilization Fund Assistance Listing Number: 84.425C, 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425C200018, S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Finding: Material Weakness, Other Matters Criteria: 2 CFR 200.403 establishes principles and standards for determining costs for federal awards carried out through grants, cost reimbursement contracts, and other agreements with state and local governments. To be allowable, under federal awards, cost must meet certain criteria: a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period. g) Be adequately documented. h) Cost must be incurred during the approved budget period. Additionally, 2 CFR 200.303 indicates that non-Federal Entities receiving Federal awards must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations and terms and conditions of the Federal award. Condition: An effective internal control system was not in place at the School District to ensure compliance with requirements related to the Education Stabilization Fund and Activities Allowed or Unallowed. Cause: The School District's management had not developed a system of internal controls that would have ensured compliance with the Activities Allowed or Unallowed compliance requirement. Effect: The failure to establish an effective internal control system placed the School District at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: $5,651 (Known questioned costs). Context: During the testing of vendor and payroll disbursements charged to Education Stabilization Fund grant awards during the audit period, the following exceptions were noted: Management was unable to provide an approved accounts payable voucher and supporting invoice for one vendor disbursement in a sample of 12 vendor disbursements. For one salaried employee selected out of a sample of 40 payroll disbursements, the employee was charged to Education Stabilization Fund grants for 50% of their time worked in a pay period. The School Corporation did not maintain any time-and-effort logs to support the employee’s partial allocation to Education Stabilization Fund grants. Identification as a repeat finding, if applicable: No. Recommendation: We recommended that the School District maintain supporting documentation for vendor and payroll disbursements to support costs charged to the federal grant awards. For payroll disbursements charged to Federal awards, management should maintain time and effort records to support payroll costs allocated to Education Stabilization Grant funds to verify they are allowable and supported by documentation for work performed under the award. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Finding number: 2024-011 Federal agency: U.S. Department of Education Pass-through agency: Commonwealth Department of Elementary and Secondary Education Program: Student Support and Academic Enrichment Program ALN #: 84.424 Award number: 0309-000548-2024-0035 Award year: September 12, 2023 to September 30, 2025 Finding: Internal Control and Compliance over Period of Performance Prior Year Finding: No Type of Finding: Material Weakness and Material Noncompliance Criteria Period of Performance A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308, 200.309, and 200.403(h). A period of performance may contain one or more budget periods. LEAs and SEAs must obligate funds during the 27 months, extending from July 1 of the fiscal year for which the funds were appropriated through September 30 of the second following fiscal year. This maximum period includes a 15-month period of initial availability plus a 12-month period for carryover. Additionally, 2 CFR 200.303 indicates that non-Federal entities receiving Federal awards must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition During our testing of period of performance associated with those expenditures charged to grant awards which began during fiscal year 2024 and cost transfers, we noted noncompliance for 2 expenditures out of a sample of 4. Per review of the underlying vendor invoices, the service period for these expenditures started prior to the award start date of September 12, 2023.Cause This appears to be due to an insufficient review of invoices to ensure the underlying services performed by vendors are within the grant awards outlined grant period. Effect Insufficient review of vendor invoices increases the risk of costs being charged to a grant award outside its approved budget period. Whether Sampling was Statistically Valid The sample was not intended to be, and was not, a statistically valid sample. Questioned Costs: $1,250,864 Recommendation We recommend that the Boston Public Schools (BPS) re-enforce its policies and procedures to ensure their review of expenditures charged to the award also includes a detailed review of the underlying vendor service period. View of Responsible Officials from the Auditee BPS will take a multi-step approach to ensuring accuracy of spending to the grant award period: 1. Reinforce our existing practice of ensuring that period of service is reflected on Purchase Orders, which it was for the PO’s in question. 2. Working with major suppliers to ensure they understand the grant funded nature of their program and the eligible dates of service, which are outlined on the Purchase Order 3. Review / Update training for our Accounts Payable team on ensuring that the period of service on an invoice matches the period of service on the Purchase Order 4. Review / Update training for our State & Federal Grants, Programs, and Compliance teams to ensure that expenses are reviewed before the end of the grant period to ensure compliance with federal regulations.
2024-001 ACTIVITIES ALLOWED OR UNALLOWED (REPEAT OF PRIOR YEAR FINDING 2023-0001) Federal Program Information: Federal Agency and Program Name Federal Assistance Listing Number U.S. Department of Labor WIOA Cluster 17.258/17.259/17.278 Criteria: 2 CFR 200.303 requires that a 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 and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.403(g) states that costs must “Be adequately documented.” Condition: During our testing of activities allowed or unallowed, for 4 of the 60 nonpayroll items tested, management could not provide adequate support that the charges were properly reviewed and approved prior to payment. Questioned Costs: Unknown Context: Total federal expenditures for the WIOA Cluster were $1,377,447 for the year ended June 30, 2024. Cause: The Board did not demonstrate that proper internal controls are in place and operating effectively to ensure that unallowable charges to the federal program do not occur. Effect: Unallowable payments to the federal program may have occurred due to the lack of effective internal controls in place. Recommendation: We recommend that the Board design and implement controls to ensure that all charges to federal programs are adequately reviewed and approved prior to payment. Views of Responsible Officials: We agree with the finding and will take the necessary corrective actions as noted in the corrective action plan attached.