Finding 2023-067: U.S. Department of Agriculture ALN #10.551 and 10.561, SNAP Cluster Grant #Various U.S. Department of Education ALN #84.126, Rehabilitation Services – Vocational Rehabilitation Grants to States Grant #H126A210038, H126A220038, H126A230038 U.S. Department of Health and Human Services ALN #93.268, Immunization Cooperative Agreements (COVID-19) Grant #Various ALN #93.323, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Grant #Various ALN #93.558, Temporary Assistance for Needy Families (TANF) (COVID-19) Grant #2101MTTANF, 2201MTTANF, 2301MTTANF ALN #93.563, Child Support Services Grant #2101MTCSES, 2201MTCSES, 2301MTCSES, 2101MTCEST, 2201MTCEST, 2301MTCEST ALN #93.566, Refugee and Entrant Assistance State/Replacement Designee Administered Programs Grant #2101MTRCMA, 2201MTRCMA, 2301MTRCMA ALN #93.575 and 93.596, Child Care Development Fund Cluster (CCDF) (COVID-19) Grant #2101MTCCDF, 2201MTCCDD, 2201MTCCDF, 2301MTCCDD, 2301MTCCDF ALN #93.658, Foster Care – Title IV-E (COVID-19) Grant #2101MTFOST, 2201MTFOST, 2301MTFOST ALN #93.659, Adoption Assistance – Title IV-E (COVID-19) Grant #2101MTADPT, 2201MTADPT, 2301MTADPT ALN #93.767, Children’s Health Insurance Program (CHIP) (COVID-19) Grant #2105MT5021, 2205MT5021, 2305MT3002 ALN #93.775, 93.777, 93.778, Medicaid Cluster (COVID-19) Grant #1205MT5ADM, 2205MT5ADM, 2305MT5ADM Criteria: Federal regulation, 2 CFR Appendix VI, in part, requires the state public assistance agency to develop, document, and implement a public assistance cost allocation plan in accordance with federal regulations. This section and federal regulation, 45 CFR 95.509, require the state agency promptly amend the cost allocation plan and submit the amended plan if certain events occur. Federal regulation, 45 CFR 200.416, requires a process for central services costs to be identified and assigned to benefitted activities on a reasonable and consistent basis. Federal regulation, 45 CFR 95.515, specifies the effective date of the cost allocation plan amendment is the first day of the calendar quarter following the date of the event requiring the amendment. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: For the fourth audit in a row, the Department of Public Health and Human Services (department) did not follow its federally approved plan to allocate costs among state and federal programs. Additionally, department internal controls did not prevent these inconsistencies. Questioned Costs: Using the “PACAP Impact Statement” sections of Public Assistance Cost Allocation Plan (PACAP) amendments for 2021, 2022, and 2023, which were submitted between May and November 2023, we estimated likely questioned costs. The following table summarizes questioned costs for major federal programs with material noncompliance or other federal programs where questioned costs are projected to exceed $25,000. See the Schedule of Findings and Questioned Costs for chart/table. Context: For the majority of the period under audit, the cost allocation plan in effect was submitted to the federal government in March 2020 and was effective as of January 1, 2020. The plan amendment for fiscal year 2021 was not submitted until May 2023, and plan amendments for fiscal years 2022 and 2023 were submitted after the end of the period under audit. Costs allocated to state and Federal programs totaled $173,808,149 and $184,493,577 for fiscal years 2022 and 2023, respectively. The table below depicts the total indirect costs allocated to each of the federal programs where we identified material noncompliance or questioned costs required to be reported. See the Schedule of Findings and Questioned Costs for chart/table. The internal control deficiency applies to all federal programs regardless of our identification of material noncompliance or reportable questioned costs. Repeat Finding: Montana’s prior Single Audit reports provided several recommendations to the department regarding its cost allocation plan. The report for the fiscal years ending June 30, 2017, recommended improving internal controls over the cost allocation plan (recommendation #2017-014). The report for the fiscal years ending June 30, 2019, advised the department to review and document all cost pools to ensure they align with the approved plan, obtain federal approval for changes, develop internal controls to detect variances, and allocate costs accordingly (#2019-022). The report for the fiscal years ending June 30, 2021, recommended enhancing internal controls, thoroughly reviewing cost allocation procedures, and obtaining federal approval before implementing changes (#2021-063). Effect: The department has not complied with federal compliance requirements by not following its submitted cost allocation plan. Cause: Since the previous audit, the department contracted with an external entity to review its cost allocation process and assist the department in making changes to cost pools and implementing new tools to facilitate the allocation processes. However, all work to review and modify the cost allocation processes was not completed during the audit period. During the audit period, the department continued implementing changes to cost pools and allocation methodologies outside the approved cost allocation plan. Recommendation: We recommend the Department of Public Health and Human Services: A. Enhance internal controls over cost allocation to ensure compliance with federal regulations. B. Continue and complete its in-depth review of its cost allocation procedures and plan. C. Allocate costs as specified in the cost allocation plan, as required by federal regulations. D. Implement changes to the cost allocation process only after receiving approval from, or submitting a plan revision to, the federal government. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department represented it was unable to comply with federal requirements to only implement changes to the cost allocation process after receiving approval or submitting a plan revision. The department has been in ongoing discussions with the federal government since March 2020 regarding the amendment effective 07/01/2018. This amendment was approved after 5 years on 09/12/2023. The department has implemented a two-year long business process improvement, and amendments are now submitted quarterly. It is the department’s position that the use of the impact statement from the department’s cost allocation plan is not a reasonable method for developing questioned costs as the impact statement includes estimates and does not delineate between actual increases in claiming costs and changes to allocation. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence. Since the department was not following its approved plan, it is our position that all changes captured in the impact statement represent questioned costs as they would not have been allocated in that manner under the approved plan. As such, our recommendation stands.
Finding 2023-067: U.S. Department of Agriculture ALN #10.551 and 10.561, SNAP Cluster Grant #Various U.S. Department of Education ALN #84.126, Rehabilitation Services – Vocational Rehabilitation Grants to States Grant #H126A210038, H126A220038, H126A230038 U.S. Department of Health and Human Services ALN #93.268, Immunization Cooperative Agreements (COVID-19) Grant #Various ALN #93.323, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Grant #Various ALN #93.558, Temporary Assistance for Needy Families (TANF) (COVID-19) Grant #2101MTTANF, 2201MTTANF, 2301MTTANF ALN #93.563, Child Support Services Grant #2101MTCSES, 2201MTCSES, 2301MTCSES, 2101MTCEST, 2201MTCEST, 2301MTCEST ALN #93.566, Refugee and Entrant Assistance State/Replacement Designee Administered Programs Grant #2101MTRCMA, 2201MTRCMA, 2301MTRCMA ALN #93.575 and 93.596, Child Care Development Fund Cluster (CCDF) (COVID-19) Grant #2101MTCCDF, 2201MTCCDD, 2201MTCCDF, 2301MTCCDD, 2301MTCCDF ALN #93.658, Foster Care – Title IV-E (COVID-19) Grant #2101MTFOST, 2201MTFOST, 2301MTFOST ALN #93.659, Adoption Assistance – Title IV-E (COVID-19) Grant #2101MTADPT, 2201MTADPT, 2301MTADPT ALN #93.767, Children’s Health Insurance Program (CHIP) (COVID-19) Grant #2105MT5021, 2205MT5021, 2305MT3002 ALN #93.775, 93.777, 93.778, Medicaid Cluster (COVID-19) Grant #1205MT5ADM, 2205MT5ADM, 2305MT5ADM Criteria: Federal regulation, 2 CFR Appendix VI, in part, requires the state public assistance agency to develop, document, and implement a public assistance cost allocation plan in accordance with federal regulations. This section and federal regulation, 45 CFR 95.509, require the state agency promptly amend the cost allocation plan and submit the amended plan if certain events occur. Federal regulation, 45 CFR 200.416, requires a process for central services costs to be identified and assigned to benefitted activities on a reasonable and consistent basis. Federal regulation, 45 CFR 95.515, specifies the effective date of the cost allocation plan amendment is the first day of the calendar quarter following the date of the event requiring the amendment. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: For the fourth audit in a row, the Department of Public Health and Human Services (department) did not follow its federally approved plan to allocate costs among state and federal programs. Additionally, department internal controls did not prevent these inconsistencies. Questioned Costs: Using the “PACAP Impact Statement” sections of Public Assistance Cost Allocation Plan (PACAP) amendments for 2021, 2022, and 2023, which were submitted between May and November 2023, we estimated likely questioned costs. The following table summarizes questioned costs for major federal programs with material noncompliance or other federal programs where questioned costs are projected to exceed $25,000. See the Schedule of Findings and Questioned Costs for chart/table. Context: For the majority of the period under audit, the cost allocation plan in effect was submitted to the federal government in March 2020 and was effective as of January 1, 2020. The plan amendment for fiscal year 2021 was not submitted until May 2023, and plan amendments for fiscal years 2022 and 2023 were submitted after the end of the period under audit. Costs allocated to state and Federal programs totaled $173,808,149 and $184,493,577 for fiscal years 2022 and 2023, respectively. The table below depicts the total indirect costs allocated to each of the federal programs where we identified material noncompliance or questioned costs required to be reported. See the Schedule of Findings and Questioned Costs for chart/table. The internal control deficiency applies to all federal programs regardless of our identification of material noncompliance or reportable questioned costs. Repeat Finding: Montana’s prior Single Audit reports provided several recommendations to the department regarding its cost allocation plan. The report for the fiscal years ending June 30, 2017, recommended improving internal controls over the cost allocation plan (recommendation #2017-014). The report for the fiscal years ending June 30, 2019, advised the department to review and document all cost pools to ensure they align with the approved plan, obtain federal approval for changes, develop internal controls to detect variances, and allocate costs accordingly (#2019-022). The report for the fiscal years ending June 30, 2021, recommended enhancing internal controls, thoroughly reviewing cost allocation procedures, and obtaining federal approval before implementing changes (#2021-063). Effect: The department has not complied with federal compliance requirements by not following its submitted cost allocation plan. Cause: Since the previous audit, the department contracted with an external entity to review its cost allocation process and assist the department in making changes to cost pools and implementing new tools to facilitate the allocation processes. However, all work to review and modify the cost allocation processes was not completed during the audit period. During the audit period, the department continued implementing changes to cost pools and allocation methodologies outside the approved cost allocation plan. Recommendation: We recommend the Department of Public Health and Human Services: A. Enhance internal controls over cost allocation to ensure compliance with federal regulations. B. Continue and complete its in-depth review of its cost allocation procedures and plan. C. Allocate costs as specified in the cost allocation plan, as required by federal regulations. D. Implement changes to the cost allocation process only after receiving approval from, or submitting a plan revision to, the federal government. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department represented it was unable to comply with federal requirements to only implement changes to the cost allocation process after receiving approval or submitting a plan revision. The department has been in ongoing discussions with the federal government since March 2020 regarding the amendment effective 07/01/2018. This amendment was approved after 5 years on 09/12/2023. The department has implemented a two-year long business process improvement, and amendments are now submitted quarterly. It is the department’s position that the use of the impact statement from the department’s cost allocation plan is not a reasonable method for developing questioned costs as the impact statement includes estimates and does not delineate between actual increases in claiming costs and changes to allocation. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence. Since the department was not following its approved plan, it is our position that all changes captured in the impact statement represent questioned costs as they would not have been allocated in that manner under the approved plan. As such, our recommendation stands.
Finding 2023-067: U.S. Department of Agriculture ALN #10.551 and 10.561, SNAP Cluster Grant #Various U.S. Department of Education ALN #84.126, Rehabilitation Services – Vocational Rehabilitation Grants to States Grant #H126A210038, H126A220038, H126A230038 U.S. Department of Health and Human Services ALN #93.268, Immunization Cooperative Agreements (COVID-19) Grant #Various ALN #93.323, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Grant #Various ALN #93.558, Temporary Assistance for Needy Families (TANF) (COVID-19) Grant #2101MTTANF, 2201MTTANF, 2301MTTANF ALN #93.563, Child Support Services Grant #2101MTCSES, 2201MTCSES, 2301MTCSES, 2101MTCEST, 2201MTCEST, 2301MTCEST ALN #93.566, Refugee and Entrant Assistance State/Replacement Designee Administered Programs Grant #2101MTRCMA, 2201MTRCMA, 2301MTRCMA ALN #93.575 and 93.596, Child Care Development Fund Cluster (CCDF) (COVID-19) Grant #2101MTCCDF, 2201MTCCDD, 2201MTCCDF, 2301MTCCDD, 2301MTCCDF ALN #93.658, Foster Care – Title IV-E (COVID-19) Grant #2101MTFOST, 2201MTFOST, 2301MTFOST ALN #93.659, Adoption Assistance – Title IV-E (COVID-19) Grant #2101MTADPT, 2201MTADPT, 2301MTADPT ALN #93.767, Children’s Health Insurance Program (CHIP) (COVID-19) Grant #2105MT5021, 2205MT5021, 2305MT3002 ALN #93.775, 93.777, 93.778, Medicaid Cluster (COVID-19) Grant #1205MT5ADM, 2205MT5ADM, 2305MT5ADM Criteria: Federal regulation, 2 CFR Appendix VI, in part, requires the state public assistance agency to develop, document, and implement a public assistance cost allocation plan in accordance with federal regulations. This section and federal regulation, 45 CFR 95.509, require the state agency promptly amend the cost allocation plan and submit the amended plan if certain events occur. Federal regulation, 45 CFR 200.416, requires a process for central services costs to be identified and assigned to benefitted activities on a reasonable and consistent basis. Federal regulation, 45 CFR 95.515, specifies the effective date of the cost allocation plan amendment is the first day of the calendar quarter following the date of the event requiring the amendment. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: For the fourth audit in a row, the Department of Public Health and Human Services (department) did not follow its federally approved plan to allocate costs among state and federal programs. Additionally, department internal controls did not prevent these inconsistencies. Questioned Costs: Using the “PACAP Impact Statement” sections of Public Assistance Cost Allocation Plan (PACAP) amendments for 2021, 2022, and 2023, which were submitted between May and November 2023, we estimated likely questioned costs. The following table summarizes questioned costs for major federal programs with material noncompliance or other federal programs where questioned costs are projected to exceed $25,000. See the Schedule of Findings and Questioned Costs for chart/table. Context: For the majority of the period under audit, the cost allocation plan in effect was submitted to the federal government in March 2020 and was effective as of January 1, 2020. The plan amendment for fiscal year 2021 was not submitted until May 2023, and plan amendments for fiscal years 2022 and 2023 were submitted after the end of the period under audit. Costs allocated to state and Federal programs totaled $173,808,149 and $184,493,577 for fiscal years 2022 and 2023, respectively. The table below depicts the total indirect costs allocated to each of the federal programs where we identified material noncompliance or questioned costs required to be reported. See the Schedule of Findings and Questioned Costs for chart/table. The internal control deficiency applies to all federal programs regardless of our identification of material noncompliance or reportable questioned costs. Repeat Finding: Montana’s prior Single Audit reports provided several recommendations to the department regarding its cost allocation plan. The report for the fiscal years ending June 30, 2017, recommended improving internal controls over the cost allocation plan (recommendation #2017-014). The report for the fiscal years ending June 30, 2019, advised the department to review and document all cost pools to ensure they align with the approved plan, obtain federal approval for changes, develop internal controls to detect variances, and allocate costs accordingly (#2019-022). The report for the fiscal years ending June 30, 2021, recommended enhancing internal controls, thoroughly reviewing cost allocation procedures, and obtaining federal approval before implementing changes (#2021-063). Effect: The department has not complied with federal compliance requirements by not following its submitted cost allocation plan. Cause: Since the previous audit, the department contracted with an external entity to review its cost allocation process and assist the department in making changes to cost pools and implementing new tools to facilitate the allocation processes. However, all work to review and modify the cost allocation processes was not completed during the audit period. During the audit period, the department continued implementing changes to cost pools and allocation methodologies outside the approved cost allocation plan. Recommendation: We recommend the Department of Public Health and Human Services: A. Enhance internal controls over cost allocation to ensure compliance with federal regulations. B. Continue and complete its in-depth review of its cost allocation procedures and plan. C. Allocate costs as specified in the cost allocation plan, as required by federal regulations. D. Implement changes to the cost allocation process only after receiving approval from, or submitting a plan revision to, the federal government. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department represented it was unable to comply with federal requirements to only implement changes to the cost allocation process after receiving approval or submitting a plan revision. The department has been in ongoing discussions with the federal government since March 2020 regarding the amendment effective 07/01/2018. This amendment was approved after 5 years on 09/12/2023. The department has implemented a two-year long business process improvement, and amendments are now submitted quarterly. It is the department’s position that the use of the impact statement from the department’s cost allocation plan is not a reasonable method for developing questioned costs as the impact statement includes estimates and does not delineate between actual increases in claiming costs and changes to allocation. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence. Since the department was not following its approved plan, it is our position that all changes captured in the impact statement represent questioned costs as they would not have been allocated in that manner under the approved plan. As such, our recommendation stands.
Finding 2023-067: U.S. Department of Agriculture ALN #10.551 and 10.561, SNAP Cluster Grant #Various U.S. Department of Education ALN #84.126, Rehabilitation Services – Vocational Rehabilitation Grants to States Grant #H126A210038, H126A220038, H126A230038 U.S. Department of Health and Human Services ALN #93.268, Immunization Cooperative Agreements (COVID-19) Grant #Various ALN #93.323, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Grant #Various ALN #93.558, Temporary Assistance for Needy Families (TANF) (COVID-19) Grant #2101MTTANF, 2201MTTANF, 2301MTTANF ALN #93.563, Child Support Services Grant #2101MTCSES, 2201MTCSES, 2301MTCSES, 2101MTCEST, 2201MTCEST, 2301MTCEST ALN #93.566, Refugee and Entrant Assistance State/Replacement Designee Administered Programs Grant #2101MTRCMA, 2201MTRCMA, 2301MTRCMA ALN #93.575 and 93.596, Child Care Development Fund Cluster (CCDF) (COVID-19) Grant #2101MTCCDF, 2201MTCCDD, 2201MTCCDF, 2301MTCCDD, 2301MTCCDF ALN #93.658, Foster Care – Title IV-E (COVID-19) Grant #2101MTFOST, 2201MTFOST, 2301MTFOST ALN #93.659, Adoption Assistance – Title IV-E (COVID-19) Grant #2101MTADPT, 2201MTADPT, 2301MTADPT ALN #93.767, Children’s Health Insurance Program (CHIP) (COVID-19) Grant #2105MT5021, 2205MT5021, 2305MT3002 ALN #93.775, 93.777, 93.778, Medicaid Cluster (COVID-19) Grant #1205MT5ADM, 2205MT5ADM, 2305MT5ADM Criteria: Federal regulation, 2 CFR Appendix VI, in part, requires the state public assistance agency to develop, document, and implement a public assistance cost allocation plan in accordance with federal regulations. This section and federal regulation, 45 CFR 95.509, require the state agency promptly amend the cost allocation plan and submit the amended plan if certain events occur. Federal regulation, 45 CFR 200.416, requires a process for central services costs to be identified and assigned to benefitted activities on a reasonable and consistent basis. Federal regulation, 45 CFR 95.515, specifies the effective date of the cost allocation plan amendment is the first day of the calendar quarter following the date of the event requiring the amendment. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: For the fourth audit in a row, the Department of Public Health and Human Services (department) did not follow its federally approved plan to allocate costs among state and federal programs. Additionally, department internal controls did not prevent these inconsistencies. Questioned Costs: Using the “PACAP Impact Statement” sections of Public Assistance Cost Allocation Plan (PACAP) amendments for 2021, 2022, and 2023, which were submitted between May and November 2023, we estimated likely questioned costs. The following table summarizes questioned costs for major federal programs with material noncompliance or other federal programs where questioned costs are projected to exceed $25,000. See the Schedule of Findings and Questioned Costs for chart/table. Context: For the majority of the period under audit, the cost allocation plan in effect was submitted to the federal government in March 2020 and was effective as of January 1, 2020. The plan amendment for fiscal year 2021 was not submitted until May 2023, and plan amendments for fiscal years 2022 and 2023 were submitted after the end of the period under audit. Costs allocated to state and Federal programs totaled $173,808,149 and $184,493,577 for fiscal years 2022 and 2023, respectively. The table below depicts the total indirect costs allocated to each of the federal programs where we identified material noncompliance or questioned costs required to be reported. See the Schedule of Findings and Questioned Costs for chart/table. The internal control deficiency applies to all federal programs regardless of our identification of material noncompliance or reportable questioned costs. Repeat Finding: Montana’s prior Single Audit reports provided several recommendations to the department regarding its cost allocation plan. The report for the fiscal years ending June 30, 2017, recommended improving internal controls over the cost allocation plan (recommendation #2017-014). The report for the fiscal years ending June 30, 2019, advised the department to review and document all cost pools to ensure they align with the approved plan, obtain federal approval for changes, develop internal controls to detect variances, and allocate costs accordingly (#2019-022). The report for the fiscal years ending June 30, 2021, recommended enhancing internal controls, thoroughly reviewing cost allocation procedures, and obtaining federal approval before implementing changes (#2021-063). Effect: The department has not complied with federal compliance requirements by not following its submitted cost allocation plan. Cause: Since the previous audit, the department contracted with an external entity to review its cost allocation process and assist the department in making changes to cost pools and implementing new tools to facilitate the allocation processes. However, all work to review and modify the cost allocation processes was not completed during the audit period. During the audit period, the department continued implementing changes to cost pools and allocation methodologies outside the approved cost allocation plan. Recommendation: We recommend the Department of Public Health and Human Services: A. Enhance internal controls over cost allocation to ensure compliance with federal regulations. B. Continue and complete its in-depth review of its cost allocation procedures and plan. C. Allocate costs as specified in the cost allocation plan, as required by federal regulations. D. Implement changes to the cost allocation process only after receiving approval from, or submitting a plan revision to, the federal government. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department represented it was unable to comply with federal requirements to only implement changes to the cost allocation process after receiving approval or submitting a plan revision. The department has been in ongoing discussions with the federal government since March 2020 regarding the amendment effective 07/01/2018. This amendment was approved after 5 years on 09/12/2023. The department has implemented a two-year long business process improvement, and amendments are now submitted quarterly. It is the department’s position that the use of the impact statement from the department’s cost allocation plan is not a reasonable method for developing questioned costs as the impact statement includes estimates and does not delineate between actual increases in claiming costs and changes to allocation. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence. Since the department was not following its approved plan, it is our position that all changes captured in the impact statement represent questioned costs as they would not have been allocated in that manner under the approved plan. As such, our recommendation stands.
Finding 2023-067: U.S. Department of Agriculture ALN #10.551 and 10.561, SNAP Cluster Grant #Various U.S. Department of Education ALN #84.126, Rehabilitation Services – Vocational Rehabilitation Grants to States Grant #H126A210038, H126A220038, H126A230038 U.S. Department of Health and Human Services ALN #93.268, Immunization Cooperative Agreements (COVID-19) Grant #Various ALN #93.323, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Grant #Various ALN #93.558, Temporary Assistance for Needy Families (TANF) (COVID-19) Grant #2101MTTANF, 2201MTTANF, 2301MTTANF ALN #93.563, Child Support Services Grant #2101MTCSES, 2201MTCSES, 2301MTCSES, 2101MTCEST, 2201MTCEST, 2301MTCEST ALN #93.566, Refugee and Entrant Assistance State/Replacement Designee Administered Programs Grant #2101MTRCMA, 2201MTRCMA, 2301MTRCMA ALN #93.575 and 93.596, Child Care Development Fund Cluster (CCDF) (COVID-19) Grant #2101MTCCDF, 2201MTCCDD, 2201MTCCDF, 2301MTCCDD, 2301MTCCDF ALN #93.658, Foster Care – Title IV-E (COVID-19) Grant #2101MTFOST, 2201MTFOST, 2301MTFOST ALN #93.659, Adoption Assistance – Title IV-E (COVID-19) Grant #2101MTADPT, 2201MTADPT, 2301MTADPT ALN #93.767, Children’s Health Insurance Program (CHIP) (COVID-19) Grant #2105MT5021, 2205MT5021, 2305MT3002 ALN #93.775, 93.777, 93.778, Medicaid Cluster (COVID-19) Grant #1205MT5ADM, 2205MT5ADM, 2305MT5ADM Criteria: Federal regulation, 2 CFR Appendix VI, in part, requires the state public assistance agency to develop, document, and implement a public assistance cost allocation plan in accordance with federal regulations. This section and federal regulation, 45 CFR 95.509, require the state agency promptly amend the cost allocation plan and submit the amended plan if certain events occur. Federal regulation, 45 CFR 200.416, requires a process for central services costs to be identified and assigned to benefitted activities on a reasonable and consistent basis. Federal regulation, 45 CFR 95.515, specifies the effective date of the cost allocation plan amendment is the first day of the calendar quarter following the date of the event requiring the amendment. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: For the fourth audit in a row, the Department of Public Health and Human Services (department) did not follow its federally approved plan to allocate costs among state and federal programs. Additionally, department internal controls did not prevent these inconsistencies. Questioned Costs: Using the “PACAP Impact Statement” sections of Public Assistance Cost Allocation Plan (PACAP) amendments for 2021, 2022, and 2023, which were submitted between May and November 2023, we estimated likely questioned costs. The following table summarizes questioned costs for major federal programs with material noncompliance or other federal programs where questioned costs are projected to exceed $25,000. See the Schedule of Findings and Questioned Costs for chart/table. Context: For the majority of the period under audit, the cost allocation plan in effect was submitted to the federal government in March 2020 and was effective as of January 1, 2020. The plan amendment for fiscal year 2021 was not submitted until May 2023, and plan amendments for fiscal years 2022 and 2023 were submitted after the end of the period under audit. Costs allocated to state and Federal programs totaled $173,808,149 and $184,493,577 for fiscal years 2022 and 2023, respectively. The table below depicts the total indirect costs allocated to each of the federal programs where we identified material noncompliance or questioned costs required to be reported. See the Schedule of Findings and Questioned Costs for chart/table. The internal control deficiency applies to all federal programs regardless of our identification of material noncompliance or reportable questioned costs. Repeat Finding: Montana’s prior Single Audit reports provided several recommendations to the department regarding its cost allocation plan. The report for the fiscal years ending June 30, 2017, recommended improving internal controls over the cost allocation plan (recommendation #2017-014). The report for the fiscal years ending June 30, 2019, advised the department to review and document all cost pools to ensure they align with the approved plan, obtain federal approval for changes, develop internal controls to detect variances, and allocate costs accordingly (#2019-022). The report for the fiscal years ending June 30, 2021, recommended enhancing internal controls, thoroughly reviewing cost allocation procedures, and obtaining federal approval before implementing changes (#2021-063). Effect: The department has not complied with federal compliance requirements by not following its submitted cost allocation plan. Cause: Since the previous audit, the department contracted with an external entity to review its cost allocation process and assist the department in making changes to cost pools and implementing new tools to facilitate the allocation processes. However, all work to review and modify the cost allocation processes was not completed during the audit period. During the audit period, the department continued implementing changes to cost pools and allocation methodologies outside the approved cost allocation plan. Recommendation: We recommend the Department of Public Health and Human Services: A. Enhance internal controls over cost allocation to ensure compliance with federal regulations. B. Continue and complete its in-depth review of its cost allocation procedures and plan. C. Allocate costs as specified in the cost allocation plan, as required by federal regulations. D. Implement changes to the cost allocation process only after receiving approval from, or submitting a plan revision to, the federal government. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department represented it was unable to comply with federal requirements to only implement changes to the cost allocation process after receiving approval or submitting a plan revision. The department has been in ongoing discussions with the federal government since March 2020 regarding the amendment effective 07/01/2018. This amendment was approved after 5 years on 09/12/2023. The department has implemented a two-year long business process improvement, and amendments are now submitted quarterly. It is the department’s position that the use of the impact statement from the department’s cost allocation plan is not a reasonable method for developing questioned costs as the impact statement includes estimates and does not delineate between actual increases in claiming costs and changes to allocation. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence. Since the department was not following its approved plan, it is our position that all changes captured in the impact statement represent questioned costs as they would not have been allocated in that manner under the approved plan. As such, our recommendation stands.
Finding 2023-067: U.S. Department of Agriculture ALN #10.551 and 10.561, SNAP Cluster Grant #Various U.S. Department of Education ALN #84.126, Rehabilitation Services – Vocational Rehabilitation Grants to States Grant #H126A210038, H126A220038, H126A230038 U.S. Department of Health and Human Services ALN #93.268, Immunization Cooperative Agreements (COVID-19) Grant #Various ALN #93.323, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Grant #Various ALN #93.558, Temporary Assistance for Needy Families (TANF) (COVID-19) Grant #2101MTTANF, 2201MTTANF, 2301MTTANF ALN #93.563, Child Support Services Grant #2101MTCSES, 2201MTCSES, 2301MTCSES, 2101MTCEST, 2201MTCEST, 2301MTCEST ALN #93.566, Refugee and Entrant Assistance State/Replacement Designee Administered Programs Grant #2101MTRCMA, 2201MTRCMA, 2301MTRCMA ALN #93.575 and 93.596, Child Care Development Fund Cluster (CCDF) (COVID-19) Grant #2101MTCCDF, 2201MTCCDD, 2201MTCCDF, 2301MTCCDD, 2301MTCCDF ALN #93.658, Foster Care – Title IV-E (COVID-19) Grant #2101MTFOST, 2201MTFOST, 2301MTFOST ALN #93.659, Adoption Assistance – Title IV-E (COVID-19) Grant #2101MTADPT, 2201MTADPT, 2301MTADPT ALN #93.767, Children’s Health Insurance Program (CHIP) (COVID-19) Grant #2105MT5021, 2205MT5021, 2305MT3002 ALN #93.775, 93.777, 93.778, Medicaid Cluster (COVID-19) Grant #1205MT5ADM, 2205MT5ADM, 2305MT5ADM Criteria: Federal regulation, 2 CFR Appendix VI, in part, requires the state public assistance agency to develop, document, and implement a public assistance cost allocation plan in accordance with federal regulations. This section and federal regulation, 45 CFR 95.509, require the state agency promptly amend the cost allocation plan and submit the amended plan if certain events occur. Federal regulation, 45 CFR 200.416, requires a process for central services costs to be identified and assigned to benefitted activities on a reasonable and consistent basis. Federal regulation, 45 CFR 95.515, specifies the effective date of the cost allocation plan amendment is the first day of the calendar quarter following the date of the event requiring the amendment. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: For the fourth audit in a row, the Department of Public Health and Human Services (department) did not follow its federally approved plan to allocate costs among state and federal programs. Additionally, department internal controls did not prevent these inconsistencies. Questioned Costs: Using the “PACAP Impact Statement” sections of Public Assistance Cost Allocation Plan (PACAP) amendments for 2021, 2022, and 2023, which were submitted between May and November 2023, we estimated likely questioned costs. The following table summarizes questioned costs for major federal programs with material noncompliance or other federal programs where questioned costs are projected to exceed $25,000. See the Schedule of Findings and Questioned Costs for chart/table. Context: For the majority of the period under audit, the cost allocation plan in effect was submitted to the federal government in March 2020 and was effective as of January 1, 2020. The plan amendment for fiscal year 2021 was not submitted until May 2023, and plan amendments for fiscal years 2022 and 2023 were submitted after the end of the period under audit. Costs allocated to state and Federal programs totaled $173,808,149 and $184,493,577 for fiscal years 2022 and 2023, respectively. The table below depicts the total indirect costs allocated to each of the federal programs where we identified material noncompliance or questioned costs required to be reported. See the Schedule of Findings and Questioned Costs for chart/table. The internal control deficiency applies to all federal programs regardless of our identification of material noncompliance or reportable questioned costs. Repeat Finding: Montana’s prior Single Audit reports provided several recommendations to the department regarding its cost allocation plan. The report for the fiscal years ending June 30, 2017, recommended improving internal controls over the cost allocation plan (recommendation #2017-014). The report for the fiscal years ending June 30, 2019, advised the department to review and document all cost pools to ensure they align with the approved plan, obtain federal approval for changes, develop internal controls to detect variances, and allocate costs accordingly (#2019-022). The report for the fiscal years ending June 30, 2021, recommended enhancing internal controls, thoroughly reviewing cost allocation procedures, and obtaining federal approval before implementing changes (#2021-063). Effect: The department has not complied with federal compliance requirements by not following its submitted cost allocation plan. Cause: Since the previous audit, the department contracted with an external entity to review its cost allocation process and assist the department in making changes to cost pools and implementing new tools to facilitate the allocation processes. However, all work to review and modify the cost allocation processes was not completed during the audit period. During the audit period, the department continued implementing changes to cost pools and allocation methodologies outside the approved cost allocation plan. Recommendation: We recommend the Department of Public Health and Human Services: A. Enhance internal controls over cost allocation to ensure compliance with federal regulations. B. Continue and complete its in-depth review of its cost allocation procedures and plan. C. Allocate costs as specified in the cost allocation plan, as required by federal regulations. D. Implement changes to the cost allocation process only after receiving approval from, or submitting a plan revision to, the federal government. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department represented it was unable to comply with federal requirements to only implement changes to the cost allocation process after receiving approval or submitting a plan revision. The department has been in ongoing discussions with the federal government since March 2020 regarding the amendment effective 07/01/2018. This amendment was approved after 5 years on 09/12/2023. The department has implemented a two-year long business process improvement, and amendments are now submitted quarterly. It is the department’s position that the use of the impact statement from the department’s cost allocation plan is not a reasonable method for developing questioned costs as the impact statement includes estimates and does not delineate between actual increases in claiming costs and changes to allocation. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence. Since the department was not following its approved plan, it is our position that all changes captured in the impact statement represent questioned costs as they would not have been allocated in that manner under the approved plan. As such, our recommendation stands.
Finding 2023-067: U.S. Department of Agriculture ALN #10.551 and 10.561, SNAP Cluster Grant #Various U.S. Department of Education ALN #84.126, Rehabilitation Services – Vocational Rehabilitation Grants to States Grant #H126A210038, H126A220038, H126A230038 U.S. Department of Health and Human Services ALN #93.268, Immunization Cooperative Agreements (COVID-19) Grant #Various ALN #93.323, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Grant #Various ALN #93.558, Temporary Assistance for Needy Families (TANF) (COVID-19) Grant #2101MTTANF, 2201MTTANF, 2301MTTANF ALN #93.563, Child Support Services Grant #2101MTCSES, 2201MTCSES, 2301MTCSES, 2101MTCEST, 2201MTCEST, 2301MTCEST ALN #93.566, Refugee and Entrant Assistance State/Replacement Designee Administered Programs Grant #2101MTRCMA, 2201MTRCMA, 2301MTRCMA ALN #93.575 and 93.596, Child Care Development Fund Cluster (CCDF) (COVID-19) Grant #2101MTCCDF, 2201MTCCDD, 2201MTCCDF, 2301MTCCDD, 2301MTCCDF ALN #93.658, Foster Care – Title IV-E (COVID-19) Grant #2101MTFOST, 2201MTFOST, 2301MTFOST ALN #93.659, Adoption Assistance – Title IV-E (COVID-19) Grant #2101MTADPT, 2201MTADPT, 2301MTADPT ALN #93.767, Children’s Health Insurance Program (CHIP) (COVID-19) Grant #2105MT5021, 2205MT5021, 2305MT3002 ALN #93.775, 93.777, 93.778, Medicaid Cluster (COVID-19) Grant #1205MT5ADM, 2205MT5ADM, 2305MT5ADM Criteria: Federal regulation, 2 CFR Appendix VI, in part, requires the state public assistance agency to develop, document, and implement a public assistance cost allocation plan in accordance with federal regulations. This section and federal regulation, 45 CFR 95.509, require the state agency promptly amend the cost allocation plan and submit the amended plan if certain events occur. Federal regulation, 45 CFR 200.416, requires a process for central services costs to be identified and assigned to benefitted activities on a reasonable and consistent basis. Federal regulation, 45 CFR 95.515, specifies the effective date of the cost allocation plan amendment is the first day of the calendar quarter following the date of the event requiring the amendment. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: For the fourth audit in a row, the Department of Public Health and Human Services (department) did not follow its federally approved plan to allocate costs among state and federal programs. Additionally, department internal controls did not prevent these inconsistencies. Questioned Costs: Using the “PACAP Impact Statement” sections of Public Assistance Cost Allocation Plan (PACAP) amendments for 2021, 2022, and 2023, which were submitted between May and November 2023, we estimated likely questioned costs. The following table summarizes questioned costs for major federal programs with material noncompliance or other federal programs where questioned costs are projected to exceed $25,000. See the Schedule of Findings and Questioned Costs for chart/table. Context: For the majority of the period under audit, the cost allocation plan in effect was submitted to the federal government in March 2020 and was effective as of January 1, 2020. The plan amendment for fiscal year 2021 was not submitted until May 2023, and plan amendments for fiscal years 2022 and 2023 were submitted after the end of the period under audit. Costs allocated to state and Federal programs totaled $173,808,149 and $184,493,577 for fiscal years 2022 and 2023, respectively. The table below depicts the total indirect costs allocated to each of the federal programs where we identified material noncompliance or questioned costs required to be reported. See the Schedule of Findings and Questioned Costs for chart/table. The internal control deficiency applies to all federal programs regardless of our identification of material noncompliance or reportable questioned costs. Repeat Finding: Montana’s prior Single Audit reports provided several recommendations to the department regarding its cost allocation plan. The report for the fiscal years ending June 30, 2017, recommended improving internal controls over the cost allocation plan (recommendation #2017-014). The report for the fiscal years ending June 30, 2019, advised the department to review and document all cost pools to ensure they align with the approved plan, obtain federal approval for changes, develop internal controls to detect variances, and allocate costs accordingly (#2019-022). The report for the fiscal years ending June 30, 2021, recommended enhancing internal controls, thoroughly reviewing cost allocation procedures, and obtaining federal approval before implementing changes (#2021-063). Effect: The department has not complied with federal compliance requirements by not following its submitted cost allocation plan. Cause: Since the previous audit, the department contracted with an external entity to review its cost allocation process and assist the department in making changes to cost pools and implementing new tools to facilitate the allocation processes. However, all work to review and modify the cost allocation processes was not completed during the audit period. During the audit period, the department continued implementing changes to cost pools and allocation methodologies outside the approved cost allocation plan. Recommendation: We recommend the Department of Public Health and Human Services: A. Enhance internal controls over cost allocation to ensure compliance with federal regulations. B. Continue and complete its in-depth review of its cost allocation procedures and plan. C. Allocate costs as specified in the cost allocation plan, as required by federal regulations. D. Implement changes to the cost allocation process only after receiving approval from, or submitting a plan revision to, the federal government. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department represented it was unable to comply with federal requirements to only implement changes to the cost allocation process after receiving approval or submitting a plan revision. The department has been in ongoing discussions with the federal government since March 2020 regarding the amendment effective 07/01/2018. This amendment was approved after 5 years on 09/12/2023. The department has implemented a two-year long business process improvement, and amendments are now submitted quarterly. It is the department’s position that the use of the impact statement from the department’s cost allocation plan is not a reasonable method for developing questioned costs as the impact statement includes estimates and does not delineate between actual increases in claiming costs and changes to allocation. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence. Since the department was not following its approved plan, it is our position that all changes captured in the impact statement represent questioned costs as they would not have been allocated in that manner under the approved plan. As such, our recommendation stands.
Finding 2023-067: U.S. Department of Agriculture ALN #10.551 and 10.561, SNAP Cluster Grant #Various U.S. Department of Education ALN #84.126, Rehabilitation Services – Vocational Rehabilitation Grants to States Grant #H126A210038, H126A220038, H126A230038 U.S. Department of Health and Human Services ALN #93.268, Immunization Cooperative Agreements (COVID-19) Grant #Various ALN #93.323, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Grant #Various ALN #93.558, Temporary Assistance for Needy Families (TANF) (COVID-19) Grant #2101MTTANF, 2201MTTANF, 2301MTTANF ALN #93.563, Child Support Services Grant #2101MTCSES, 2201MTCSES, 2301MTCSES, 2101MTCEST, 2201MTCEST, 2301MTCEST ALN #93.566, Refugee and Entrant Assistance State/Replacement Designee Administered Programs Grant #2101MTRCMA, 2201MTRCMA, 2301MTRCMA ALN #93.575 and 93.596, Child Care Development Fund Cluster (CCDF) (COVID-19) Grant #2101MTCCDF, 2201MTCCDD, 2201MTCCDF, 2301MTCCDD, 2301MTCCDF ALN #93.658, Foster Care – Title IV-E (COVID-19) Grant #2101MTFOST, 2201MTFOST, 2301MTFOST ALN #93.659, Adoption Assistance – Title IV-E (COVID-19) Grant #2101MTADPT, 2201MTADPT, 2301MTADPT ALN #93.767, Children’s Health Insurance Program (CHIP) (COVID-19) Grant #2105MT5021, 2205MT5021, 2305MT3002 ALN #93.775, 93.777, 93.778, Medicaid Cluster (COVID-19) Grant #1205MT5ADM, 2205MT5ADM, 2305MT5ADM Criteria: Federal regulation, 2 CFR Appendix VI, in part, requires the state public assistance agency to develop, document, and implement a public assistance cost allocation plan in accordance with federal regulations. This section and federal regulation, 45 CFR 95.509, require the state agency promptly amend the cost allocation plan and submit the amended plan if certain events occur. Federal regulation, 45 CFR 200.416, requires a process for central services costs to be identified and assigned to benefitted activities on a reasonable and consistent basis. Federal regulation, 45 CFR 95.515, specifies the effective date of the cost allocation plan amendment is the first day of the calendar quarter following the date of the event requiring the amendment. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: For the fourth audit in a row, the Department of Public Health and Human Services (department) did not follow its federally approved plan to allocate costs among state and federal programs. Additionally, department internal controls did not prevent these inconsistencies. Questioned Costs: Using the “PACAP Impact Statement” sections of Public Assistance Cost Allocation Plan (PACAP) amendments for 2021, 2022, and 2023, which were submitted between May and November 2023, we estimated likely questioned costs. The following table summarizes questioned costs for major federal programs with material noncompliance or other federal programs where questioned costs are projected to exceed $25,000. See the Schedule of Findings and Questioned Costs for chart/table. Context: For the majority of the period under audit, the cost allocation plan in effect was submitted to the federal government in March 2020 and was effective as of January 1, 2020. The plan amendment for fiscal year 2021 was not submitted until May 2023, and plan amendments for fiscal years 2022 and 2023 were submitted after the end of the period under audit. Costs allocated to state and Federal programs totaled $173,808,149 and $184,493,577 for fiscal years 2022 and 2023, respectively. The table below depicts the total indirect costs allocated to each of the federal programs where we identified material noncompliance or questioned costs required to be reported. See the Schedule of Findings and Questioned Costs for chart/table. The internal control deficiency applies to all federal programs regardless of our identification of material noncompliance or reportable questioned costs. Repeat Finding: Montana’s prior Single Audit reports provided several recommendations to the department regarding its cost allocation plan. The report for the fiscal years ending June 30, 2017, recommended improving internal controls over the cost allocation plan (recommendation #2017-014). The report for the fiscal years ending June 30, 2019, advised the department to review and document all cost pools to ensure they align with the approved plan, obtain federal approval for changes, develop internal controls to detect variances, and allocate costs accordingly (#2019-022). The report for the fiscal years ending June 30, 2021, recommended enhancing internal controls, thoroughly reviewing cost allocation procedures, and obtaining federal approval before implementing changes (#2021-063). Effect: The department has not complied with federal compliance requirements by not following its submitted cost allocation plan. Cause: Since the previous audit, the department contracted with an external entity to review its cost allocation process and assist the department in making changes to cost pools and implementing new tools to facilitate the allocation processes. However, all work to review and modify the cost allocation processes was not completed during the audit period. During the audit period, the department continued implementing changes to cost pools and allocation methodologies outside the approved cost allocation plan. Recommendation: We recommend the Department of Public Health and Human Services: A. Enhance internal controls over cost allocation to ensure compliance with federal regulations. B. Continue and complete its in-depth review of its cost allocation procedures and plan. C. Allocate costs as specified in the cost allocation plan, as required by federal regulations. D. Implement changes to the cost allocation process only after receiving approval from, or submitting a plan revision to, the federal government. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department represented it was unable to comply with federal requirements to only implement changes to the cost allocation process after receiving approval or submitting a plan revision. The department has been in ongoing discussions with the federal government since March 2020 regarding the amendment effective 07/01/2018. This amendment was approved after 5 years on 09/12/2023. The department has implemented a two-year long business process improvement, and amendments are now submitted quarterly. It is the department’s position that the use of the impact statement from the department’s cost allocation plan is not a reasonable method for developing questioned costs as the impact statement includes estimates and does not delineate between actual increases in claiming costs and changes to allocation. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence. Since the department was not following its approved plan, it is our position that all changes captured in the impact statement represent questioned costs as they would not have been allocated in that manner under the approved plan. As such, our recommendation stands.
Finding 2023-067: U.S. Department of Agriculture ALN #10.551 and 10.561, SNAP Cluster Grant #Various U.S. Department of Education ALN #84.126, Rehabilitation Services – Vocational Rehabilitation Grants to States Grant #H126A210038, H126A220038, H126A230038 U.S. Department of Health and Human Services ALN #93.268, Immunization Cooperative Agreements (COVID-19) Grant #Various ALN #93.323, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Grant #Various ALN #93.558, Temporary Assistance for Needy Families (TANF) (COVID-19) Grant #2101MTTANF, 2201MTTANF, 2301MTTANF ALN #93.563, Child Support Services Grant #2101MTCSES, 2201MTCSES, 2301MTCSES, 2101MTCEST, 2201MTCEST, 2301MTCEST ALN #93.566, Refugee and Entrant Assistance State/Replacement Designee Administered Programs Grant #2101MTRCMA, 2201MTRCMA, 2301MTRCMA ALN #93.575 and 93.596, Child Care Development Fund Cluster (CCDF) (COVID-19) Grant #2101MTCCDF, 2201MTCCDD, 2201MTCCDF, 2301MTCCDD, 2301MTCCDF ALN #93.658, Foster Care – Title IV-E (COVID-19) Grant #2101MTFOST, 2201MTFOST, 2301MTFOST ALN #93.659, Adoption Assistance – Title IV-E (COVID-19) Grant #2101MTADPT, 2201MTADPT, 2301MTADPT ALN #93.767, Children’s Health Insurance Program (CHIP) (COVID-19) Grant #2105MT5021, 2205MT5021, 2305MT3002 ALN #93.775, 93.777, 93.778, Medicaid Cluster (COVID-19) Grant #1205MT5ADM, 2205MT5ADM, 2305MT5ADM Criteria: Federal regulation, 2 CFR Appendix VI, in part, requires the state public assistance agency to develop, document, and implement a public assistance cost allocation plan in accordance with federal regulations. This section and federal regulation, 45 CFR 95.509, require the state agency promptly amend the cost allocation plan and submit the amended plan if certain events occur. Federal regulation, 45 CFR 200.416, requires a process for central services costs to be identified and assigned to benefitted activities on a reasonable and consistent basis. Federal regulation, 45 CFR 95.515, specifies the effective date of the cost allocation plan amendment is the first day of the calendar quarter following the date of the event requiring the amendment. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: For the fourth audit in a row, the Department of Public Health and Human Services (department) did not follow its federally approved plan to allocate costs among state and federal programs. Additionally, department internal controls did not prevent these inconsistencies. Questioned Costs: Using the “PACAP Impact Statement” sections of Public Assistance Cost Allocation Plan (PACAP) amendments for 2021, 2022, and 2023, which were submitted between May and November 2023, we estimated likely questioned costs. The following table summarizes questioned costs for major federal programs with material noncompliance or other federal programs where questioned costs are projected to exceed $25,000. See the Schedule of Findings and Questioned Costs for chart/table. Context: For the majority of the period under audit, the cost allocation plan in effect was submitted to the federal government in March 2020 and was effective as of January 1, 2020. The plan amendment for fiscal year 2021 was not submitted until May 2023, and plan amendments for fiscal years 2022 and 2023 were submitted after the end of the period under audit. Costs allocated to state and Federal programs totaled $173,808,149 and $184,493,577 for fiscal years 2022 and 2023, respectively. The table below depicts the total indirect costs allocated to each of the federal programs where we identified material noncompliance or questioned costs required to be reported. See the Schedule of Findings and Questioned Costs for chart/table. The internal control deficiency applies to all federal programs regardless of our identification of material noncompliance or reportable questioned costs. Repeat Finding: Montana’s prior Single Audit reports provided several recommendations to the department regarding its cost allocation plan. The report for the fiscal years ending June 30, 2017, recommended improving internal controls over the cost allocation plan (recommendation #2017-014). The report for the fiscal years ending June 30, 2019, advised the department to review and document all cost pools to ensure they align with the approved plan, obtain federal approval for changes, develop internal controls to detect variances, and allocate costs accordingly (#2019-022). The report for the fiscal years ending June 30, 2021, recommended enhancing internal controls, thoroughly reviewing cost allocation procedures, and obtaining federal approval before implementing changes (#2021-063). Effect: The department has not complied with federal compliance requirements by not following its submitted cost allocation plan. Cause: Since the previous audit, the department contracted with an external entity to review its cost allocation process and assist the department in making changes to cost pools and implementing new tools to facilitate the allocation processes. However, all work to review and modify the cost allocation processes was not completed during the audit period. During the audit period, the department continued implementing changes to cost pools and allocation methodologies outside the approved cost allocation plan. Recommendation: We recommend the Department of Public Health and Human Services: A. Enhance internal controls over cost allocation to ensure compliance with federal regulations. B. Continue and complete its in-depth review of its cost allocation procedures and plan. C. Allocate costs as specified in the cost allocation plan, as required by federal regulations. D. Implement changes to the cost allocation process only after receiving approval from, or submitting a plan revision to, the federal government. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department represented it was unable to comply with federal requirements to only implement changes to the cost allocation process after receiving approval or submitting a plan revision. The department has been in ongoing discussions with the federal government since March 2020 regarding the amendment effective 07/01/2018. This amendment was approved after 5 years on 09/12/2023. The department has implemented a two-year long business process improvement, and amendments are now submitted quarterly. It is the department’s position that the use of the impact statement from the department’s cost allocation plan is not a reasonable method for developing questioned costs as the impact statement includes estimates and does not delineate between actual increases in claiming costs and changes to allocation. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence. Since the department was not following its approved plan, it is our position that all changes captured in the impact statement represent questioned costs as they would not have been allocated in that manner under the approved plan. As such, our recommendation stands.
Finding 2023-067: U.S. Department of Agriculture ALN #10.551 and 10.561, SNAP Cluster Grant #Various U.S. Department of Education ALN #84.126, Rehabilitation Services – Vocational Rehabilitation Grants to States Grant #H126A210038, H126A220038, H126A230038 U.S. Department of Health and Human Services ALN #93.268, Immunization Cooperative Agreements (COVID-19) Grant #Various ALN #93.323, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Grant #Various ALN #93.558, Temporary Assistance for Needy Families (TANF) (COVID-19) Grant #2101MTTANF, 2201MTTANF, 2301MTTANF ALN #93.563, Child Support Services Grant #2101MTCSES, 2201MTCSES, 2301MTCSES, 2101MTCEST, 2201MTCEST, 2301MTCEST ALN #93.566, Refugee and Entrant Assistance State/Replacement Designee Administered Programs Grant #2101MTRCMA, 2201MTRCMA, 2301MTRCMA ALN #93.575 and 93.596, Child Care Development Fund Cluster (CCDF) (COVID-19) Grant #2101MTCCDF, 2201MTCCDD, 2201MTCCDF, 2301MTCCDD, 2301MTCCDF ALN #93.658, Foster Care – Title IV-E (COVID-19) Grant #2101MTFOST, 2201MTFOST, 2301MTFOST ALN #93.659, Adoption Assistance – Title IV-E (COVID-19) Grant #2101MTADPT, 2201MTADPT, 2301MTADPT ALN #93.767, Children’s Health Insurance Program (CHIP) (COVID-19) Grant #2105MT5021, 2205MT5021, 2305MT3002 ALN #93.775, 93.777, 93.778, Medicaid Cluster (COVID-19) Grant #1205MT5ADM, 2205MT5ADM, 2305MT5ADM Criteria: Federal regulation, 2 CFR Appendix VI, in part, requires the state public assistance agency to develop, document, and implement a public assistance cost allocation plan in accordance with federal regulations. This section and federal regulation, 45 CFR 95.509, require the state agency promptly amend the cost allocation plan and submit the amended plan if certain events occur. Federal regulation, 45 CFR 200.416, requires a process for central services costs to be identified and assigned to benefitted activities on a reasonable and consistent basis. Federal regulation, 45 CFR 95.515, specifies the effective date of the cost allocation plan amendment is the first day of the calendar quarter following the date of the event requiring the amendment. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: For the fourth audit in a row, the Department of Public Health and Human Services (department) did not follow its federally approved plan to allocate costs among state and federal programs. Additionally, department internal controls did not prevent these inconsistencies. Questioned Costs: Using the “PACAP Impact Statement” sections of Public Assistance Cost Allocation Plan (PACAP) amendments for 2021, 2022, and 2023, which were submitted between May and November 2023, we estimated likely questioned costs. The following table summarizes questioned costs for major federal programs with material noncompliance or other federal programs where questioned costs are projected to exceed $25,000. See the Schedule of Findings and Questioned Costs for chart/table. Context: For the majority of the period under audit, the cost allocation plan in effect was submitted to the federal government in March 2020 and was effective as of January 1, 2020. The plan amendment for fiscal year 2021 was not submitted until May 2023, and plan amendments for fiscal years 2022 and 2023 were submitted after the end of the period under audit. Costs allocated to state and Federal programs totaled $173,808,149 and $184,493,577 for fiscal years 2022 and 2023, respectively. The table below depicts the total indirect costs allocated to each of the federal programs where we identified material noncompliance or questioned costs required to be reported. See the Schedule of Findings and Questioned Costs for chart/table. The internal control deficiency applies to all federal programs regardless of our identification of material noncompliance or reportable questioned costs. Repeat Finding: Montana’s prior Single Audit reports provided several recommendations to the department regarding its cost allocation plan. The report for the fiscal years ending June 30, 2017, recommended improving internal controls over the cost allocation plan (recommendation #2017-014). The report for the fiscal years ending June 30, 2019, advised the department to review and document all cost pools to ensure they align with the approved plan, obtain federal approval for changes, develop internal controls to detect variances, and allocate costs accordingly (#2019-022). The report for the fiscal years ending June 30, 2021, recommended enhancing internal controls, thoroughly reviewing cost allocation procedures, and obtaining federal approval before implementing changes (#2021-063). Effect: The department has not complied with federal compliance requirements by not following its submitted cost allocation plan. Cause: Since the previous audit, the department contracted with an external entity to review its cost allocation process and assist the department in making changes to cost pools and implementing new tools to facilitate the allocation processes. However, all work to review and modify the cost allocation processes was not completed during the audit period. During the audit period, the department continued implementing changes to cost pools and allocation methodologies outside the approved cost allocation plan. Recommendation: We recommend the Department of Public Health and Human Services: A. Enhance internal controls over cost allocation to ensure compliance with federal regulations. B. Continue and complete its in-depth review of its cost allocation procedures and plan. C. Allocate costs as specified in the cost allocation plan, as required by federal regulations. D. Implement changes to the cost allocation process only after receiving approval from, or submitting a plan revision to, the federal government. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department represented it was unable to comply with federal requirements to only implement changes to the cost allocation process after receiving approval or submitting a plan revision. The department has been in ongoing discussions with the federal government since March 2020 regarding the amendment effective 07/01/2018. This amendment was approved after 5 years on 09/12/2023. The department has implemented a two-year long business process improvement, and amendments are now submitted quarterly. It is the department’s position that the use of the impact statement from the department’s cost allocation plan is not a reasonable method for developing questioned costs as the impact statement includes estimates and does not delineate between actual increases in claiming costs and changes to allocation. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence. Since the department was not following its approved plan, it is our position that all changes captured in the impact statement represent questioned costs as they would not have been allocated in that manner under the approved plan. As such, our recommendation stands.
Finding 2023-067: U.S. Department of Agriculture ALN #10.551 and 10.561, SNAP Cluster Grant #Various U.S. Department of Education ALN #84.126, Rehabilitation Services – Vocational Rehabilitation Grants to States Grant #H126A210038, H126A220038, H126A230038 U.S. Department of Health and Human Services ALN #93.268, Immunization Cooperative Agreements (COVID-19) Grant #Various ALN #93.323, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Grant #Various ALN #93.558, Temporary Assistance for Needy Families (TANF) (COVID-19) Grant #2101MTTANF, 2201MTTANF, 2301MTTANF ALN #93.563, Child Support Services Grant #2101MTCSES, 2201MTCSES, 2301MTCSES, 2101MTCEST, 2201MTCEST, 2301MTCEST ALN #93.566, Refugee and Entrant Assistance State/Replacement Designee Administered Programs Grant #2101MTRCMA, 2201MTRCMA, 2301MTRCMA ALN #93.575 and 93.596, Child Care Development Fund Cluster (CCDF) (COVID-19) Grant #2101MTCCDF, 2201MTCCDD, 2201MTCCDF, 2301MTCCDD, 2301MTCCDF ALN #93.658, Foster Care – Title IV-E (COVID-19) Grant #2101MTFOST, 2201MTFOST, 2301MTFOST ALN #93.659, Adoption Assistance – Title IV-E (COVID-19) Grant #2101MTADPT, 2201MTADPT, 2301MTADPT ALN #93.767, Children’s Health Insurance Program (CHIP) (COVID-19) Grant #2105MT5021, 2205MT5021, 2305MT3002 ALN #93.775, 93.777, 93.778, Medicaid Cluster (COVID-19) Grant #1205MT5ADM, 2205MT5ADM, 2305MT5ADM Criteria: Federal regulation, 2 CFR Appendix VI, in part, requires the state public assistance agency to develop, document, and implement a public assistance cost allocation plan in accordance with federal regulations. This section and federal regulation, 45 CFR 95.509, require the state agency promptly amend the cost allocation plan and submit the amended plan if certain events occur. Federal regulation, 45 CFR 200.416, requires a process for central services costs to be identified and assigned to benefitted activities on a reasonable and consistent basis. Federal regulation, 45 CFR 95.515, specifies the effective date of the cost allocation plan amendment is the first day of the calendar quarter following the date of the event requiring the amendment. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: For the fourth audit in a row, the Department of Public Health and Human Services (department) did not follow its federally approved plan to allocate costs among state and federal programs. Additionally, department internal controls did not prevent these inconsistencies. Questioned Costs: Using the “PACAP Impact Statement” sections of Public Assistance Cost Allocation Plan (PACAP) amendments for 2021, 2022, and 2023, which were submitted between May and November 2023, we estimated likely questioned costs. The following table summarizes questioned costs for major federal programs with material noncompliance or other federal programs where questioned costs are projected to exceed $25,000. See the Schedule of Findings and Questioned Costs for chart/table. Context: For the majority of the period under audit, the cost allocation plan in effect was submitted to the federal government in March 2020 and was effective as of January 1, 2020. The plan amendment for fiscal year 2021 was not submitted until May 2023, and plan amendments for fiscal years 2022 and 2023 were submitted after the end of the period under audit. Costs allocated to state and Federal programs totaled $173,808,149 and $184,493,577 for fiscal years 2022 and 2023, respectively. The table below depicts the total indirect costs allocated to each of the federal programs where we identified material noncompliance or questioned costs required to be reported. See the Schedule of Findings and Questioned Costs for chart/table. The internal control deficiency applies to all federal programs regardless of our identification of material noncompliance or reportable questioned costs. Repeat Finding: Montana’s prior Single Audit reports provided several recommendations to the department regarding its cost allocation plan. The report for the fiscal years ending June 30, 2017, recommended improving internal controls over the cost allocation plan (recommendation #2017-014). The report for the fiscal years ending June 30, 2019, advised the department to review and document all cost pools to ensure they align with the approved plan, obtain federal approval for changes, develop internal controls to detect variances, and allocate costs accordingly (#2019-022). The report for the fiscal years ending June 30, 2021, recommended enhancing internal controls, thoroughly reviewing cost allocation procedures, and obtaining federal approval before implementing changes (#2021-063). Effect: The department has not complied with federal compliance requirements by not following its submitted cost allocation plan. Cause: Since the previous audit, the department contracted with an external entity to review its cost allocation process and assist the department in making changes to cost pools and implementing new tools to facilitate the allocation processes. However, all work to review and modify the cost allocation processes was not completed during the audit period. During the audit period, the department continued implementing changes to cost pools and allocation methodologies outside the approved cost allocation plan. Recommendation: We recommend the Department of Public Health and Human Services: A. Enhance internal controls over cost allocation to ensure compliance with federal regulations. B. Continue and complete its in-depth review of its cost allocation procedures and plan. C. Allocate costs as specified in the cost allocation plan, as required by federal regulations. D. Implement changes to the cost allocation process only after receiving approval from, or submitting a plan revision to, the federal government. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department represented it was unable to comply with federal requirements to only implement changes to the cost allocation process after receiving approval or submitting a plan revision. The department has been in ongoing discussions with the federal government since March 2020 regarding the amendment effective 07/01/2018. This amendment was approved after 5 years on 09/12/2023. The department has implemented a two-year long business process improvement, and amendments are now submitted quarterly. It is the department’s position that the use of the impact statement from the department’s cost allocation plan is not a reasonable method for developing questioned costs as the impact statement includes estimates and does not delineate between actual increases in claiming costs and changes to allocation. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence. Since the department was not following its approved plan, it is our position that all changes captured in the impact statement represent questioned costs as they would not have been allocated in that manner under the approved plan. As such, our recommendation stands.
Finding 2023-067: U.S. Department of Agriculture ALN #10.551 and 10.561, SNAP Cluster Grant #Various U.S. Department of Education ALN #84.126, Rehabilitation Services – Vocational Rehabilitation Grants to States Grant #H126A210038, H126A220038, H126A230038 U.S. Department of Health and Human Services ALN #93.268, Immunization Cooperative Agreements (COVID-19) Grant #Various ALN #93.323, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Grant #Various ALN #93.558, Temporary Assistance for Needy Families (TANF) (COVID-19) Grant #2101MTTANF, 2201MTTANF, 2301MTTANF ALN #93.563, Child Support Services Grant #2101MTCSES, 2201MTCSES, 2301MTCSES, 2101MTCEST, 2201MTCEST, 2301MTCEST ALN #93.566, Refugee and Entrant Assistance State/Replacement Designee Administered Programs Grant #2101MTRCMA, 2201MTRCMA, 2301MTRCMA ALN #93.575 and 93.596, Child Care Development Fund Cluster (CCDF) (COVID-19) Grant #2101MTCCDF, 2201MTCCDD, 2201MTCCDF, 2301MTCCDD, 2301MTCCDF ALN #93.658, Foster Care – Title IV-E (COVID-19) Grant #2101MTFOST, 2201MTFOST, 2301MTFOST ALN #93.659, Adoption Assistance – Title IV-E (COVID-19) Grant #2101MTADPT, 2201MTADPT, 2301MTADPT ALN #93.767, Children’s Health Insurance Program (CHIP) (COVID-19) Grant #2105MT5021, 2205MT5021, 2305MT3002 ALN #93.775, 93.777, 93.778, Medicaid Cluster (COVID-19) Grant #1205MT5ADM, 2205MT5ADM, 2305MT5ADM Criteria: Federal regulation, 2 CFR Appendix VI, in part, requires the state public assistance agency to develop, document, and implement a public assistance cost allocation plan in accordance with federal regulations. This section and federal regulation, 45 CFR 95.509, require the state agency promptly amend the cost allocation plan and submit the amended plan if certain events occur. Federal regulation, 45 CFR 200.416, requires a process for central services costs to be identified and assigned to benefitted activities on a reasonable and consistent basis. Federal regulation, 45 CFR 95.515, specifies the effective date of the cost allocation plan amendment is the first day of the calendar quarter following the date of the event requiring the amendment. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: For the fourth audit in a row, the Department of Public Health and Human Services (department) did not follow its federally approved plan to allocate costs among state and federal programs. Additionally, department internal controls did not prevent these inconsistencies. Questioned Costs: Using the “PACAP Impact Statement” sections of Public Assistance Cost Allocation Plan (PACAP) amendments for 2021, 2022, and 2023, which were submitted between May and November 2023, we estimated likely questioned costs. The following table summarizes questioned costs for major federal programs with material noncompliance or other federal programs where questioned costs are projected to exceed $25,000. See the Schedule of Findings and Questioned Costs for chart/table. Context: For the majority of the period under audit, the cost allocation plan in effect was submitted to the federal government in March 2020 and was effective as of January 1, 2020. The plan amendment for fiscal year 2021 was not submitted until May 2023, and plan amendments for fiscal years 2022 and 2023 were submitted after the end of the period under audit. Costs allocated to state and Federal programs totaled $173,808,149 and $184,493,577 for fiscal years 2022 and 2023, respectively. The table below depicts the total indirect costs allocated to each of the federal programs where we identified material noncompliance or questioned costs required to be reported. See the Schedule of Findings and Questioned Costs for chart/table. The internal control deficiency applies to all federal programs regardless of our identification of material noncompliance or reportable questioned costs. Repeat Finding: Montana’s prior Single Audit reports provided several recommendations to the department regarding its cost allocation plan. The report for the fiscal years ending June 30, 2017, recommended improving internal controls over the cost allocation plan (recommendation #2017-014). The report for the fiscal years ending June 30, 2019, advised the department to review and document all cost pools to ensure they align with the approved plan, obtain federal approval for changes, develop internal controls to detect variances, and allocate costs accordingly (#2019-022). The report for the fiscal years ending June 30, 2021, recommended enhancing internal controls, thoroughly reviewing cost allocation procedures, and obtaining federal approval before implementing changes (#2021-063). Effect: The department has not complied with federal compliance requirements by not following its submitted cost allocation plan. Cause: Since the previous audit, the department contracted with an external entity to review its cost allocation process and assist the department in making changes to cost pools and implementing new tools to facilitate the allocation processes. However, all work to review and modify the cost allocation processes was not completed during the audit period. During the audit period, the department continued implementing changes to cost pools and allocation methodologies outside the approved cost allocation plan. Recommendation: We recommend the Department of Public Health and Human Services: A. Enhance internal controls over cost allocation to ensure compliance with federal regulations. B. Continue and complete its in-depth review of its cost allocation procedures and plan. C. Allocate costs as specified in the cost allocation plan, as required by federal regulations. D. Implement changes to the cost allocation process only after receiving approval from, or submitting a plan revision to, the federal government. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department represented it was unable to comply with federal requirements to only implement changes to the cost allocation process after receiving approval or submitting a plan revision. The department has been in ongoing discussions with the federal government since March 2020 regarding the amendment effective 07/01/2018. This amendment was approved after 5 years on 09/12/2023. The department has implemented a two-year long business process improvement, and amendments are now submitted quarterly. It is the department’s position that the use of the impact statement from the department’s cost allocation plan is not a reasonable method for developing questioned costs as the impact statement includes estimates and does not delineate between actual increases in claiming costs and changes to allocation. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence. Since the department was not following its approved plan, it is our position that all changes captured in the impact statement represent questioned costs as they would not have been allocated in that manner under the approved plan. As such, our recommendation stands.
Finding 2023-067: U.S. Department of Agriculture ALN #10.551 and 10.561, SNAP Cluster Grant #Various U.S. Department of Education ALN #84.126, Rehabilitation Services – Vocational Rehabilitation Grants to States Grant #H126A210038, H126A220038, H126A230038 U.S. Department of Health and Human Services ALN #93.268, Immunization Cooperative Agreements (COVID-19) Grant #Various ALN #93.323, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Grant #Various ALN #93.558, Temporary Assistance for Needy Families (TANF) (COVID-19) Grant #2101MTTANF, 2201MTTANF, 2301MTTANF ALN #93.563, Child Support Services Grant #2101MTCSES, 2201MTCSES, 2301MTCSES, 2101MTCEST, 2201MTCEST, 2301MTCEST ALN #93.566, Refugee and Entrant Assistance State/Replacement Designee Administered Programs Grant #2101MTRCMA, 2201MTRCMA, 2301MTRCMA ALN #93.575 and 93.596, Child Care Development Fund Cluster (CCDF) (COVID-19) Grant #2101MTCCDF, 2201MTCCDD, 2201MTCCDF, 2301MTCCDD, 2301MTCCDF ALN #93.658, Foster Care – Title IV-E (COVID-19) Grant #2101MTFOST, 2201MTFOST, 2301MTFOST ALN #93.659, Adoption Assistance – Title IV-E (COVID-19) Grant #2101MTADPT, 2201MTADPT, 2301MTADPT ALN #93.767, Children’s Health Insurance Program (CHIP) (COVID-19) Grant #2105MT5021, 2205MT5021, 2305MT3002 ALN #93.775, 93.777, 93.778, Medicaid Cluster (COVID-19) Grant #1205MT5ADM, 2205MT5ADM, 2305MT5ADM Criteria: Federal regulation, 2 CFR Appendix VI, in part, requires the state public assistance agency to develop, document, and implement a public assistance cost allocation plan in accordance with federal regulations. This section and federal regulation, 45 CFR 95.509, require the state agency promptly amend the cost allocation plan and submit the amended plan if certain events occur. Federal regulation, 45 CFR 200.416, requires a process for central services costs to be identified and assigned to benefitted activities on a reasonable and consistent basis. Federal regulation, 45 CFR 95.515, specifies the effective date of the cost allocation plan amendment is the first day of the calendar quarter following the date of the event requiring the amendment. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: For the fourth audit in a row, the Department of Public Health and Human Services (department) did not follow its federally approved plan to allocate costs among state and federal programs. Additionally, department internal controls did not prevent these inconsistencies. Questioned Costs: Using the “PACAP Impact Statement” sections of Public Assistance Cost Allocation Plan (PACAP) amendments for 2021, 2022, and 2023, which were submitted between May and November 2023, we estimated likely questioned costs. The following table summarizes questioned costs for major federal programs with material noncompliance or other federal programs where questioned costs are projected to exceed $25,000. See the Schedule of Findings and Questioned Costs for chart/table. Context: For the majority of the period under audit, the cost allocation plan in effect was submitted to the federal government in March 2020 and was effective as of January 1, 2020. The plan amendment for fiscal year 2021 was not submitted until May 2023, and plan amendments for fiscal years 2022 and 2023 were submitted after the end of the period under audit. Costs allocated to state and Federal programs totaled $173,808,149 and $184,493,577 for fiscal years 2022 and 2023, respectively. The table below depicts the total indirect costs allocated to each of the federal programs where we identified material noncompliance or questioned costs required to be reported. See the Schedule of Findings and Questioned Costs for chart/table. The internal control deficiency applies to all federal programs regardless of our identification of material noncompliance or reportable questioned costs. Repeat Finding: Montana’s prior Single Audit reports provided several recommendations to the department regarding its cost allocation plan. The report for the fiscal years ending June 30, 2017, recommended improving internal controls over the cost allocation plan (recommendation #2017-014). The report for the fiscal years ending June 30, 2019, advised the department to review and document all cost pools to ensure they align with the approved plan, obtain federal approval for changes, develop internal controls to detect variances, and allocate costs accordingly (#2019-022). The report for the fiscal years ending June 30, 2021, recommended enhancing internal controls, thoroughly reviewing cost allocation procedures, and obtaining federal approval before implementing changes (#2021-063). Effect: The department has not complied with federal compliance requirements by not following its submitted cost allocation plan. Cause: Since the previous audit, the department contracted with an external entity to review its cost allocation process and assist the department in making changes to cost pools and implementing new tools to facilitate the allocation processes. However, all work to review and modify the cost allocation processes was not completed during the audit period. During the audit period, the department continued implementing changes to cost pools and allocation methodologies outside the approved cost allocation plan. Recommendation: We recommend the Department of Public Health and Human Services: A. Enhance internal controls over cost allocation to ensure compliance with federal regulations. B. Continue and complete its in-depth review of its cost allocation procedures and plan. C. Allocate costs as specified in the cost allocation plan, as required by federal regulations. D. Implement changes to the cost allocation process only after receiving approval from, or submitting a plan revision to, the federal government. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department represented it was unable to comply with federal requirements to only implement changes to the cost allocation process after receiving approval or submitting a plan revision. The department has been in ongoing discussions with the federal government since March 2020 regarding the amendment effective 07/01/2018. This amendment was approved after 5 years on 09/12/2023. The department has implemented a two-year long business process improvement, and amendments are now submitted quarterly. It is the department’s position that the use of the impact statement from the department’s cost allocation plan is not a reasonable method for developing questioned costs as the impact statement includes estimates and does not delineate between actual increases in claiming costs and changes to allocation. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence. Since the department was not following its approved plan, it is our position that all changes captured in the impact statement represent questioned costs as they would not have been allocated in that manner under the approved plan. As such, our recommendation stands.
Finding 2023-067: U.S. Department of Agriculture ALN #10.551 and 10.561, SNAP Cluster Grant #Various U.S. Department of Education ALN #84.126, Rehabilitation Services – Vocational Rehabilitation Grants to States Grant #H126A210038, H126A220038, H126A230038 U.S. Department of Health and Human Services ALN #93.268, Immunization Cooperative Agreements (COVID-19) Grant #Various ALN #93.323, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Grant #Various ALN #93.558, Temporary Assistance for Needy Families (TANF) (COVID-19) Grant #2101MTTANF, 2201MTTANF, 2301MTTANF ALN #93.563, Child Support Services Grant #2101MTCSES, 2201MTCSES, 2301MTCSES, 2101MTCEST, 2201MTCEST, 2301MTCEST ALN #93.566, Refugee and Entrant Assistance State/Replacement Designee Administered Programs Grant #2101MTRCMA, 2201MTRCMA, 2301MTRCMA ALN #93.575 and 93.596, Child Care Development Fund Cluster (CCDF) (COVID-19) Grant #2101MTCCDF, 2201MTCCDD, 2201MTCCDF, 2301MTCCDD, 2301MTCCDF ALN #93.658, Foster Care – Title IV-E (COVID-19) Grant #2101MTFOST, 2201MTFOST, 2301MTFOST ALN #93.659, Adoption Assistance – Title IV-E (COVID-19) Grant #2101MTADPT, 2201MTADPT, 2301MTADPT ALN #93.767, Children’s Health Insurance Program (CHIP) (COVID-19) Grant #2105MT5021, 2205MT5021, 2305MT3002 ALN #93.775, 93.777, 93.778, Medicaid Cluster (COVID-19) Grant #1205MT5ADM, 2205MT5ADM, 2305MT5ADM Criteria: Federal regulation, 2 CFR Appendix VI, in part, requires the state public assistance agency to develop, document, and implement a public assistance cost allocation plan in accordance with federal regulations. This section and federal regulation, 45 CFR 95.509, require the state agency promptly amend the cost allocation plan and submit the amended plan if certain events occur. Federal regulation, 45 CFR 200.416, requires a process for central services costs to be identified and assigned to benefitted activities on a reasonable and consistent basis. Federal regulation, 45 CFR 95.515, specifies the effective date of the cost allocation plan amendment is the first day of the calendar quarter following the date of the event requiring the amendment. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: For the fourth audit in a row, the Department of Public Health and Human Services (department) did not follow its federally approved plan to allocate costs among state and federal programs. Additionally, department internal controls did not prevent these inconsistencies. Questioned Costs: Using the “PACAP Impact Statement” sections of Public Assistance Cost Allocation Plan (PACAP) amendments for 2021, 2022, and 2023, which were submitted between May and November 2023, we estimated likely questioned costs. The following table summarizes questioned costs for major federal programs with material noncompliance or other federal programs where questioned costs are projected to exceed $25,000. See the Schedule of Findings and Questioned Costs for chart/table. Context: For the majority of the period under audit, the cost allocation plan in effect was submitted to the federal government in March 2020 and was effective as of January 1, 2020. The plan amendment for fiscal year 2021 was not submitted until May 2023, and plan amendments for fiscal years 2022 and 2023 were submitted after the end of the period under audit. Costs allocated to state and Federal programs totaled $173,808,149 and $184,493,577 for fiscal years 2022 and 2023, respectively. The table below depicts the total indirect costs allocated to each of the federal programs where we identified material noncompliance or questioned costs required to be reported. See the Schedule of Findings and Questioned Costs for chart/table. The internal control deficiency applies to all federal programs regardless of our identification of material noncompliance or reportable questioned costs. Repeat Finding: Montana’s prior Single Audit reports provided several recommendations to the department regarding its cost allocation plan. The report for the fiscal years ending June 30, 2017, recommended improving internal controls over the cost allocation plan (recommendation #2017-014). The report for the fiscal years ending June 30, 2019, advised the department to review and document all cost pools to ensure they align with the approved plan, obtain federal approval for changes, develop internal controls to detect variances, and allocate costs accordingly (#2019-022). The report for the fiscal years ending June 30, 2021, recommended enhancing internal controls, thoroughly reviewing cost allocation procedures, and obtaining federal approval before implementing changes (#2021-063). Effect: The department has not complied with federal compliance requirements by not following its submitted cost allocation plan. Cause: Since the previous audit, the department contracted with an external entity to review its cost allocation process and assist the department in making changes to cost pools and implementing new tools to facilitate the allocation processes. However, all work to review and modify the cost allocation processes was not completed during the audit period. During the audit period, the department continued implementing changes to cost pools and allocation methodologies outside the approved cost allocation plan. Recommendation: We recommend the Department of Public Health and Human Services: A. Enhance internal controls over cost allocation to ensure compliance with federal regulations. B. Continue and complete its in-depth review of its cost allocation procedures and plan. C. Allocate costs as specified in the cost allocation plan, as required by federal regulations. D. Implement changes to the cost allocation process only after receiving approval from, or submitting a plan revision to, the federal government. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department represented it was unable to comply with federal requirements to only implement changes to the cost allocation process after receiving approval or submitting a plan revision. The department has been in ongoing discussions with the federal government since March 2020 regarding the amendment effective 07/01/2018. This amendment was approved after 5 years on 09/12/2023. The department has implemented a two-year long business process improvement, and amendments are now submitted quarterly. It is the department’s position that the use of the impact statement from the department’s cost allocation plan is not a reasonable method for developing questioned costs as the impact statement includes estimates and does not delineate between actual increases in claiming costs and changes to allocation. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence. Since the department was not following its approved plan, it is our position that all changes captured in the impact statement represent questioned costs as they would not have been allocated in that manner under the approved plan. As such, our recommendation stands.
Finding 2023-067: U.S. Department of Agriculture ALN #10.551 and 10.561, SNAP Cluster Grant #Various U.S. Department of Education ALN #84.126, Rehabilitation Services – Vocational Rehabilitation Grants to States Grant #H126A210038, H126A220038, H126A230038 U.S. Department of Health and Human Services ALN #93.268, Immunization Cooperative Agreements (COVID-19) Grant #Various ALN #93.323, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Grant #Various ALN #93.558, Temporary Assistance for Needy Families (TANF) (COVID-19) Grant #2101MTTANF, 2201MTTANF, 2301MTTANF ALN #93.563, Child Support Services Grant #2101MTCSES, 2201MTCSES, 2301MTCSES, 2101MTCEST, 2201MTCEST, 2301MTCEST ALN #93.566, Refugee and Entrant Assistance State/Replacement Designee Administered Programs Grant #2101MTRCMA, 2201MTRCMA, 2301MTRCMA ALN #93.575 and 93.596, Child Care Development Fund Cluster (CCDF) (COVID-19) Grant #2101MTCCDF, 2201MTCCDD, 2201MTCCDF, 2301MTCCDD, 2301MTCCDF ALN #93.658, Foster Care – Title IV-E (COVID-19) Grant #2101MTFOST, 2201MTFOST, 2301MTFOST ALN #93.659, Adoption Assistance – Title IV-E (COVID-19) Grant #2101MTADPT, 2201MTADPT, 2301MTADPT ALN #93.767, Children’s Health Insurance Program (CHIP) (COVID-19) Grant #2105MT5021, 2205MT5021, 2305MT3002 ALN #93.775, 93.777, 93.778, Medicaid Cluster (COVID-19) Grant #1205MT5ADM, 2205MT5ADM, 2305MT5ADM Criteria: Federal regulation, 2 CFR Appendix VI, in part, requires the state public assistance agency to develop, document, and implement a public assistance cost allocation plan in accordance with federal regulations. This section and federal regulation, 45 CFR 95.509, require the state agency promptly amend the cost allocation plan and submit the amended plan if certain events occur. Federal regulation, 45 CFR 200.416, requires a process for central services costs to be identified and assigned to benefitted activities on a reasonable and consistent basis. Federal regulation, 45 CFR 95.515, specifies the effective date of the cost allocation plan amendment is the first day of the calendar quarter following the date of the event requiring the amendment. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: For the fourth audit in a row, the Department of Public Health and Human Services (department) did not follow its federally approved plan to allocate costs among state and federal programs. Additionally, department internal controls did not prevent these inconsistencies. Questioned Costs: Using the “PACAP Impact Statement” sections of Public Assistance Cost Allocation Plan (PACAP) amendments for 2021, 2022, and 2023, which were submitted between May and November 2023, we estimated likely questioned costs. The following table summarizes questioned costs for major federal programs with material noncompliance or other federal programs where questioned costs are projected to exceed $25,000. See the Schedule of Findings and Questioned Costs for chart/table. Context: For the majority of the period under audit, the cost allocation plan in effect was submitted to the federal government in March 2020 and was effective as of January 1, 2020. The plan amendment for fiscal year 2021 was not submitted until May 2023, and plan amendments for fiscal years 2022 and 2023 were submitted after the end of the period under audit. Costs allocated to state and Federal programs totaled $173,808,149 and $184,493,577 for fiscal years 2022 and 2023, respectively. The table below depicts the total indirect costs allocated to each of the federal programs where we identified material noncompliance or questioned costs required to be reported. See the Schedule of Findings and Questioned Costs for chart/table. The internal control deficiency applies to all federal programs regardless of our identification of material noncompliance or reportable questioned costs. Repeat Finding: Montana’s prior Single Audit reports provided several recommendations to the department regarding its cost allocation plan. The report for the fiscal years ending June 30, 2017, recommended improving internal controls over the cost allocation plan (recommendation #2017-014). The report for the fiscal years ending June 30, 2019, advised the department to review and document all cost pools to ensure they align with the approved plan, obtain federal approval for changes, develop internal controls to detect variances, and allocate costs accordingly (#2019-022). The report for the fiscal years ending June 30, 2021, recommended enhancing internal controls, thoroughly reviewing cost allocation procedures, and obtaining federal approval before implementing changes (#2021-063). Effect: The department has not complied with federal compliance requirements by not following its submitted cost allocation plan. Cause: Since the previous audit, the department contracted with an external entity to review its cost allocation process and assist the department in making changes to cost pools and implementing new tools to facilitate the allocation processes. However, all work to review and modify the cost allocation processes was not completed during the audit period. During the audit period, the department continued implementing changes to cost pools and allocation methodologies outside the approved cost allocation plan. Recommendation: We recommend the Department of Public Health and Human Services: A. Enhance internal controls over cost allocation to ensure compliance with federal regulations. B. Continue and complete its in-depth review of its cost allocation procedures and plan. C. Allocate costs as specified in the cost allocation plan, as required by federal regulations. D. Implement changes to the cost allocation process only after receiving approval from, or submitting a plan revision to, the federal government. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department represented it was unable to comply with federal requirements to only implement changes to the cost allocation process after receiving approval or submitting a plan revision. The department has been in ongoing discussions with the federal government since March 2020 regarding the amendment effective 07/01/2018. This amendment was approved after 5 years on 09/12/2023. The department has implemented a two-year long business process improvement, and amendments are now submitted quarterly. It is the department’s position that the use of the impact statement from the department’s cost allocation plan is not a reasonable method for developing questioned costs as the impact statement includes estimates and does not delineate between actual increases in claiming costs and changes to allocation. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence. Since the department was not following its approved plan, it is our position that all changes captured in the impact statement represent questioned costs as they would not have been allocated in that manner under the approved plan. As such, our recommendation stands.
Finding 2023-067: U.S. Department of Agriculture ALN #10.551 and 10.561, SNAP Cluster Grant #Various U.S. Department of Education ALN #84.126, Rehabilitation Services – Vocational Rehabilitation Grants to States Grant #H126A210038, H126A220038, H126A230038 U.S. Department of Health and Human Services ALN #93.268, Immunization Cooperative Agreements (COVID-19) Grant #Various ALN #93.323, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Grant #Various ALN #93.558, Temporary Assistance for Needy Families (TANF) (COVID-19) Grant #2101MTTANF, 2201MTTANF, 2301MTTANF ALN #93.563, Child Support Services Grant #2101MTCSES, 2201MTCSES, 2301MTCSES, 2101MTCEST, 2201MTCEST, 2301MTCEST ALN #93.566, Refugee and Entrant Assistance State/Replacement Designee Administered Programs Grant #2101MTRCMA, 2201MTRCMA, 2301MTRCMA ALN #93.575 and 93.596, Child Care Development Fund Cluster (CCDF) (COVID-19) Grant #2101MTCCDF, 2201MTCCDD, 2201MTCCDF, 2301MTCCDD, 2301MTCCDF ALN #93.658, Foster Care – Title IV-E (COVID-19) Grant #2101MTFOST, 2201MTFOST, 2301MTFOST ALN #93.659, Adoption Assistance – Title IV-E (COVID-19) Grant #2101MTADPT, 2201MTADPT, 2301MTADPT ALN #93.767, Children’s Health Insurance Program (CHIP) (COVID-19) Grant #2105MT5021, 2205MT5021, 2305MT3002 ALN #93.775, 93.777, 93.778, Medicaid Cluster (COVID-19) Grant #1205MT5ADM, 2205MT5ADM, 2305MT5ADM Criteria: Federal regulation, 2 CFR Appendix VI, in part, requires the state public assistance agency to develop, document, and implement a public assistance cost allocation plan in accordance with federal regulations. This section and federal regulation, 45 CFR 95.509, require the state agency promptly amend the cost allocation plan and submit the amended plan if certain events occur. Federal regulation, 45 CFR 200.416, requires a process for central services costs to be identified and assigned to benefitted activities on a reasonable and consistent basis. Federal regulation, 45 CFR 95.515, specifies the effective date of the cost allocation plan amendment is the first day of the calendar quarter following the date of the event requiring the amendment. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: For the fourth audit in a row, the Department of Public Health and Human Services (department) did not follow its federally approved plan to allocate costs among state and federal programs. Additionally, department internal controls did not prevent these inconsistencies. Questioned Costs: Using the “PACAP Impact Statement” sections of Public Assistance Cost Allocation Plan (PACAP) amendments for 2021, 2022, and 2023, which were submitted between May and November 2023, we estimated likely questioned costs. The following table summarizes questioned costs for major federal programs with material noncompliance or other federal programs where questioned costs are projected to exceed $25,000. See the Schedule of Findings and Questioned Costs for chart/table. Context: For the majority of the period under audit, the cost allocation plan in effect was submitted to the federal government in March 2020 and was effective as of January 1, 2020. The plan amendment for fiscal year 2021 was not submitted until May 2023, and plan amendments for fiscal years 2022 and 2023 were submitted after the end of the period under audit. Costs allocated to state and Federal programs totaled $173,808,149 and $184,493,577 for fiscal years 2022 and 2023, respectively. The table below depicts the total indirect costs allocated to each of the federal programs where we identified material noncompliance or questioned costs required to be reported. See the Schedule of Findings and Questioned Costs for chart/table. The internal control deficiency applies to all federal programs regardless of our identification of material noncompliance or reportable questioned costs. Repeat Finding: Montana’s prior Single Audit reports provided several recommendations to the department regarding its cost allocation plan. The report for the fiscal years ending June 30, 2017, recommended improving internal controls over the cost allocation plan (recommendation #2017-014). The report for the fiscal years ending June 30, 2019, advised the department to review and document all cost pools to ensure they align with the approved plan, obtain federal approval for changes, develop internal controls to detect variances, and allocate costs accordingly (#2019-022). The report for the fiscal years ending June 30, 2021, recommended enhancing internal controls, thoroughly reviewing cost allocation procedures, and obtaining federal approval before implementing changes (#2021-063). Effect: The department has not complied with federal compliance requirements by not following its submitted cost allocation plan. Cause: Since the previous audit, the department contracted with an external entity to review its cost allocation process and assist the department in making changes to cost pools and implementing new tools to facilitate the allocation processes. However, all work to review and modify the cost allocation processes was not completed during the audit period. During the audit period, the department continued implementing changes to cost pools and allocation methodologies outside the approved cost allocation plan. Recommendation: We recommend the Department of Public Health and Human Services: A. Enhance internal controls over cost allocation to ensure compliance with federal regulations. B. Continue and complete its in-depth review of its cost allocation procedures and plan. C. Allocate costs as specified in the cost allocation plan, as required by federal regulations. D. Implement changes to the cost allocation process only after receiving approval from, or submitting a plan revision to, the federal government. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department represented it was unable to comply with federal requirements to only implement changes to the cost allocation process after receiving approval or submitting a plan revision. The department has been in ongoing discussions with the federal government since March 2020 regarding the amendment effective 07/01/2018. This amendment was approved after 5 years on 09/12/2023. The department has implemented a two-year long business process improvement, and amendments are now submitted quarterly. It is the department’s position that the use of the impact statement from the department’s cost allocation plan is not a reasonable method for developing questioned costs as the impact statement includes estimates and does not delineate between actual increases in claiming costs and changes to allocation. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence. Since the department was not following its approved plan, it is our position that all changes captured in the impact statement represent questioned costs as they would not have been allocated in that manner under the approved plan. As such, our recommendation stands.
Finding 2023-067: U.S. Department of Agriculture ALN #10.551 and 10.561, SNAP Cluster Grant #Various U.S. Department of Education ALN #84.126, Rehabilitation Services – Vocational Rehabilitation Grants to States Grant #H126A210038, H126A220038, H126A230038 U.S. Department of Health and Human Services ALN #93.268, Immunization Cooperative Agreements (COVID-19) Grant #Various ALN #93.323, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Grant #Various ALN #93.558, Temporary Assistance for Needy Families (TANF) (COVID-19) Grant #2101MTTANF, 2201MTTANF, 2301MTTANF ALN #93.563, Child Support Services Grant #2101MTCSES, 2201MTCSES, 2301MTCSES, 2101MTCEST, 2201MTCEST, 2301MTCEST ALN #93.566, Refugee and Entrant Assistance State/Replacement Designee Administered Programs Grant #2101MTRCMA, 2201MTRCMA, 2301MTRCMA ALN #93.575 and 93.596, Child Care Development Fund Cluster (CCDF) (COVID-19) Grant #2101MTCCDF, 2201MTCCDD, 2201MTCCDF, 2301MTCCDD, 2301MTCCDF ALN #93.658, Foster Care – Title IV-E (COVID-19) Grant #2101MTFOST, 2201MTFOST, 2301MTFOST ALN #93.659, Adoption Assistance – Title IV-E (COVID-19) Grant #2101MTADPT, 2201MTADPT, 2301MTADPT ALN #93.767, Children’s Health Insurance Program (CHIP) (COVID-19) Grant #2105MT5021, 2205MT5021, 2305MT3002 ALN #93.775, 93.777, 93.778, Medicaid Cluster (COVID-19) Grant #1205MT5ADM, 2205MT5ADM, 2305MT5ADM Criteria: Federal regulation, 2 CFR Appendix VI, in part, requires the state public assistance agency to develop, document, and implement a public assistance cost allocation plan in accordance with federal regulations. This section and federal regulation, 45 CFR 95.509, require the state agency promptly amend the cost allocation plan and submit the amended plan if certain events occur. Federal regulation, 45 CFR 200.416, requires a process for central services costs to be identified and assigned to benefitted activities on a reasonable and consistent basis. Federal regulation, 45 CFR 95.515, specifies the effective date of the cost allocation plan amendment is the first day of the calendar quarter following the date of the event requiring the amendment. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: For the fourth audit in a row, the Department of Public Health and Human Services (department) did not follow its federally approved plan to allocate costs among state and federal programs. Additionally, department internal controls did not prevent these inconsistencies. Questioned Costs: Using the “PACAP Impact Statement” sections of Public Assistance Cost Allocation Plan (PACAP) amendments for 2021, 2022, and 2023, which were submitted between May and November 2023, we estimated likely questioned costs. The following table summarizes questioned costs for major federal programs with material noncompliance or other federal programs where questioned costs are projected to exceed $25,000. See the Schedule of Findings and Questioned Costs for chart/table. Context: For the majority of the period under audit, the cost allocation plan in effect was submitted to the federal government in March 2020 and was effective as of January 1, 2020. The plan amendment for fiscal year 2021 was not submitted until May 2023, and plan amendments for fiscal years 2022 and 2023 were submitted after the end of the period under audit. Costs allocated to state and Federal programs totaled $173,808,149 and $184,493,577 for fiscal years 2022 and 2023, respectively. The table below depicts the total indirect costs allocated to each of the federal programs where we identified material noncompliance or questioned costs required to be reported. See the Schedule of Findings and Questioned Costs for chart/table. The internal control deficiency applies to all federal programs regardless of our identification of material noncompliance or reportable questioned costs. Repeat Finding: Montana’s prior Single Audit reports provided several recommendations to the department regarding its cost allocation plan. The report for the fiscal years ending June 30, 2017, recommended improving internal controls over the cost allocation plan (recommendation #2017-014). The report for the fiscal years ending June 30, 2019, advised the department to review and document all cost pools to ensure they align with the approved plan, obtain federal approval for changes, develop internal controls to detect variances, and allocate costs accordingly (#2019-022). The report for the fiscal years ending June 30, 2021, recommended enhancing internal controls, thoroughly reviewing cost allocation procedures, and obtaining federal approval before implementing changes (#2021-063). Effect: The department has not complied with federal compliance requirements by not following its submitted cost allocation plan. Cause: Since the previous audit, the department contracted with an external entity to review its cost allocation process and assist the department in making changes to cost pools and implementing new tools to facilitate the allocation processes. However, all work to review and modify the cost allocation processes was not completed during the audit period. During the audit period, the department continued implementing changes to cost pools and allocation methodologies outside the approved cost allocation plan. Recommendation: We recommend the Department of Public Health and Human Services: A. Enhance internal controls over cost allocation to ensure compliance with federal regulations. B. Continue and complete its in-depth review of its cost allocation procedures and plan. C. Allocate costs as specified in the cost allocation plan, as required by federal regulations. D. Implement changes to the cost allocation process only after receiving approval from, or submitting a plan revision to, the federal government. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department represented it was unable to comply with federal requirements to only implement changes to the cost allocation process after receiving approval or submitting a plan revision. The department has been in ongoing discussions with the federal government since March 2020 regarding the amendment effective 07/01/2018. This amendment was approved after 5 years on 09/12/2023. The department has implemented a two-year long business process improvement, and amendments are now submitted quarterly. It is the department’s position that the use of the impact statement from the department’s cost allocation plan is not a reasonable method for developing questioned costs as the impact statement includes estimates and does not delineate between actual increases in claiming costs and changes to allocation. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence. Since the department was not following its approved plan, it is our position that all changes captured in the impact statement represent questioned costs as they would not have been allocated in that manner under the approved plan. As such, our recommendation stands.
Finding 2023-067: U.S. Department of Agriculture ALN #10.551 and 10.561, SNAP Cluster Grant #Various U.S. Department of Education ALN #84.126, Rehabilitation Services – Vocational Rehabilitation Grants to States Grant #H126A210038, H126A220038, H126A230038 U.S. Department of Health and Human Services ALN #93.268, Immunization Cooperative Agreements (COVID-19) Grant #Various ALN #93.323, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Grant #Various ALN #93.558, Temporary Assistance for Needy Families (TANF) (COVID-19) Grant #2101MTTANF, 2201MTTANF, 2301MTTANF ALN #93.563, Child Support Services Grant #2101MTCSES, 2201MTCSES, 2301MTCSES, 2101MTCEST, 2201MTCEST, 2301MTCEST ALN #93.566, Refugee and Entrant Assistance State/Replacement Designee Administered Programs Grant #2101MTRCMA, 2201MTRCMA, 2301MTRCMA ALN #93.575 and 93.596, Child Care Development Fund Cluster (CCDF) (COVID-19) Grant #2101MTCCDF, 2201MTCCDD, 2201MTCCDF, 2301MTCCDD, 2301MTCCDF ALN #93.658, Foster Care – Title IV-E (COVID-19) Grant #2101MTFOST, 2201MTFOST, 2301MTFOST ALN #93.659, Adoption Assistance – Title IV-E (COVID-19) Grant #2101MTADPT, 2201MTADPT, 2301MTADPT ALN #93.767, Children’s Health Insurance Program (CHIP) (COVID-19) Grant #2105MT5021, 2205MT5021, 2305MT3002 ALN #93.775, 93.777, 93.778, Medicaid Cluster (COVID-19) Grant #1205MT5ADM, 2205MT5ADM, 2305MT5ADM Criteria: Federal regulation, 2 CFR Appendix VI, in part, requires the state public assistance agency to develop, document, and implement a public assistance cost allocation plan in accordance with federal regulations. This section and federal regulation, 45 CFR 95.509, require the state agency promptly amend the cost allocation plan and submit the amended plan if certain events occur. Federal regulation, 45 CFR 200.416, requires a process for central services costs to be identified and assigned to benefitted activities on a reasonable and consistent basis. Federal regulation, 45 CFR 95.515, specifies the effective date of the cost allocation plan amendment is the first day of the calendar quarter following the date of the event requiring the amendment. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: For the fourth audit in a row, the Department of Public Health and Human Services (department) did not follow its federally approved plan to allocate costs among state and federal programs. Additionally, department internal controls did not prevent these inconsistencies. Questioned Costs: Using the “PACAP Impact Statement” sections of Public Assistance Cost Allocation Plan (PACAP) amendments for 2021, 2022, and 2023, which were submitted between May and November 2023, we estimated likely questioned costs. The following table summarizes questioned costs for major federal programs with material noncompliance or other federal programs where questioned costs are projected to exceed $25,000. See the Schedule of Findings and Questioned Costs for chart/table. Context: For the majority of the period under audit, the cost allocation plan in effect was submitted to the federal government in March 2020 and was effective as of January 1, 2020. The plan amendment for fiscal year 2021 was not submitted until May 2023, and plan amendments for fiscal years 2022 and 2023 were submitted after the end of the period under audit. Costs allocated to state and Federal programs totaled $173,808,149 and $184,493,577 for fiscal years 2022 and 2023, respectively. The table below depicts the total indirect costs allocated to each of the federal programs where we identified material noncompliance or questioned costs required to be reported. See the Schedule of Findings and Questioned Costs for chart/table. The internal control deficiency applies to all federal programs regardless of our identification of material noncompliance or reportable questioned costs. Repeat Finding: Montana’s prior Single Audit reports provided several recommendations to the department regarding its cost allocation plan. The report for the fiscal years ending June 30, 2017, recommended improving internal controls over the cost allocation plan (recommendation #2017-014). The report for the fiscal years ending June 30, 2019, advised the department to review and document all cost pools to ensure they align with the approved plan, obtain federal approval for changes, develop internal controls to detect variances, and allocate costs accordingly (#2019-022). The report for the fiscal years ending June 30, 2021, recommended enhancing internal controls, thoroughly reviewing cost allocation procedures, and obtaining federal approval before implementing changes (#2021-063). Effect: The department has not complied with federal compliance requirements by not following its submitted cost allocation plan. Cause: Since the previous audit, the department contracted with an external entity to review its cost allocation process and assist the department in making changes to cost pools and implementing new tools to facilitate the allocation processes. However, all work to review and modify the cost allocation processes was not completed during the audit period. During the audit period, the department continued implementing changes to cost pools and allocation methodologies outside the approved cost allocation plan. Recommendation: We recommend the Department of Public Health and Human Services: A. Enhance internal controls over cost allocation to ensure compliance with federal regulations. B. Continue and complete its in-depth review of its cost allocation procedures and plan. C. Allocate costs as specified in the cost allocation plan, as required by federal regulations. D. Implement changes to the cost allocation process only after receiving approval from, or submitting a plan revision to, the federal government. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department represented it was unable to comply with federal requirements to only implement changes to the cost allocation process after receiving approval or submitting a plan revision. The department has been in ongoing discussions with the federal government since March 2020 regarding the amendment effective 07/01/2018. This amendment was approved after 5 years on 09/12/2023. The department has implemented a two-year long business process improvement, and amendments are now submitted quarterly. It is the department’s position that the use of the impact statement from the department’s cost allocation plan is not a reasonable method for developing questioned costs as the impact statement includes estimates and does not delineate between actual increases in claiming costs and changes to allocation. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence. Since the department was not following its approved plan, it is our position that all changes captured in the impact statement represent questioned costs as they would not have been allocated in that manner under the approved plan. As such, our recommendation stands.
Finding 2023-067: U.S. Department of Agriculture ALN #10.551 and 10.561, SNAP Cluster Grant #Various U.S. Department of Education ALN #84.126, Rehabilitation Services – Vocational Rehabilitation Grants to States Grant #H126A210038, H126A220038, H126A230038 U.S. Department of Health and Human Services ALN #93.268, Immunization Cooperative Agreements (COVID-19) Grant #Various ALN #93.323, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Grant #Various ALN #93.558, Temporary Assistance for Needy Families (TANF) (COVID-19) Grant #2101MTTANF, 2201MTTANF, 2301MTTANF ALN #93.563, Child Support Services Grant #2101MTCSES, 2201MTCSES, 2301MTCSES, 2101MTCEST, 2201MTCEST, 2301MTCEST ALN #93.566, Refugee and Entrant Assistance State/Replacement Designee Administered Programs Grant #2101MTRCMA, 2201MTRCMA, 2301MTRCMA ALN #93.575 and 93.596, Child Care Development Fund Cluster (CCDF) (COVID-19) Grant #2101MTCCDF, 2201MTCCDD, 2201MTCCDF, 2301MTCCDD, 2301MTCCDF ALN #93.658, Foster Care – Title IV-E (COVID-19) Grant #2101MTFOST, 2201MTFOST, 2301MTFOST ALN #93.659, Adoption Assistance – Title IV-E (COVID-19) Grant #2101MTADPT, 2201MTADPT, 2301MTADPT ALN #93.767, Children’s Health Insurance Program (CHIP) (COVID-19) Grant #2105MT5021, 2205MT5021, 2305MT3002 ALN #93.775, 93.777, 93.778, Medicaid Cluster (COVID-19) Grant #1205MT5ADM, 2205MT5ADM, 2305MT5ADM Criteria: Federal regulation, 2 CFR Appendix VI, in part, requires the state public assistance agency to develop, document, and implement a public assistance cost allocation plan in accordance with federal regulations. This section and federal regulation, 45 CFR 95.509, require the state agency promptly amend the cost allocation plan and submit the amended plan if certain events occur. Federal regulation, 45 CFR 200.416, requires a process for central services costs to be identified and assigned to benefitted activities on a reasonable and consistent basis. Federal regulation, 45 CFR 95.515, specifies the effective date of the cost allocation plan amendment is the first day of the calendar quarter following the date of the event requiring the amendment. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: For the fourth audit in a row, the Department of Public Health and Human Services (department) did not follow its federally approved plan to allocate costs among state and federal programs. Additionally, department internal controls did not prevent these inconsistencies. Questioned Costs: Using the “PACAP Impact Statement” sections of Public Assistance Cost Allocation Plan (PACAP) amendments for 2021, 2022, and 2023, which were submitted between May and November 2023, we estimated likely questioned costs. The following table summarizes questioned costs for major federal programs with material noncompliance or other federal programs where questioned costs are projected to exceed $25,000. See the Schedule of Findings and Questioned Costs for chart/table. Context: For the majority of the period under audit, the cost allocation plan in effect was submitted to the federal government in March 2020 and was effective as of January 1, 2020. The plan amendment for fiscal year 2021 was not submitted until May 2023, and plan amendments for fiscal years 2022 and 2023 were submitted after the end of the period under audit. Costs allocated to state and Federal programs totaled $173,808,149 and $184,493,577 for fiscal years 2022 and 2023, respectively. The table below depicts the total indirect costs allocated to each of the federal programs where we identified material noncompliance or questioned costs required to be reported. See the Schedule of Findings and Questioned Costs for chart/table. The internal control deficiency applies to all federal programs regardless of our identification of material noncompliance or reportable questioned costs. Repeat Finding: Montana’s prior Single Audit reports provided several recommendations to the department regarding its cost allocation plan. The report for the fiscal years ending June 30, 2017, recommended improving internal controls over the cost allocation plan (recommendation #2017-014). The report for the fiscal years ending June 30, 2019, advised the department to review and document all cost pools to ensure they align with the approved plan, obtain federal approval for changes, develop internal controls to detect variances, and allocate costs accordingly (#2019-022). The report for the fiscal years ending June 30, 2021, recommended enhancing internal controls, thoroughly reviewing cost allocation procedures, and obtaining federal approval before implementing changes (#2021-063). Effect: The department has not complied with federal compliance requirements by not following its submitted cost allocation plan. Cause: Since the previous audit, the department contracted with an external entity to review its cost allocation process and assist the department in making changes to cost pools and implementing new tools to facilitate the allocation processes. However, all work to review and modify the cost allocation processes was not completed during the audit period. During the audit period, the department continued implementing changes to cost pools and allocation methodologies outside the approved cost allocation plan. Recommendation: We recommend the Department of Public Health and Human Services: A. Enhance internal controls over cost allocation to ensure compliance with federal regulations. B. Continue and complete its in-depth review of its cost allocation procedures and plan. C. Allocate costs as specified in the cost allocation plan, as required by federal regulations. D. Implement changes to the cost allocation process only after receiving approval from, or submitting a plan revision to, the federal government. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department represented it was unable to comply with federal requirements to only implement changes to the cost allocation process after receiving approval or submitting a plan revision. The department has been in ongoing discussions with the federal government since March 2020 regarding the amendment effective 07/01/2018. This amendment was approved after 5 years on 09/12/2023. The department has implemented a two-year long business process improvement, and amendments are now submitted quarterly. It is the department’s position that the use of the impact statement from the department’s cost allocation plan is not a reasonable method for developing questioned costs as the impact statement includes estimates and does not delineate between actual increases in claiming costs and changes to allocation. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence. Since the department was not following its approved plan, it is our position that all changes captured in the impact statement represent questioned costs as they would not have been allocated in that manner under the approved plan. As such, our recommendation stands.
Finding 2023-067: U.S. Department of Agriculture ALN #10.551 and 10.561, SNAP Cluster Grant #Various U.S. Department of Education ALN #84.126, Rehabilitation Services – Vocational Rehabilitation Grants to States Grant #H126A210038, H126A220038, H126A230038 U.S. Department of Health and Human Services ALN #93.268, Immunization Cooperative Agreements (COVID-19) Grant #Various ALN #93.323, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Grant #Various ALN #93.558, Temporary Assistance for Needy Families (TANF) (COVID-19) Grant #2101MTTANF, 2201MTTANF, 2301MTTANF ALN #93.563, Child Support Services Grant #2101MTCSES, 2201MTCSES, 2301MTCSES, 2101MTCEST, 2201MTCEST, 2301MTCEST ALN #93.566, Refugee and Entrant Assistance State/Replacement Designee Administered Programs Grant #2101MTRCMA, 2201MTRCMA, 2301MTRCMA ALN #93.575 and 93.596, Child Care Development Fund Cluster (CCDF) (COVID-19) Grant #2101MTCCDF, 2201MTCCDD, 2201MTCCDF, 2301MTCCDD, 2301MTCCDF ALN #93.658, Foster Care – Title IV-E (COVID-19) Grant #2101MTFOST, 2201MTFOST, 2301MTFOST ALN #93.659, Adoption Assistance – Title IV-E (COVID-19) Grant #2101MTADPT, 2201MTADPT, 2301MTADPT ALN #93.767, Children’s Health Insurance Program (CHIP) (COVID-19) Grant #2105MT5021, 2205MT5021, 2305MT3002 ALN #93.775, 93.777, 93.778, Medicaid Cluster (COVID-19) Grant #1205MT5ADM, 2205MT5ADM, 2305MT5ADM Criteria: Federal regulation, 2 CFR Appendix VI, in part, requires the state public assistance agency to develop, document, and implement a public assistance cost allocation plan in accordance with federal regulations. This section and federal regulation, 45 CFR 95.509, require the state agency promptly amend the cost allocation plan and submit the amended plan if certain events occur. Federal regulation, 45 CFR 200.416, requires a process for central services costs to be identified and assigned to benefitted activities on a reasonable and consistent basis. Federal regulation, 45 CFR 95.515, specifies the effective date of the cost allocation plan amendment is the first day of the calendar quarter following the date of the event requiring the amendment. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: For the fourth audit in a row, the Department of Public Health and Human Services (department) did not follow its federally approved plan to allocate costs among state and federal programs. Additionally, department internal controls did not prevent these inconsistencies. Questioned Costs: Using the “PACAP Impact Statement” sections of Public Assistance Cost Allocation Plan (PACAP) amendments for 2021, 2022, and 2023, which were submitted between May and November 2023, we estimated likely questioned costs. The following table summarizes questioned costs for major federal programs with material noncompliance or other federal programs where questioned costs are projected to exceed $25,000. See the Schedule of Findings and Questioned Costs for chart/table. Context: For the majority of the period under audit, the cost allocation plan in effect was submitted to the federal government in March 2020 and was effective as of January 1, 2020. The plan amendment for fiscal year 2021 was not submitted until May 2023, and plan amendments for fiscal years 2022 and 2023 were submitted after the end of the period under audit. Costs allocated to state and Federal programs totaled $173,808,149 and $184,493,577 for fiscal years 2022 and 2023, respectively. The table below depicts the total indirect costs allocated to each of the federal programs where we identified material noncompliance or questioned costs required to be reported. See the Schedule of Findings and Questioned Costs for chart/table. The internal control deficiency applies to all federal programs regardless of our identification of material noncompliance or reportable questioned costs. Repeat Finding: Montana’s prior Single Audit reports provided several recommendations to the department regarding its cost allocation plan. The report for the fiscal years ending June 30, 2017, recommended improving internal controls over the cost allocation plan (recommendation #2017-014). The report for the fiscal years ending June 30, 2019, advised the department to review and document all cost pools to ensure they align with the approved plan, obtain federal approval for changes, develop internal controls to detect variances, and allocate costs accordingly (#2019-022). The report for the fiscal years ending June 30, 2021, recommended enhancing internal controls, thoroughly reviewing cost allocation procedures, and obtaining federal approval before implementing changes (#2021-063). Effect: The department has not complied with federal compliance requirements by not following its submitted cost allocation plan. Cause: Since the previous audit, the department contracted with an external entity to review its cost allocation process and assist the department in making changes to cost pools and implementing new tools to facilitate the allocation processes. However, all work to review and modify the cost allocation processes was not completed during the audit period. During the audit period, the department continued implementing changes to cost pools and allocation methodologies outside the approved cost allocation plan. Recommendation: We recommend the Department of Public Health and Human Services: A. Enhance internal controls over cost allocation to ensure compliance with federal regulations. B. Continue and complete its in-depth review of its cost allocation procedures and plan. C. Allocate costs as specified in the cost allocation plan, as required by federal regulations. D. Implement changes to the cost allocation process only after receiving approval from, or submitting a plan revision to, the federal government. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department represented it was unable to comply with federal requirements to only implement changes to the cost allocation process after receiving approval or submitting a plan revision. The department has been in ongoing discussions with the federal government since March 2020 regarding the amendment effective 07/01/2018. This amendment was approved after 5 years on 09/12/2023. The department has implemented a two-year long business process improvement, and amendments are now submitted quarterly. It is the department’s position that the use of the impact statement from the department’s cost allocation plan is not a reasonable method for developing questioned costs as the impact statement includes estimates and does not delineate between actual increases in claiming costs and changes to allocation. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence. Since the department was not following its approved plan, it is our position that all changes captured in the impact statement represent questioned costs as they would not have been allocated in that manner under the approved plan. As such, our recommendation stands.
Finding 2023-067: U.S. Department of Agriculture ALN #10.551 and 10.561, SNAP Cluster Grant #Various U.S. Department of Education ALN #84.126, Rehabilitation Services – Vocational Rehabilitation Grants to States Grant #H126A210038, H126A220038, H126A230038 U.S. Department of Health and Human Services ALN #93.268, Immunization Cooperative Agreements (COVID-19) Grant #Various ALN #93.323, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Grant #Various ALN #93.558, Temporary Assistance for Needy Families (TANF) (COVID-19) Grant #2101MTTANF, 2201MTTANF, 2301MTTANF ALN #93.563, Child Support Services Grant #2101MTCSES, 2201MTCSES, 2301MTCSES, 2101MTCEST, 2201MTCEST, 2301MTCEST ALN #93.566, Refugee and Entrant Assistance State/Replacement Designee Administered Programs Grant #2101MTRCMA, 2201MTRCMA, 2301MTRCMA ALN #93.575 and 93.596, Child Care Development Fund Cluster (CCDF) (COVID-19) Grant #2101MTCCDF, 2201MTCCDD, 2201MTCCDF, 2301MTCCDD, 2301MTCCDF ALN #93.658, Foster Care – Title IV-E (COVID-19) Grant #2101MTFOST, 2201MTFOST, 2301MTFOST ALN #93.659, Adoption Assistance – Title IV-E (COVID-19) Grant #2101MTADPT, 2201MTADPT, 2301MTADPT ALN #93.767, Children’s Health Insurance Program (CHIP) (COVID-19) Grant #2105MT5021, 2205MT5021, 2305MT3002 ALN #93.775, 93.777, 93.778, Medicaid Cluster (COVID-19) Grant #1205MT5ADM, 2205MT5ADM, 2305MT5ADM Criteria: Federal regulation, 2 CFR Appendix VI, in part, requires the state public assistance agency to develop, document, and implement a public assistance cost allocation plan in accordance with federal regulations. This section and federal regulation, 45 CFR 95.509, require the state agency promptly amend the cost allocation plan and submit the amended plan if certain events occur. Federal regulation, 45 CFR 200.416, requires a process for central services costs to be identified and assigned to benefitted activities on a reasonable and consistent basis. Federal regulation, 45 CFR 95.515, specifies the effective date of the cost allocation plan amendment is the first day of the calendar quarter following the date of the event requiring the amendment. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: For the fourth audit in a row, the Department of Public Health and Human Services (department) did not follow its federally approved plan to allocate costs among state and federal programs. Additionally, department internal controls did not prevent these inconsistencies. Questioned Costs: Using the “PACAP Impact Statement” sections of Public Assistance Cost Allocation Plan (PACAP) amendments for 2021, 2022, and 2023, which were submitted between May and November 2023, we estimated likely questioned costs. The following table summarizes questioned costs for major federal programs with material noncompliance or other federal programs where questioned costs are projected to exceed $25,000. See the Schedule of Findings and Questioned Costs for chart/table. Context: For the majority of the period under audit, the cost allocation plan in effect was submitted to the federal government in March 2020 and was effective as of January 1, 2020. The plan amendment for fiscal year 2021 was not submitted until May 2023, and plan amendments for fiscal years 2022 and 2023 were submitted after the end of the period under audit. Costs allocated to state and Federal programs totaled $173,808,149 and $184,493,577 for fiscal years 2022 and 2023, respectively. The table below depicts the total indirect costs allocated to each of the federal programs where we identified material noncompliance or questioned costs required to be reported. See the Schedule of Findings and Questioned Costs for chart/table. The internal control deficiency applies to all federal programs regardless of our identification of material noncompliance or reportable questioned costs. Repeat Finding: Montana’s prior Single Audit reports provided several recommendations to the department regarding its cost allocation plan. The report for the fiscal years ending June 30, 2017, recommended improving internal controls over the cost allocation plan (recommendation #2017-014). The report for the fiscal years ending June 30, 2019, advised the department to review and document all cost pools to ensure they align with the approved plan, obtain federal approval for changes, develop internal controls to detect variances, and allocate costs accordingly (#2019-022). The report for the fiscal years ending June 30, 2021, recommended enhancing internal controls, thoroughly reviewing cost allocation procedures, and obtaining federal approval before implementing changes (#2021-063). Effect: The department has not complied with federal compliance requirements by not following its submitted cost allocation plan. Cause: Since the previous audit, the department contracted with an external entity to review its cost allocation process and assist the department in making changes to cost pools and implementing new tools to facilitate the allocation processes. However, all work to review and modify the cost allocation processes was not completed during the audit period. During the audit period, the department continued implementing changes to cost pools and allocation methodologies outside the approved cost allocation plan. Recommendation: We recommend the Department of Public Health and Human Services: A. Enhance internal controls over cost allocation to ensure compliance with federal regulations. B. Continue and complete its in-depth review of its cost allocation procedures and plan. C. Allocate costs as specified in the cost allocation plan, as required by federal regulations. D. Implement changes to the cost allocation process only after receiving approval from, or submitting a plan revision to, the federal government. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department represented it was unable to comply with federal requirements to only implement changes to the cost allocation process after receiving approval or submitting a plan revision. The department has been in ongoing discussions with the federal government since March 2020 regarding the amendment effective 07/01/2018. This amendment was approved after 5 years on 09/12/2023. The department has implemented a two-year long business process improvement, and amendments are now submitted quarterly. It is the department’s position that the use of the impact statement from the department’s cost allocation plan is not a reasonable method for developing questioned costs as the impact statement includes estimates and does not delineate between actual increases in claiming costs and changes to allocation. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence. Since the department was not following its approved plan, it is our position that all changes captured in the impact statement represent questioned costs as they would not have been allocated in that manner under the approved plan. As such, our recommendation stands.
Finding 2023-067: U.S. Department of Agriculture ALN #10.551 and 10.561, SNAP Cluster Grant #Various U.S. Department of Education ALN #84.126, Rehabilitation Services – Vocational Rehabilitation Grants to States Grant #H126A210038, H126A220038, H126A230038 U.S. Department of Health and Human Services ALN #93.268, Immunization Cooperative Agreements (COVID-19) Grant #Various ALN #93.323, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Grant #Various ALN #93.558, Temporary Assistance for Needy Families (TANF) (COVID-19) Grant #2101MTTANF, 2201MTTANF, 2301MTTANF ALN #93.563, Child Support Services Grant #2101MTCSES, 2201MTCSES, 2301MTCSES, 2101MTCEST, 2201MTCEST, 2301MTCEST ALN #93.566, Refugee and Entrant Assistance State/Replacement Designee Administered Programs Grant #2101MTRCMA, 2201MTRCMA, 2301MTRCMA ALN #93.575 and 93.596, Child Care Development Fund Cluster (CCDF) (COVID-19) Grant #2101MTCCDF, 2201MTCCDD, 2201MTCCDF, 2301MTCCDD, 2301MTCCDF ALN #93.658, Foster Care – Title IV-E (COVID-19) Grant #2101MTFOST, 2201MTFOST, 2301MTFOST ALN #93.659, Adoption Assistance – Title IV-E (COVID-19) Grant #2101MTADPT, 2201MTADPT, 2301MTADPT ALN #93.767, Children’s Health Insurance Program (CHIP) (COVID-19) Grant #2105MT5021, 2205MT5021, 2305MT3002 ALN #93.775, 93.777, 93.778, Medicaid Cluster (COVID-19) Grant #1205MT5ADM, 2205MT5ADM, 2305MT5ADM Criteria: Federal regulation, 2 CFR Appendix VI, in part, requires the state public assistance agency to develop, document, and implement a public assistance cost allocation plan in accordance with federal regulations. This section and federal regulation, 45 CFR 95.509, require the state agency promptly amend the cost allocation plan and submit the amended plan if certain events occur. Federal regulation, 45 CFR 200.416, requires a process for central services costs to be identified and assigned to benefitted activities on a reasonable and consistent basis. Federal regulation, 45 CFR 95.515, specifies the effective date of the cost allocation plan amendment is the first day of the calendar quarter following the date of the event requiring the amendment. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: For the fourth audit in a row, the Department of Public Health and Human Services (department) did not follow its federally approved plan to allocate costs among state and federal programs. Additionally, department internal controls did not prevent these inconsistencies. Questioned Costs: Using the “PACAP Impact Statement” sections of Public Assistance Cost Allocation Plan (PACAP) amendments for 2021, 2022, and 2023, which were submitted between May and November 2023, we estimated likely questioned costs. The following table summarizes questioned costs for major federal programs with material noncompliance or other federal programs where questioned costs are projected to exceed $25,000. See the Schedule of Findings and Questioned Costs for chart/table. Context: For the majority of the period under audit, the cost allocation plan in effect was submitted to the federal government in March 2020 and was effective as of January 1, 2020. The plan amendment for fiscal year 2021 was not submitted until May 2023, and plan amendments for fiscal years 2022 and 2023 were submitted after the end of the period under audit. Costs allocated to state and Federal programs totaled $173,808,149 and $184,493,577 for fiscal years 2022 and 2023, respectively. The table below depicts the total indirect costs allocated to each of the federal programs where we identified material noncompliance or questioned costs required to be reported. See the Schedule of Findings and Questioned Costs for chart/table. The internal control deficiency applies to all federal programs regardless of our identification of material noncompliance or reportable questioned costs. Repeat Finding: Montana’s prior Single Audit reports provided several recommendations to the department regarding its cost allocation plan. The report for the fiscal years ending June 30, 2017, recommended improving internal controls over the cost allocation plan (recommendation #2017-014). The report for the fiscal years ending June 30, 2019, advised the department to review and document all cost pools to ensure they align with the approved plan, obtain federal approval for changes, develop internal controls to detect variances, and allocate costs accordingly (#2019-022). The report for the fiscal years ending June 30, 2021, recommended enhancing internal controls, thoroughly reviewing cost allocation procedures, and obtaining federal approval before implementing changes (#2021-063). Effect: The department has not complied with federal compliance requirements by not following its submitted cost allocation plan. Cause: Since the previous audit, the department contracted with an external entity to review its cost allocation process and assist the department in making changes to cost pools and implementing new tools to facilitate the allocation processes. However, all work to review and modify the cost allocation processes was not completed during the audit period. During the audit period, the department continued implementing changes to cost pools and allocation methodologies outside the approved cost allocation plan. Recommendation: We recommend the Department of Public Health and Human Services: A. Enhance internal controls over cost allocation to ensure compliance with federal regulations. B. Continue and complete its in-depth review of its cost allocation procedures and plan. C. Allocate costs as specified in the cost allocation plan, as required by federal regulations. D. Implement changes to the cost allocation process only after receiving approval from, or submitting a plan revision to, the federal government. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department represented it was unable to comply with federal requirements to only implement changes to the cost allocation process after receiving approval or submitting a plan revision. The department has been in ongoing discussions with the federal government since March 2020 regarding the amendment effective 07/01/2018. This amendment was approved after 5 years on 09/12/2023. The department has implemented a two-year long business process improvement, and amendments are now submitted quarterly. It is the department’s position that the use of the impact statement from the department’s cost allocation plan is not a reasonable method for developing questioned costs as the impact statement includes estimates and does not delineate between actual increases in claiming costs and changes to allocation. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence. Since the department was not following its approved plan, it is our position that all changes captured in the impact statement represent questioned costs as they would not have been allocated in that manner under the approved plan. As such, our recommendation stands.
Finding 2023-067: U.S. Department of Agriculture ALN #10.551 and 10.561, SNAP Cluster Grant #Various U.S. Department of Education ALN #84.126, Rehabilitation Services – Vocational Rehabilitation Grants to States Grant #H126A210038, H126A220038, H126A230038 U.S. Department of Health and Human Services ALN #93.268, Immunization Cooperative Agreements (COVID-19) Grant #Various ALN #93.323, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Grant #Various ALN #93.558, Temporary Assistance for Needy Families (TANF) (COVID-19) Grant #2101MTTANF, 2201MTTANF, 2301MTTANF ALN #93.563, Child Support Services Grant #2101MTCSES, 2201MTCSES, 2301MTCSES, 2101MTCEST, 2201MTCEST, 2301MTCEST ALN #93.566, Refugee and Entrant Assistance State/Replacement Designee Administered Programs Grant #2101MTRCMA, 2201MTRCMA, 2301MTRCMA ALN #93.575 and 93.596, Child Care Development Fund Cluster (CCDF) (COVID-19) Grant #2101MTCCDF, 2201MTCCDD, 2201MTCCDF, 2301MTCCDD, 2301MTCCDF ALN #93.658, Foster Care – Title IV-E (COVID-19) Grant #2101MTFOST, 2201MTFOST, 2301MTFOST ALN #93.659, Adoption Assistance – Title IV-E (COVID-19) Grant #2101MTADPT, 2201MTADPT, 2301MTADPT ALN #93.767, Children’s Health Insurance Program (CHIP) (COVID-19) Grant #2105MT5021, 2205MT5021, 2305MT3002 ALN #93.775, 93.777, 93.778, Medicaid Cluster (COVID-19) Grant #1205MT5ADM, 2205MT5ADM, 2305MT5ADM Criteria: Federal regulation, 2 CFR Appendix VI, in part, requires the state public assistance agency to develop, document, and implement a public assistance cost allocation plan in accordance with federal regulations. This section and federal regulation, 45 CFR 95.509, require the state agency promptly amend the cost allocation plan and submit the amended plan if certain events occur. Federal regulation, 45 CFR 200.416, requires a process for central services costs to be identified and assigned to benefitted activities on a reasonable and consistent basis. Federal regulation, 45 CFR 95.515, specifies the effective date of the cost allocation plan amendment is the first day of the calendar quarter following the date of the event requiring the amendment. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: For the fourth audit in a row, the Department of Public Health and Human Services (department) did not follow its federally approved plan to allocate costs among state and federal programs. Additionally, department internal controls did not prevent these inconsistencies. Questioned Costs: Using the “PACAP Impact Statement” sections of Public Assistance Cost Allocation Plan (PACAP) amendments for 2021, 2022, and 2023, which were submitted between May and November 2023, we estimated likely questioned costs. The following table summarizes questioned costs for major federal programs with material noncompliance or other federal programs where questioned costs are projected to exceed $25,000. See the Schedule of Findings and Questioned Costs for chart/table. Context: For the majority of the period under audit, the cost allocation plan in effect was submitted to the federal government in March 2020 and was effective as of January 1, 2020. The plan amendment for fiscal year 2021 was not submitted until May 2023, and plan amendments for fiscal years 2022 and 2023 were submitted after the end of the period under audit. Costs allocated to state and Federal programs totaled $173,808,149 and $184,493,577 for fiscal years 2022 and 2023, respectively. The table below depicts the total indirect costs allocated to each of the federal programs where we identified material noncompliance or questioned costs required to be reported. See the Schedule of Findings and Questioned Costs for chart/table. The internal control deficiency applies to all federal programs regardless of our identification of material noncompliance or reportable questioned costs. Repeat Finding: Montana’s prior Single Audit reports provided several recommendations to the department regarding its cost allocation plan. The report for the fiscal years ending June 30, 2017, recommended improving internal controls over the cost allocation plan (recommendation #2017-014). The report for the fiscal years ending June 30, 2019, advised the department to review and document all cost pools to ensure they align with the approved plan, obtain federal approval for changes, develop internal controls to detect variances, and allocate costs accordingly (#2019-022). The report for the fiscal years ending June 30, 2021, recommended enhancing internal controls, thoroughly reviewing cost allocation procedures, and obtaining federal approval before implementing changes (#2021-063). Effect: The department has not complied with federal compliance requirements by not following its submitted cost allocation plan. Cause: Since the previous audit, the department contracted with an external entity to review its cost allocation process and assist the department in making changes to cost pools and implementing new tools to facilitate the allocation processes. However, all work to review and modify the cost allocation processes was not completed during the audit period. During the audit period, the department continued implementing changes to cost pools and allocation methodologies outside the approved cost allocation plan. Recommendation: We recommend the Department of Public Health and Human Services: A. Enhance internal controls over cost allocation to ensure compliance with federal regulations. B. Continue and complete its in-depth review of its cost allocation procedures and plan. C. Allocate costs as specified in the cost allocation plan, as required by federal regulations. D. Implement changes to the cost allocation process only after receiving approval from, or submitting a plan revision to, the federal government. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department represented it was unable to comply with federal requirements to only implement changes to the cost allocation process after receiving approval or submitting a plan revision. The department has been in ongoing discussions with the federal government since March 2020 regarding the amendment effective 07/01/2018. This amendment was approved after 5 years on 09/12/2023. The department has implemented a two-year long business process improvement, and amendments are now submitted quarterly. It is the department’s position that the use of the impact statement from the department’s cost allocation plan is not a reasonable method for developing questioned costs as the impact statement includes estimates and does not delineate between actual increases in claiming costs and changes to allocation. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence. Since the department was not following its approved plan, it is our position that all changes captured in the impact statement represent questioned costs as they would not have been allocated in that manner under the approved plan. As such, our recommendation stands.
Finding 2023-067: U.S. Department of Agriculture ALN #10.551 and 10.561, SNAP Cluster Grant #Various U.S. Department of Education ALN #84.126, Rehabilitation Services – Vocational Rehabilitation Grants to States Grant #H126A210038, H126A220038, H126A230038 U.S. Department of Health and Human Services ALN #93.268, Immunization Cooperative Agreements (COVID-19) Grant #Various ALN #93.323, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Grant #Various ALN #93.558, Temporary Assistance for Needy Families (TANF) (COVID-19) Grant #2101MTTANF, 2201MTTANF, 2301MTTANF ALN #93.563, Child Support Services Grant #2101MTCSES, 2201MTCSES, 2301MTCSES, 2101MTCEST, 2201MTCEST, 2301MTCEST ALN #93.566, Refugee and Entrant Assistance State/Replacement Designee Administered Programs Grant #2101MTRCMA, 2201MTRCMA, 2301MTRCMA ALN #93.575 and 93.596, Child Care Development Fund Cluster (CCDF) (COVID-19) Grant #2101MTCCDF, 2201MTCCDD, 2201MTCCDF, 2301MTCCDD, 2301MTCCDF ALN #93.658, Foster Care – Title IV-E (COVID-19) Grant #2101MTFOST, 2201MTFOST, 2301MTFOST ALN #93.659, Adoption Assistance – Title IV-E (COVID-19) Grant #2101MTADPT, 2201MTADPT, 2301MTADPT ALN #93.767, Children’s Health Insurance Program (CHIP) (COVID-19) Grant #2105MT5021, 2205MT5021, 2305MT3002 ALN #93.775, 93.777, 93.778, Medicaid Cluster (COVID-19) Grant #1205MT5ADM, 2205MT5ADM, 2305MT5ADM Criteria: Federal regulation, 2 CFR Appendix VI, in part, requires the state public assistance agency to develop, document, and implement a public assistance cost allocation plan in accordance with federal regulations. This section and federal regulation, 45 CFR 95.509, require the state agency promptly amend the cost allocation plan and submit the amended plan if certain events occur. Federal regulation, 45 CFR 200.416, requires a process for central services costs to be identified and assigned to benefitted activities on a reasonable and consistent basis. Federal regulation, 45 CFR 95.515, specifies the effective date of the cost allocation plan amendment is the first day of the calendar quarter following the date of the event requiring the amendment. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: For the fourth audit in a row, the Department of Public Health and Human Services (department) did not follow its federally approved plan to allocate costs among state and federal programs. Additionally, department internal controls did not prevent these inconsistencies. Questioned Costs: Using the “PACAP Impact Statement” sections of Public Assistance Cost Allocation Plan (PACAP) amendments for 2021, 2022, and 2023, which were submitted between May and November 2023, we estimated likely questioned costs. The following table summarizes questioned costs for major federal programs with material noncompliance or other federal programs where questioned costs are projected to exceed $25,000. See the Schedule of Findings and Questioned Costs for chart/table. Context: For the majority of the period under audit, the cost allocation plan in effect was submitted to the federal government in March 2020 and was effective as of January 1, 2020. The plan amendment for fiscal year 2021 was not submitted until May 2023, and plan amendments for fiscal years 2022 and 2023 were submitted after the end of the period under audit. Costs allocated to state and Federal programs totaled $173,808,149 and $184,493,577 for fiscal years 2022 and 2023, respectively. The table below depicts the total indirect costs allocated to each of the federal programs where we identified material noncompliance or questioned costs required to be reported. See the Schedule of Findings and Questioned Costs for chart/table. The internal control deficiency applies to all federal programs regardless of our identification of material noncompliance or reportable questioned costs. Repeat Finding: Montana’s prior Single Audit reports provided several recommendations to the department regarding its cost allocation plan. The report for the fiscal years ending June 30, 2017, recommended improving internal controls over the cost allocation plan (recommendation #2017-014). The report for the fiscal years ending June 30, 2019, advised the department to review and document all cost pools to ensure they align with the approved plan, obtain federal approval for changes, develop internal controls to detect variances, and allocate costs accordingly (#2019-022). The report for the fiscal years ending June 30, 2021, recommended enhancing internal controls, thoroughly reviewing cost allocation procedures, and obtaining federal approval before implementing changes (#2021-063). Effect: The department has not complied with federal compliance requirements by not following its submitted cost allocation plan. Cause: Since the previous audit, the department contracted with an external entity to review its cost allocation process and assist the department in making changes to cost pools and implementing new tools to facilitate the allocation processes. However, all work to review and modify the cost allocation processes was not completed during the audit period. During the audit period, the department continued implementing changes to cost pools and allocation methodologies outside the approved cost allocation plan. Recommendation: We recommend the Department of Public Health and Human Services: A. Enhance internal controls over cost allocation to ensure compliance with federal regulations. B. Continue and complete its in-depth review of its cost allocation procedures and plan. C. Allocate costs as specified in the cost allocation plan, as required by federal regulations. D. Implement changes to the cost allocation process only after receiving approval from, or submitting a plan revision to, the federal government. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department represented it was unable to comply with federal requirements to only implement changes to the cost allocation process after receiving approval or submitting a plan revision. The department has been in ongoing discussions with the federal government since March 2020 regarding the amendment effective 07/01/2018. This amendment was approved after 5 years on 09/12/2023. The department has implemented a two-year long business process improvement, and amendments are now submitted quarterly. It is the department’s position that the use of the impact statement from the department’s cost allocation plan is not a reasonable method for developing questioned costs as the impact statement includes estimates and does not delineate between actual increases in claiming costs and changes to allocation. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence. Since the department was not following its approved plan, it is our position that all changes captured in the impact statement represent questioned costs as they would not have been allocated in that manner under the approved plan. As such, our recommendation stands.
Finding 2023-067: U.S. Department of Agriculture ALN #10.551 and 10.561, SNAP Cluster Grant #Various U.S. Department of Education ALN #84.126, Rehabilitation Services – Vocational Rehabilitation Grants to States Grant #H126A210038, H126A220038, H126A230038 U.S. Department of Health and Human Services ALN #93.268, Immunization Cooperative Agreements (COVID-19) Grant #Various ALN #93.323, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Grant #Various ALN #93.558, Temporary Assistance for Needy Families (TANF) (COVID-19) Grant #2101MTTANF, 2201MTTANF, 2301MTTANF ALN #93.563, Child Support Services Grant #2101MTCSES, 2201MTCSES, 2301MTCSES, 2101MTCEST, 2201MTCEST, 2301MTCEST ALN #93.566, Refugee and Entrant Assistance State/Replacement Designee Administered Programs Grant #2101MTRCMA, 2201MTRCMA, 2301MTRCMA ALN #93.575 and 93.596, Child Care Development Fund Cluster (CCDF) (COVID-19) Grant #2101MTCCDF, 2201MTCCDD, 2201MTCCDF, 2301MTCCDD, 2301MTCCDF ALN #93.658, Foster Care – Title IV-E (COVID-19) Grant #2101MTFOST, 2201MTFOST, 2301MTFOST ALN #93.659, Adoption Assistance – Title IV-E (COVID-19) Grant #2101MTADPT, 2201MTADPT, 2301MTADPT ALN #93.767, Children’s Health Insurance Program (CHIP) (COVID-19) Grant #2105MT5021, 2205MT5021, 2305MT3002 ALN #93.775, 93.777, 93.778, Medicaid Cluster (COVID-19) Grant #1205MT5ADM, 2205MT5ADM, 2305MT5ADM Criteria: Federal regulation, 2 CFR Appendix VI, in part, requires the state public assistance agency to develop, document, and implement a public assistance cost allocation plan in accordance with federal regulations. This section and federal regulation, 45 CFR 95.509, require the state agency promptly amend the cost allocation plan and submit the amended plan if certain events occur. Federal regulation, 45 CFR 200.416, requires a process for central services costs to be identified and assigned to benefitted activities on a reasonable and consistent basis. Federal regulation, 45 CFR 95.515, specifies the effective date of the cost allocation plan amendment is the first day of the calendar quarter following the date of the event requiring the amendment. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: For the fourth audit in a row, the Department of Public Health and Human Services (department) did not follow its federally approved plan to allocate costs among state and federal programs. Additionally, department internal controls did not prevent these inconsistencies. Questioned Costs: Using the “PACAP Impact Statement” sections of Public Assistance Cost Allocation Plan (PACAP) amendments for 2021, 2022, and 2023, which were submitted between May and November 2023, we estimated likely questioned costs. The following table summarizes questioned costs for major federal programs with material noncompliance or other federal programs where questioned costs are projected to exceed $25,000. See the Schedule of Findings and Questioned Costs for chart/table. Context: For the majority of the period under audit, the cost allocation plan in effect was submitted to the federal government in March 2020 and was effective as of January 1, 2020. The plan amendment for fiscal year 2021 was not submitted until May 2023, and plan amendments for fiscal years 2022 and 2023 were submitted after the end of the period under audit. Costs allocated to state and Federal programs totaled $173,808,149 and $184,493,577 for fiscal years 2022 and 2023, respectively. The table below depicts the total indirect costs allocated to each of the federal programs where we identified material noncompliance or questioned costs required to be reported. See the Schedule of Findings and Questioned Costs for chart/table. The internal control deficiency applies to all federal programs regardless of our identification of material noncompliance or reportable questioned costs. Repeat Finding: Montana’s prior Single Audit reports provided several recommendations to the department regarding its cost allocation plan. The report for the fiscal years ending June 30, 2017, recommended improving internal controls over the cost allocation plan (recommendation #2017-014). The report for the fiscal years ending June 30, 2019, advised the department to review and document all cost pools to ensure they align with the approved plan, obtain federal approval for changes, develop internal controls to detect variances, and allocate costs accordingly (#2019-022). The report for the fiscal years ending June 30, 2021, recommended enhancing internal controls, thoroughly reviewing cost allocation procedures, and obtaining federal approval before implementing changes (#2021-063). Effect: The department has not complied with federal compliance requirements by not following its submitted cost allocation plan. Cause: Since the previous audit, the department contracted with an external entity to review its cost allocation process and assist the department in making changes to cost pools and implementing new tools to facilitate the allocation processes. However, all work to review and modify the cost allocation processes was not completed during the audit period. During the audit period, the department continued implementing changes to cost pools and allocation methodologies outside the approved cost allocation plan. Recommendation: We recommend the Department of Public Health and Human Services: A. Enhance internal controls over cost allocation to ensure compliance with federal regulations. B. Continue and complete its in-depth review of its cost allocation procedures and plan. C. Allocate costs as specified in the cost allocation plan, as required by federal regulations. D. Implement changes to the cost allocation process only after receiving approval from, or submitting a plan revision to, the federal government. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department represented it was unable to comply with federal requirements to only implement changes to the cost allocation process after receiving approval or submitting a plan revision. The department has been in ongoing discussions with the federal government since March 2020 regarding the amendment effective 07/01/2018. This amendment was approved after 5 years on 09/12/2023. The department has implemented a two-year long business process improvement, and amendments are now submitted quarterly. It is the department’s position that the use of the impact statement from the department’s cost allocation plan is not a reasonable method for developing questioned costs as the impact statement includes estimates and does not delineate between actual increases in claiming costs and changes to allocation. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence. Since the department was not following its approved plan, it is our position that all changes captured in the impact statement represent questioned costs as they would not have been allocated in that manner under the approved plan. As such, our recommendation stands.
Finding 2023-067: U.S. Department of Agriculture ALN #10.551 and 10.561, SNAP Cluster Grant #Various U.S. Department of Education ALN #84.126, Rehabilitation Services – Vocational Rehabilitation Grants to States Grant #H126A210038, H126A220038, H126A230038 U.S. Department of Health and Human Services ALN #93.268, Immunization Cooperative Agreements (COVID-19) Grant #Various ALN #93.323, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Grant #Various ALN #93.558, Temporary Assistance for Needy Families (TANF) (COVID-19) Grant #2101MTTANF, 2201MTTANF, 2301MTTANF ALN #93.563, Child Support Services Grant #2101MTCSES, 2201MTCSES, 2301MTCSES, 2101MTCEST, 2201MTCEST, 2301MTCEST ALN #93.566, Refugee and Entrant Assistance State/Replacement Designee Administered Programs Grant #2101MTRCMA, 2201MTRCMA, 2301MTRCMA ALN #93.575 and 93.596, Child Care Development Fund Cluster (CCDF) (COVID-19) Grant #2101MTCCDF, 2201MTCCDD, 2201MTCCDF, 2301MTCCDD, 2301MTCCDF ALN #93.658, Foster Care – Title IV-E (COVID-19) Grant #2101MTFOST, 2201MTFOST, 2301MTFOST ALN #93.659, Adoption Assistance – Title IV-E (COVID-19) Grant #2101MTADPT, 2201MTADPT, 2301MTADPT ALN #93.767, Children’s Health Insurance Program (CHIP) (COVID-19) Grant #2105MT5021, 2205MT5021, 2305MT3002 ALN #93.775, 93.777, 93.778, Medicaid Cluster (COVID-19) Grant #1205MT5ADM, 2205MT5ADM, 2305MT5ADM Criteria: Federal regulation, 2 CFR Appendix VI, in part, requires the state public assistance agency to develop, document, and implement a public assistance cost allocation plan in accordance with federal regulations. This section and federal regulation, 45 CFR 95.509, require the state agency promptly amend the cost allocation plan and submit the amended plan if certain events occur. Federal regulation, 45 CFR 200.416, requires a process for central services costs to be identified and assigned to benefitted activities on a reasonable and consistent basis. Federal regulation, 45 CFR 95.515, specifies the effective date of the cost allocation plan amendment is the first day of the calendar quarter following the date of the event requiring the amendment. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: For the fourth audit in a row, the Department of Public Health and Human Services (department) did not follow its federally approved plan to allocate costs among state and federal programs. Additionally, department internal controls did not prevent these inconsistencies. Questioned Costs: Using the “PACAP Impact Statement” sections of Public Assistance Cost Allocation Plan (PACAP) amendments for 2021, 2022, and 2023, which were submitted between May and November 2023, we estimated likely questioned costs. The following table summarizes questioned costs for major federal programs with material noncompliance or other federal programs where questioned costs are projected to exceed $25,000. See the Schedule of Findings and Questioned Costs for chart/table. Context: For the majority of the period under audit, the cost allocation plan in effect was submitted to the federal government in March 2020 and was effective as of January 1, 2020. The plan amendment for fiscal year 2021 was not submitted until May 2023, and plan amendments for fiscal years 2022 and 2023 were submitted after the end of the period under audit. Costs allocated to state and Federal programs totaled $173,808,149 and $184,493,577 for fiscal years 2022 and 2023, respectively. The table below depicts the total indirect costs allocated to each of the federal programs where we identified material noncompliance or questioned costs required to be reported. See the Schedule of Findings and Questioned Costs for chart/table. The internal control deficiency applies to all federal programs regardless of our identification of material noncompliance or reportable questioned costs. Repeat Finding: Montana’s prior Single Audit reports provided several recommendations to the department regarding its cost allocation plan. The report for the fiscal years ending June 30, 2017, recommended improving internal controls over the cost allocation plan (recommendation #2017-014). The report for the fiscal years ending June 30, 2019, advised the department to review and document all cost pools to ensure they align with the approved plan, obtain federal approval for changes, develop internal controls to detect variances, and allocate costs accordingly (#2019-022). The report for the fiscal years ending June 30, 2021, recommended enhancing internal controls, thoroughly reviewing cost allocation procedures, and obtaining federal approval before implementing changes (#2021-063). Effect: The department has not complied with federal compliance requirements by not following its submitted cost allocation plan. Cause: Since the previous audit, the department contracted with an external entity to review its cost allocation process and assist the department in making changes to cost pools and implementing new tools to facilitate the allocation processes. However, all work to review and modify the cost allocation processes was not completed during the audit period. During the audit period, the department continued implementing changes to cost pools and allocation methodologies outside the approved cost allocation plan. Recommendation: We recommend the Department of Public Health and Human Services: A. Enhance internal controls over cost allocation to ensure compliance with federal regulations. B. Continue and complete its in-depth review of its cost allocation procedures and plan. C. Allocate costs as specified in the cost allocation plan, as required by federal regulations. D. Implement changes to the cost allocation process only after receiving approval from, or submitting a plan revision to, the federal government. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department represented it was unable to comply with federal requirements to only implement changes to the cost allocation process after receiving approval or submitting a plan revision. The department has been in ongoing discussions with the federal government since March 2020 regarding the amendment effective 07/01/2018. This amendment was approved after 5 years on 09/12/2023. The department has implemented a two-year long business process improvement, and amendments are now submitted quarterly. It is the department’s position that the use of the impact statement from the department’s cost allocation plan is not a reasonable method for developing questioned costs as the impact statement includes estimates and does not delineate between actual increases in claiming costs and changes to allocation. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence. Since the department was not following its approved plan, it is our position that all changes captured in the impact statement represent questioned costs as they would not have been allocated in that manner under the approved plan. As such, our recommendation stands.
Finding 2023-067: U.S. Department of Agriculture ALN #10.551 and 10.561, SNAP Cluster Grant #Various U.S. Department of Education ALN #84.126, Rehabilitation Services – Vocational Rehabilitation Grants to States Grant #H126A210038, H126A220038, H126A230038 U.S. Department of Health and Human Services ALN #93.268, Immunization Cooperative Agreements (COVID-19) Grant #Various ALN #93.323, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Grant #Various ALN #93.558, Temporary Assistance for Needy Families (TANF) (COVID-19) Grant #2101MTTANF, 2201MTTANF, 2301MTTANF ALN #93.563, Child Support Services Grant #2101MTCSES, 2201MTCSES, 2301MTCSES, 2101MTCEST, 2201MTCEST, 2301MTCEST ALN #93.566, Refugee and Entrant Assistance State/Replacement Designee Administered Programs Grant #2101MTRCMA, 2201MTRCMA, 2301MTRCMA ALN #93.575 and 93.596, Child Care Development Fund Cluster (CCDF) (COVID-19) Grant #2101MTCCDF, 2201MTCCDD, 2201MTCCDF, 2301MTCCDD, 2301MTCCDF ALN #93.658, Foster Care – Title IV-E (COVID-19) Grant #2101MTFOST, 2201MTFOST, 2301MTFOST ALN #93.659, Adoption Assistance – Title IV-E (COVID-19) Grant #2101MTADPT, 2201MTADPT, 2301MTADPT ALN #93.767, Children’s Health Insurance Program (CHIP) (COVID-19) Grant #2105MT5021, 2205MT5021, 2305MT3002 ALN #93.775, 93.777, 93.778, Medicaid Cluster (COVID-19) Grant #1205MT5ADM, 2205MT5ADM, 2305MT5ADM Criteria: Federal regulation, 2 CFR Appendix VI, in part, requires the state public assistance agency to develop, document, and implement a public assistance cost allocation plan in accordance with federal regulations. This section and federal regulation, 45 CFR 95.509, require the state agency promptly amend the cost allocation plan and submit the amended plan if certain events occur. Federal regulation, 45 CFR 200.416, requires a process for central services costs to be identified and assigned to benefitted activities on a reasonable and consistent basis. Federal regulation, 45 CFR 95.515, specifies the effective date of the cost allocation plan amendment is the first day of the calendar quarter following the date of the event requiring the amendment. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: For the fourth audit in a row, the Department of Public Health and Human Services (department) did not follow its federally approved plan to allocate costs among state and federal programs. Additionally, department internal controls did not prevent these inconsistencies. Questioned Costs: Using the “PACAP Impact Statement” sections of Public Assistance Cost Allocation Plan (PACAP) amendments for 2021, 2022, and 2023, which were submitted between May and November 2023, we estimated likely questioned costs. The following table summarizes questioned costs for major federal programs with material noncompliance or other federal programs where questioned costs are projected to exceed $25,000. See the Schedule of Findings and Questioned Costs for chart/table. Context: For the majority of the period under audit, the cost allocation plan in effect was submitted to the federal government in March 2020 and was effective as of January 1, 2020. The plan amendment for fiscal year 2021 was not submitted until May 2023, and plan amendments for fiscal years 2022 and 2023 were submitted after the end of the period under audit. Costs allocated to state and Federal programs totaled $173,808,149 and $184,493,577 for fiscal years 2022 and 2023, respectively. The table below depicts the total indirect costs allocated to each of the federal programs where we identified material noncompliance or questioned costs required to be reported. See the Schedule of Findings and Questioned Costs for chart/table. The internal control deficiency applies to all federal programs regardless of our identification of material noncompliance or reportable questioned costs. Repeat Finding: Montana’s prior Single Audit reports provided several recommendations to the department regarding its cost allocation plan. The report for the fiscal years ending June 30, 2017, recommended improving internal controls over the cost allocation plan (recommendation #2017-014). The report for the fiscal years ending June 30, 2019, advised the department to review and document all cost pools to ensure they align with the approved plan, obtain federal approval for changes, develop internal controls to detect variances, and allocate costs accordingly (#2019-022). The report for the fiscal years ending June 30, 2021, recommended enhancing internal controls, thoroughly reviewing cost allocation procedures, and obtaining federal approval before implementing changes (#2021-063). Effect: The department has not complied with federal compliance requirements by not following its submitted cost allocation plan. Cause: Since the previous audit, the department contracted with an external entity to review its cost allocation process and assist the department in making changes to cost pools and implementing new tools to facilitate the allocation processes. However, all work to review and modify the cost allocation processes was not completed during the audit period. During the audit period, the department continued implementing changes to cost pools and allocation methodologies outside the approved cost allocation plan. Recommendation: We recommend the Department of Public Health and Human Services: A. Enhance internal controls over cost allocation to ensure compliance with federal regulations. B. Continue and complete its in-depth review of its cost allocation procedures and plan. C. Allocate costs as specified in the cost allocation plan, as required by federal regulations. D. Implement changes to the cost allocation process only after receiving approval from, or submitting a plan revision to, the federal government. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department represented it was unable to comply with federal requirements to only implement changes to the cost allocation process after receiving approval or submitting a plan revision. The department has been in ongoing discussions with the federal government since March 2020 regarding the amendment effective 07/01/2018. This amendment was approved after 5 years on 09/12/2023. The department has implemented a two-year long business process improvement, and amendments are now submitted quarterly. It is the department’s position that the use of the impact statement from the department’s cost allocation plan is not a reasonable method for developing questioned costs as the impact statement includes estimates and does not delineate between actual increases in claiming costs and changes to allocation. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence. Since the department was not following its approved plan, it is our position that all changes captured in the impact statement represent questioned costs as they would not have been allocated in that manner under the approved plan. As such, our recommendation stands.
Finding 2023-067: U.S. Department of Agriculture ALN #10.551 and 10.561, SNAP Cluster Grant #Various U.S. Department of Education ALN #84.126, Rehabilitation Services – Vocational Rehabilitation Grants to States Grant #H126A210038, H126A220038, H126A230038 U.S. Department of Health and Human Services ALN #93.268, Immunization Cooperative Agreements (COVID-19) Grant #Various ALN #93.323, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Grant #Various ALN #93.558, Temporary Assistance for Needy Families (TANF) (COVID-19) Grant #2101MTTANF, 2201MTTANF, 2301MTTANF ALN #93.563, Child Support Services Grant #2101MTCSES, 2201MTCSES, 2301MTCSES, 2101MTCEST, 2201MTCEST, 2301MTCEST ALN #93.566, Refugee and Entrant Assistance State/Replacement Designee Administered Programs Grant #2101MTRCMA, 2201MTRCMA, 2301MTRCMA ALN #93.575 and 93.596, Child Care Development Fund Cluster (CCDF) (COVID-19) Grant #2101MTCCDF, 2201MTCCDD, 2201MTCCDF, 2301MTCCDD, 2301MTCCDF ALN #93.658, Foster Care – Title IV-E (COVID-19) Grant #2101MTFOST, 2201MTFOST, 2301MTFOST ALN #93.659, Adoption Assistance – Title IV-E (COVID-19) Grant #2101MTADPT, 2201MTADPT, 2301MTADPT ALN #93.767, Children’s Health Insurance Program (CHIP) (COVID-19) Grant #2105MT5021, 2205MT5021, 2305MT3002 ALN #93.775, 93.777, 93.778, Medicaid Cluster (COVID-19) Grant #1205MT5ADM, 2205MT5ADM, 2305MT5ADM Criteria: Federal regulation, 2 CFR Appendix VI, in part, requires the state public assistance agency to develop, document, and implement a public assistance cost allocation plan in accordance with federal regulations. This section and federal regulation, 45 CFR 95.509, require the state agency promptly amend the cost allocation plan and submit the amended plan if certain events occur. Federal regulation, 45 CFR 200.416, requires a process for central services costs to be identified and assigned to benefitted activities on a reasonable and consistent basis. Federal regulation, 45 CFR 95.515, specifies the effective date of the cost allocation plan amendment is the first day of the calendar quarter following the date of the event requiring the amendment. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: For the fourth audit in a row, the Department of Public Health and Human Services (department) did not follow its federally approved plan to allocate costs among state and federal programs. Additionally, department internal controls did not prevent these inconsistencies. Questioned Costs: Using the “PACAP Impact Statement” sections of Public Assistance Cost Allocation Plan (PACAP) amendments for 2021, 2022, and 2023, which were submitted between May and November 2023, we estimated likely questioned costs. The following table summarizes questioned costs for major federal programs with material noncompliance or other federal programs where questioned costs are projected to exceed $25,000. See the Schedule of Findings and Questioned Costs for chart/table. Context: For the majority of the period under audit, the cost allocation plan in effect was submitted to the federal government in March 2020 and was effective as of January 1, 2020. The plan amendment for fiscal year 2021 was not submitted until May 2023, and plan amendments for fiscal years 2022 and 2023 were submitted after the end of the period under audit. Costs allocated to state and Federal programs totaled $173,808,149 and $184,493,577 for fiscal years 2022 and 2023, respectively. The table below depicts the total indirect costs allocated to each of the federal programs where we identified material noncompliance or questioned costs required to be reported. See the Schedule of Findings and Questioned Costs for chart/table. The internal control deficiency applies to all federal programs regardless of our identification of material noncompliance or reportable questioned costs. Repeat Finding: Montana’s prior Single Audit reports provided several recommendations to the department regarding its cost allocation plan. The report for the fiscal years ending June 30, 2017, recommended improving internal controls over the cost allocation plan (recommendation #2017-014). The report for the fiscal years ending June 30, 2019, advised the department to review and document all cost pools to ensure they align with the approved plan, obtain federal approval for changes, develop internal controls to detect variances, and allocate costs accordingly (#2019-022). The report for the fiscal years ending June 30, 2021, recommended enhancing internal controls, thoroughly reviewing cost allocation procedures, and obtaining federal approval before implementing changes (#2021-063). Effect: The department has not complied with federal compliance requirements by not following its submitted cost allocation plan. Cause: Since the previous audit, the department contracted with an external entity to review its cost allocation process and assist the department in making changes to cost pools and implementing new tools to facilitate the allocation processes. However, all work to review and modify the cost allocation processes was not completed during the audit period. During the audit period, the department continued implementing changes to cost pools and allocation methodologies outside the approved cost allocation plan. Recommendation: We recommend the Department of Public Health and Human Services: A. Enhance internal controls over cost allocation to ensure compliance with federal regulations. B. Continue and complete its in-depth review of its cost allocation procedures and plan. C. Allocate costs as specified in the cost allocation plan, as required by federal regulations. D. Implement changes to the cost allocation process only after receiving approval from, or submitting a plan revision to, the federal government. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department represented it was unable to comply with federal requirements to only implement changes to the cost allocation process after receiving approval or submitting a plan revision. The department has been in ongoing discussions with the federal government since March 2020 regarding the amendment effective 07/01/2018. This amendment was approved after 5 years on 09/12/2023. The department has implemented a two-year long business process improvement, and amendments are now submitted quarterly. It is the department’s position that the use of the impact statement from the department’s cost allocation plan is not a reasonable method for developing questioned costs as the impact statement includes estimates and does not delineate between actual increases in claiming costs and changes to allocation. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence. Since the department was not following its approved plan, it is our position that all changes captured in the impact statement represent questioned costs as they would not have been allocated in that manner under the approved plan. As such, our recommendation stands.
Finding 2023-067: U.S. Department of Agriculture ALN #10.551 and 10.561, SNAP Cluster Grant #Various U.S. Department of Education ALN #84.126, Rehabilitation Services – Vocational Rehabilitation Grants to States Grant #H126A210038, H126A220038, H126A230038 U.S. Department of Health and Human Services ALN #93.268, Immunization Cooperative Agreements (COVID-19) Grant #Various ALN #93.323, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Grant #Various ALN #93.558, Temporary Assistance for Needy Families (TANF) (COVID-19) Grant #2101MTTANF, 2201MTTANF, 2301MTTANF ALN #93.563, Child Support Services Grant #2101MTCSES, 2201MTCSES, 2301MTCSES, 2101MTCEST, 2201MTCEST, 2301MTCEST ALN #93.566, Refugee and Entrant Assistance State/Replacement Designee Administered Programs Grant #2101MTRCMA, 2201MTRCMA, 2301MTRCMA ALN #93.575 and 93.596, Child Care Development Fund Cluster (CCDF) (COVID-19) Grant #2101MTCCDF, 2201MTCCDD, 2201MTCCDF, 2301MTCCDD, 2301MTCCDF ALN #93.658, Foster Care – Title IV-E (COVID-19) Grant #2101MTFOST, 2201MTFOST, 2301MTFOST ALN #93.659, Adoption Assistance – Title IV-E (COVID-19) Grant #2101MTADPT, 2201MTADPT, 2301MTADPT ALN #93.767, Children’s Health Insurance Program (CHIP) (COVID-19) Grant #2105MT5021, 2205MT5021, 2305MT3002 ALN #93.775, 93.777, 93.778, Medicaid Cluster (COVID-19) Grant #1205MT5ADM, 2205MT5ADM, 2305MT5ADM Criteria: Federal regulation, 2 CFR Appendix VI, in part, requires the state public assistance agency to develop, document, and implement a public assistance cost allocation plan in accordance with federal regulations. This section and federal regulation, 45 CFR 95.509, require the state agency promptly amend the cost allocation plan and submit the amended plan if certain events occur. Federal regulation, 45 CFR 200.416, requires a process for central services costs to be identified and assigned to benefitted activities on a reasonable and consistent basis. Federal regulation, 45 CFR 95.515, specifies the effective date of the cost allocation plan amendment is the first day of the calendar quarter following the date of the event requiring the amendment. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: For the fourth audit in a row, the Department of Public Health and Human Services (department) did not follow its federally approved plan to allocate costs among state and federal programs. Additionally, department internal controls did not prevent these inconsistencies. Questioned Costs: Using the “PACAP Impact Statement” sections of Public Assistance Cost Allocation Plan (PACAP) amendments for 2021, 2022, and 2023, which were submitted between May and November 2023, we estimated likely questioned costs. The following table summarizes questioned costs for major federal programs with material noncompliance or other federal programs where questioned costs are projected to exceed $25,000. See the Schedule of Findings and Questioned Costs for chart/table. Context: For the majority of the period under audit, the cost allocation plan in effect was submitted to the federal government in March 2020 and was effective as of January 1, 2020. The plan amendment for fiscal year 2021 was not submitted until May 2023, and plan amendments for fiscal years 2022 and 2023 were submitted after the end of the period under audit. Costs allocated to state and Federal programs totaled $173,808,149 and $184,493,577 for fiscal years 2022 and 2023, respectively. The table below depicts the total indirect costs allocated to each of the federal programs where we identified material noncompliance or questioned costs required to be reported. See the Schedule of Findings and Questioned Costs for chart/table. The internal control deficiency applies to all federal programs regardless of our identification of material noncompliance or reportable questioned costs. Repeat Finding: Montana’s prior Single Audit reports provided several recommendations to the department regarding its cost allocation plan. The report for the fiscal years ending June 30, 2017, recommended improving internal controls over the cost allocation plan (recommendation #2017-014). The report for the fiscal years ending June 30, 2019, advised the department to review and document all cost pools to ensure they align with the approved plan, obtain federal approval for changes, develop internal controls to detect variances, and allocate costs accordingly (#2019-022). The report for the fiscal years ending June 30, 2021, recommended enhancing internal controls, thoroughly reviewing cost allocation procedures, and obtaining federal approval before implementing changes (#2021-063). Effect: The department has not complied with federal compliance requirements by not following its submitted cost allocation plan. Cause: Since the previous audit, the department contracted with an external entity to review its cost allocation process and assist the department in making changes to cost pools and implementing new tools to facilitate the allocation processes. However, all work to review and modify the cost allocation processes was not completed during the audit period. During the audit period, the department continued implementing changes to cost pools and allocation methodologies outside the approved cost allocation plan. Recommendation: We recommend the Department of Public Health and Human Services: A. Enhance internal controls over cost allocation to ensure compliance with federal regulations. B. Continue and complete its in-depth review of its cost allocation procedures and plan. C. Allocate costs as specified in the cost allocation plan, as required by federal regulations. D. Implement changes to the cost allocation process only after receiving approval from, or submitting a plan revision to, the federal government. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department represented it was unable to comply with federal requirements to only implement changes to the cost allocation process after receiving approval or submitting a plan revision. The department has been in ongoing discussions with the federal government since March 2020 regarding the amendment effective 07/01/2018. This amendment was approved after 5 years on 09/12/2023. The department has implemented a two-year long business process improvement, and amendments are now submitted quarterly. It is the department’s position that the use of the impact statement from the department’s cost allocation plan is not a reasonable method for developing questioned costs as the impact statement includes estimates and does not delineate between actual increases in claiming costs and changes to allocation. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence. Since the department was not following its approved plan, it is our position that all changes captured in the impact statement represent questioned costs as they would not have been allocated in that manner under the approved plan. As such, our recommendation stands.
Finding 2023-067: U.S. Department of Agriculture ALN #10.551 and 10.561, SNAP Cluster Grant #Various U.S. Department of Education ALN #84.126, Rehabilitation Services – Vocational Rehabilitation Grants to States Grant #H126A210038, H126A220038, H126A230038 U.S. Department of Health and Human Services ALN #93.268, Immunization Cooperative Agreements (COVID-19) Grant #Various ALN #93.323, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Grant #Various ALN #93.558, Temporary Assistance for Needy Families (TANF) (COVID-19) Grant #2101MTTANF, 2201MTTANF, 2301MTTANF ALN #93.563, Child Support Services Grant #2101MTCSES, 2201MTCSES, 2301MTCSES, 2101MTCEST, 2201MTCEST, 2301MTCEST ALN #93.566, Refugee and Entrant Assistance State/Replacement Designee Administered Programs Grant #2101MTRCMA, 2201MTRCMA, 2301MTRCMA ALN #93.575 and 93.596, Child Care Development Fund Cluster (CCDF) (COVID-19) Grant #2101MTCCDF, 2201MTCCDD, 2201MTCCDF, 2301MTCCDD, 2301MTCCDF ALN #93.658, Foster Care – Title IV-E (COVID-19) Grant #2101MTFOST, 2201MTFOST, 2301MTFOST ALN #93.659, Adoption Assistance – Title IV-E (COVID-19) Grant #2101MTADPT, 2201MTADPT, 2301MTADPT ALN #93.767, Children’s Health Insurance Program (CHIP) (COVID-19) Grant #2105MT5021, 2205MT5021, 2305MT3002 ALN #93.775, 93.777, 93.778, Medicaid Cluster (COVID-19) Grant #1205MT5ADM, 2205MT5ADM, 2305MT5ADM Criteria: Federal regulation, 2 CFR Appendix VI, in part, requires the state public assistance agency to develop, document, and implement a public assistance cost allocation plan in accordance with federal regulations. This section and federal regulation, 45 CFR 95.509, require the state agency promptly amend the cost allocation plan and submit the amended plan if certain events occur. Federal regulation, 45 CFR 200.416, requires a process for central services costs to be identified and assigned to benefitted activities on a reasonable and consistent basis. Federal regulation, 45 CFR 95.515, specifies the effective date of the cost allocation plan amendment is the first day of the calendar quarter following the date of the event requiring the amendment. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: For the fourth audit in a row, the Department of Public Health and Human Services (department) did not follow its federally approved plan to allocate costs among state and federal programs. Additionally, department internal controls did not prevent these inconsistencies. Questioned Costs: Using the “PACAP Impact Statement” sections of Public Assistance Cost Allocation Plan (PACAP) amendments for 2021, 2022, and 2023, which were submitted between May and November 2023, we estimated likely questioned costs. The following table summarizes questioned costs for major federal programs with material noncompliance or other federal programs where questioned costs are projected to exceed $25,000. See the Schedule of Findings and Questioned Costs for chart/table. Context: For the majority of the period under audit, the cost allocation plan in effect was submitted to the federal government in March 2020 and was effective as of January 1, 2020. The plan amendment for fiscal year 2021 was not submitted until May 2023, and plan amendments for fiscal years 2022 and 2023 were submitted after the end of the period under audit. Costs allocated to state and Federal programs totaled $173,808,149 and $184,493,577 for fiscal years 2022 and 2023, respectively. The table below depicts the total indirect costs allocated to each of the federal programs where we identified material noncompliance or questioned costs required to be reported. See the Schedule of Findings and Questioned Costs for chart/table. The internal control deficiency applies to all federal programs regardless of our identification of material noncompliance or reportable questioned costs. Repeat Finding: Montana’s prior Single Audit reports provided several recommendations to the department regarding its cost allocation plan. The report for the fiscal years ending June 30, 2017, recommended improving internal controls over the cost allocation plan (recommendation #2017-014). The report for the fiscal years ending June 30, 2019, advised the department to review and document all cost pools to ensure they align with the approved plan, obtain federal approval for changes, develop internal controls to detect variances, and allocate costs accordingly (#2019-022). The report for the fiscal years ending June 30, 2021, recommended enhancing internal controls, thoroughly reviewing cost allocation procedures, and obtaining federal approval before implementing changes (#2021-063). Effect: The department has not complied with federal compliance requirements by not following its submitted cost allocation plan. Cause: Since the previous audit, the department contracted with an external entity to review its cost allocation process and assist the department in making changes to cost pools and implementing new tools to facilitate the allocation processes. However, all work to review and modify the cost allocation processes was not completed during the audit period. During the audit period, the department continued implementing changes to cost pools and allocation methodologies outside the approved cost allocation plan. Recommendation: We recommend the Department of Public Health and Human Services: A. Enhance internal controls over cost allocation to ensure compliance with federal regulations. B. Continue and complete its in-depth review of its cost allocation procedures and plan. C. Allocate costs as specified in the cost allocation plan, as required by federal regulations. D. Implement changes to the cost allocation process only after receiving approval from, or submitting a plan revision to, the federal government. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department represented it was unable to comply with federal requirements to only implement changes to the cost allocation process after receiving approval or submitting a plan revision. The department has been in ongoing discussions with the federal government since March 2020 regarding the amendment effective 07/01/2018. This amendment was approved after 5 years on 09/12/2023. The department has implemented a two-year long business process improvement, and amendments are now submitted quarterly. It is the department’s position that the use of the impact statement from the department’s cost allocation plan is not a reasonable method for developing questioned costs as the impact statement includes estimates and does not delineate between actual increases in claiming costs and changes to allocation. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence. Since the department was not following its approved plan, it is our position that all changes captured in the impact statement represent questioned costs as they would not have been allocated in that manner under the approved plan. As such, our recommendation stands.
Finding 2023-067: U.S. Department of Agriculture ALN #10.551 and 10.561, SNAP Cluster Grant #Various U.S. Department of Education ALN #84.126, Rehabilitation Services – Vocational Rehabilitation Grants to States Grant #H126A210038, H126A220038, H126A230038 U.S. Department of Health and Human Services ALN #93.268, Immunization Cooperative Agreements (COVID-19) Grant #Various ALN #93.323, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Grant #Various ALN #93.558, Temporary Assistance for Needy Families (TANF) (COVID-19) Grant #2101MTTANF, 2201MTTANF, 2301MTTANF ALN #93.563, Child Support Services Grant #2101MTCSES, 2201MTCSES, 2301MTCSES, 2101MTCEST, 2201MTCEST, 2301MTCEST ALN #93.566, Refugee and Entrant Assistance State/Replacement Designee Administered Programs Grant #2101MTRCMA, 2201MTRCMA, 2301MTRCMA ALN #93.575 and 93.596, Child Care Development Fund Cluster (CCDF) (COVID-19) Grant #2101MTCCDF, 2201MTCCDD, 2201MTCCDF, 2301MTCCDD, 2301MTCCDF ALN #93.658, Foster Care – Title IV-E (COVID-19) Grant #2101MTFOST, 2201MTFOST, 2301MTFOST ALN #93.659, Adoption Assistance – Title IV-E (COVID-19) Grant #2101MTADPT, 2201MTADPT, 2301MTADPT ALN #93.767, Children’s Health Insurance Program (CHIP) (COVID-19) Grant #2105MT5021, 2205MT5021, 2305MT3002 ALN #93.775, 93.777, 93.778, Medicaid Cluster (COVID-19) Grant #1205MT5ADM, 2205MT5ADM, 2305MT5ADM Criteria: Federal regulation, 2 CFR Appendix VI, in part, requires the state public assistance agency to develop, document, and implement a public assistance cost allocation plan in accordance with federal regulations. This section and federal regulation, 45 CFR 95.509, require the state agency promptly amend the cost allocation plan and submit the amended plan if certain events occur. Federal regulation, 45 CFR 200.416, requires a process for central services costs to be identified and assigned to benefitted activities on a reasonable and consistent basis. Federal regulation, 45 CFR 95.515, specifies the effective date of the cost allocation plan amendment is the first day of the calendar quarter following the date of the event requiring the amendment. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: For the fourth audit in a row, the Department of Public Health and Human Services (department) did not follow its federally approved plan to allocate costs among state and federal programs. Additionally, department internal controls did not prevent these inconsistencies. Questioned Costs: Using the “PACAP Impact Statement” sections of Public Assistance Cost Allocation Plan (PACAP) amendments for 2021, 2022, and 2023, which were submitted between May and November 2023, we estimated likely questioned costs. The following table summarizes questioned costs for major federal programs with material noncompliance or other federal programs where questioned costs are projected to exceed $25,000. See the Schedule of Findings and Questioned Costs for chart/table. Context: For the majority of the period under audit, the cost allocation plan in effect was submitted to the federal government in March 2020 and was effective as of January 1, 2020. The plan amendment for fiscal year 2021 was not submitted until May 2023, and plan amendments for fiscal years 2022 and 2023 were submitted after the end of the period under audit. Costs allocated to state and Federal programs totaled $173,808,149 and $184,493,577 for fiscal years 2022 and 2023, respectively. The table below depicts the total indirect costs allocated to each of the federal programs where we identified material noncompliance or questioned costs required to be reported. See the Schedule of Findings and Questioned Costs for chart/table. The internal control deficiency applies to all federal programs regardless of our identification of material noncompliance or reportable questioned costs. Repeat Finding: Montana’s prior Single Audit reports provided several recommendations to the department regarding its cost allocation plan. The report for the fiscal years ending June 30, 2017, recommended improving internal controls over the cost allocation plan (recommendation #2017-014). The report for the fiscal years ending June 30, 2019, advised the department to review and document all cost pools to ensure they align with the approved plan, obtain federal approval for changes, develop internal controls to detect variances, and allocate costs accordingly (#2019-022). The report for the fiscal years ending June 30, 2021, recommended enhancing internal controls, thoroughly reviewing cost allocation procedures, and obtaining federal approval before implementing changes (#2021-063). Effect: The department has not complied with federal compliance requirements by not following its submitted cost allocation plan. Cause: Since the previous audit, the department contracted with an external entity to review its cost allocation process and assist the department in making changes to cost pools and implementing new tools to facilitate the allocation processes. However, all work to review and modify the cost allocation processes was not completed during the audit period. During the audit period, the department continued implementing changes to cost pools and allocation methodologies outside the approved cost allocation plan. Recommendation: We recommend the Department of Public Health and Human Services: A. Enhance internal controls over cost allocation to ensure compliance with federal regulations. B. Continue and complete its in-depth review of its cost allocation procedures and plan. C. Allocate costs as specified in the cost allocation plan, as required by federal regulations. D. Implement changes to the cost allocation process only after receiving approval from, or submitting a plan revision to, the federal government. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department represented it was unable to comply with federal requirements to only implement changes to the cost allocation process after receiving approval or submitting a plan revision. The department has been in ongoing discussions with the federal government since March 2020 regarding the amendment effective 07/01/2018. This amendment was approved after 5 years on 09/12/2023. The department has implemented a two-year long business process improvement, and amendments are now submitted quarterly. It is the department’s position that the use of the impact statement from the department’s cost allocation plan is not a reasonable method for developing questioned costs as the impact statement includes estimates and does not delineate between actual increases in claiming costs and changes to allocation. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence. Since the department was not following its approved plan, it is our position that all changes captured in the impact statement represent questioned costs as they would not have been allocated in that manner under the approved plan. As such, our recommendation stands.
Finding 2023-067: U.S. Department of Agriculture ALN #10.551 and 10.561, SNAP Cluster Grant #Various U.S. Department of Education ALN #84.126, Rehabilitation Services – Vocational Rehabilitation Grants to States Grant #H126A210038, H126A220038, H126A230038 U.S. Department of Health and Human Services ALN #93.268, Immunization Cooperative Agreements (COVID-19) Grant #Various ALN #93.323, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Grant #Various ALN #93.558, Temporary Assistance for Needy Families (TANF) (COVID-19) Grant #2101MTTANF, 2201MTTANF, 2301MTTANF ALN #93.563, Child Support Services Grant #2101MTCSES, 2201MTCSES, 2301MTCSES, 2101MTCEST, 2201MTCEST, 2301MTCEST ALN #93.566, Refugee and Entrant Assistance State/Replacement Designee Administered Programs Grant #2101MTRCMA, 2201MTRCMA, 2301MTRCMA ALN #93.575 and 93.596, Child Care Development Fund Cluster (CCDF) (COVID-19) Grant #2101MTCCDF, 2201MTCCDD, 2201MTCCDF, 2301MTCCDD, 2301MTCCDF ALN #93.658, Foster Care – Title IV-E (COVID-19) Grant #2101MTFOST, 2201MTFOST, 2301MTFOST ALN #93.659, Adoption Assistance – Title IV-E (COVID-19) Grant #2101MTADPT, 2201MTADPT, 2301MTADPT ALN #93.767, Children’s Health Insurance Program (CHIP) (COVID-19) Grant #2105MT5021, 2205MT5021, 2305MT3002 ALN #93.775, 93.777, 93.778, Medicaid Cluster (COVID-19) Grant #1205MT5ADM, 2205MT5ADM, 2305MT5ADM Criteria: Federal regulation, 2 CFR Appendix VI, in part, requires the state public assistance agency to develop, document, and implement a public assistance cost allocation plan in accordance with federal regulations. This section and federal regulation, 45 CFR 95.509, require the state agency promptly amend the cost allocation plan and submit the amended plan if certain events occur. Federal regulation, 45 CFR 200.416, requires a process for central services costs to be identified and assigned to benefitted activities on a reasonable and consistent basis. Federal regulation, 45 CFR 95.515, specifies the effective date of the cost allocation plan amendment is the first day of the calendar quarter following the date of the event requiring the amendment. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: For the fourth audit in a row, the Department of Public Health and Human Services (department) did not follow its federally approved plan to allocate costs among state and federal programs. Additionally, department internal controls did not prevent these inconsistencies. Questioned Costs: Using the “PACAP Impact Statement” sections of Public Assistance Cost Allocation Plan (PACAP) amendments for 2021, 2022, and 2023, which were submitted between May and November 2023, we estimated likely questioned costs. The following table summarizes questioned costs for major federal programs with material noncompliance or other federal programs where questioned costs are projected to exceed $25,000. See the Schedule of Findings and Questioned Costs for chart/table. Context: For the majority of the period under audit, the cost allocation plan in effect was submitted to the federal government in March 2020 and was effective as of January 1, 2020. The plan amendment for fiscal year 2021 was not submitted until May 2023, and plan amendments for fiscal years 2022 and 2023 were submitted after the end of the period under audit. Costs allocated to state and Federal programs totaled $173,808,149 and $184,493,577 for fiscal years 2022 and 2023, respectively. The table below depicts the total indirect costs allocated to each of the federal programs where we identified material noncompliance or questioned costs required to be reported. See the Schedule of Findings and Questioned Costs for chart/table. The internal control deficiency applies to all federal programs regardless of our identification of material noncompliance or reportable questioned costs. Repeat Finding: Montana’s prior Single Audit reports provided several recommendations to the department regarding its cost allocation plan. The report for the fiscal years ending June 30, 2017, recommended improving internal controls over the cost allocation plan (recommendation #2017-014). The report for the fiscal years ending June 30, 2019, advised the department to review and document all cost pools to ensure they align with the approved plan, obtain federal approval for changes, develop internal controls to detect variances, and allocate costs accordingly (#2019-022). The report for the fiscal years ending June 30, 2021, recommended enhancing internal controls, thoroughly reviewing cost allocation procedures, and obtaining federal approval before implementing changes (#2021-063). Effect: The department has not complied with federal compliance requirements by not following its submitted cost allocation plan. Cause: Since the previous audit, the department contracted with an external entity to review its cost allocation process and assist the department in making changes to cost pools and implementing new tools to facilitate the allocation processes. However, all work to review and modify the cost allocation processes was not completed during the audit period. During the audit period, the department continued implementing changes to cost pools and allocation methodologies outside the approved cost allocation plan. Recommendation: We recommend the Department of Public Health and Human Services: A. Enhance internal controls over cost allocation to ensure compliance with federal regulations. B. Continue and complete its in-depth review of its cost allocation procedures and plan. C. Allocate costs as specified in the cost allocation plan, as required by federal regulations. D. Implement changes to the cost allocation process only after receiving approval from, or submitting a plan revision to, the federal government. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department represented it was unable to comply with federal requirements to only implement changes to the cost allocation process after receiving approval or submitting a plan revision. The department has been in ongoing discussions with the federal government since March 2020 regarding the amendment effective 07/01/2018. This amendment was approved after 5 years on 09/12/2023. The department has implemented a two-year long business process improvement, and amendments are now submitted quarterly. It is the department’s position that the use of the impact statement from the department’s cost allocation plan is not a reasonable method for developing questioned costs as the impact statement includes estimates and does not delineate between actual increases in claiming costs and changes to allocation. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence. Since the department was not following its approved plan, it is our position that all changes captured in the impact statement represent questioned costs as they would not have been allocated in that manner under the approved plan. As such, our recommendation stands.
Finding 2023-067: U.S. Department of Agriculture ALN #10.551 and 10.561, SNAP Cluster Grant #Various U.S. Department of Education ALN #84.126, Rehabilitation Services – Vocational Rehabilitation Grants to States Grant #H126A210038, H126A220038, H126A230038 U.S. Department of Health and Human Services ALN #93.268, Immunization Cooperative Agreements (COVID-19) Grant #Various ALN #93.323, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Grant #Various ALN #93.558, Temporary Assistance for Needy Families (TANF) (COVID-19) Grant #2101MTTANF, 2201MTTANF, 2301MTTANF ALN #93.563, Child Support Services Grant #2101MTCSES, 2201MTCSES, 2301MTCSES, 2101MTCEST, 2201MTCEST, 2301MTCEST ALN #93.566, Refugee and Entrant Assistance State/Replacement Designee Administered Programs Grant #2101MTRCMA, 2201MTRCMA, 2301MTRCMA ALN #93.575 and 93.596, Child Care Development Fund Cluster (CCDF) (COVID-19) Grant #2101MTCCDF, 2201MTCCDD, 2201MTCCDF, 2301MTCCDD, 2301MTCCDF ALN #93.658, Foster Care – Title IV-E (COVID-19) Grant #2101MTFOST, 2201MTFOST, 2301MTFOST ALN #93.659, Adoption Assistance – Title IV-E (COVID-19) Grant #2101MTADPT, 2201MTADPT, 2301MTADPT ALN #93.767, Children’s Health Insurance Program (CHIP) (COVID-19) Grant #2105MT5021, 2205MT5021, 2305MT3002 ALN #93.775, 93.777, 93.778, Medicaid Cluster (COVID-19) Grant #1205MT5ADM, 2205MT5ADM, 2305MT5ADM Criteria: Federal regulation, 2 CFR Appendix VI, in part, requires the state public assistance agency to develop, document, and implement a public assistance cost allocation plan in accordance with federal regulations. This section and federal regulation, 45 CFR 95.509, require the state agency promptly amend the cost allocation plan and submit the amended plan if certain events occur. Federal regulation, 45 CFR 200.416, requires a process for central services costs to be identified and assigned to benefitted activities on a reasonable and consistent basis. Federal regulation, 45 CFR 95.515, specifies the effective date of the cost allocation plan amendment is the first day of the calendar quarter following the date of the event requiring the amendment. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: For the fourth audit in a row, the Department of Public Health and Human Services (department) did not follow its federally approved plan to allocate costs among state and federal programs. Additionally, department internal controls did not prevent these inconsistencies. Questioned Costs: Using the “PACAP Impact Statement” sections of Public Assistance Cost Allocation Plan (PACAP) amendments for 2021, 2022, and 2023, which were submitted between May and November 2023, we estimated likely questioned costs. The following table summarizes questioned costs for major federal programs with material noncompliance or other federal programs where questioned costs are projected to exceed $25,000. See the Schedule of Findings and Questioned Costs for chart/table. Context: For the majority of the period under audit, the cost allocation plan in effect was submitted to the federal government in March 2020 and was effective as of January 1, 2020. The plan amendment for fiscal year 2021 was not submitted until May 2023, and plan amendments for fiscal years 2022 and 2023 were submitted after the end of the period under audit. Costs allocated to state and Federal programs totaled $173,808,149 and $184,493,577 for fiscal years 2022 and 2023, respectively. The table below depicts the total indirect costs allocated to each of the federal programs where we identified material noncompliance or questioned costs required to be reported. See the Schedule of Findings and Questioned Costs for chart/table. The internal control deficiency applies to all federal programs regardless of our identification of material noncompliance or reportable questioned costs. Repeat Finding: Montana’s prior Single Audit reports provided several recommendations to the department regarding its cost allocation plan. The report for the fiscal years ending June 30, 2017, recommended improving internal controls over the cost allocation plan (recommendation #2017-014). The report for the fiscal years ending June 30, 2019, advised the department to review and document all cost pools to ensure they align with the approved plan, obtain federal approval for changes, develop internal controls to detect variances, and allocate costs accordingly (#2019-022). The report for the fiscal years ending June 30, 2021, recommended enhancing internal controls, thoroughly reviewing cost allocation procedures, and obtaining federal approval before implementing changes (#2021-063). Effect: The department has not complied with federal compliance requirements by not following its submitted cost allocation plan. Cause: Since the previous audit, the department contracted with an external entity to review its cost allocation process and assist the department in making changes to cost pools and implementing new tools to facilitate the allocation processes. However, all work to review and modify the cost allocation processes was not completed during the audit period. During the audit period, the department continued implementing changes to cost pools and allocation methodologies outside the approved cost allocation plan. Recommendation: We recommend the Department of Public Health and Human Services: A. Enhance internal controls over cost allocation to ensure compliance with federal regulations. B. Continue and complete its in-depth review of its cost allocation procedures and plan. C. Allocate costs as specified in the cost allocation plan, as required by federal regulations. D. Implement changes to the cost allocation process only after receiving approval from, or submitting a plan revision to, the federal government. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department represented it was unable to comply with federal requirements to only implement changes to the cost allocation process after receiving approval or submitting a plan revision. The department has been in ongoing discussions with the federal government since March 2020 regarding the amendment effective 07/01/2018. This amendment was approved after 5 years on 09/12/2023. The department has implemented a two-year long business process improvement, and amendments are now submitted quarterly. It is the department’s position that the use of the impact statement from the department’s cost allocation plan is not a reasonable method for developing questioned costs as the impact statement includes estimates and does not delineate between actual increases in claiming costs and changes to allocation. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence. Since the department was not following its approved plan, it is our position that all changes captured in the impact statement represent questioned costs as they would not have been allocated in that manner under the approved plan. As such, our recommendation stands.
Finding 2023-067: U.S. Department of Agriculture ALN #10.551 and 10.561, SNAP Cluster Grant #Various U.S. Department of Education ALN #84.126, Rehabilitation Services – Vocational Rehabilitation Grants to States Grant #H126A210038, H126A220038, H126A230038 U.S. Department of Health and Human Services ALN #93.268, Immunization Cooperative Agreements (COVID-19) Grant #Various ALN #93.323, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Grant #Various ALN #93.558, Temporary Assistance for Needy Families (TANF) (COVID-19) Grant #2101MTTANF, 2201MTTANF, 2301MTTANF ALN #93.563, Child Support Services Grant #2101MTCSES, 2201MTCSES, 2301MTCSES, 2101MTCEST, 2201MTCEST, 2301MTCEST ALN #93.566, Refugee and Entrant Assistance State/Replacement Designee Administered Programs Grant #2101MTRCMA, 2201MTRCMA, 2301MTRCMA ALN #93.575 and 93.596, Child Care Development Fund Cluster (CCDF) (COVID-19) Grant #2101MTCCDF, 2201MTCCDD, 2201MTCCDF, 2301MTCCDD, 2301MTCCDF ALN #93.658, Foster Care – Title IV-E (COVID-19) Grant #2101MTFOST, 2201MTFOST, 2301MTFOST ALN #93.659, Adoption Assistance – Title IV-E (COVID-19) Grant #2101MTADPT, 2201MTADPT, 2301MTADPT ALN #93.767, Children’s Health Insurance Program (CHIP) (COVID-19) Grant #2105MT5021, 2205MT5021, 2305MT3002 ALN #93.775, 93.777, 93.778, Medicaid Cluster (COVID-19) Grant #1205MT5ADM, 2205MT5ADM, 2305MT5ADM Criteria: Federal regulation, 2 CFR Appendix VI, in part, requires the state public assistance agency to develop, document, and implement a public assistance cost allocation plan in accordance with federal regulations. This section and federal regulation, 45 CFR 95.509, require the state agency promptly amend the cost allocation plan and submit the amended plan if certain events occur. Federal regulation, 45 CFR 200.416, requires a process for central services costs to be identified and assigned to benefitted activities on a reasonable and consistent basis. Federal regulation, 45 CFR 95.515, specifies the effective date of the cost allocation plan amendment is the first day of the calendar quarter following the date of the event requiring the amendment. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: For the fourth audit in a row, the Department of Public Health and Human Services (department) did not follow its federally approved plan to allocate costs among state and federal programs. Additionally, department internal controls did not prevent these inconsistencies. Questioned Costs: Using the “PACAP Impact Statement” sections of Public Assistance Cost Allocation Plan (PACAP) amendments for 2021, 2022, and 2023, which were submitted between May and November 2023, we estimated likely questioned costs. The following table summarizes questioned costs for major federal programs with material noncompliance or other federal programs where questioned costs are projected to exceed $25,000. See the Schedule of Findings and Questioned Costs for chart/table. Context: For the majority of the period under audit, the cost allocation plan in effect was submitted to the federal government in March 2020 and was effective as of January 1, 2020. The plan amendment for fiscal year 2021 was not submitted until May 2023, and plan amendments for fiscal years 2022 and 2023 were submitted after the end of the period under audit. Costs allocated to state and Federal programs totaled $173,808,149 and $184,493,577 for fiscal years 2022 and 2023, respectively. The table below depicts the total indirect costs allocated to each of the federal programs where we identified material noncompliance or questioned costs required to be reported. See the Schedule of Findings and Questioned Costs for chart/table. The internal control deficiency applies to all federal programs regardless of our identification of material noncompliance or reportable questioned costs. Repeat Finding: Montana’s prior Single Audit reports provided several recommendations to the department regarding its cost allocation plan. The report for the fiscal years ending June 30, 2017, recommended improving internal controls over the cost allocation plan (recommendation #2017-014). The report for the fiscal years ending June 30, 2019, advised the department to review and document all cost pools to ensure they align with the approved plan, obtain federal approval for changes, develop internal controls to detect variances, and allocate costs accordingly (#2019-022). The report for the fiscal years ending June 30, 2021, recommended enhancing internal controls, thoroughly reviewing cost allocation procedures, and obtaining federal approval before implementing changes (#2021-063). Effect: The department has not complied with federal compliance requirements by not following its submitted cost allocation plan. Cause: Since the previous audit, the department contracted with an external entity to review its cost allocation process and assist the department in making changes to cost pools and implementing new tools to facilitate the allocation processes. However, all work to review and modify the cost allocation processes was not completed during the audit period. During the audit period, the department continued implementing changes to cost pools and allocation methodologies outside the approved cost allocation plan. Recommendation: We recommend the Department of Public Health and Human Services: A. Enhance internal controls over cost allocation to ensure compliance with federal regulations. B. Continue and complete its in-depth review of its cost allocation procedures and plan. C. Allocate costs as specified in the cost allocation plan, as required by federal regulations. D. Implement changes to the cost allocation process only after receiving approval from, or submitting a plan revision to, the federal government. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department represented it was unable to comply with federal requirements to only implement changes to the cost allocation process after receiving approval or submitting a plan revision. The department has been in ongoing discussions with the federal government since March 2020 regarding the amendment effective 07/01/2018. This amendment was approved after 5 years on 09/12/2023. The department has implemented a two-year long business process improvement, and amendments are now submitted quarterly. It is the department’s position that the use of the impact statement from the department’s cost allocation plan is not a reasonable method for developing questioned costs as the impact statement includes estimates and does not delineate between actual increases in claiming costs and changes to allocation. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence. Since the department was not following its approved plan, it is our position that all changes captured in the impact statement represent questioned costs as they would not have been allocated in that manner under the approved plan. As such, our recommendation stands.
Finding 2023-067: U.S. Department of Agriculture ALN #10.551 and 10.561, SNAP Cluster Grant #Various U.S. Department of Education ALN #84.126, Rehabilitation Services – Vocational Rehabilitation Grants to States Grant #H126A210038, H126A220038, H126A230038 U.S. Department of Health and Human Services ALN #93.268, Immunization Cooperative Agreements (COVID-19) Grant #Various ALN #93.323, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Grant #Various ALN #93.558, Temporary Assistance for Needy Families (TANF) (COVID-19) Grant #2101MTTANF, 2201MTTANF, 2301MTTANF ALN #93.563, Child Support Services Grant #2101MTCSES, 2201MTCSES, 2301MTCSES, 2101MTCEST, 2201MTCEST, 2301MTCEST ALN #93.566, Refugee and Entrant Assistance State/Replacement Designee Administered Programs Grant #2101MTRCMA, 2201MTRCMA, 2301MTRCMA ALN #93.575 and 93.596, Child Care Development Fund Cluster (CCDF) (COVID-19) Grant #2101MTCCDF, 2201MTCCDD, 2201MTCCDF, 2301MTCCDD, 2301MTCCDF ALN #93.658, Foster Care – Title IV-E (COVID-19) Grant #2101MTFOST, 2201MTFOST, 2301MTFOST ALN #93.659, Adoption Assistance – Title IV-E (COVID-19) Grant #2101MTADPT, 2201MTADPT, 2301MTADPT ALN #93.767, Children’s Health Insurance Program (CHIP) (COVID-19) Grant #2105MT5021, 2205MT5021, 2305MT3002 ALN #93.775, 93.777, 93.778, Medicaid Cluster (COVID-19) Grant #1205MT5ADM, 2205MT5ADM, 2305MT5ADM Criteria: Federal regulation, 2 CFR Appendix VI, in part, requires the state public assistance agency to develop, document, and implement a public assistance cost allocation plan in accordance with federal regulations. This section and federal regulation, 45 CFR 95.509, require the state agency promptly amend the cost allocation plan and submit the amended plan if certain events occur. Federal regulation, 45 CFR 200.416, requires a process for central services costs to be identified and assigned to benefitted activities on a reasonable and consistent basis. Federal regulation, 45 CFR 95.515, specifies the effective date of the cost allocation plan amendment is the first day of the calendar quarter following the date of the event requiring the amendment. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: For the fourth audit in a row, the Department of Public Health and Human Services (department) did not follow its federally approved plan to allocate costs among state and federal programs. Additionally, department internal controls did not prevent these inconsistencies. Questioned Costs: Using the “PACAP Impact Statement” sections of Public Assistance Cost Allocation Plan (PACAP) amendments for 2021, 2022, and 2023, which were submitted between May and November 2023, we estimated likely questioned costs. The following table summarizes questioned costs for major federal programs with material noncompliance or other federal programs where questioned costs are projected to exceed $25,000. See the Schedule of Findings and Questioned Costs for chart/table. Context: For the majority of the period under audit, the cost allocation plan in effect was submitted to the federal government in March 2020 and was effective as of January 1, 2020. The plan amendment for fiscal year 2021 was not submitted until May 2023, and plan amendments for fiscal years 2022 and 2023 were submitted after the end of the period under audit. Costs allocated to state and Federal programs totaled $173,808,149 and $184,493,577 for fiscal years 2022 and 2023, respectively. The table below depicts the total indirect costs allocated to each of the federal programs where we identified material noncompliance or questioned costs required to be reported. See the Schedule of Findings and Questioned Costs for chart/table. The internal control deficiency applies to all federal programs regardless of our identification of material noncompliance or reportable questioned costs. Repeat Finding: Montana’s prior Single Audit reports provided several recommendations to the department regarding its cost allocation plan. The report for the fiscal years ending June 30, 2017, recommended improving internal controls over the cost allocation plan (recommendation #2017-014). The report for the fiscal years ending June 30, 2019, advised the department to review and document all cost pools to ensure they align with the approved plan, obtain federal approval for changes, develop internal controls to detect variances, and allocate costs accordingly (#2019-022). The report for the fiscal years ending June 30, 2021, recommended enhancing internal controls, thoroughly reviewing cost allocation procedures, and obtaining federal approval before implementing changes (#2021-063). Effect: The department has not complied with federal compliance requirements by not following its submitted cost allocation plan. Cause: Since the previous audit, the department contracted with an external entity to review its cost allocation process and assist the department in making changes to cost pools and implementing new tools to facilitate the allocation processes. However, all work to review and modify the cost allocation processes was not completed during the audit period. During the audit period, the department continued implementing changes to cost pools and allocation methodologies outside the approved cost allocation plan. Recommendation: We recommend the Department of Public Health and Human Services: A. Enhance internal controls over cost allocation to ensure compliance with federal regulations. B. Continue and complete its in-depth review of its cost allocation procedures and plan. C. Allocate costs as specified in the cost allocation plan, as required by federal regulations. D. Implement changes to the cost allocation process only after receiving approval from, or submitting a plan revision to, the federal government. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department represented it was unable to comply with federal requirements to only implement changes to the cost allocation process after receiving approval or submitting a plan revision. The department has been in ongoing discussions with the federal government since March 2020 regarding the amendment effective 07/01/2018. This amendment was approved after 5 years on 09/12/2023. The department has implemented a two-year long business process improvement, and amendments are now submitted quarterly. It is the department’s position that the use of the impact statement from the department’s cost allocation plan is not a reasonable method for developing questioned costs as the impact statement includes estimates and does not delineate between actual increases in claiming costs and changes to allocation. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence. Since the department was not following its approved plan, it is our position that all changes captured in the impact statement represent questioned costs as they would not have been allocated in that manner under the approved plan. As such, our recommendation stands.
Finding 2023-067: U.S. Department of Agriculture ALN #10.551 and 10.561, SNAP Cluster Grant #Various U.S. Department of Education ALN #84.126, Rehabilitation Services – Vocational Rehabilitation Grants to States Grant #H126A210038, H126A220038, H126A230038 U.S. Department of Health and Human Services ALN #93.268, Immunization Cooperative Agreements (COVID-19) Grant #Various ALN #93.323, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Grant #Various ALN #93.558, Temporary Assistance for Needy Families (TANF) (COVID-19) Grant #2101MTTANF, 2201MTTANF, 2301MTTANF ALN #93.563, Child Support Services Grant #2101MTCSES, 2201MTCSES, 2301MTCSES, 2101MTCEST, 2201MTCEST, 2301MTCEST ALN #93.566, Refugee and Entrant Assistance State/Replacement Designee Administered Programs Grant #2101MTRCMA, 2201MTRCMA, 2301MTRCMA ALN #93.575 and 93.596, Child Care Development Fund Cluster (CCDF) (COVID-19) Grant #2101MTCCDF, 2201MTCCDD, 2201MTCCDF, 2301MTCCDD, 2301MTCCDF ALN #93.658, Foster Care – Title IV-E (COVID-19) Grant #2101MTFOST, 2201MTFOST, 2301MTFOST ALN #93.659, Adoption Assistance – Title IV-E (COVID-19) Grant #2101MTADPT, 2201MTADPT, 2301MTADPT ALN #93.767, Children’s Health Insurance Program (CHIP) (COVID-19) Grant #2105MT5021, 2205MT5021, 2305MT3002 ALN #93.775, 93.777, 93.778, Medicaid Cluster (COVID-19) Grant #1205MT5ADM, 2205MT5ADM, 2305MT5ADM Criteria: Federal regulation, 2 CFR Appendix VI, in part, requires the state public assistance agency to develop, document, and implement a public assistance cost allocation plan in accordance with federal regulations. This section and federal regulation, 45 CFR 95.509, require the state agency promptly amend the cost allocation plan and submit the amended plan if certain events occur. Federal regulation, 45 CFR 200.416, requires a process for central services costs to be identified and assigned to benefitted activities on a reasonable and consistent basis. Federal regulation, 45 CFR 95.515, specifies the effective date of the cost allocation plan amendment is the first day of the calendar quarter following the date of the event requiring the amendment. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: For the fourth audit in a row, the Department of Public Health and Human Services (department) did not follow its federally approved plan to allocate costs among state and federal programs. Additionally, department internal controls did not prevent these inconsistencies. Questioned Costs: Using the “PACAP Impact Statement” sections of Public Assistance Cost Allocation Plan (PACAP) amendments for 2021, 2022, and 2023, which were submitted between May and November 2023, we estimated likely questioned costs. The following table summarizes questioned costs for major federal programs with material noncompliance or other federal programs where questioned costs are projected to exceed $25,000. See the Schedule of Findings and Questioned Costs for chart/table. Context: For the majority of the period under audit, the cost allocation plan in effect was submitted to the federal government in March 2020 and was effective as of January 1, 2020. The plan amendment for fiscal year 2021 was not submitted until May 2023, and plan amendments for fiscal years 2022 and 2023 were submitted after the end of the period under audit. Costs allocated to state and Federal programs totaled $173,808,149 and $184,493,577 for fiscal years 2022 and 2023, respectively. The table below depicts the total indirect costs allocated to each of the federal programs where we identified material noncompliance or questioned costs required to be reported. See the Schedule of Findings and Questioned Costs for chart/table. The internal control deficiency applies to all federal programs regardless of our identification of material noncompliance or reportable questioned costs. Repeat Finding: Montana’s prior Single Audit reports provided several recommendations to the department regarding its cost allocation plan. The report for the fiscal years ending June 30, 2017, recommended improving internal controls over the cost allocation plan (recommendation #2017-014). The report for the fiscal years ending June 30, 2019, advised the department to review and document all cost pools to ensure they align with the approved plan, obtain federal approval for changes, develop internal controls to detect variances, and allocate costs accordingly (#2019-022). The report for the fiscal years ending June 30, 2021, recommended enhancing internal controls, thoroughly reviewing cost allocation procedures, and obtaining federal approval before implementing changes (#2021-063). Effect: The department has not complied with federal compliance requirements by not following its submitted cost allocation plan. Cause: Since the previous audit, the department contracted with an external entity to review its cost allocation process and assist the department in making changes to cost pools and implementing new tools to facilitate the allocation processes. However, all work to review and modify the cost allocation processes was not completed during the audit period. During the audit period, the department continued implementing changes to cost pools and allocation methodologies outside the approved cost allocation plan. Recommendation: We recommend the Department of Public Health and Human Services: A. Enhance internal controls over cost allocation to ensure compliance with federal regulations. B. Continue and complete its in-depth review of its cost allocation procedures and plan. C. Allocate costs as specified in the cost allocation plan, as required by federal regulations. D. Implement changes to the cost allocation process only after receiving approval from, or submitting a plan revision to, the federal government. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department represented it was unable to comply with federal requirements to only implement changes to the cost allocation process after receiving approval or submitting a plan revision. The department has been in ongoing discussions with the federal government since March 2020 regarding the amendment effective 07/01/2018. This amendment was approved after 5 years on 09/12/2023. The department has implemented a two-year long business process improvement, and amendments are now submitted quarterly. It is the department’s position that the use of the impact statement from the department’s cost allocation plan is not a reasonable method for developing questioned costs as the impact statement includes estimates and does not delineate between actual increases in claiming costs and changes to allocation. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence. Since the department was not following its approved plan, it is our position that all changes captured in the impact statement represent questioned costs as they would not have been allocated in that manner under the approved plan. As such, our recommendation stands.
Finding 2023-067: U.S. Department of Agriculture ALN #10.551 and 10.561, SNAP Cluster Grant #Various U.S. Department of Education ALN #84.126, Rehabilitation Services – Vocational Rehabilitation Grants to States Grant #H126A210038, H126A220038, H126A230038 U.S. Department of Health and Human Services ALN #93.268, Immunization Cooperative Agreements (COVID-19) Grant #Various ALN #93.323, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Grant #Various ALN #93.558, Temporary Assistance for Needy Families (TANF) (COVID-19) Grant #2101MTTANF, 2201MTTANF, 2301MTTANF ALN #93.563, Child Support Services Grant #2101MTCSES, 2201MTCSES, 2301MTCSES, 2101MTCEST, 2201MTCEST, 2301MTCEST ALN #93.566, Refugee and Entrant Assistance State/Replacement Designee Administered Programs Grant #2101MTRCMA, 2201MTRCMA, 2301MTRCMA ALN #93.575 and 93.596, Child Care Development Fund Cluster (CCDF) (COVID-19) Grant #2101MTCCDF, 2201MTCCDD, 2201MTCCDF, 2301MTCCDD, 2301MTCCDF ALN #93.658, Foster Care – Title IV-E (COVID-19) Grant #2101MTFOST, 2201MTFOST, 2301MTFOST ALN #93.659, Adoption Assistance – Title IV-E (COVID-19) Grant #2101MTADPT, 2201MTADPT, 2301MTADPT ALN #93.767, Children’s Health Insurance Program (CHIP) (COVID-19) Grant #2105MT5021, 2205MT5021, 2305MT3002 ALN #93.775, 93.777, 93.778, Medicaid Cluster (COVID-19) Grant #1205MT5ADM, 2205MT5ADM, 2305MT5ADM Criteria: Federal regulation, 2 CFR Appendix VI, in part, requires the state public assistance agency to develop, document, and implement a public assistance cost allocation plan in accordance with federal regulations. This section and federal regulation, 45 CFR 95.509, require the state agency promptly amend the cost allocation plan and submit the amended plan if certain events occur. Federal regulation, 45 CFR 200.416, requires a process for central services costs to be identified and assigned to benefitted activities on a reasonable and consistent basis. Federal regulation, 45 CFR 95.515, specifies the effective date of the cost allocation plan amendment is the first day of the calendar quarter following the date of the event requiring the amendment. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: For the fourth audit in a row, the Department of Public Health and Human Services (department) did not follow its federally approved plan to allocate costs among state and federal programs. Additionally, department internal controls did not prevent these inconsistencies. Questioned Costs: Using the “PACAP Impact Statement” sections of Public Assistance Cost Allocation Plan (PACAP) amendments for 2021, 2022, and 2023, which were submitted between May and November 2023, we estimated likely questioned costs. The following table summarizes questioned costs for major federal programs with material noncompliance or other federal programs where questioned costs are projected to exceed $25,000. See the Schedule of Findings and Questioned Costs for chart/table. Context: For the majority of the period under audit, the cost allocation plan in effect was submitted to the federal government in March 2020 and was effective as of January 1, 2020. The plan amendment for fiscal year 2021 was not submitted until May 2023, and plan amendments for fiscal years 2022 and 2023 were submitted after the end of the period under audit. Costs allocated to state and Federal programs totaled $173,808,149 and $184,493,577 for fiscal years 2022 and 2023, respectively. The table below depicts the total indirect costs allocated to each of the federal programs where we identified material noncompliance or questioned costs required to be reported. See the Schedule of Findings and Questioned Costs for chart/table. The internal control deficiency applies to all federal programs regardless of our identification of material noncompliance or reportable questioned costs. Repeat Finding: Montana’s prior Single Audit reports provided several recommendations to the department regarding its cost allocation plan. The report for the fiscal years ending June 30, 2017, recommended improving internal controls over the cost allocation plan (recommendation #2017-014). The report for the fiscal years ending June 30, 2019, advised the department to review and document all cost pools to ensure they align with the approved plan, obtain federal approval for changes, develop internal controls to detect variances, and allocate costs accordingly (#2019-022). The report for the fiscal years ending June 30, 2021, recommended enhancing internal controls, thoroughly reviewing cost allocation procedures, and obtaining federal approval before implementing changes (#2021-063). Effect: The department has not complied with federal compliance requirements by not following its submitted cost allocation plan. Cause: Since the previous audit, the department contracted with an external entity to review its cost allocation process and assist the department in making changes to cost pools and implementing new tools to facilitate the allocation processes. However, all work to review and modify the cost allocation processes was not completed during the audit period. During the audit period, the department continued implementing changes to cost pools and allocation methodologies outside the approved cost allocation plan. Recommendation: We recommend the Department of Public Health and Human Services: A. Enhance internal controls over cost allocation to ensure compliance with federal regulations. B. Continue and complete its in-depth review of its cost allocation procedures and plan. C. Allocate costs as specified in the cost allocation plan, as required by federal regulations. D. Implement changes to the cost allocation process only after receiving approval from, or submitting a plan revision to, the federal government. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department represented it was unable to comply with federal requirements to only implement changes to the cost allocation process after receiving approval or submitting a plan revision. The department has been in ongoing discussions with the federal government since March 2020 regarding the amendment effective 07/01/2018. This amendment was approved after 5 years on 09/12/2023. The department has implemented a two-year long business process improvement, and amendments are now submitted quarterly. It is the department’s position that the use of the impact statement from the department’s cost allocation plan is not a reasonable method for developing questioned costs as the impact statement includes estimates and does not delineate between actual increases in claiming costs and changes to allocation. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence. Since the department was not following its approved plan, it is our position that all changes captured in the impact statement represent questioned costs as they would not have been allocated in that manner under the approved plan. As such, our recommendation stands.
Finding 2023-067: U.S. Department of Agriculture ALN #10.551 and 10.561, SNAP Cluster Grant #Various U.S. Department of Education ALN #84.126, Rehabilitation Services – Vocational Rehabilitation Grants to States Grant #H126A210038, H126A220038, H126A230038 U.S. Department of Health and Human Services ALN #93.268, Immunization Cooperative Agreements (COVID-19) Grant #Various ALN #93.323, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Grant #Various ALN #93.558, Temporary Assistance for Needy Families (TANF) (COVID-19) Grant #2101MTTANF, 2201MTTANF, 2301MTTANF ALN #93.563, Child Support Services Grant #2101MTCSES, 2201MTCSES, 2301MTCSES, 2101MTCEST, 2201MTCEST, 2301MTCEST ALN #93.566, Refugee and Entrant Assistance State/Replacement Designee Administered Programs Grant #2101MTRCMA, 2201MTRCMA, 2301MTRCMA ALN #93.575 and 93.596, Child Care Development Fund Cluster (CCDF) (COVID-19) Grant #2101MTCCDF, 2201MTCCDD, 2201MTCCDF, 2301MTCCDD, 2301MTCCDF ALN #93.658, Foster Care – Title IV-E (COVID-19) Grant #2101MTFOST, 2201MTFOST, 2301MTFOST ALN #93.659, Adoption Assistance – Title IV-E (COVID-19) Grant #2101MTADPT, 2201MTADPT, 2301MTADPT ALN #93.767, Children’s Health Insurance Program (CHIP) (COVID-19) Grant #2105MT5021, 2205MT5021, 2305MT3002 ALN #93.775, 93.777, 93.778, Medicaid Cluster (COVID-19) Grant #1205MT5ADM, 2205MT5ADM, 2305MT5ADM Criteria: Federal regulation, 2 CFR Appendix VI, in part, requires the state public assistance agency to develop, document, and implement a public assistance cost allocation plan in accordance with federal regulations. This section and federal regulation, 45 CFR 95.509, require the state agency promptly amend the cost allocation plan and submit the amended plan if certain events occur. Federal regulation, 45 CFR 200.416, requires a process for central services costs to be identified and assigned to benefitted activities on a reasonable and consistent basis. Federal regulation, 45 CFR 95.515, specifies the effective date of the cost allocation plan amendment is the first day of the calendar quarter following the date of the event requiring the amendment. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: For the fourth audit in a row, the Department of Public Health and Human Services (department) did not follow its federally approved plan to allocate costs among state and federal programs. Additionally, department internal controls did not prevent these inconsistencies. Questioned Costs: Using the “PACAP Impact Statement” sections of Public Assistance Cost Allocation Plan (PACAP) amendments for 2021, 2022, and 2023, which were submitted between May and November 2023, we estimated likely questioned costs. The following table summarizes questioned costs for major federal programs with material noncompliance or other federal programs where questioned costs are projected to exceed $25,000. See the Schedule of Findings and Questioned Costs for chart/table. Context: For the majority of the period under audit, the cost allocation plan in effect was submitted to the federal government in March 2020 and was effective as of January 1, 2020. The plan amendment for fiscal year 2021 was not submitted until May 2023, and plan amendments for fiscal years 2022 and 2023 were submitted after the end of the period under audit. Costs allocated to state and Federal programs totaled $173,808,149 and $184,493,577 for fiscal years 2022 and 2023, respectively. The table below depicts the total indirect costs allocated to each of the federal programs where we identified material noncompliance or questioned costs required to be reported. See the Schedule of Findings and Questioned Costs for chart/table. The internal control deficiency applies to all federal programs regardless of our identification of material noncompliance or reportable questioned costs. Repeat Finding: Montana’s prior Single Audit reports provided several recommendations to the department regarding its cost allocation plan. The report for the fiscal years ending June 30, 2017, recommended improving internal controls over the cost allocation plan (recommendation #2017-014). The report for the fiscal years ending June 30, 2019, advised the department to review and document all cost pools to ensure they align with the approved plan, obtain federal approval for changes, develop internal controls to detect variances, and allocate costs accordingly (#2019-022). The report for the fiscal years ending June 30, 2021, recommended enhancing internal controls, thoroughly reviewing cost allocation procedures, and obtaining federal approval before implementing changes (#2021-063). Effect: The department has not complied with federal compliance requirements by not following its submitted cost allocation plan. Cause: Since the previous audit, the department contracted with an external entity to review its cost allocation process and assist the department in making changes to cost pools and implementing new tools to facilitate the allocation processes. However, all work to review and modify the cost allocation processes was not completed during the audit period. During the audit period, the department continued implementing changes to cost pools and allocation methodologies outside the approved cost allocation plan. Recommendation: We recommend the Department of Public Health and Human Services: A. Enhance internal controls over cost allocation to ensure compliance with federal regulations. B. Continue and complete its in-depth review of its cost allocation procedures and plan. C. Allocate costs as specified in the cost allocation plan, as required by federal regulations. D. Implement changes to the cost allocation process only after receiving approval from, or submitting a plan revision to, the federal government. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department represented it was unable to comply with federal requirements to only implement changes to the cost allocation process after receiving approval or submitting a plan revision. The department has been in ongoing discussions with the federal government since March 2020 regarding the amendment effective 07/01/2018. This amendment was approved after 5 years on 09/12/2023. The department has implemented a two-year long business process improvement, and amendments are now submitted quarterly. It is the department’s position that the use of the impact statement from the department’s cost allocation plan is not a reasonable method for developing questioned costs as the impact statement includes estimates and does not delineate between actual increases in claiming costs and changes to allocation. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence. Since the department was not following its approved plan, it is our position that all changes captured in the impact statement represent questioned costs as they would not have been allocated in that manner under the approved plan. As such, our recommendation stands.
Finding 2023-067: U.S. Department of Agriculture ALN #10.551 and 10.561, SNAP Cluster Grant #Various U.S. Department of Education ALN #84.126, Rehabilitation Services – Vocational Rehabilitation Grants to States Grant #H126A210038, H126A220038, H126A230038 U.S. Department of Health and Human Services ALN #93.268, Immunization Cooperative Agreements (COVID-19) Grant #Various ALN #93.323, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Grant #Various ALN #93.558, Temporary Assistance for Needy Families (TANF) (COVID-19) Grant #2101MTTANF, 2201MTTANF, 2301MTTANF ALN #93.563, Child Support Services Grant #2101MTCSES, 2201MTCSES, 2301MTCSES, 2101MTCEST, 2201MTCEST, 2301MTCEST ALN #93.566, Refugee and Entrant Assistance State/Replacement Designee Administered Programs Grant #2101MTRCMA, 2201MTRCMA, 2301MTRCMA ALN #93.575 and 93.596, Child Care Development Fund Cluster (CCDF) (COVID-19) Grant #2101MTCCDF, 2201MTCCDD, 2201MTCCDF, 2301MTCCDD, 2301MTCCDF ALN #93.658, Foster Care – Title IV-E (COVID-19) Grant #2101MTFOST, 2201MTFOST, 2301MTFOST ALN #93.659, Adoption Assistance – Title IV-E (COVID-19) Grant #2101MTADPT, 2201MTADPT, 2301MTADPT ALN #93.767, Children’s Health Insurance Program (CHIP) (COVID-19) Grant #2105MT5021, 2205MT5021, 2305MT3002 ALN #93.775, 93.777, 93.778, Medicaid Cluster (COVID-19) Grant #1205MT5ADM, 2205MT5ADM, 2305MT5ADM Criteria: Federal regulation, 2 CFR Appendix VI, in part, requires the state public assistance agency to develop, document, and implement a public assistance cost allocation plan in accordance with federal regulations. This section and federal regulation, 45 CFR 95.509, require the state agency promptly amend the cost allocation plan and submit the amended plan if certain events occur. Federal regulation, 45 CFR 200.416, requires a process for central services costs to be identified and assigned to benefitted activities on a reasonable and consistent basis. Federal regulation, 45 CFR 95.515, specifies the effective date of the cost allocation plan amendment is the first day of the calendar quarter following the date of the event requiring the amendment. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: For the fourth audit in a row, the Department of Public Health and Human Services (department) did not follow its federally approved plan to allocate costs among state and federal programs. Additionally, department internal controls did not prevent these inconsistencies. Questioned Costs: Using the “PACAP Impact Statement” sections of Public Assistance Cost Allocation Plan (PACAP) amendments for 2021, 2022, and 2023, which were submitted between May and November 2023, we estimated likely questioned costs. The following table summarizes questioned costs for major federal programs with material noncompliance or other federal programs where questioned costs are projected to exceed $25,000. See the Schedule of Findings and Questioned Costs for chart/table. Context: For the majority of the period under audit, the cost allocation plan in effect was submitted to the federal government in March 2020 and was effective as of January 1, 2020. The plan amendment for fiscal year 2021 was not submitted until May 2023, and plan amendments for fiscal years 2022 and 2023 were submitted after the end of the period under audit. Costs allocated to state and Federal programs totaled $173,808,149 and $184,493,577 for fiscal years 2022 and 2023, respectively. The table below depicts the total indirect costs allocated to each of the federal programs where we identified material noncompliance or questioned costs required to be reported. See the Schedule of Findings and Questioned Costs for chart/table. The internal control deficiency applies to all federal programs regardless of our identification of material noncompliance or reportable questioned costs. Repeat Finding: Montana’s prior Single Audit reports provided several recommendations to the department regarding its cost allocation plan. The report for the fiscal years ending June 30, 2017, recommended improving internal controls over the cost allocation plan (recommendation #2017-014). The report for the fiscal years ending June 30, 2019, advised the department to review and document all cost pools to ensure they align with the approved plan, obtain federal approval for changes, develop internal controls to detect variances, and allocate costs accordingly (#2019-022). The report for the fiscal years ending June 30, 2021, recommended enhancing internal controls, thoroughly reviewing cost allocation procedures, and obtaining federal approval before implementing changes (#2021-063). Effect: The department has not complied with federal compliance requirements by not following its submitted cost allocation plan. Cause: Since the previous audit, the department contracted with an external entity to review its cost allocation process and assist the department in making changes to cost pools and implementing new tools to facilitate the allocation processes. However, all work to review and modify the cost allocation processes was not completed during the audit period. During the audit period, the department continued implementing changes to cost pools and allocation methodologies outside the approved cost allocation plan. Recommendation: We recommend the Department of Public Health and Human Services: A. Enhance internal controls over cost allocation to ensure compliance with federal regulations. B. Continue and complete its in-depth review of its cost allocation procedures and plan. C. Allocate costs as specified in the cost allocation plan, as required by federal regulations. D. Implement changes to the cost allocation process only after receiving approval from, or submitting a plan revision to, the federal government. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department represented it was unable to comply with federal requirements to only implement changes to the cost allocation process after receiving approval or submitting a plan revision. The department has been in ongoing discussions with the federal government since March 2020 regarding the amendment effective 07/01/2018. This amendment was approved after 5 years on 09/12/2023. The department has implemented a two-year long business process improvement, and amendments are now submitted quarterly. It is the department’s position that the use of the impact statement from the department’s cost allocation plan is not a reasonable method for developing questioned costs as the impact statement includes estimates and does not delineate between actual increases in claiming costs and changes to allocation. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence. Since the department was not following its approved plan, it is our position that all changes captured in the impact statement represent questioned costs as they would not have been allocated in that manner under the approved plan. As such, our recommendation stands.
Finding 2023-067: U.S. Department of Agriculture ALN #10.551 and 10.561, SNAP Cluster Grant #Various U.S. Department of Education ALN #84.126, Rehabilitation Services – Vocational Rehabilitation Grants to States Grant #H126A210038, H126A220038, H126A230038 U.S. Department of Health and Human Services ALN #93.268, Immunization Cooperative Agreements (COVID-19) Grant #Various ALN #93.323, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Grant #Various ALN #93.558, Temporary Assistance for Needy Families (TANF) (COVID-19) Grant #2101MTTANF, 2201MTTANF, 2301MTTANF ALN #93.563, Child Support Services Grant #2101MTCSES, 2201MTCSES, 2301MTCSES, 2101MTCEST, 2201MTCEST, 2301MTCEST ALN #93.566, Refugee and Entrant Assistance State/Replacement Designee Administered Programs Grant #2101MTRCMA, 2201MTRCMA, 2301MTRCMA ALN #93.575 and 93.596, Child Care Development Fund Cluster (CCDF) (COVID-19) Grant #2101MTCCDF, 2201MTCCDD, 2201MTCCDF, 2301MTCCDD, 2301MTCCDF ALN #93.658, Foster Care – Title IV-E (COVID-19) Grant #2101MTFOST, 2201MTFOST, 2301MTFOST ALN #93.659, Adoption Assistance – Title IV-E (COVID-19) Grant #2101MTADPT, 2201MTADPT, 2301MTADPT ALN #93.767, Children’s Health Insurance Program (CHIP) (COVID-19) Grant #2105MT5021, 2205MT5021, 2305MT3002 ALN #93.775, 93.777, 93.778, Medicaid Cluster (COVID-19) Grant #1205MT5ADM, 2205MT5ADM, 2305MT5ADM Criteria: Federal regulation, 2 CFR Appendix VI, in part, requires the state public assistance agency to develop, document, and implement a public assistance cost allocation plan in accordance with federal regulations. This section and federal regulation, 45 CFR 95.509, require the state agency promptly amend the cost allocation plan and submit the amended plan if certain events occur. Federal regulation, 45 CFR 200.416, requires a process for central services costs to be identified and assigned to benefitted activities on a reasonable and consistent basis. Federal regulation, 45 CFR 95.515, specifies the effective date of the cost allocation plan amendment is the first day of the calendar quarter following the date of the event requiring the amendment. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: For the fourth audit in a row, the Department of Public Health and Human Services (department) did not follow its federally approved plan to allocate costs among state and federal programs. Additionally, department internal controls did not prevent these inconsistencies. Questioned Costs: Using the “PACAP Impact Statement” sections of Public Assistance Cost Allocation Plan (PACAP) amendments for 2021, 2022, and 2023, which were submitted between May and November 2023, we estimated likely questioned costs. The following table summarizes questioned costs for major federal programs with material noncompliance or other federal programs where questioned costs are projected to exceed $25,000. See the Schedule of Findings and Questioned Costs for chart/table. Context: For the majority of the period under audit, the cost allocation plan in effect was submitted to the federal government in March 2020 and was effective as of January 1, 2020. The plan amendment for fiscal year 2021 was not submitted until May 2023, and plan amendments for fiscal years 2022 and 2023 were submitted after the end of the period under audit. Costs allocated to state and Federal programs totaled $173,808,149 and $184,493,577 for fiscal years 2022 and 2023, respectively. The table below depicts the total indirect costs allocated to each of the federal programs where we identified material noncompliance or questioned costs required to be reported. See the Schedule of Findings and Questioned Costs for chart/table. The internal control deficiency applies to all federal programs regardless of our identification of material noncompliance or reportable questioned costs. Repeat Finding: Montana’s prior Single Audit reports provided several recommendations to the department regarding its cost allocation plan. The report for the fiscal years ending June 30, 2017, recommended improving internal controls over the cost allocation plan (recommendation #2017-014). The report for the fiscal years ending June 30, 2019, advised the department to review and document all cost pools to ensure they align with the approved plan, obtain federal approval for changes, develop internal controls to detect variances, and allocate costs accordingly (#2019-022). The report for the fiscal years ending June 30, 2021, recommended enhancing internal controls, thoroughly reviewing cost allocation procedures, and obtaining federal approval before implementing changes (#2021-063). Effect: The department has not complied with federal compliance requirements by not following its submitted cost allocation plan. Cause: Since the previous audit, the department contracted with an external entity to review its cost allocation process and assist the department in making changes to cost pools and implementing new tools to facilitate the allocation processes. However, all work to review and modify the cost allocation processes was not completed during the audit period. During the audit period, the department continued implementing changes to cost pools and allocation methodologies outside the approved cost allocation plan. Recommendation: We recommend the Department of Public Health and Human Services: A. Enhance internal controls over cost allocation to ensure compliance with federal regulations. B. Continue and complete its in-depth review of its cost allocation procedures and plan. C. Allocate costs as specified in the cost allocation plan, as required by federal regulations. D. Implement changes to the cost allocation process only after receiving approval from, or submitting a plan revision to, the federal government. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department represented it was unable to comply with federal requirements to only implement changes to the cost allocation process after receiving approval or submitting a plan revision. The department has been in ongoing discussions with the federal government since March 2020 regarding the amendment effective 07/01/2018. This amendment was approved after 5 years on 09/12/2023. The department has implemented a two-year long business process improvement, and amendments are now submitted quarterly. It is the department’s position that the use of the impact statement from the department’s cost allocation plan is not a reasonable method for developing questioned costs as the impact statement includes estimates and does not delineate between actual increases in claiming costs and changes to allocation. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence. Since the department was not following its approved plan, it is our position that all changes captured in the impact statement represent questioned costs as they would not have been allocated in that manner under the approved plan. As such, our recommendation stands.
Finding 2023-067: U.S. Department of Agriculture ALN #10.551 and 10.561, SNAP Cluster Grant #Various U.S. Department of Education ALN #84.126, Rehabilitation Services – Vocational Rehabilitation Grants to States Grant #H126A210038, H126A220038, H126A230038 U.S. Department of Health and Human Services ALN #93.268, Immunization Cooperative Agreements (COVID-19) Grant #Various ALN #93.323, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Grant #Various ALN #93.558, Temporary Assistance for Needy Families (TANF) (COVID-19) Grant #2101MTTANF, 2201MTTANF, 2301MTTANF ALN #93.563, Child Support Services Grant #2101MTCSES, 2201MTCSES, 2301MTCSES, 2101MTCEST, 2201MTCEST, 2301MTCEST ALN #93.566, Refugee and Entrant Assistance State/Replacement Designee Administered Programs Grant #2101MTRCMA, 2201MTRCMA, 2301MTRCMA ALN #93.575 and 93.596, Child Care Development Fund Cluster (CCDF) (COVID-19) Grant #2101MTCCDF, 2201MTCCDD, 2201MTCCDF, 2301MTCCDD, 2301MTCCDF ALN #93.658, Foster Care – Title IV-E (COVID-19) Grant #2101MTFOST, 2201MTFOST, 2301MTFOST ALN #93.659, Adoption Assistance – Title IV-E (COVID-19) Grant #2101MTADPT, 2201MTADPT, 2301MTADPT ALN #93.767, Children’s Health Insurance Program (CHIP) (COVID-19) Grant #2105MT5021, 2205MT5021, 2305MT3002 ALN #93.775, 93.777, 93.778, Medicaid Cluster (COVID-19) Grant #1205MT5ADM, 2205MT5ADM, 2305MT5ADM Criteria: Federal regulation, 2 CFR Appendix VI, in part, requires the state public assistance agency to develop, document, and implement a public assistance cost allocation plan in accordance with federal regulations. This section and federal regulation, 45 CFR 95.509, require the state agency promptly amend the cost allocation plan and submit the amended plan if certain events occur. Federal regulation, 45 CFR 200.416, requires a process for central services costs to be identified and assigned to benefitted activities on a reasonable and consistent basis. Federal regulation, 45 CFR 95.515, specifies the effective date of the cost allocation plan amendment is the first day of the calendar quarter following the date of the event requiring the amendment. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: For the fourth audit in a row, the Department of Public Health and Human Services (department) did not follow its federally approved plan to allocate costs among state and federal programs. Additionally, department internal controls did not prevent these inconsistencies. Questioned Costs: Using the “PACAP Impact Statement” sections of Public Assistance Cost Allocation Plan (PACAP) amendments for 2021, 2022, and 2023, which were submitted between May and November 2023, we estimated likely questioned costs. The following table summarizes questioned costs for major federal programs with material noncompliance or other federal programs where questioned costs are projected to exceed $25,000. See the Schedule of Findings and Questioned Costs for chart/table. Context: For the majority of the period under audit, the cost allocation plan in effect was submitted to the federal government in March 2020 and was effective as of January 1, 2020. The plan amendment for fiscal year 2021 was not submitted until May 2023, and plan amendments for fiscal years 2022 and 2023 were submitted after the end of the period under audit. Costs allocated to state and Federal programs totaled $173,808,149 and $184,493,577 for fiscal years 2022 and 2023, respectively. The table below depicts the total indirect costs allocated to each of the federal programs where we identified material noncompliance or questioned costs required to be reported. See the Schedule of Findings and Questioned Costs for chart/table. The internal control deficiency applies to all federal programs regardless of our identification of material noncompliance or reportable questioned costs. Repeat Finding: Montana’s prior Single Audit reports provided several recommendations to the department regarding its cost allocation plan. The report for the fiscal years ending June 30, 2017, recommended improving internal controls over the cost allocation plan (recommendation #2017-014). The report for the fiscal years ending June 30, 2019, advised the department to review and document all cost pools to ensure they align with the approved plan, obtain federal approval for changes, develop internal controls to detect variances, and allocate costs accordingly (#2019-022). The report for the fiscal years ending June 30, 2021, recommended enhancing internal controls, thoroughly reviewing cost allocation procedures, and obtaining federal approval before implementing changes (#2021-063). Effect: The department has not complied with federal compliance requirements by not following its submitted cost allocation plan. Cause: Since the previous audit, the department contracted with an external entity to review its cost allocation process and assist the department in making changes to cost pools and implementing new tools to facilitate the allocation processes. However, all work to review and modify the cost allocation processes was not completed during the audit period. During the audit period, the department continued implementing changes to cost pools and allocation methodologies outside the approved cost allocation plan. Recommendation: We recommend the Department of Public Health and Human Services: A. Enhance internal controls over cost allocation to ensure compliance with federal regulations. B. Continue and complete its in-depth review of its cost allocation procedures and plan. C. Allocate costs as specified in the cost allocation plan, as required by federal regulations. D. Implement changes to the cost allocation process only after receiving approval from, or submitting a plan revision to, the federal government. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department represented it was unable to comply with federal requirements to only implement changes to the cost allocation process after receiving approval or submitting a plan revision. The department has been in ongoing discussions with the federal government since March 2020 regarding the amendment effective 07/01/2018. This amendment was approved after 5 years on 09/12/2023. The department has implemented a two-year long business process improvement, and amendments are now submitted quarterly. It is the department’s position that the use of the impact statement from the department’s cost allocation plan is not a reasonable method for developing questioned costs as the impact statement includes estimates and does not delineate between actual increases in claiming costs and changes to allocation. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence. Since the department was not following its approved plan, it is our position that all changes captured in the impact statement represent questioned costs as they would not have been allocated in that manner under the approved plan. As such, our recommendation stands.
Finding 2023-067: U.S. Department of Agriculture ALN #10.551 and 10.561, SNAP Cluster Grant #Various U.S. Department of Education ALN #84.126, Rehabilitation Services – Vocational Rehabilitation Grants to States Grant #H126A210038, H126A220038, H126A230038 U.S. Department of Health and Human Services ALN #93.268, Immunization Cooperative Agreements (COVID-19) Grant #Various ALN #93.323, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Grant #Various ALN #93.558, Temporary Assistance for Needy Families (TANF) (COVID-19) Grant #2101MTTANF, 2201MTTANF, 2301MTTANF ALN #93.563, Child Support Services Grant #2101MTCSES, 2201MTCSES, 2301MTCSES, 2101MTCEST, 2201MTCEST, 2301MTCEST ALN #93.566, Refugee and Entrant Assistance State/Replacement Designee Administered Programs Grant #2101MTRCMA, 2201MTRCMA, 2301MTRCMA ALN #93.575 and 93.596, Child Care Development Fund Cluster (CCDF) (COVID-19) Grant #2101MTCCDF, 2201MTCCDD, 2201MTCCDF, 2301MTCCDD, 2301MTCCDF ALN #93.658, Foster Care – Title IV-E (COVID-19) Grant #2101MTFOST, 2201MTFOST, 2301MTFOST ALN #93.659, Adoption Assistance – Title IV-E (COVID-19) Grant #2101MTADPT, 2201MTADPT, 2301MTADPT ALN #93.767, Children’s Health Insurance Program (CHIP) (COVID-19) Grant #2105MT5021, 2205MT5021, 2305MT3002 ALN #93.775, 93.777, 93.778, Medicaid Cluster (COVID-19) Grant #1205MT5ADM, 2205MT5ADM, 2305MT5ADM Criteria: Federal regulation, 2 CFR Appendix VI, in part, requires the state public assistance agency to develop, document, and implement a public assistance cost allocation plan in accordance with federal regulations. This section and federal regulation, 45 CFR 95.509, require the state agency promptly amend the cost allocation plan and submit the amended plan if certain events occur. Federal regulation, 45 CFR 200.416, requires a process for central services costs to be identified and assigned to benefitted activities on a reasonable and consistent basis. Federal regulation, 45 CFR 95.515, specifies the effective date of the cost allocation plan amendment is the first day of the calendar quarter following the date of the event requiring the amendment. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: For the fourth audit in a row, the Department of Public Health and Human Services (department) did not follow its federally approved plan to allocate costs among state and federal programs. Additionally, department internal controls did not prevent these inconsistencies. Questioned Costs: Using the “PACAP Impact Statement” sections of Public Assistance Cost Allocation Plan (PACAP) amendments for 2021, 2022, and 2023, which were submitted between May and November 2023, we estimated likely questioned costs. The following table summarizes questioned costs for major federal programs with material noncompliance or other federal programs where questioned costs are projected to exceed $25,000. See the Schedule of Findings and Questioned Costs for chart/table. Context: For the majority of the period under audit, the cost allocation plan in effect was submitted to the federal government in March 2020 and was effective as of January 1, 2020. The plan amendment for fiscal year 2021 was not submitted until May 2023, and plan amendments for fiscal years 2022 and 2023 were submitted after the end of the period under audit. Costs allocated to state and Federal programs totaled $173,808,149 and $184,493,577 for fiscal years 2022 and 2023, respectively. The table below depicts the total indirect costs allocated to each of the federal programs where we identified material noncompliance or questioned costs required to be reported. See the Schedule of Findings and Questioned Costs for chart/table. The internal control deficiency applies to all federal programs regardless of our identification of material noncompliance or reportable questioned costs. Repeat Finding: Montana’s prior Single Audit reports provided several recommendations to the department regarding its cost allocation plan. The report for the fiscal years ending June 30, 2017, recommended improving internal controls over the cost allocation plan (recommendation #2017-014). The report for the fiscal years ending June 30, 2019, advised the department to review and document all cost pools to ensure they align with the approved plan, obtain federal approval for changes, develop internal controls to detect variances, and allocate costs accordingly (#2019-022). The report for the fiscal years ending June 30, 2021, recommended enhancing internal controls, thoroughly reviewing cost allocation procedures, and obtaining federal approval before implementing changes (#2021-063). Effect: The department has not complied with federal compliance requirements by not following its submitted cost allocation plan. Cause: Since the previous audit, the department contracted with an external entity to review its cost allocation process and assist the department in making changes to cost pools and implementing new tools to facilitate the allocation processes. However, all work to review and modify the cost allocation processes was not completed during the audit period. During the audit period, the department continued implementing changes to cost pools and allocation methodologies outside the approved cost allocation plan. Recommendation: We recommend the Department of Public Health and Human Services: A. Enhance internal controls over cost allocation to ensure compliance with federal regulations. B. Continue and complete its in-depth review of its cost allocation procedures and plan. C. Allocate costs as specified in the cost allocation plan, as required by federal regulations. D. Implement changes to the cost allocation process only after receiving approval from, or submitting a plan revision to, the federal government. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department represented it was unable to comply with federal requirements to only implement changes to the cost allocation process after receiving approval or submitting a plan revision. The department has been in ongoing discussions with the federal government since March 2020 regarding the amendment effective 07/01/2018. This amendment was approved after 5 years on 09/12/2023. The department has implemented a two-year long business process improvement, and amendments are now submitted quarterly. It is the department’s position that the use of the impact statement from the department’s cost allocation plan is not a reasonable method for developing questioned costs as the impact statement includes estimates and does not delineate between actual increases in claiming costs and changes to allocation. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence. Since the department was not following its approved plan, it is our position that all changes captured in the impact statement represent questioned costs as they would not have been allocated in that manner under the approved plan. As such, our recommendation stands.
Finding 2023-067: U.S. Department of Agriculture ALN #10.551 and 10.561, SNAP Cluster Grant #Various U.S. Department of Education ALN #84.126, Rehabilitation Services – Vocational Rehabilitation Grants to States Grant #H126A210038, H126A220038, H126A230038 U.S. Department of Health and Human Services ALN #93.268, Immunization Cooperative Agreements (COVID-19) Grant #Various ALN #93.323, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Grant #Various ALN #93.558, Temporary Assistance for Needy Families (TANF) (COVID-19) Grant #2101MTTANF, 2201MTTANF, 2301MTTANF ALN #93.563, Child Support Services Grant #2101MTCSES, 2201MTCSES, 2301MTCSES, 2101MTCEST, 2201MTCEST, 2301MTCEST ALN #93.566, Refugee and Entrant Assistance State/Replacement Designee Administered Programs Grant #2101MTRCMA, 2201MTRCMA, 2301MTRCMA ALN #93.575 and 93.596, Child Care Development Fund Cluster (CCDF) (COVID-19) Grant #2101MTCCDF, 2201MTCCDD, 2201MTCCDF, 2301MTCCDD, 2301MTCCDF ALN #93.658, Foster Care – Title IV-E (COVID-19) Grant #2101MTFOST, 2201MTFOST, 2301MTFOST ALN #93.659, Adoption Assistance – Title IV-E (COVID-19) Grant #2101MTADPT, 2201MTADPT, 2301MTADPT ALN #93.767, Children’s Health Insurance Program (CHIP) (COVID-19) Grant #2105MT5021, 2205MT5021, 2305MT3002 ALN #93.775, 93.777, 93.778, Medicaid Cluster (COVID-19) Grant #1205MT5ADM, 2205MT5ADM, 2305MT5ADM Criteria: Federal regulation, 2 CFR Appendix VI, in part, requires the state public assistance agency to develop, document, and implement a public assistance cost allocation plan in accordance with federal regulations. This section and federal regulation, 45 CFR 95.509, require the state agency promptly amend the cost allocation plan and submit the amended plan if certain events occur. Federal regulation, 45 CFR 200.416, requires a process for central services costs to be identified and assigned to benefitted activities on a reasonable and consistent basis. Federal regulation, 45 CFR 95.515, specifies the effective date of the cost allocation plan amendment is the first day of the calendar quarter following the date of the event requiring the amendment. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: For the fourth audit in a row, the Department of Public Health and Human Services (department) did not follow its federally approved plan to allocate costs among state and federal programs. Additionally, department internal controls did not prevent these inconsistencies. Questioned Costs: Using the “PACAP Impact Statement” sections of Public Assistance Cost Allocation Plan (PACAP) amendments for 2021, 2022, and 2023, which were submitted between May and November 2023, we estimated likely questioned costs. The following table summarizes questioned costs for major federal programs with material noncompliance or other federal programs where questioned costs are projected to exceed $25,000. See the Schedule of Findings and Questioned Costs for chart/table. Context: For the majority of the period under audit, the cost allocation plan in effect was submitted to the federal government in March 2020 and was effective as of January 1, 2020. The plan amendment for fiscal year 2021 was not submitted until May 2023, and plan amendments for fiscal years 2022 and 2023 were submitted after the end of the period under audit. Costs allocated to state and Federal programs totaled $173,808,149 and $184,493,577 for fiscal years 2022 and 2023, respectively. The table below depicts the total indirect costs allocated to each of the federal programs where we identified material noncompliance or questioned costs required to be reported. See the Schedule of Findings and Questioned Costs for chart/table. The internal control deficiency applies to all federal programs regardless of our identification of material noncompliance or reportable questioned costs. Repeat Finding: Montana’s prior Single Audit reports provided several recommendations to the department regarding its cost allocation plan. The report for the fiscal years ending June 30, 2017, recommended improving internal controls over the cost allocation plan (recommendation #2017-014). The report for the fiscal years ending June 30, 2019, advised the department to review and document all cost pools to ensure they align with the approved plan, obtain federal approval for changes, develop internal controls to detect variances, and allocate costs accordingly (#2019-022). The report for the fiscal years ending June 30, 2021, recommended enhancing internal controls, thoroughly reviewing cost allocation procedures, and obtaining federal approval before implementing changes (#2021-063). Effect: The department has not complied with federal compliance requirements by not following its submitted cost allocation plan. Cause: Since the previous audit, the department contracted with an external entity to review its cost allocation process and assist the department in making changes to cost pools and implementing new tools to facilitate the allocation processes. However, all work to review and modify the cost allocation processes was not completed during the audit period. During the audit period, the department continued implementing changes to cost pools and allocation methodologies outside the approved cost allocation plan. Recommendation: We recommend the Department of Public Health and Human Services: A. Enhance internal controls over cost allocation to ensure compliance with federal regulations. B. Continue and complete its in-depth review of its cost allocation procedures and plan. C. Allocate costs as specified in the cost allocation plan, as required by federal regulations. D. Implement changes to the cost allocation process only after receiving approval from, or submitting a plan revision to, the federal government. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department represented it was unable to comply with federal requirements to only implement changes to the cost allocation process after receiving approval or submitting a plan revision. The department has been in ongoing discussions with the federal government since March 2020 regarding the amendment effective 07/01/2018. This amendment was approved after 5 years on 09/12/2023. The department has implemented a two-year long business process improvement, and amendments are now submitted quarterly. It is the department’s position that the use of the impact statement from the department’s cost allocation plan is not a reasonable method for developing questioned costs as the impact statement includes estimates and does not delineate between actual increases in claiming costs and changes to allocation. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence. Since the department was not following its approved plan, it is our position that all changes captured in the impact statement represent questioned costs as they would not have been allocated in that manner under the approved plan. As such, our recommendation stands.
Finding 2023-067: U.S. Department of Agriculture ALN #10.551 and 10.561, SNAP Cluster Grant #Various U.S. Department of Education ALN #84.126, Rehabilitation Services – Vocational Rehabilitation Grants to States Grant #H126A210038, H126A220038, H126A230038 U.S. Department of Health and Human Services ALN #93.268, Immunization Cooperative Agreements (COVID-19) Grant #Various ALN #93.323, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Grant #Various ALN #93.558, Temporary Assistance for Needy Families (TANF) (COVID-19) Grant #2101MTTANF, 2201MTTANF, 2301MTTANF ALN #93.563, Child Support Services Grant #2101MTCSES, 2201MTCSES, 2301MTCSES, 2101MTCEST, 2201MTCEST, 2301MTCEST ALN #93.566, Refugee and Entrant Assistance State/Replacement Designee Administered Programs Grant #2101MTRCMA, 2201MTRCMA, 2301MTRCMA ALN #93.575 and 93.596, Child Care Development Fund Cluster (CCDF) (COVID-19) Grant #2101MTCCDF, 2201MTCCDD, 2201MTCCDF, 2301MTCCDD, 2301MTCCDF ALN #93.658, Foster Care – Title IV-E (COVID-19) Grant #2101MTFOST, 2201MTFOST, 2301MTFOST ALN #93.659, Adoption Assistance – Title IV-E (COVID-19) Grant #2101MTADPT, 2201MTADPT, 2301MTADPT ALN #93.767, Children’s Health Insurance Program (CHIP) (COVID-19) Grant #2105MT5021, 2205MT5021, 2305MT3002 ALN #93.775, 93.777, 93.778, Medicaid Cluster (COVID-19) Grant #1205MT5ADM, 2205MT5ADM, 2305MT5ADM Criteria: Federal regulation, 2 CFR Appendix VI, in part, requires the state public assistance agency to develop, document, and implement a public assistance cost allocation plan in accordance with federal regulations. This section and federal regulation, 45 CFR 95.509, require the state agency promptly amend the cost allocation plan and submit the amended plan if certain events occur. Federal regulation, 45 CFR 200.416, requires a process for central services costs to be identified and assigned to benefitted activities on a reasonable and consistent basis. Federal regulation, 45 CFR 95.515, specifies the effective date of the cost allocation plan amendment is the first day of the calendar quarter following the date of the event requiring the amendment. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: For the fourth audit in a row, the Department of Public Health and Human Services (department) did not follow its federally approved plan to allocate costs among state and federal programs. Additionally, department internal controls did not prevent these inconsistencies. Questioned Costs: Using the “PACAP Impact Statement” sections of Public Assistance Cost Allocation Plan (PACAP) amendments for 2021, 2022, and 2023, which were submitted between May and November 2023, we estimated likely questioned costs. The following table summarizes questioned costs for major federal programs with material noncompliance or other federal programs where questioned costs are projected to exceed $25,000. See the Schedule of Findings and Questioned Costs for chart/table. Context: For the majority of the period under audit, the cost allocation plan in effect was submitted to the federal government in March 2020 and was effective as of January 1, 2020. The plan amendment for fiscal year 2021 was not submitted until May 2023, and plan amendments for fiscal years 2022 and 2023 were submitted after the end of the period under audit. Costs allocated to state and Federal programs totaled $173,808,149 and $184,493,577 for fiscal years 2022 and 2023, respectively. The table below depicts the total indirect costs allocated to each of the federal programs where we identified material noncompliance or questioned costs required to be reported. See the Schedule of Findings and Questioned Costs for chart/table. The internal control deficiency applies to all federal programs regardless of our identification of material noncompliance or reportable questioned costs. Repeat Finding: Montana’s prior Single Audit reports provided several recommendations to the department regarding its cost allocation plan. The report for the fiscal years ending June 30, 2017, recommended improving internal controls over the cost allocation plan (recommendation #2017-014). The report for the fiscal years ending June 30, 2019, advised the department to review and document all cost pools to ensure they align with the approved plan, obtain federal approval for changes, develop internal controls to detect variances, and allocate costs accordingly (#2019-022). The report for the fiscal years ending June 30, 2021, recommended enhancing internal controls, thoroughly reviewing cost allocation procedures, and obtaining federal approval before implementing changes (#2021-063). Effect: The department has not complied with federal compliance requirements by not following its submitted cost allocation plan. Cause: Since the previous audit, the department contracted with an external entity to review its cost allocation process and assist the department in making changes to cost pools and implementing new tools to facilitate the allocation processes. However, all work to review and modify the cost allocation processes was not completed during the audit period. During the audit period, the department continued implementing changes to cost pools and allocation methodologies outside the approved cost allocation plan. Recommendation: We recommend the Department of Public Health and Human Services: A. Enhance internal controls over cost allocation to ensure compliance with federal regulations. B. Continue and complete its in-depth review of its cost allocation procedures and plan. C. Allocate costs as specified in the cost allocation plan, as required by federal regulations. D. Implement changes to the cost allocation process only after receiving approval from, or submitting a plan revision to, the federal government. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department represented it was unable to comply with federal requirements to only implement changes to the cost allocation process after receiving approval or submitting a plan revision. The department has been in ongoing discussions with the federal government since March 2020 regarding the amendment effective 07/01/2018. This amendment was approved after 5 years on 09/12/2023. The department has implemented a two-year long business process improvement, and amendments are now submitted quarterly. It is the department’s position that the use of the impact statement from the department’s cost allocation plan is not a reasonable method for developing questioned costs as the impact statement includes estimates and does not delineate between actual increases in claiming costs and changes to allocation. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence. Since the department was not following its approved plan, it is our position that all changes captured in the impact statement represent questioned costs as they would not have been allocated in that manner under the approved plan. As such, our recommendation stands.
Finding 2023-067: U.S. Department of Agriculture ALN #10.551 and 10.561, SNAP Cluster Grant #Various U.S. Department of Education ALN #84.126, Rehabilitation Services – Vocational Rehabilitation Grants to States Grant #H126A210038, H126A220038, H126A230038 U.S. Department of Health and Human Services ALN #93.268, Immunization Cooperative Agreements (COVID-19) Grant #Various ALN #93.323, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Grant #Various ALN #93.558, Temporary Assistance for Needy Families (TANF) (COVID-19) Grant #2101MTTANF, 2201MTTANF, 2301MTTANF ALN #93.563, Child Support Services Grant #2101MTCSES, 2201MTCSES, 2301MTCSES, 2101MTCEST, 2201MTCEST, 2301MTCEST ALN #93.566, Refugee and Entrant Assistance State/Replacement Designee Administered Programs Grant #2101MTRCMA, 2201MTRCMA, 2301MTRCMA ALN #93.575 and 93.596, Child Care Development Fund Cluster (CCDF) (COVID-19) Grant #2101MTCCDF, 2201MTCCDD, 2201MTCCDF, 2301MTCCDD, 2301MTCCDF ALN #93.658, Foster Care – Title IV-E (COVID-19) Grant #2101MTFOST, 2201MTFOST, 2301MTFOST ALN #93.659, Adoption Assistance – Title IV-E (COVID-19) Grant #2101MTADPT, 2201MTADPT, 2301MTADPT ALN #93.767, Children’s Health Insurance Program (CHIP) (COVID-19) Grant #2105MT5021, 2205MT5021, 2305MT3002 ALN #93.775, 93.777, 93.778, Medicaid Cluster (COVID-19) Grant #1205MT5ADM, 2205MT5ADM, 2305MT5ADM Criteria: Federal regulation, 2 CFR Appendix VI, in part, requires the state public assistance agency to develop, document, and implement a public assistance cost allocation plan in accordance with federal regulations. This section and federal regulation, 45 CFR 95.509, require the state agency promptly amend the cost allocation plan and submit the amended plan if certain events occur. Federal regulation, 45 CFR 200.416, requires a process for central services costs to be identified and assigned to benefitted activities on a reasonable and consistent basis. Federal regulation, 45 CFR 95.515, specifies the effective date of the cost allocation plan amendment is the first day of the calendar quarter following the date of the event requiring the amendment. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: For the fourth audit in a row, the Department of Public Health and Human Services (department) did not follow its federally approved plan to allocate costs among state and federal programs. Additionally, department internal controls did not prevent these inconsistencies. Questioned Costs: Using the “PACAP Impact Statement” sections of Public Assistance Cost Allocation Plan (PACAP) amendments for 2021, 2022, and 2023, which were submitted between May and November 2023, we estimated likely questioned costs. The following table summarizes questioned costs for major federal programs with material noncompliance or other federal programs where questioned costs are projected to exceed $25,000. See the Schedule of Findings and Questioned Costs for chart/table. Context: For the majority of the period under audit, the cost allocation plan in effect was submitted to the federal government in March 2020 and was effective as of January 1, 2020. The plan amendment for fiscal year 2021 was not submitted until May 2023, and plan amendments for fiscal years 2022 and 2023 were submitted after the end of the period under audit. Costs allocated to state and Federal programs totaled $173,808,149 and $184,493,577 for fiscal years 2022 and 2023, respectively. The table below depicts the total indirect costs allocated to each of the federal programs where we identified material noncompliance or questioned costs required to be reported. See the Schedule of Findings and Questioned Costs for chart/table. The internal control deficiency applies to all federal programs regardless of our identification of material noncompliance or reportable questioned costs. Repeat Finding: Montana’s prior Single Audit reports provided several recommendations to the department regarding its cost allocation plan. The report for the fiscal years ending June 30, 2017, recommended improving internal controls over the cost allocation plan (recommendation #2017-014). The report for the fiscal years ending June 30, 2019, advised the department to review and document all cost pools to ensure they align with the approved plan, obtain federal approval for changes, develop internal controls to detect variances, and allocate costs accordingly (#2019-022). The report for the fiscal years ending June 30, 2021, recommended enhancing internal controls, thoroughly reviewing cost allocation procedures, and obtaining federal approval before implementing changes (#2021-063). Effect: The department has not complied with federal compliance requirements by not following its submitted cost allocation plan. Cause: Since the previous audit, the department contracted with an external entity to review its cost allocation process and assist the department in making changes to cost pools and implementing new tools to facilitate the allocation processes. However, all work to review and modify the cost allocation processes was not completed during the audit period. During the audit period, the department continued implementing changes to cost pools and allocation methodologies outside the approved cost allocation plan. Recommendation: We recommend the Department of Public Health and Human Services: A. Enhance internal controls over cost allocation to ensure compliance with federal regulations. B. Continue and complete its in-depth review of its cost allocation procedures and plan. C. Allocate costs as specified in the cost allocation plan, as required by federal regulations. D. Implement changes to the cost allocation process only after receiving approval from, or submitting a plan revision to, the federal government. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department represented it was unable to comply with federal requirements to only implement changes to the cost allocation process after receiving approval or submitting a plan revision. The department has been in ongoing discussions with the federal government since March 2020 regarding the amendment effective 07/01/2018. This amendment was approved after 5 years on 09/12/2023. The department has implemented a two-year long business process improvement, and amendments are now submitted quarterly. It is the department’s position that the use of the impact statement from the department’s cost allocation plan is not a reasonable method for developing questioned costs as the impact statement includes estimates and does not delineate between actual increases in claiming costs and changes to allocation. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence. Since the department was not following its approved plan, it is our position that all changes captured in the impact statement represent questioned costs as they would not have been allocated in that manner under the approved plan. As such, our recommendation stands.
Finding 2023-067: U.S. Department of Agriculture ALN #10.551 and 10.561, SNAP Cluster Grant #Various U.S. Department of Education ALN #84.126, Rehabilitation Services – Vocational Rehabilitation Grants to States Grant #H126A210038, H126A220038, H126A230038 U.S. Department of Health and Human Services ALN #93.268, Immunization Cooperative Agreements (COVID-19) Grant #Various ALN #93.323, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Grant #Various ALN #93.558, Temporary Assistance for Needy Families (TANF) (COVID-19) Grant #2101MTTANF, 2201MTTANF, 2301MTTANF ALN #93.563, Child Support Services Grant #2101MTCSES, 2201MTCSES, 2301MTCSES, 2101MTCEST, 2201MTCEST, 2301MTCEST ALN #93.566, Refugee and Entrant Assistance State/Replacement Designee Administered Programs Grant #2101MTRCMA, 2201MTRCMA, 2301MTRCMA ALN #93.575 and 93.596, Child Care Development Fund Cluster (CCDF) (COVID-19) Grant #2101MTCCDF, 2201MTCCDD, 2201MTCCDF, 2301MTCCDD, 2301MTCCDF ALN #93.658, Foster Care – Title IV-E (COVID-19) Grant #2101MTFOST, 2201MTFOST, 2301MTFOST ALN #93.659, Adoption Assistance – Title IV-E (COVID-19) Grant #2101MTADPT, 2201MTADPT, 2301MTADPT ALN #93.767, Children’s Health Insurance Program (CHIP) (COVID-19) Grant #2105MT5021, 2205MT5021, 2305MT3002 ALN #93.775, 93.777, 93.778, Medicaid Cluster (COVID-19) Grant #1205MT5ADM, 2205MT5ADM, 2305MT5ADM Criteria: Federal regulation, 2 CFR Appendix VI, in part, requires the state public assistance agency to develop, document, and implement a public assistance cost allocation plan in accordance with federal regulations. This section and federal regulation, 45 CFR 95.509, require the state agency promptly amend the cost allocation plan and submit the amended plan if certain events occur. Federal regulation, 45 CFR 200.416, requires a process for central services costs to be identified and assigned to benefitted activities on a reasonable and consistent basis. Federal regulation, 45 CFR 95.515, specifies the effective date of the cost allocation plan amendment is the first day of the calendar quarter following the date of the event requiring the amendment. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: For the fourth audit in a row, the Department of Public Health and Human Services (department) did not follow its federally approved plan to allocate costs among state and federal programs. Additionally, department internal controls did not prevent these inconsistencies. Questioned Costs: Using the “PACAP Impact Statement” sections of Public Assistance Cost Allocation Plan (PACAP) amendments for 2021, 2022, and 2023, which were submitted between May and November 2023, we estimated likely questioned costs. The following table summarizes questioned costs for major federal programs with material noncompliance or other federal programs where questioned costs are projected to exceed $25,000. See the Schedule of Findings and Questioned Costs for chart/table. Context: For the majority of the period under audit, the cost allocation plan in effect was submitted to the federal government in March 2020 and was effective as of January 1, 2020. The plan amendment for fiscal year 2021 was not submitted until May 2023, and plan amendments for fiscal years 2022 and 2023 were submitted after the end of the period under audit. Costs allocated to state and Federal programs totaled $173,808,149 and $184,493,577 for fiscal years 2022 and 2023, respectively. The table below depicts the total indirect costs allocated to each of the federal programs where we identified material noncompliance or questioned costs required to be reported. See the Schedule of Findings and Questioned Costs for chart/table. The internal control deficiency applies to all federal programs regardless of our identification of material noncompliance or reportable questioned costs. Repeat Finding: Montana’s prior Single Audit reports provided several recommendations to the department regarding its cost allocation plan. The report for the fiscal years ending June 30, 2017, recommended improving internal controls over the cost allocation plan (recommendation #2017-014). The report for the fiscal years ending June 30, 2019, advised the department to review and document all cost pools to ensure they align with the approved plan, obtain federal approval for changes, develop internal controls to detect variances, and allocate costs accordingly (#2019-022). The report for the fiscal years ending June 30, 2021, recommended enhancing internal controls, thoroughly reviewing cost allocation procedures, and obtaining federal approval before implementing changes (#2021-063). Effect: The department has not complied with federal compliance requirements by not following its submitted cost allocation plan. Cause: Since the previous audit, the department contracted with an external entity to review its cost allocation process and assist the department in making changes to cost pools and implementing new tools to facilitate the allocation processes. However, all work to review and modify the cost allocation processes was not completed during the audit period. During the audit period, the department continued implementing changes to cost pools and allocation methodologies outside the approved cost allocation plan. Recommendation: We recommend the Department of Public Health and Human Services: A. Enhance internal controls over cost allocation to ensure compliance with federal regulations. B. Continue and complete its in-depth review of its cost allocation procedures and plan. C. Allocate costs as specified in the cost allocation plan, as required by federal regulations. D. Implement changes to the cost allocation process only after receiving approval from, or submitting a plan revision to, the federal government. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department represented it was unable to comply with federal requirements to only implement changes to the cost allocation process after receiving approval or submitting a plan revision. The department has been in ongoing discussions with the federal government since March 2020 regarding the amendment effective 07/01/2018. This amendment was approved after 5 years on 09/12/2023. The department has implemented a two-year long business process improvement, and amendments are now submitted quarterly. It is the department’s position that the use of the impact statement from the department’s cost allocation plan is not a reasonable method for developing questioned costs as the impact statement includes estimates and does not delineate between actual increases in claiming costs and changes to allocation. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence. Since the department was not following its approved plan, it is our position that all changes captured in the impact statement represent questioned costs as they would not have been allocated in that manner under the approved plan. As such, our recommendation stands.
Criteria: In accordance with the operating contract, section 6, and federal regulations, entities charging indirect costs to federal programs must prepare, maintain, and make available an Annual Cost Allocation Plan in compliance with 2 CFR §200.414 and 2 CFR §200.416-200.417. The plan must be retained and be made available for audit to support the methodology used to charge indirect costs. Condition: The auditor was unable to obtain the entity’s Annual Cost Allocation Plan. Without this plan, the auditor could not assess whether the entity used the proper indirect cost rate or whether the methodology for calculating and allocation costs complied with federal requirements. Cause: The Annual Cost Allocation Plan could not be obtained to determine if the organization submitted indirect costs using the correct rate. It is unclear whether the plan was never created or whether it was not preserved due to deficiencies in the entity’s record-keeping procedures. Effect: The auditor could not validate the appropriateness or accuracy of indirect costs charged to the federal program. This lack of documentation increases the risk that indirect costs charged may be unallowable, improperly allocated, or inaccurately calculated. Recommendation: The entity should prepare an Annual Cost Allocation Plan in accordance with the program’s operating contract and federal regulations and ensure it is consistently retained and made available for audit. The entity should also establish internal controls over the preparation, approval, and retention of the plan.Management’s Response: Management agrees with the finding and will ensure that the Annual Cost Allocation Plan is completed in a timely manner in accordance with the operating contract and ensure it complied with applicable federal regulations.