Program: Various, including AL 84.027 – Special Education Grants to States; AL 84.173 – COVID-19 Special Education Preschool Grants; AL 84.425D – COVID-19 Education Stabilization Fund – Elementary and Secondary School Emergency Relief Fund (ESSER I and ESSER II); AL 84.425U – COVID-19 Education Stabilization Fund – American Rescue Plan – Elementary and Secondary School Emergency Relief Fund (ARP ESSER) – Subrecipient Monitoring Grant Number & Year: Various, including H027A210079, FFY 2022; H173X210077, FFY 2022; S425D200048, grant period ending 9/30/2022; S425D210048, grant period ending 9/30/2023; S425U210048, grant period ending 9/30/2024. Federal Grantor Agency: U.S. Department of Education Criteria: Per 2 CFR § 3474.1 (January 1, 2023), the U.S. Department of Education adopted the OMB Uniform Guidance in 2 CFR part 200, except for 2 CFR § 200.102(a) and 200.207(a). Per 2 CFR § 200.403 (January 1, 2023), allowable costs must be necessary, reasonable, and adequately documented. 2 CFR § 200.332 (January 1, 2023) states, in relevant part, the following: All pass-through entities must: * * * * (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. * * * * (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521. (4) The pass-through entity is responsible for resolving audit findings specifically related to the subaward[.] * * * * (f) Verify that every subrecipient is audited as required by Subpart F of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501. 2 CFR § 200.521 (January 1, 2023) states, in relevant part, the following: (c) Pass-through entity. As provided in § 200.332(d), the pass-through entity must be responsible for issuing a management decision for audit findings that relate to Federal awards it makes to subrecipients. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. Good internal control requires procedures to ensure that subrecipients are using grant funds for allowable purposes. Good internal control also requires procedures to ensure that subrecipient Single Audit reports are being reviewed, and management decision letters are being issued in a timely manner to ensure that corrective action is being implemented. Condition: For 3 of 27 subrecipients tested that received Federal funds from the Special Education Cluster, the Agency did not perform adequate subrecipient monitoring to ensure that funds were used for allowable purposes. For seven subrecipients tested that received Federal funds from the Education Stabilization Fund and/or Special Education Cluster, the Agency did not issue a management decision letter within the time requirement for five subrecipients and did not issue a management decision letter for two subrecipients. The Agency also failed to track and review the Single Audit report for one subrecipient. Repeat Finding: No Questioned Costs: Unknown Statistical Sample: No Context: The Agency performs various subrecipient monitoring activities during the year to ensure that subrecipients are using funds for an allowable purpose. These activities include reviewing a sample of expenditures from all reimbursement requests, tracking subrecipient audit requirements and reviewing Single Audit reports, and performing fiscal monitoring on a three-year basis. During review of reimbursement requests, the Agency does not perform procedures to ensure that salary and benefits allocated to the Special Education (SPED) grants are adequately supported by underlying documentation for a majority of its subrecipients. Rather the Agency relies on the fiscal monitoring to test that payroll is being properly allocated to grants, and the subrecipients have procedures in place to comply with Uniform Guidance Requirements. During testing of 27 subrecipients that received SPED grants, we noted the following for three subrecipients: • For the first subrecipient, the Agency had never completed a fiscal monitoring review. The Agency indicated that it was currently conducting fiscal monitoring of the school, but the subrecipient had been slow to provide documentation, resulting in delays. • The second subrecipient also did not have a fiscal monitoring review. At the time of the reimbursement, moreover, the Agency did not review any underlying documentation to support the costs allocated to the grant. The Agency stated that it relied on the entity’s annual audit to ensure costs were allocated properly; however, the subrecipient had not had a recent Single Audit in which the Special Education Cluster was a major program. • The third subrecipient had a fiscal monitoring review of payroll costs, but there was no documentation to show that the Agency had reviewed other purchased services at the time of reimbursement or during the fiscal monitoring. During review of the Agency’s procedures for reviewing subrecipient Single Audits, we noted the following: • For two subrecipients tested, their Single Audits noted significant deficiencies and material weaknesses, including one instance of questioned costs totaling $105,273; however, the Agency did not issue a management decision letter on the findings or provide documentation of any follow-up performed. • For five subrecipients tested, the management decision letter was issued eight to nine months after the audit was made available on the Federal Audit Clearinghouse (FAC). • One subrecipient was not being tracked by the Agency. This subrecipient had received $939,358 in Federal funds from the Agency. After the APA pointed this out, the Agency obtained a copy of the subrecipient’s Single Audit report, which noted no findings. Cause: Inadequate subrecipient monitoring procedures. The Agency stated it had other priorities during the year that delayed its review of the subrecipients’ Single Audit reports. Effect: Without adequate procedures, there is increased risk of noncompliance with Federal regulations, audit findings of subrecipients not being corrected, and an increased risk of loss or misuse of funds. Recommendation: We recommend the Agency review its procedures for reimbursements and fiscal monitoring to ensure subrecipients are operating in compliance with Federal requirements. We also recommend the Agency improve procedures to ensure that all subrecipients are being tracked for Single Audit requirements, and management decisions are issued in response to all findings in a timely manner. Management Response: First SPED subrecipient – The first recipient’s fiscal monitoring review is part of the current annual group of recipients being monitored; set to close June 30, 2024. Second SPED subrecipient – As part of the FY2020 federal Single Audit testing conducted by KPMG, determined the after-the-fact verification as a method to certify that the payment received on a project is reasonable in relation to the amount of work performed. Third SPED subrecipient – Purchased services and supplies were reviewed during fiscal monitoring, but the documentation was in paper form, not electronic, and was not initially provided to the auditors when requested. It was provided on March 4, 2024, when located. Single Audits – Due to extensive time commitment to State audit facilitation and Education Stabilization Fund Annual Performance Reporting, some management decision letters were not issued or were issued late. The NDE staff member performing the annual audit reviews was not aware of an additional subrecipient that needed reviewed. APA Response: The Special Education Cluster was not a major program for the second subrecipient in FY2020. For the third subrecipient, we originally requested the Agency’s fiscal monitoring documentation on December 21, 2023. Neb. Rev. Stat. § 84-305(2) (Cum. Supp. 2022) requires compliance with such a request to occur within “three business days after actual receipt of the request.” The only exceptions to that three-day response requirement are if there is “a legal basis for refusal to comply with the request” or “the entire request cannot with reasonable good faith efforts be fulfilled within three business days after actual receipt of the request due to the significant difficulty or the extensiveness of the request.” In either instance, § 84-305(2) requires the recipient of the request to take specific action in claiming the exception. The Agency failed to do so, clearly violating § 84-305(2). In no case not involving a legal basis for noncompliance, moreover, may the required compliance “exceed three calendar weeks after actual receipt of such request by any public entity.” Nevertheless, the additional documentation was not provided until over 11 weeks after being requested, which is another clear violation of § 84-305(2).
Program: Various, including AL 84.027 – Special Education Grants to States; AL 84.173 – COVID-19 Special Education Preschool Grants; AL 84.425D – COVID-19 Education Stabilization Fund – Elementary and Secondary School Emergency Relief Fund (ESSER I and ESSER II); AL 84.425U – COVID-19 Education Stabilization Fund – American Rescue Plan – Elementary and Secondary School Emergency Relief Fund (ARP ESSER) – Subrecipient Monitoring Grant Number & Year: Various, including H027A210079, FFY 2022; H173X210077, FFY 2022; S425D200048, grant period ending 9/30/2022; S425D210048, grant period ending 9/30/2023; S425U210048, grant period ending 9/30/2024. Federal Grantor Agency: U.S. Department of Education Criteria: Per 2 CFR § 3474.1 (January 1, 2023), the U.S. Department of Education adopted the OMB Uniform Guidance in 2 CFR part 200, except for 2 CFR § 200.102(a) and 200.207(a). Per 2 CFR § 200.403 (January 1, 2023), allowable costs must be necessary, reasonable, and adequately documented. 2 CFR § 200.332 (January 1, 2023) states, in relevant part, the following: All pass-through entities must: * * * * (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. * * * * (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521. (4) The pass-through entity is responsible for resolving audit findings specifically related to the subaward[.] * * * * (f) Verify that every subrecipient is audited as required by Subpart F of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501. 2 CFR § 200.521 (January 1, 2023) states, in relevant part, the following: (c) Pass-through entity. As provided in § 200.332(d), the pass-through entity must be responsible for issuing a management decision for audit findings that relate to Federal awards it makes to subrecipients. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. Good internal control requires procedures to ensure that subrecipients are using grant funds for allowable purposes. Good internal control also requires procedures to ensure that subrecipient Single Audit reports are being reviewed, and management decision letters are being issued in a timely manner to ensure that corrective action is being implemented. Condition: For 3 of 27 subrecipients tested that received Federal funds from the Special Education Cluster, the Agency did not perform adequate subrecipient monitoring to ensure that funds were used for allowable purposes. For seven subrecipients tested that received Federal funds from the Education Stabilization Fund and/or Special Education Cluster, the Agency did not issue a management decision letter within the time requirement for five subrecipients and did not issue a management decision letter for two subrecipients. The Agency also failed to track and review the Single Audit report for one subrecipient. Repeat Finding: No Questioned Costs: Unknown Statistical Sample: No Context: The Agency performs various subrecipient monitoring activities during the year to ensure that subrecipients are using funds for an allowable purpose. These activities include reviewing a sample of expenditures from all reimbursement requests, tracking subrecipient audit requirements and reviewing Single Audit reports, and performing fiscal monitoring on a three-year basis. During review of reimbursement requests, the Agency does not perform procedures to ensure that salary and benefits allocated to the Special Education (SPED) grants are adequately supported by underlying documentation for a majority of its subrecipients. Rather the Agency relies on the fiscal monitoring to test that payroll is being properly allocated to grants, and the subrecipients have procedures in place to comply with Uniform Guidance Requirements. During testing of 27 subrecipients that received SPED grants, we noted the following for three subrecipients: • For the first subrecipient, the Agency had never completed a fiscal monitoring review. The Agency indicated that it was currently conducting fiscal monitoring of the school, but the subrecipient had been slow to provide documentation, resulting in delays. • The second subrecipient also did not have a fiscal monitoring review. At the time of the reimbursement, moreover, the Agency did not review any underlying documentation to support the costs allocated to the grant. The Agency stated that it relied on the entity’s annual audit to ensure costs were allocated properly; however, the subrecipient had not had a recent Single Audit in which the Special Education Cluster was a major program. • The third subrecipient had a fiscal monitoring review of payroll costs, but there was no documentation to show that the Agency had reviewed other purchased services at the time of reimbursement or during the fiscal monitoring. During review of the Agency’s procedures for reviewing subrecipient Single Audits, we noted the following: • For two subrecipients tested, their Single Audits noted significant deficiencies and material weaknesses, including one instance of questioned costs totaling $105,273; however, the Agency did not issue a management decision letter on the findings or provide documentation of any follow-up performed. • For five subrecipients tested, the management decision letter was issued eight to nine months after the audit was made available on the Federal Audit Clearinghouse (FAC). • One subrecipient was not being tracked by the Agency. This subrecipient had received $939,358 in Federal funds from the Agency. After the APA pointed this out, the Agency obtained a copy of the subrecipient’s Single Audit report, which noted no findings. Cause: Inadequate subrecipient monitoring procedures. The Agency stated it had other priorities during the year that delayed its review of the subrecipients’ Single Audit reports. Effect: Without adequate procedures, there is increased risk of noncompliance with Federal regulations, audit findings of subrecipients not being corrected, and an increased risk of loss or misuse of funds. Recommendation: We recommend the Agency review its procedures for reimbursements and fiscal monitoring to ensure subrecipients are operating in compliance with Federal requirements. We also recommend the Agency improve procedures to ensure that all subrecipients are being tracked for Single Audit requirements, and management decisions are issued in response to all findings in a timely manner. Management Response: First SPED subrecipient – The first recipient’s fiscal monitoring review is part of the current annual group of recipients being monitored; set to close June 30, 2024. Second SPED subrecipient – As part of the FY2020 federal Single Audit testing conducted by KPMG, determined the after-the-fact verification as a method to certify that the payment received on a project is reasonable in relation to the amount of work performed. Third SPED subrecipient – Purchased services and supplies were reviewed during fiscal monitoring, but the documentation was in paper form, not electronic, and was not initially provided to the auditors when requested. It was provided on March 4, 2024, when located. Single Audits – Due to extensive time commitment to State audit facilitation and Education Stabilization Fund Annual Performance Reporting, some management decision letters were not issued or were issued late. The NDE staff member performing the annual audit reviews was not aware of an additional subrecipient that needed reviewed. APA Response: The Special Education Cluster was not a major program for the second subrecipient in FY2020. For the third subrecipient, we originally requested the Agency’s fiscal monitoring documentation on December 21, 2023. Neb. Rev. Stat. § 84-305(2) (Cum. Supp. 2022) requires compliance with such a request to occur within “three business days after actual receipt of the request.” The only exceptions to that three-day response requirement are if there is “a legal basis for refusal to comply with the request” or “the entire request cannot with reasonable good faith efforts be fulfilled within three business days after actual receipt of the request due to the significant difficulty or the extensiveness of the request.” In either instance, § 84-305(2) requires the recipient of the request to take specific action in claiming the exception. The Agency failed to do so, clearly violating § 84-305(2). In no case not involving a legal basis for noncompliance, moreover, may the required compliance “exceed three calendar weeks after actual receipt of such request by any public entity.” Nevertheless, the additional documentation was not provided until over 11 weeks after being requested, which is another clear violation of § 84-305(2).
Program: Various, including AL 84.027 – Special Education Grants to States; AL 84.173 – COVID-19 Special Education Preschool Grants; AL 84.425D – COVID-19 Education Stabilization Fund – Elementary and Secondary School Emergency Relief Fund (ESSER I and ESSER II); AL 84.425U – COVID-19 Education Stabilization Fund – American Rescue Plan – Elementary and Secondary School Emergency Relief Fund (ARP ESSER) – Subrecipient Monitoring Grant Number & Year: Various, including H027A210079, FFY 2022; H173X210077, FFY 2022; S425D200048, grant period ending 9/30/2022; S425D210048, grant period ending 9/30/2023; S425U210048, grant period ending 9/30/2024. Federal Grantor Agency: U.S. Department of Education Criteria: Per 2 CFR § 3474.1 (January 1, 2023), the U.S. Department of Education adopted the OMB Uniform Guidance in 2 CFR part 200, except for 2 CFR § 200.102(a) and 200.207(a). Per 2 CFR § 200.403 (January 1, 2023), allowable costs must be necessary, reasonable, and adequately documented. 2 CFR § 200.332 (January 1, 2023) states, in relevant part, the following: All pass-through entities must: * * * * (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. * * * * (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521. (4) The pass-through entity is responsible for resolving audit findings specifically related to the subaward[.] * * * * (f) Verify that every subrecipient is audited as required by Subpart F of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501. 2 CFR § 200.521 (January 1, 2023) states, in relevant part, the following: (c) Pass-through entity. As provided in § 200.332(d), the pass-through entity must be responsible for issuing a management decision for audit findings that relate to Federal awards it makes to subrecipients. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. Good internal control requires procedures to ensure that subrecipients are using grant funds for allowable purposes. Good internal control also requires procedures to ensure that subrecipient Single Audit reports are being reviewed, and management decision letters are being issued in a timely manner to ensure that corrective action is being implemented. Condition: For 3 of 27 subrecipients tested that received Federal funds from the Special Education Cluster, the Agency did not perform adequate subrecipient monitoring to ensure that funds were used for allowable purposes. For seven subrecipients tested that received Federal funds from the Education Stabilization Fund and/or Special Education Cluster, the Agency did not issue a management decision letter within the time requirement for five subrecipients and did not issue a management decision letter for two subrecipients. The Agency also failed to track and review the Single Audit report for one subrecipient. Repeat Finding: No Questioned Costs: Unknown Statistical Sample: No Context: The Agency performs various subrecipient monitoring activities during the year to ensure that subrecipients are using funds for an allowable purpose. These activities include reviewing a sample of expenditures from all reimbursement requests, tracking subrecipient audit requirements and reviewing Single Audit reports, and performing fiscal monitoring on a three-year basis. During review of reimbursement requests, the Agency does not perform procedures to ensure that salary and benefits allocated to the Special Education (SPED) grants are adequately supported by underlying documentation for a majority of its subrecipients. Rather the Agency relies on the fiscal monitoring to test that payroll is being properly allocated to grants, and the subrecipients have procedures in place to comply with Uniform Guidance Requirements. During testing of 27 subrecipients that received SPED grants, we noted the following for three subrecipients: • For the first subrecipient, the Agency had never completed a fiscal monitoring review. The Agency indicated that it was currently conducting fiscal monitoring of the school, but the subrecipient had been slow to provide documentation, resulting in delays. • The second subrecipient also did not have a fiscal monitoring review. At the time of the reimbursement, moreover, the Agency did not review any underlying documentation to support the costs allocated to the grant. The Agency stated that it relied on the entity’s annual audit to ensure costs were allocated properly; however, the subrecipient had not had a recent Single Audit in which the Special Education Cluster was a major program. • The third subrecipient had a fiscal monitoring review of payroll costs, but there was no documentation to show that the Agency had reviewed other purchased services at the time of reimbursement or during the fiscal monitoring. During review of the Agency’s procedures for reviewing subrecipient Single Audits, we noted the following: • For two subrecipients tested, their Single Audits noted significant deficiencies and material weaknesses, including one instance of questioned costs totaling $105,273; however, the Agency did not issue a management decision letter on the findings or provide documentation of any follow-up performed. • For five subrecipients tested, the management decision letter was issued eight to nine months after the audit was made available on the Federal Audit Clearinghouse (FAC). • One subrecipient was not being tracked by the Agency. This subrecipient had received $939,358 in Federal funds from the Agency. After the APA pointed this out, the Agency obtained a copy of the subrecipient’s Single Audit report, which noted no findings. Cause: Inadequate subrecipient monitoring procedures. The Agency stated it had other priorities during the year that delayed its review of the subrecipients’ Single Audit reports. Effect: Without adequate procedures, there is increased risk of noncompliance with Federal regulations, audit findings of subrecipients not being corrected, and an increased risk of loss or misuse of funds. Recommendation: We recommend the Agency review its procedures for reimbursements and fiscal monitoring to ensure subrecipients are operating in compliance with Federal requirements. We also recommend the Agency improve procedures to ensure that all subrecipients are being tracked for Single Audit requirements, and management decisions are issued in response to all findings in a timely manner. Management Response: First SPED subrecipient – The first recipient’s fiscal monitoring review is part of the current annual group of recipients being monitored; set to close June 30, 2024. Second SPED subrecipient – As part of the FY2020 federal Single Audit testing conducted by KPMG, determined the after-the-fact verification as a method to certify that the payment received on a project is reasonable in relation to the amount of work performed. Third SPED subrecipient – Purchased services and supplies were reviewed during fiscal monitoring, but the documentation was in paper form, not electronic, and was not initially provided to the auditors when requested. It was provided on March 4, 2024, when located. Single Audits – Due to extensive time commitment to State audit facilitation and Education Stabilization Fund Annual Performance Reporting, some management decision letters were not issued or were issued late. The NDE staff member performing the annual audit reviews was not aware of an additional subrecipient that needed reviewed. APA Response: The Special Education Cluster was not a major program for the second subrecipient in FY2020. For the third subrecipient, we originally requested the Agency’s fiscal monitoring documentation on December 21, 2023. Neb. Rev. Stat. § 84-305(2) (Cum. Supp. 2022) requires compliance with such a request to occur within “three business days after actual receipt of the request.” The only exceptions to that three-day response requirement are if there is “a legal basis for refusal to comply with the request” or “the entire request cannot with reasonable good faith efforts be fulfilled within three business days after actual receipt of the request due to the significant difficulty or the extensiveness of the request.” In either instance, § 84-305(2) requires the recipient of the request to take specific action in claiming the exception. The Agency failed to do so, clearly violating § 84-305(2). In no case not involving a legal basis for noncompliance, moreover, may the required compliance “exceed three calendar weeks after actual receipt of such request by any public entity.” Nevertheless, the additional documentation was not provided until over 11 weeks after being requested, which is another clear violation of § 84-305(2).
Program: Various, including AL 84.027 – Special Education Grants to States; AL 84.173 – COVID-19 Special Education Preschool Grants; AL 84.425D – COVID-19 Education Stabilization Fund – Elementary and Secondary School Emergency Relief Fund (ESSER I and ESSER II); AL 84.425U – COVID-19 Education Stabilization Fund – American Rescue Plan – Elementary and Secondary School Emergency Relief Fund (ARP ESSER) – Subrecipient Monitoring Grant Number & Year: Various, including H027A210079, FFY 2022; H173X210077, FFY 2022; S425D200048, grant period ending 9/30/2022; S425D210048, grant period ending 9/30/2023; S425U210048, grant period ending 9/30/2024. Federal Grantor Agency: U.S. Department of Education Criteria: Per 2 CFR § 3474.1 (January 1, 2023), the U.S. Department of Education adopted the OMB Uniform Guidance in 2 CFR part 200, except for 2 CFR § 200.102(a) and 200.207(a). Per 2 CFR § 200.403 (January 1, 2023), allowable costs must be necessary, reasonable, and adequately documented. 2 CFR § 200.332 (January 1, 2023) states, in relevant part, the following: All pass-through entities must: * * * * (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. * * * * (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521. (4) The pass-through entity is responsible for resolving audit findings specifically related to the subaward[.] * * * * (f) Verify that every subrecipient is audited as required by Subpart F of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501. 2 CFR § 200.521 (January 1, 2023) states, in relevant part, the following: (c) Pass-through entity. As provided in § 200.332(d), the pass-through entity must be responsible for issuing a management decision for audit findings that relate to Federal awards it makes to subrecipients. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. Good internal control requires procedures to ensure that subrecipients are using grant funds for allowable purposes. Good internal control also requires procedures to ensure that subrecipient Single Audit reports are being reviewed, and management decision letters are being issued in a timely manner to ensure that corrective action is being implemented. Condition: For 3 of 27 subrecipients tested that received Federal funds from the Special Education Cluster, the Agency did not perform adequate subrecipient monitoring to ensure that funds were used for allowable purposes. For seven subrecipients tested that received Federal funds from the Education Stabilization Fund and/or Special Education Cluster, the Agency did not issue a management decision letter within the time requirement for five subrecipients and did not issue a management decision letter for two subrecipients. The Agency also failed to track and review the Single Audit report for one subrecipient. Repeat Finding: No Questioned Costs: Unknown Statistical Sample: No Context: The Agency performs various subrecipient monitoring activities during the year to ensure that subrecipients are using funds for an allowable purpose. These activities include reviewing a sample of expenditures from all reimbursement requests, tracking subrecipient audit requirements and reviewing Single Audit reports, and performing fiscal monitoring on a three-year basis. During review of reimbursement requests, the Agency does not perform procedures to ensure that salary and benefits allocated to the Special Education (SPED) grants are adequately supported by underlying documentation for a majority of its subrecipients. Rather the Agency relies on the fiscal monitoring to test that payroll is being properly allocated to grants, and the subrecipients have procedures in place to comply with Uniform Guidance Requirements. During testing of 27 subrecipients that received SPED grants, we noted the following for three subrecipients: • For the first subrecipient, the Agency had never completed a fiscal monitoring review. The Agency indicated that it was currently conducting fiscal monitoring of the school, but the subrecipient had been slow to provide documentation, resulting in delays. • The second subrecipient also did not have a fiscal monitoring review. At the time of the reimbursement, moreover, the Agency did not review any underlying documentation to support the costs allocated to the grant. The Agency stated that it relied on the entity’s annual audit to ensure costs were allocated properly; however, the subrecipient had not had a recent Single Audit in which the Special Education Cluster was a major program. • The third subrecipient had a fiscal monitoring review of payroll costs, but there was no documentation to show that the Agency had reviewed other purchased services at the time of reimbursement or during the fiscal monitoring. During review of the Agency’s procedures for reviewing subrecipient Single Audits, we noted the following: • For two subrecipients tested, their Single Audits noted significant deficiencies and material weaknesses, including one instance of questioned costs totaling $105,273; however, the Agency did not issue a management decision letter on the findings or provide documentation of any follow-up performed. • For five subrecipients tested, the management decision letter was issued eight to nine months after the audit was made available on the Federal Audit Clearinghouse (FAC). • One subrecipient was not being tracked by the Agency. This subrecipient had received $939,358 in Federal funds from the Agency. After the APA pointed this out, the Agency obtained a copy of the subrecipient’s Single Audit report, which noted no findings. Cause: Inadequate subrecipient monitoring procedures. The Agency stated it had other priorities during the year that delayed its review of the subrecipients’ Single Audit reports. Effect: Without adequate procedures, there is increased risk of noncompliance with Federal regulations, audit findings of subrecipients not being corrected, and an increased risk of loss or misuse of funds. Recommendation: We recommend the Agency review its procedures for reimbursements and fiscal monitoring to ensure subrecipients are operating in compliance with Federal requirements. We also recommend the Agency improve procedures to ensure that all subrecipients are being tracked for Single Audit requirements, and management decisions are issued in response to all findings in a timely manner. Management Response: First SPED subrecipient – The first recipient’s fiscal monitoring review is part of the current annual group of recipients being monitored; set to close June 30, 2024. Second SPED subrecipient – As part of the FY2020 federal Single Audit testing conducted by KPMG, determined the after-the-fact verification as a method to certify that the payment received on a project is reasonable in relation to the amount of work performed. Third SPED subrecipient – Purchased services and supplies were reviewed during fiscal monitoring, but the documentation was in paper form, not electronic, and was not initially provided to the auditors when requested. It was provided on March 4, 2024, when located. Single Audits – Due to extensive time commitment to State audit facilitation and Education Stabilization Fund Annual Performance Reporting, some management decision letters were not issued or were issued late. The NDE staff member performing the annual audit reviews was not aware of an additional subrecipient that needed reviewed. APA Response: The Special Education Cluster was not a major program for the second subrecipient in FY2020. For the third subrecipient, we originally requested the Agency’s fiscal monitoring documentation on December 21, 2023. Neb. Rev. Stat. § 84-305(2) (Cum. Supp. 2022) requires compliance with such a request to occur within “three business days after actual receipt of the request.” The only exceptions to that three-day response requirement are if there is “a legal basis for refusal to comply with the request” or “the entire request cannot with reasonable good faith efforts be fulfilled within three business days after actual receipt of the request due to the significant difficulty or the extensiveness of the request.” In either instance, § 84-305(2) requires the recipient of the request to take specific action in claiming the exception. The Agency failed to do so, clearly violating § 84-305(2). In no case not involving a legal basis for noncompliance, moreover, may the required compliance “exceed three calendar weeks after actual receipt of such request by any public entity.” Nevertheless, the additional documentation was not provided until over 11 weeks after being requested, which is another clear violation of § 84-305(2).
Program: AL 97.036 – Disaster Grants - Public Assistance (Presidentially Declared Disasters) – Subrecipient Monitoring Grant Number & Year: All open, including 4420-DR-NE, declared March 21, 2019 Federal Grantor Agency: U.S. Department of Homeland Security Criteria: 2 CFR § 200.332 (January 1, 2023) states, in relevant part, the following: All pass-through entities must: * * * * (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the pass-through entity. (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521. * * * * (f) Verify that every subrecipient is audited as required by Subpart F of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 2 CFR § 200.501(b) (January 1, 2023) states, in relevant part, the following: “A non-Federal entity that expends $750,000 or more during the non-Federal entity’s fiscal year in Federal awards must have a single audit conducted in accordance with § 200.514 . . .” Per Chapter VII, Section B, of the Agency’s 2023 Annual Administrative Plan for the Public Assistance Program, it is the State’s responsibility to review Single audits completed by subrecipients and to ensure appropriate action is taken for adverse findings. A good internal control plan requires procedures to ensure subrecipient audits are reviewed timely. Condition: The Agency did not ensure subrecipient Single Audits were obtained timely. Repeat Finding: No Questioned Costs: None Statistical Sample: No Context: The Agency utilizes a spreadsheet to track whether subrecipients obtain Single Audits when required. Additionally, the Agency sends letters to all subrecipients requiring them to respond on whether they were required to obtain a Single Audit. However, the Agency did not complete these processes during fiscal year 2023. We selected six subrecipients for testing that would have required a Single Audit be issued during State fiscal year 2023 based on the amount of funds they received from the Agency. For all six subrecipients tested, the Agency had not verified whether or not the subrecipients obtained Single Audits prior to our inquiry in December 2023. One of the six subrecipients appears to have required a Single Audit because it received $1,261,565 in disaster grant funds passed through the Agency during fiscal year 2022, but it did not obtain one. Cause: According to Agency representatives, the process was not completed due to a severe lack of staffing. Effect: Without adequate monitoring procedures, there is an increased risk that Federal awards could be used for unallowable costs. Recommendation: We recommend the Agency implement procedures to ensure subrecipient audits are reviewed timely. Management Response: Due to the Agency’s extreme staffing shortage which has persisted for two years, NEMA has had to prioritize workload. This has been particularly acute with Federal Aid Administrators to whom the tasks of subrecipient monitoring fall. Several projects slipped the normal timeframes for completion.
Various Agencies Finding 2023 – 024: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 – Child Nutrition Cluster (including COVID-19) ALN 10.565, 10.568, and 10.569 – Food Distribution Cluster ALN 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children ALN 10.558 – Child and Adult Care Food Program ALN 84.010 – Title I Grants to Local Educational Agencies ALN 84.027 and 84.173¬ – Special Education Cluster (IDEA) (including COVID-19) ALN 84.367 – Supporting Effective Instruction State Grants ALN 84.425C – COVID-19 – Education Stabilization Fund - GEER Fund ALN 84.425D – COVID-19 – Education Stabilization Fund - ESSER Fund ALN 84.425R – COVID-19 – Education Stabilization Fund - CRRSA EANS ALN 84.425U – COVID-19 – Education Stabilization Fund - ARP ESSER ALN 84.425V – COVID-19 – Education Stabilization Fund - ARP EANS ALN 93.044, 93.045, and 93.053 – Aging Cluster (including COVID-19) ALN 93.323 – Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2022-014) Federal Grant Number(s) and Year(s): 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC5 (12/27/2020 – 9/30/2023), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAOACM (10/01/2020 – 9/30/2023), 2101PAOAHD (10/01/2020 – 9/30/2023), 2101PAOANS (10/01/2020 – 9/30/2023), 2101PAOASS (10/01/2020 – 9/30/2023), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2101PAVAC5 (4/01/2021 – 9/30/2023), 2201PAOACM (10/01/2021 – 9/30/2023), 2201PAOAHD (10/01/2021 – 9/30/2023), 2201PAOANS (10/01/2021 – 9/30/2023), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD 10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA365N8903 (1/01/2022 – 9/30/2023), 231PA365N8903 (10/01/2022 – 9/30/2024), 231PA305L1603 (10/01/2022 – 9/30/2023), 221PA305L1603 (10/01/2021 – 9/30/2022), 221PA825Y8005 (10/01/2021 – 9/30/2022), 231PA825Y8005 (10/01/2022 – 9/30/2023), 221PA825Y8105 (10/01/2021 – 9/30/2022), 231PA825Y8105 (10/01/2022 – 9/30/2023), 201PA715W5003 (10/01/2019 – 9/30/2023), 211PA715W5003 (10/01/2020 – 9/30/2024), 221PA705W1003 (10/01/2021 – 9/30/2022), 221PA705W1006 (10/01/2021 – 9/30/2022), 221PA715W5003 (10/01/2021 – 9/30/2024), 231PA705W1003 (10/01/2022 – 9/30/2023), 231PA705W1006 (10/01/2022 – 9/30/2023), 231PA715W5003 (10/01/2022 – 9/30/2025), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA315N1050 (10/01/2021 – 9/30/2023), 231PA315N1050 (10/01/2022 – 9/30/2024), 221PA305N2020 (10/01/2021 – 9/30/2022), 231PA305N2020 (10/01/2022 – 9/30/2023), S010A190038 (7/01/2019 – 9/30/2022), S010A200038 (7/01/2020 – 9/30/2022), S010A210038 (7/01/2021 – 9/30/2022), S010A220038 (7/01/2022 – 9/30/2024), S367A150051 (7/01/2015 – 9/30/2017), S367A190051 (7/01/2019 – 9/30/2021), S367A200051 (7/01/2020 – 9/30/2022), S367A210051 (7/01/2021 – 9/30/2023), S367A220051 (7/01/2022 – 9 /30/2024), H027A200093 (7/01/2020 – 9/30/2022), H027A210093 (7/01/2021 – 9/30/2023), H027A220093 (7/01/2022 – 9/30/2024), H027X210093 (7/01/2021 – 9/30/2023), H173A200090 (7/01/2020 – 9/30/2022), H173A210090 (7/01/2021 – 9/30/2023), H173A220090 (7/01/2022 – 9/30/2024), H173X210090 (7/01/2021 – 9/30/2023), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021 – 9/30/2023), S425D210028 (1/05/2021 – 9/30/2023), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2023), S425V210037 (11/16/2021 – 9/30/2023), S425C210013 (3/13/2020 – 9/30/2023), S425D200028 (3/13/2020 – 9/30/2022), NU50CK000527 (8/01/2019 – 7/31/2024) Finding 2023 – 024: (continued) Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2023 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2022 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2023. We also evaluated the Commonwealth’s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2023 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 10.5 months after the FAC MDL start date for the one audit report with findings. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 12 months to over 18 months after the FAC MDL start date for three out of three audit reports with findings. There was also a delay in PDA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Our testing disclosed one audit report submitted to the FAC over nine months late that included $19.4 million in subrecipient expenditures passed through PDA. In addition, our testing disclosed that PDA subgranted federal funds totaling approximately $4.8 million to five subrecipients during the fiscal year ended June 30, 2022, for which Single Audits were not submitted to the FAC as of our January 2024 testing date. This was over 16 or 10 months after the respective, September 30, 2022 or March 31, 2023 due dates. • Department of Education (PDE): The time period for making a management decision on findings was approximately 9.3 to over 16.9 months after the FAC MDL start date for 14 out of 22 audit reports with findings. One of the 14 audit reports was improperly classified on PDE’s audit tracking list as not having federal award findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Health (DOH): The time period for making a management decision on findings was over 11 months after the FAC MDL start date for two out of two audit reports with findings. One audit report with the late management decision on findings was excluded from DOH’s tracking list. Finding 2023 – 024: (continued) Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR Section 200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR Section 200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR Section 200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. Finding 2023 – 024: (continued) 2 CFR Section 200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. Finding 2023 – 024: (continued) (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08 in order to ensure compliance with federal audit submission requirements. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Finding 2023 – 024: (continued) Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08. DOH Response: DOH agrees with the finding. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding and will be hiring a complement position to ensure compliance in the future. PDE Response: PDE agrees with the finding. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2023 – 024: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 – Child Nutrition Cluster (including COVID-19) ALN 10.565, 10.568, and 10.569 – Food Distribution Cluster ALN 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children ALN 10.558 – Child and Adult Care Food Program ALN 84.010 – Title I Grants to Local Educational Agencies ALN 84.027 and 84.173¬ – Special Education Cluster (IDEA) (including COVID-19) ALN 84.367 – Supporting Effective Instruction State Grants ALN 84.425C – COVID-19 – Education Stabilization Fund - GEER Fund ALN 84.425D – COVID-19 – Education Stabilization Fund - ESSER Fund ALN 84.425R – COVID-19 – Education Stabilization Fund - CRRSA EANS ALN 84.425U – COVID-19 – Education Stabilization Fund - ARP ESSER ALN 84.425V – COVID-19 – Education Stabilization Fund - ARP EANS ALN 93.044, 93.045, and 93.053 – Aging Cluster (including COVID-19) ALN 93.323 – Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2022-014) Federal Grant Number(s) and Year(s): 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC5 (12/27/2020 – 9/30/2023), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAOACM (10/01/2020 – 9/30/2023), 2101PAOAHD (10/01/2020 – 9/30/2023), 2101PAOANS (10/01/2020 – 9/30/2023), 2101PAOASS (10/01/2020 – 9/30/2023), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2101PAVAC5 (4/01/2021 – 9/30/2023), 2201PAOACM (10/01/2021 – 9/30/2023), 2201PAOAHD (10/01/2021 – 9/30/2023), 2201PAOANS (10/01/2021 – 9/30/2023), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD 10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA365N8903 (1/01/2022 – 9/30/2023), 231PA365N8903 (10/01/2022 – 9/30/2024), 231PA305L1603 (10/01/2022 – 9/30/2023), 221PA305L1603 (10/01/2021 – 9/30/2022), 221PA825Y8005 (10/01/2021 – 9/30/2022), 231PA825Y8005 (10/01/2022 – 9/30/2023), 221PA825Y8105 (10/01/2021 – 9/30/2022), 231PA825Y8105 (10/01/2022 – 9/30/2023), 201PA715W5003 (10/01/2019 – 9/30/2023), 211PA715W5003 (10/01/2020 – 9/30/2024), 221PA705W1003 (10/01/2021 – 9/30/2022), 221PA705W1006 (10/01/2021 – 9/30/2022), 221PA715W5003 (10/01/2021 – 9/30/2024), 231PA705W1003 (10/01/2022 – 9/30/2023), 231PA705W1006 (10/01/2022 – 9/30/2023), 231PA715W5003 (10/01/2022 – 9/30/2025), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA315N1050 (10/01/2021 – 9/30/2023), 231PA315N1050 (10/01/2022 – 9/30/2024), 221PA305N2020 (10/01/2021 – 9/30/2022), 231PA305N2020 (10/01/2022 – 9/30/2023), S010A190038 (7/01/2019 – 9/30/2022), S010A200038 (7/01/2020 – 9/30/2022), S010A210038 (7/01/2021 – 9/30/2022), S010A220038 (7/01/2022 – 9/30/2024), S367A150051 (7/01/2015 – 9/30/2017), S367A190051 (7/01/2019 – 9/30/2021), S367A200051 (7/01/2020 – 9/30/2022), S367A210051 (7/01/2021 – 9/30/2023), S367A220051 (7/01/2022 – 9 /30/2024), H027A200093 (7/01/2020 – 9/30/2022), H027A210093 (7/01/2021 – 9/30/2023), H027A220093 (7/01/2022 – 9/30/2024), H027X210093 (7/01/2021 – 9/30/2023), H173A200090 (7/01/2020 – 9/30/2022), H173A210090 (7/01/2021 – 9/30/2023), H173A220090 (7/01/2022 – 9/30/2024), H173X210090 (7/01/2021 – 9/30/2023), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021 – 9/30/2023), S425D210028 (1/05/2021 – 9/30/2023), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2023), S425V210037 (11/16/2021 – 9/30/2023), S425C210013 (3/13/2020 – 9/30/2023), S425D200028 (3/13/2020 – 9/30/2022), NU50CK000527 (8/01/2019 – 7/31/2024) Finding 2023 – 024: (continued) Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2023 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2022 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2023. We also evaluated the Commonwealth’s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2023 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 10.5 months after the FAC MDL start date for the one audit report with findings. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 12 months to over 18 months after the FAC MDL start date for three out of three audit reports with findings. There was also a delay in PDA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Our testing disclosed one audit report submitted to the FAC over nine months late that included $19.4 million in subrecipient expenditures passed through PDA. In addition, our testing disclosed that PDA subgranted federal funds totaling approximately $4.8 million to five subrecipients during the fiscal year ended June 30, 2022, for which Single Audits were not submitted to the FAC as of our January 2024 testing date. This was over 16 or 10 months after the respective, September 30, 2022 or March 31, 2023 due dates. • Department of Education (PDE): The time period for making a management decision on findings was approximately 9.3 to over 16.9 months after the FAC MDL start date for 14 out of 22 audit reports with findings. One of the 14 audit reports was improperly classified on PDE’s audit tracking list as not having federal award findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Health (DOH): The time period for making a management decision on findings was over 11 months after the FAC MDL start date for two out of two audit reports with findings. One audit report with the late management decision on findings was excluded from DOH’s tracking list. Finding 2023 – 024: (continued) Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR Section 200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR Section 200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR Section 200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. Finding 2023 – 024: (continued) 2 CFR Section 200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. Finding 2023 – 024: (continued) (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08 in order to ensure compliance with federal audit submission requirements. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Finding 2023 – 024: (continued) Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08. DOH Response: DOH agrees with the finding. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding and will be hiring a complement position to ensure compliance in the future. PDE Response: PDE agrees with the finding. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2023 – 024: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 – Child Nutrition Cluster (including COVID-19) ALN 10.565, 10.568, and 10.569 – Food Distribution Cluster ALN 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children ALN 10.558 – Child and Adult Care Food Program ALN 84.010 – Title I Grants to Local Educational Agencies ALN 84.027 and 84.173¬ – Special Education Cluster (IDEA) (including COVID-19) ALN 84.367 – Supporting Effective Instruction State Grants ALN 84.425C – COVID-19 – Education Stabilization Fund - GEER Fund ALN 84.425D – COVID-19 – Education Stabilization Fund - ESSER Fund ALN 84.425R – COVID-19 – Education Stabilization Fund - CRRSA EANS ALN 84.425U – COVID-19 – Education Stabilization Fund - ARP ESSER ALN 84.425V – COVID-19 – Education Stabilization Fund - ARP EANS ALN 93.044, 93.045, and 93.053 – Aging Cluster (including COVID-19) ALN 93.323 – Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2022-014) Federal Grant Number(s) and Year(s): 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC5 (12/27/2020 – 9/30/2023), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAOACM (10/01/2020 – 9/30/2023), 2101PAOAHD (10/01/2020 – 9/30/2023), 2101PAOANS (10/01/2020 – 9/30/2023), 2101PAOASS (10/01/2020 – 9/30/2023), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2101PAVAC5 (4/01/2021 – 9/30/2023), 2201PAOACM (10/01/2021 – 9/30/2023), 2201PAOAHD (10/01/2021 – 9/30/2023), 2201PAOANS (10/01/2021 – 9/30/2023), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD 10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA365N8903 (1/01/2022 – 9/30/2023), 231PA365N8903 (10/01/2022 – 9/30/2024), 231PA305L1603 (10/01/2022 – 9/30/2023), 221PA305L1603 (10/01/2021 – 9/30/2022), 221PA825Y8005 (10/01/2021 – 9/30/2022), 231PA825Y8005 (10/01/2022 – 9/30/2023), 221PA825Y8105 (10/01/2021 – 9/30/2022), 231PA825Y8105 (10/01/2022 – 9/30/2023), 201PA715W5003 (10/01/2019 – 9/30/2023), 211PA715W5003 (10/01/2020 – 9/30/2024), 221PA705W1003 (10/01/2021 – 9/30/2022), 221PA705W1006 (10/01/2021 – 9/30/2022), 221PA715W5003 (10/01/2021 – 9/30/2024), 231PA705W1003 (10/01/2022 – 9/30/2023), 231PA705W1006 (10/01/2022 – 9/30/2023), 231PA715W5003 (10/01/2022 – 9/30/2025), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA315N1050 (10/01/2021 – 9/30/2023), 231PA315N1050 (10/01/2022 – 9/30/2024), 221PA305N2020 (10/01/2021 – 9/30/2022), 231PA305N2020 (10/01/2022 – 9/30/2023), S010A190038 (7/01/2019 – 9/30/2022), S010A200038 (7/01/2020 – 9/30/2022), S010A210038 (7/01/2021 – 9/30/2022), S010A220038 (7/01/2022 – 9/30/2024), S367A150051 (7/01/2015 – 9/30/2017), S367A190051 (7/01/2019 – 9/30/2021), S367A200051 (7/01/2020 – 9/30/2022), S367A210051 (7/01/2021 – 9/30/2023), S367A220051 (7/01/2022 – 9 /30/2024), H027A200093 (7/01/2020 – 9/30/2022), H027A210093 (7/01/2021 – 9/30/2023), H027A220093 (7/01/2022 – 9/30/2024), H027X210093 (7/01/2021 – 9/30/2023), H173A200090 (7/01/2020 – 9/30/2022), H173A210090 (7/01/2021 – 9/30/2023), H173A220090 (7/01/2022 – 9/30/2024), H173X210090 (7/01/2021 – 9/30/2023), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021 – 9/30/2023), S425D210028 (1/05/2021 – 9/30/2023), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2023), S425V210037 (11/16/2021 – 9/30/2023), S425C210013 (3/13/2020 – 9/30/2023), S425D200028 (3/13/2020 – 9/30/2022), NU50CK000527 (8/01/2019 – 7/31/2024) Finding 2023 – 024: (continued) Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2023 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2022 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2023. We also evaluated the Commonwealth’s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2023 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 10.5 months after the FAC MDL start date for the one audit report with findings. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 12 months to over 18 months after the FAC MDL start date for three out of three audit reports with findings. There was also a delay in PDA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Our testing disclosed one audit report submitted to the FAC over nine months late that included $19.4 million in subrecipient expenditures passed through PDA. In addition, our testing disclosed that PDA subgranted federal funds totaling approximately $4.8 million to five subrecipients during the fiscal year ended June 30, 2022, for which Single Audits were not submitted to the FAC as of our January 2024 testing date. This was over 16 or 10 months after the respective, September 30, 2022 or March 31, 2023 due dates. • Department of Education (PDE): The time period for making a management decision on findings was approximately 9.3 to over 16.9 months after the FAC MDL start date for 14 out of 22 audit reports with findings. One of the 14 audit reports was improperly classified on PDE’s audit tracking list as not having federal award findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Health (DOH): The time period for making a management decision on findings was over 11 months after the FAC MDL start date for two out of two audit reports with findings. One audit report with the late management decision on findings was excluded from DOH’s tracking list. Finding 2023 – 024: (continued) Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR Section 200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR Section 200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR Section 200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. Finding 2023 – 024: (continued) 2 CFR Section 200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. Finding 2023 – 024: (continued) (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08 in order to ensure compliance with federal audit submission requirements. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Finding 2023 – 024: (continued) Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08. DOH Response: DOH agrees with the finding. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding and will be hiring a complement position to ensure compliance in the future. PDE Response: PDE agrees with the finding. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2023 – 024: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 – Child Nutrition Cluster (including COVID-19) ALN 10.565, 10.568, and 10.569 – Food Distribution Cluster ALN 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children ALN 10.558 – Child and Adult Care Food Program ALN 84.010 – Title I Grants to Local Educational Agencies ALN 84.027 and 84.173¬ – Special Education Cluster (IDEA) (including COVID-19) ALN 84.367 – Supporting Effective Instruction State Grants ALN 84.425C – COVID-19 – Education Stabilization Fund - GEER Fund ALN 84.425D – COVID-19 – Education Stabilization Fund - ESSER Fund ALN 84.425R – COVID-19 – Education Stabilization Fund - CRRSA EANS ALN 84.425U – COVID-19 – Education Stabilization Fund - ARP ESSER ALN 84.425V – COVID-19 – Education Stabilization Fund - ARP EANS ALN 93.044, 93.045, and 93.053 – Aging Cluster (including COVID-19) ALN 93.323 – Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2022-014) Federal Grant Number(s) and Year(s): 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC5 (12/27/2020 – 9/30/2023), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAOACM (10/01/2020 – 9/30/2023), 2101PAOAHD (10/01/2020 – 9/30/2023), 2101PAOANS (10/01/2020 – 9/30/2023), 2101PAOASS (10/01/2020 – 9/30/2023), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2101PAVAC5 (4/01/2021 – 9/30/2023), 2201PAOACM (10/01/2021 – 9/30/2023), 2201PAOAHD (10/01/2021 – 9/30/2023), 2201PAOANS (10/01/2021 – 9/30/2023), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD 10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA365N8903 (1/01/2022 – 9/30/2023), 231PA365N8903 (10/01/2022 – 9/30/2024), 231PA305L1603 (10/01/2022 – 9/30/2023), 221PA305L1603 (10/01/2021 – 9/30/2022), 221PA825Y8005 (10/01/2021 – 9/30/2022), 231PA825Y8005 (10/01/2022 – 9/30/2023), 221PA825Y8105 (10/01/2021 – 9/30/2022), 231PA825Y8105 (10/01/2022 – 9/30/2023), 201PA715W5003 (10/01/2019 – 9/30/2023), 211PA715W5003 (10/01/2020 – 9/30/2024), 221PA705W1003 (10/01/2021 – 9/30/2022), 221PA705W1006 (10/01/2021 – 9/30/2022), 221PA715W5003 (10/01/2021 – 9/30/2024), 231PA705W1003 (10/01/2022 – 9/30/2023), 231PA705W1006 (10/01/2022 – 9/30/2023), 231PA715W5003 (10/01/2022 – 9/30/2025), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA315N1050 (10/01/2021 – 9/30/2023), 231PA315N1050 (10/01/2022 – 9/30/2024), 221PA305N2020 (10/01/2021 – 9/30/2022), 231PA305N2020 (10/01/2022 – 9/30/2023), S010A190038 (7/01/2019 – 9/30/2022), S010A200038 (7/01/2020 – 9/30/2022), S010A210038 (7/01/2021 – 9/30/2022), S010A220038 (7/01/2022 – 9/30/2024), S367A150051 (7/01/2015 – 9/30/2017), S367A190051 (7/01/2019 – 9/30/2021), S367A200051 (7/01/2020 – 9/30/2022), S367A210051 (7/01/2021 – 9/30/2023), S367A220051 (7/01/2022 – 9 /30/2024), H027A200093 (7/01/2020 – 9/30/2022), H027A210093 (7/01/2021 – 9/30/2023), H027A220093 (7/01/2022 – 9/30/2024), H027X210093 (7/01/2021 – 9/30/2023), H173A200090 (7/01/2020 – 9/30/2022), H173A210090 (7/01/2021 – 9/30/2023), H173A220090 (7/01/2022 – 9/30/2024), H173X210090 (7/01/2021 – 9/30/2023), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021 – 9/30/2023), S425D210028 (1/05/2021 – 9/30/2023), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2023), S425V210037 (11/16/2021 – 9/30/2023), S425C210013 (3/13/2020 – 9/30/2023), S425D200028 (3/13/2020 – 9/30/2022), NU50CK000527 (8/01/2019 – 7/31/2024) Finding 2023 – 024: (continued) Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2023 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2022 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2023. We also evaluated the Commonwealth’s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2023 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 10.5 months after the FAC MDL start date for the one audit report with findings. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 12 months to over 18 months after the FAC MDL start date for three out of three audit reports with findings. There was also a delay in PDA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Our testing disclosed one audit report submitted to the FAC over nine months late that included $19.4 million in subrecipient expenditures passed through PDA. In addition, our testing disclosed that PDA subgranted federal funds totaling approximately $4.8 million to five subrecipients during the fiscal year ended June 30, 2022, for which Single Audits were not submitted to the FAC as of our January 2024 testing date. This was over 16 or 10 months after the respective, September 30, 2022 or March 31, 2023 due dates. • Department of Education (PDE): The time period for making a management decision on findings was approximately 9.3 to over 16.9 months after the FAC MDL start date for 14 out of 22 audit reports with findings. One of the 14 audit reports was improperly classified on PDE’s audit tracking list as not having federal award findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Health (DOH): The time period for making a management decision on findings was over 11 months after the FAC MDL start date for two out of two audit reports with findings. One audit report with the late management decision on findings was excluded from DOH’s tracking list. Finding 2023 – 024: (continued) Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR Section 200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR Section 200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR Section 200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. Finding 2023 – 024: (continued) 2 CFR Section 200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. Finding 2023 – 024: (continued) (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08 in order to ensure compliance with federal audit submission requirements. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Finding 2023 – 024: (continued) Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08. DOH Response: DOH agrees with the finding. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding and will be hiring a complement position to ensure compliance in the future. PDE Response: PDE agrees with the finding. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2023 – 024: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 – Child Nutrition Cluster (including COVID-19) ALN 10.565, 10.568, and 10.569 – Food Distribution Cluster ALN 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children ALN 10.558 – Child and Adult Care Food Program ALN 84.010 – Title I Grants to Local Educational Agencies ALN 84.027 and 84.173¬ – Special Education Cluster (IDEA) (including COVID-19) ALN 84.367 – Supporting Effective Instruction State Grants ALN 84.425C – COVID-19 – Education Stabilization Fund - GEER Fund ALN 84.425D – COVID-19 – Education Stabilization Fund - ESSER Fund ALN 84.425R – COVID-19 – Education Stabilization Fund - CRRSA EANS ALN 84.425U – COVID-19 – Education Stabilization Fund - ARP ESSER ALN 84.425V – COVID-19 – Education Stabilization Fund - ARP EANS ALN 93.044, 93.045, and 93.053 – Aging Cluster (including COVID-19) ALN 93.323 – Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2022-014) Federal Grant Number(s) and Year(s): 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC5 (12/27/2020 – 9/30/2023), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAOACM (10/01/2020 – 9/30/2023), 2101PAOAHD (10/01/2020 – 9/30/2023), 2101PAOANS (10/01/2020 – 9/30/2023), 2101PAOASS (10/01/2020 – 9/30/2023), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2101PAVAC5 (4/01/2021 – 9/30/2023), 2201PAOACM (10/01/2021 – 9/30/2023), 2201PAOAHD (10/01/2021 – 9/30/2023), 2201PAOANS (10/01/2021 – 9/30/2023), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD 10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA365N8903 (1/01/2022 – 9/30/2023), 231PA365N8903 (10/01/2022 – 9/30/2024), 231PA305L1603 (10/01/2022 – 9/30/2023), 221PA305L1603 (10/01/2021 – 9/30/2022), 221PA825Y8005 (10/01/2021 – 9/30/2022), 231PA825Y8005 (10/01/2022 – 9/30/2023), 221PA825Y8105 (10/01/2021 – 9/30/2022), 231PA825Y8105 (10/01/2022 – 9/30/2023), 201PA715W5003 (10/01/2019 – 9/30/2023), 211PA715W5003 (10/01/2020 – 9/30/2024), 221PA705W1003 (10/01/2021 – 9/30/2022), 221PA705W1006 (10/01/2021 – 9/30/2022), 221PA715W5003 (10/01/2021 – 9/30/2024), 231PA705W1003 (10/01/2022 – 9/30/2023), 231PA705W1006 (10/01/2022 – 9/30/2023), 231PA715W5003 (10/01/2022 – 9/30/2025), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA315N1050 (10/01/2021 – 9/30/2023), 231PA315N1050 (10/01/2022 – 9/30/2024), 221PA305N2020 (10/01/2021 – 9/30/2022), 231PA305N2020 (10/01/2022 – 9/30/2023), S010A190038 (7/01/2019 – 9/30/2022), S010A200038 (7/01/2020 – 9/30/2022), S010A210038 (7/01/2021 – 9/30/2022), S010A220038 (7/01/2022 – 9/30/2024), S367A150051 (7/01/2015 – 9/30/2017), S367A190051 (7/01/2019 – 9/30/2021), S367A200051 (7/01/2020 – 9/30/2022), S367A210051 (7/01/2021 – 9/30/2023), S367A220051 (7/01/2022 – 9 /30/2024), H027A200093 (7/01/2020 – 9/30/2022), H027A210093 (7/01/2021 – 9/30/2023), H027A220093 (7/01/2022 – 9/30/2024), H027X210093 (7/01/2021 – 9/30/2023), H173A200090 (7/01/2020 – 9/30/2022), H173A210090 (7/01/2021 – 9/30/2023), H173A220090 (7/01/2022 – 9/30/2024), H173X210090 (7/01/2021 – 9/30/2023), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021 – 9/30/2023), S425D210028 (1/05/2021 – 9/30/2023), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2023), S425V210037 (11/16/2021 – 9/30/2023), S425C210013 (3/13/2020 – 9/30/2023), S425D200028 (3/13/2020 – 9/30/2022), NU50CK000527 (8/01/2019 – 7/31/2024) Finding 2023 – 024: (continued) Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2023 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2022 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2023. We also evaluated the Commonwealth’s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2023 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 10.5 months after the FAC MDL start date for the one audit report with findings. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 12 months to over 18 months after the FAC MDL start date for three out of three audit reports with findings. There was also a delay in PDA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Our testing disclosed one audit report submitted to the FAC over nine months late that included $19.4 million in subrecipient expenditures passed through PDA. In addition, our testing disclosed that PDA subgranted federal funds totaling approximately $4.8 million to five subrecipients during the fiscal year ended June 30, 2022, for which Single Audits were not submitted to the FAC as of our January 2024 testing date. This was over 16 or 10 months after the respective, September 30, 2022 or March 31, 2023 due dates. • Department of Education (PDE): The time period for making a management decision on findings was approximately 9.3 to over 16.9 months after the FAC MDL start date for 14 out of 22 audit reports with findings. One of the 14 audit reports was improperly classified on PDE’s audit tracking list as not having federal award findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Health (DOH): The time period for making a management decision on findings was over 11 months after the FAC MDL start date for two out of two audit reports with findings. One audit report with the late management decision on findings was excluded from DOH’s tracking list. Finding 2023 – 024: (continued) Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR Section 200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR Section 200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR Section 200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. Finding 2023 – 024: (continued) 2 CFR Section 200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. Finding 2023 – 024: (continued) (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08 in order to ensure compliance with federal audit submission requirements. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Finding 2023 – 024: (continued) Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08. DOH Response: DOH agrees with the finding. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding and will be hiring a complement position to ensure compliance in the future. PDE Response: PDE agrees with the finding. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2023 – 024: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 – Child Nutrition Cluster (including COVID-19) ALN 10.565, 10.568, and 10.569 – Food Distribution Cluster ALN 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children ALN 10.558 – Child and Adult Care Food Program ALN 84.010 – Title I Grants to Local Educational Agencies ALN 84.027 and 84.173¬ – Special Education Cluster (IDEA) (including COVID-19) ALN 84.367 – Supporting Effective Instruction State Grants ALN 84.425C – COVID-19 – Education Stabilization Fund - GEER Fund ALN 84.425D – COVID-19 – Education Stabilization Fund - ESSER Fund ALN 84.425R – COVID-19 – Education Stabilization Fund - CRRSA EANS ALN 84.425U – COVID-19 – Education Stabilization Fund - ARP ESSER ALN 84.425V – COVID-19 – Education Stabilization Fund - ARP EANS ALN 93.044, 93.045, and 93.053 – Aging Cluster (including COVID-19) ALN 93.323 – Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2022-014) Federal Grant Number(s) and Year(s): 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC5 (12/27/2020 – 9/30/2023), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAOACM (10/01/2020 – 9/30/2023), 2101PAOAHD (10/01/2020 – 9/30/2023), 2101PAOANS (10/01/2020 – 9/30/2023), 2101PAOASS (10/01/2020 – 9/30/2023), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2101PAVAC5 (4/01/2021 – 9/30/2023), 2201PAOACM (10/01/2021 – 9/30/2023), 2201PAOAHD (10/01/2021 – 9/30/2023), 2201PAOANS (10/01/2021 – 9/30/2023), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD 10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA365N8903 (1/01/2022 – 9/30/2023), 231PA365N8903 (10/01/2022 – 9/30/2024), 231PA305L1603 (10/01/2022 – 9/30/2023), 221PA305L1603 (10/01/2021 – 9/30/2022), 221PA825Y8005 (10/01/2021 – 9/30/2022), 231PA825Y8005 (10/01/2022 – 9/30/2023), 221PA825Y8105 (10/01/2021 – 9/30/2022), 231PA825Y8105 (10/01/2022 – 9/30/2023), 201PA715W5003 (10/01/2019 – 9/30/2023), 211PA715W5003 (10/01/2020 – 9/30/2024), 221PA705W1003 (10/01/2021 – 9/30/2022), 221PA705W1006 (10/01/2021 – 9/30/2022), 221PA715W5003 (10/01/2021 – 9/30/2024), 231PA705W1003 (10/01/2022 – 9/30/2023), 231PA705W1006 (10/01/2022 – 9/30/2023), 231PA715W5003 (10/01/2022 – 9/30/2025), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA315N1050 (10/01/2021 – 9/30/2023), 231PA315N1050 (10/01/2022 – 9/30/2024), 221PA305N2020 (10/01/2021 – 9/30/2022), 231PA305N2020 (10/01/2022 – 9/30/2023), S010A190038 (7/01/2019 – 9/30/2022), S010A200038 (7/01/2020 – 9/30/2022), S010A210038 (7/01/2021 – 9/30/2022), S010A220038 (7/01/2022 – 9/30/2024), S367A150051 (7/01/2015 – 9/30/2017), S367A190051 (7/01/2019 – 9/30/2021), S367A200051 (7/01/2020 – 9/30/2022), S367A210051 (7/01/2021 – 9/30/2023), S367A220051 (7/01/2022 – 9 /30/2024), H027A200093 (7/01/2020 – 9/30/2022), H027A210093 (7/01/2021 – 9/30/2023), H027A220093 (7/01/2022 – 9/30/2024), H027X210093 (7/01/2021 – 9/30/2023), H173A200090 (7/01/2020 – 9/30/2022), H173A210090 (7/01/2021 – 9/30/2023), H173A220090 (7/01/2022 – 9/30/2024), H173X210090 (7/01/2021 – 9/30/2023), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021 – 9/30/2023), S425D210028 (1/05/2021 – 9/30/2023), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2023), S425V210037 (11/16/2021 – 9/30/2023), S425C210013 (3/13/2020 – 9/30/2023), S425D200028 (3/13/2020 – 9/30/2022), NU50CK000527 (8/01/2019 – 7/31/2024) Finding 2023 – 024: (continued) Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2023 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2022 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2023. We also evaluated the Commonwealth’s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2023 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 10.5 months after the FAC MDL start date for the one audit report with findings. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 12 months to over 18 months after the FAC MDL start date for three out of three audit reports with findings. There was also a delay in PDA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Our testing disclosed one audit report submitted to the FAC over nine months late that included $19.4 million in subrecipient expenditures passed through PDA. In addition, our testing disclosed that PDA subgranted federal funds totaling approximately $4.8 million to five subrecipients during the fiscal year ended June 30, 2022, for which Single Audits were not submitted to the FAC as of our January 2024 testing date. This was over 16 or 10 months after the respective, September 30, 2022 or March 31, 2023 due dates. • Department of Education (PDE): The time period for making a management decision on findings was approximately 9.3 to over 16.9 months after the FAC MDL start date for 14 out of 22 audit reports with findings. One of the 14 audit reports was improperly classified on PDE’s audit tracking list as not having federal award findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Health (DOH): The time period for making a management decision on findings was over 11 months after the FAC MDL start date for two out of two audit reports with findings. One audit report with the late management decision on findings was excluded from DOH’s tracking list. Finding 2023 – 024: (continued) Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR Section 200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR Section 200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR Section 200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. Finding 2023 – 024: (continued) 2 CFR Section 200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. Finding 2023 – 024: (continued) (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08 in order to ensure compliance with federal audit submission requirements. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Finding 2023 – 024: (continued) Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08. DOH Response: DOH agrees with the finding. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding and will be hiring a complement position to ensure compliance in the future. PDE Response: PDE agrees with the finding. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2023 – 024: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 – Child Nutrition Cluster (including COVID-19) ALN 10.565, 10.568, and 10.569 – Food Distribution Cluster ALN 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children ALN 10.558 – Child and Adult Care Food Program ALN 84.010 – Title I Grants to Local Educational Agencies ALN 84.027 and 84.173¬ – Special Education Cluster (IDEA) (including COVID-19) ALN 84.367 – Supporting Effective Instruction State Grants ALN 84.425C – COVID-19 – Education Stabilization Fund - GEER Fund ALN 84.425D – COVID-19 – Education Stabilization Fund - ESSER Fund ALN 84.425R – COVID-19 – Education Stabilization Fund - CRRSA EANS ALN 84.425U – COVID-19 – Education Stabilization Fund - ARP ESSER ALN 84.425V – COVID-19 – Education Stabilization Fund - ARP EANS ALN 93.044, 93.045, and 93.053 – Aging Cluster (including COVID-19) ALN 93.323 – Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2022-014) Federal Grant Number(s) and Year(s): 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC5 (12/27/2020 – 9/30/2023), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAOACM (10/01/2020 – 9/30/2023), 2101PAOAHD (10/01/2020 – 9/30/2023), 2101PAOANS (10/01/2020 – 9/30/2023), 2101PAOASS (10/01/2020 – 9/30/2023), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2101PAVAC5 (4/01/2021 – 9/30/2023), 2201PAOACM (10/01/2021 – 9/30/2023), 2201PAOAHD (10/01/2021 – 9/30/2023), 2201PAOANS (10/01/2021 – 9/30/2023), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD 10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA365N8903 (1/01/2022 – 9/30/2023), 231PA365N8903 (10/01/2022 – 9/30/2024), 231PA305L1603 (10/01/2022 – 9/30/2023), 221PA305L1603 (10/01/2021 – 9/30/2022), 221PA825Y8005 (10/01/2021 – 9/30/2022), 231PA825Y8005 (10/01/2022 – 9/30/2023), 221PA825Y8105 (10/01/2021 – 9/30/2022), 231PA825Y8105 (10/01/2022 – 9/30/2023), 201PA715W5003 (10/01/2019 – 9/30/2023), 211PA715W5003 (10/01/2020 – 9/30/2024), 221PA705W1003 (10/01/2021 – 9/30/2022), 221PA705W1006 (10/01/2021 – 9/30/2022), 221PA715W5003 (10/01/2021 – 9/30/2024), 231PA705W1003 (10/01/2022 – 9/30/2023), 231PA705W1006 (10/01/2022 – 9/30/2023), 231PA715W5003 (10/01/2022 – 9/30/2025), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA315N1050 (10/01/2021 – 9/30/2023), 231PA315N1050 (10/01/2022 – 9/30/2024), 221PA305N2020 (10/01/2021 – 9/30/2022), 231PA305N2020 (10/01/2022 – 9/30/2023), S010A190038 (7/01/2019 – 9/30/2022), S010A200038 (7/01/2020 – 9/30/2022), S010A210038 (7/01/2021 – 9/30/2022), S010A220038 (7/01/2022 – 9/30/2024), S367A150051 (7/01/2015 – 9/30/2017), S367A190051 (7/01/2019 – 9/30/2021), S367A200051 (7/01/2020 – 9/30/2022), S367A210051 (7/01/2021 – 9/30/2023), S367A220051 (7/01/2022 – 9 /30/2024), H027A200093 (7/01/2020 – 9/30/2022), H027A210093 (7/01/2021 – 9/30/2023), H027A220093 (7/01/2022 – 9/30/2024), H027X210093 (7/01/2021 – 9/30/2023), H173A200090 (7/01/2020 – 9/30/2022), H173A210090 (7/01/2021 – 9/30/2023), H173A220090 (7/01/2022 – 9/30/2024), H173X210090 (7/01/2021 – 9/30/2023), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021 – 9/30/2023), S425D210028 (1/05/2021 – 9/30/2023), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2023), S425V210037 (11/16/2021 – 9/30/2023), S425C210013 (3/13/2020 – 9/30/2023), S425D200028 (3/13/2020 – 9/30/2022), NU50CK000527 (8/01/2019 – 7/31/2024) Finding 2023 – 024: (continued) Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2023 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2022 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2023. We also evaluated the Commonwealth’s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2023 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 10.5 months after the FAC MDL start date for the one audit report with findings. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 12 months to over 18 months after the FAC MDL start date for three out of three audit reports with findings. There was also a delay in PDA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Our testing disclosed one audit report submitted to the FAC over nine months late that included $19.4 million in subrecipient expenditures passed through PDA. In addition, our testing disclosed that PDA subgranted federal funds totaling approximately $4.8 million to five subrecipients during the fiscal year ended June 30, 2022, for which Single Audits were not submitted to the FAC as of our January 2024 testing date. This was over 16 or 10 months after the respective, September 30, 2022 or March 31, 2023 due dates. • Department of Education (PDE): The time period for making a management decision on findings was approximately 9.3 to over 16.9 months after the FAC MDL start date for 14 out of 22 audit reports with findings. One of the 14 audit reports was improperly classified on PDE’s audit tracking list as not having federal award findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Health (DOH): The time period for making a management decision on findings was over 11 months after the FAC MDL start date for two out of two audit reports with findings. One audit report with the late management decision on findings was excluded from DOH’s tracking list. Finding 2023 – 024: (continued) Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR Section 200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR Section 200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR Section 200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. Finding 2023 – 024: (continued) 2 CFR Section 200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. Finding 2023 – 024: (continued) (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08 in order to ensure compliance with federal audit submission requirements. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Finding 2023 – 024: (continued) Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08. DOH Response: DOH agrees with the finding. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding and will be hiring a complement position to ensure compliance in the future. PDE Response: PDE agrees with the finding. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2023 – 024: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 – Child Nutrition Cluster (including COVID-19) ALN 10.565, 10.568, and 10.569 – Food Distribution Cluster ALN 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children ALN 10.558 – Child and Adult Care Food Program ALN 84.010 – Title I Grants to Local Educational Agencies ALN 84.027 and 84.173¬ – Special Education Cluster (IDEA) (including COVID-19) ALN 84.367 – Supporting Effective Instruction State Grants ALN 84.425C – COVID-19 – Education Stabilization Fund - GEER Fund ALN 84.425D – COVID-19 – Education Stabilization Fund - ESSER Fund ALN 84.425R – COVID-19 – Education Stabilization Fund - CRRSA EANS ALN 84.425U – COVID-19 – Education Stabilization Fund - ARP ESSER ALN 84.425V – COVID-19 – Education Stabilization Fund - ARP EANS ALN 93.044, 93.045, and 93.053 – Aging Cluster (including COVID-19) ALN 93.323 – Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2022-014) Federal Grant Number(s) and Year(s): 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC5 (12/27/2020 – 9/30/2023), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAOACM (10/01/2020 – 9/30/2023), 2101PAOAHD (10/01/2020 – 9/30/2023), 2101PAOANS (10/01/2020 – 9/30/2023), 2101PAOASS (10/01/2020 – 9/30/2023), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2101PAVAC5 (4/01/2021 – 9/30/2023), 2201PAOACM (10/01/2021 – 9/30/2023), 2201PAOAHD (10/01/2021 – 9/30/2023), 2201PAOANS (10/01/2021 – 9/30/2023), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD 10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA365N8903 (1/01/2022 – 9/30/2023), 231PA365N8903 (10/01/2022 – 9/30/2024), 231PA305L1603 (10/01/2022 – 9/30/2023), 221PA305L1603 (10/01/2021 – 9/30/2022), 221PA825Y8005 (10/01/2021 – 9/30/2022), 231PA825Y8005 (10/01/2022 – 9/30/2023), 221PA825Y8105 (10/01/2021 – 9/30/2022), 231PA825Y8105 (10/01/2022 – 9/30/2023), 201PA715W5003 (10/01/2019 – 9/30/2023), 211PA715W5003 (10/01/2020 – 9/30/2024), 221PA705W1003 (10/01/2021 – 9/30/2022), 221PA705W1006 (10/01/2021 – 9/30/2022), 221PA715W5003 (10/01/2021 – 9/30/2024), 231PA705W1003 (10/01/2022 – 9/30/2023), 231PA705W1006 (10/01/2022 – 9/30/2023), 231PA715W5003 (10/01/2022 – 9/30/2025), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA315N1050 (10/01/2021 – 9/30/2023), 231PA315N1050 (10/01/2022 – 9/30/2024), 221PA305N2020 (10/01/2021 – 9/30/2022), 231PA305N2020 (10/01/2022 – 9/30/2023), S010A190038 (7/01/2019 – 9/30/2022), S010A200038 (7/01/2020 – 9/30/2022), S010A210038 (7/01/2021 – 9/30/2022), S010A220038 (7/01/2022 – 9/30/2024), S367A150051 (7/01/2015 – 9/30/2017), S367A190051 (7/01/2019 – 9/30/2021), S367A200051 (7/01/2020 – 9/30/2022), S367A210051 (7/01/2021 – 9/30/2023), S367A220051 (7/01/2022 – 9 /30/2024), H027A200093 (7/01/2020 – 9/30/2022), H027A210093 (7/01/2021 – 9/30/2023), H027A220093 (7/01/2022 – 9/30/2024), H027X210093 (7/01/2021 – 9/30/2023), H173A200090 (7/01/2020 – 9/30/2022), H173A210090 (7/01/2021 – 9/30/2023), H173A220090 (7/01/2022 – 9/30/2024), H173X210090 (7/01/2021 – 9/30/2023), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021 – 9/30/2023), S425D210028 (1/05/2021 – 9/30/2023), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2023), S425V210037 (11/16/2021 – 9/30/2023), S425C210013 (3/13/2020 – 9/30/2023), S425D200028 (3/13/2020 – 9/30/2022), NU50CK000527 (8/01/2019 – 7/31/2024) Finding 2023 – 024: (continued) Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2023 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2022 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2023. We also evaluated the Commonwealth’s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2023 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 10.5 months after the FAC MDL start date for the one audit report with findings. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 12 months to over 18 months after the FAC MDL start date for three out of three audit reports with findings. There was also a delay in PDA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Our testing disclosed one audit report submitted to the FAC over nine months late that included $19.4 million in subrecipient expenditures passed through PDA. In addition, our testing disclosed that PDA subgranted federal funds totaling approximately $4.8 million to five subrecipients during the fiscal year ended June 30, 2022, for which Single Audits were not submitted to the FAC as of our January 2024 testing date. This was over 16 or 10 months after the respective, September 30, 2022 or March 31, 2023 due dates. • Department of Education (PDE): The time period for making a management decision on findings was approximately 9.3 to over 16.9 months after the FAC MDL start date for 14 out of 22 audit reports with findings. One of the 14 audit reports was improperly classified on PDE’s audit tracking list as not having federal award findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Health (DOH): The time period for making a management decision on findings was over 11 months after the FAC MDL start date for two out of two audit reports with findings. One audit report with the late management decision on findings was excluded from DOH’s tracking list. Finding 2023 – 024: (continued) Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR Section 200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR Section 200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR Section 200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. Finding 2023 – 024: (continued) 2 CFR Section 200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. Finding 2023 – 024: (continued) (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08 in order to ensure compliance with federal audit submission requirements. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Finding 2023 – 024: (continued) Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08. DOH Response: DOH agrees with the finding. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding and will be hiring a complement position to ensure compliance in the future. PDE Response: PDE agrees with the finding. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2023 – 024: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 – Child Nutrition Cluster (including COVID-19) ALN 10.565, 10.568, and 10.569 – Food Distribution Cluster ALN 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children ALN 10.558 – Child and Adult Care Food Program ALN 84.010 – Title I Grants to Local Educational Agencies ALN 84.027 and 84.173¬ – Special Education Cluster (IDEA) (including COVID-19) ALN 84.367 – Supporting Effective Instruction State Grants ALN 84.425C – COVID-19 – Education Stabilization Fund - GEER Fund ALN 84.425D – COVID-19 – Education Stabilization Fund - ESSER Fund ALN 84.425R – COVID-19 – Education Stabilization Fund - CRRSA EANS ALN 84.425U – COVID-19 – Education Stabilization Fund - ARP ESSER ALN 84.425V – COVID-19 – Education Stabilization Fund - ARP EANS ALN 93.044, 93.045, and 93.053 – Aging Cluster (including COVID-19) ALN 93.323 – Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2022-014) Federal Grant Number(s) and Year(s): 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC5 (12/27/2020 – 9/30/2023), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAOACM (10/01/2020 – 9/30/2023), 2101PAOAHD (10/01/2020 – 9/30/2023), 2101PAOANS (10/01/2020 – 9/30/2023), 2101PAOASS (10/01/2020 – 9/30/2023), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2101PAVAC5 (4/01/2021 – 9/30/2023), 2201PAOACM (10/01/2021 – 9/30/2023), 2201PAOAHD (10/01/2021 – 9/30/2023), 2201PAOANS (10/01/2021 – 9/30/2023), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD 10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA365N8903 (1/01/2022 – 9/30/2023), 231PA365N8903 (10/01/2022 – 9/30/2024), 231PA305L1603 (10/01/2022 – 9/30/2023), 221PA305L1603 (10/01/2021 – 9/30/2022), 221PA825Y8005 (10/01/2021 – 9/30/2022), 231PA825Y8005 (10/01/2022 – 9/30/2023), 221PA825Y8105 (10/01/2021 – 9/30/2022), 231PA825Y8105 (10/01/2022 – 9/30/2023), 201PA715W5003 (10/01/2019 – 9/30/2023), 211PA715W5003 (10/01/2020 – 9/30/2024), 221PA705W1003 (10/01/2021 – 9/30/2022), 221PA705W1006 (10/01/2021 – 9/30/2022), 221PA715W5003 (10/01/2021 – 9/30/2024), 231PA705W1003 (10/01/2022 – 9/30/2023), 231PA705W1006 (10/01/2022 – 9/30/2023), 231PA715W5003 (10/01/2022 – 9/30/2025), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA315N1050 (10/01/2021 – 9/30/2023), 231PA315N1050 (10/01/2022 – 9/30/2024), 221PA305N2020 (10/01/2021 – 9/30/2022), 231PA305N2020 (10/01/2022 – 9/30/2023), S010A190038 (7/01/2019 – 9/30/2022), S010A200038 (7/01/2020 – 9/30/2022), S010A210038 (7/01/2021 – 9/30/2022), S010A220038 (7/01/2022 – 9/30/2024), S367A150051 (7/01/2015 – 9/30/2017), S367A190051 (7/01/2019 – 9/30/2021), S367A200051 (7/01/2020 – 9/30/2022), S367A210051 (7/01/2021 – 9/30/2023), S367A220051 (7/01/2022 – 9 /30/2024), H027A200093 (7/01/2020 – 9/30/2022), H027A210093 (7/01/2021 – 9/30/2023), H027A220093 (7/01/2022 – 9/30/2024), H027X210093 (7/01/2021 – 9/30/2023), H173A200090 (7/01/2020 – 9/30/2022), H173A210090 (7/01/2021 – 9/30/2023), H173A220090 (7/01/2022 – 9/30/2024), H173X210090 (7/01/2021 – 9/30/2023), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021 – 9/30/2023), S425D210028 (1/05/2021 – 9/30/2023), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2023), S425V210037 (11/16/2021 – 9/30/2023), S425C210013 (3/13/2020 – 9/30/2023), S425D200028 (3/13/2020 – 9/30/2022), NU50CK000527 (8/01/2019 – 7/31/2024) Finding 2023 – 024: (continued) Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2023 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2022 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2023. We also evaluated the Commonwealth’s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2023 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 10.5 months after the FAC MDL start date for the one audit report with findings. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 12 months to over 18 months after the FAC MDL start date for three out of three audit reports with findings. There was also a delay in PDA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Our testing disclosed one audit report submitted to the FAC over nine months late that included $19.4 million in subrecipient expenditures passed through PDA. In addition, our testing disclosed that PDA subgranted federal funds totaling approximately $4.8 million to five subrecipients during the fiscal year ended June 30, 2022, for which Single Audits were not submitted to the FAC as of our January 2024 testing date. This was over 16 or 10 months after the respective, September 30, 2022 or March 31, 2023 due dates. • Department of Education (PDE): The time period for making a management decision on findings was approximately 9.3 to over 16.9 months after the FAC MDL start date for 14 out of 22 audit reports with findings. One of the 14 audit reports was improperly classified on PDE’s audit tracking list as not having federal award findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Health (DOH): The time period for making a management decision on findings was over 11 months after the FAC MDL start date for two out of two audit reports with findings. One audit report with the late management decision on findings was excluded from DOH’s tracking list. Finding 2023 – 024: (continued) Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR Section 200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR Section 200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR Section 200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. Finding 2023 – 024: (continued) 2 CFR Section 200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. Finding 2023 – 024: (continued) (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08 in order to ensure compliance with federal audit submission requirements. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Finding 2023 – 024: (continued) Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08. DOH Response: DOH agrees with the finding. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding and will be hiring a complement position to ensure compliance in the future. PDE Response: PDE agrees with the finding. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2023 – 024: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 – Child Nutrition Cluster (including COVID-19) ALN 10.565, 10.568, and 10.569 – Food Distribution Cluster ALN 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children ALN 10.558 – Child and Adult Care Food Program ALN 84.010 – Title I Grants to Local Educational Agencies ALN 84.027 and 84.173¬ – Special Education Cluster (IDEA) (including COVID-19) ALN 84.367 – Supporting Effective Instruction State Grants ALN 84.425C – COVID-19 – Education Stabilization Fund - GEER Fund ALN 84.425D – COVID-19 – Education Stabilization Fund - ESSER Fund ALN 84.425R – COVID-19 – Education Stabilization Fund - CRRSA EANS ALN 84.425U – COVID-19 – Education Stabilization Fund - ARP ESSER ALN 84.425V – COVID-19 – Education Stabilization Fund - ARP EANS ALN 93.044, 93.045, and 93.053 – Aging Cluster (including COVID-19) ALN 93.323 – Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2022-014) Federal Grant Number(s) and Year(s): 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC5 (12/27/2020 – 9/30/2023), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAOACM (10/01/2020 – 9/30/2023), 2101PAOAHD (10/01/2020 – 9/30/2023), 2101PAOANS (10/01/2020 – 9/30/2023), 2101PAOASS (10/01/2020 – 9/30/2023), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2101PAVAC5 (4/01/2021 – 9/30/2023), 2201PAOACM (10/01/2021 – 9/30/2023), 2201PAOAHD (10/01/2021 – 9/30/2023), 2201PAOANS (10/01/2021 – 9/30/2023), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD 10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA365N8903 (1/01/2022 – 9/30/2023), 231PA365N8903 (10/01/2022 – 9/30/2024), 231PA305L1603 (10/01/2022 – 9/30/2023), 221PA305L1603 (10/01/2021 – 9/30/2022), 221PA825Y8005 (10/01/2021 – 9/30/2022), 231PA825Y8005 (10/01/2022 – 9/30/2023), 221PA825Y8105 (10/01/2021 – 9/30/2022), 231PA825Y8105 (10/01/2022 – 9/30/2023), 201PA715W5003 (10/01/2019 – 9/30/2023), 211PA715W5003 (10/01/2020 – 9/30/2024), 221PA705W1003 (10/01/2021 – 9/30/2022), 221PA705W1006 (10/01/2021 – 9/30/2022), 221PA715W5003 (10/01/2021 – 9/30/2024), 231PA705W1003 (10/01/2022 – 9/30/2023), 231PA705W1006 (10/01/2022 – 9/30/2023), 231PA715W5003 (10/01/2022 – 9/30/2025), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA315N1050 (10/01/2021 – 9/30/2023), 231PA315N1050 (10/01/2022 – 9/30/2024), 221PA305N2020 (10/01/2021 – 9/30/2022), 231PA305N2020 (10/01/2022 – 9/30/2023), S010A190038 (7/01/2019 – 9/30/2022), S010A200038 (7/01/2020 – 9/30/2022), S010A210038 (7/01/2021 – 9/30/2022), S010A220038 (7/01/2022 – 9/30/2024), S367A150051 (7/01/2015 – 9/30/2017), S367A190051 (7/01/2019 – 9/30/2021), S367A200051 (7/01/2020 – 9/30/2022), S367A210051 (7/01/2021 – 9/30/2023), S367A220051 (7/01/2022 – 9 /30/2024), H027A200093 (7/01/2020 – 9/30/2022), H027A210093 (7/01/2021 – 9/30/2023), H027A220093 (7/01/2022 – 9/30/2024), H027X210093 (7/01/2021 – 9/30/2023), H173A200090 (7/01/2020 – 9/30/2022), H173A210090 (7/01/2021 – 9/30/2023), H173A220090 (7/01/2022 – 9/30/2024), H173X210090 (7/01/2021 – 9/30/2023), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021 – 9/30/2023), S425D210028 (1/05/2021 – 9/30/2023), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2023), S425V210037 (11/16/2021 – 9/30/2023), S425C210013 (3/13/2020 – 9/30/2023), S425D200028 (3/13/2020 – 9/30/2022), NU50CK000527 (8/01/2019 – 7/31/2024) Finding 2023 – 024: (continued) Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2023 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2022 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2023. We also evaluated the Commonwealth’s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2023 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 10.5 months after the FAC MDL start date for the one audit report with findings. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 12 months to over 18 months after the FAC MDL start date for three out of three audit reports with findings. There was also a delay in PDA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Our testing disclosed one audit report submitted to the FAC over nine months late that included $19.4 million in subrecipient expenditures passed through PDA. In addition, our testing disclosed that PDA subgranted federal funds totaling approximately $4.8 million to five subrecipients during the fiscal year ended June 30, 2022, for which Single Audits were not submitted to the FAC as of our January 2024 testing date. This was over 16 or 10 months after the respective, September 30, 2022 or March 31, 2023 due dates. • Department of Education (PDE): The time period for making a management decision on findings was approximately 9.3 to over 16.9 months after the FAC MDL start date for 14 out of 22 audit reports with findings. One of the 14 audit reports was improperly classified on PDE’s audit tracking list as not having federal award findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Health (DOH): The time period for making a management decision on findings was over 11 months after the FAC MDL start date for two out of two audit reports with findings. One audit report with the late management decision on findings was excluded from DOH’s tracking list. Finding 2023 – 024: (continued) Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR Section 200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR Section 200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR Section 200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. Finding 2023 – 024: (continued) 2 CFR Section 200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. Finding 2023 – 024: (continued) (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08 in order to ensure compliance with federal audit submission requirements. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Finding 2023 – 024: (continued) Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08. DOH Response: DOH agrees with the finding. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding and will be hiring a complement position to ensure compliance in the future. PDE Response: PDE agrees with the finding. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2023 – 024: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 – Child Nutrition Cluster (including COVID-19) ALN 10.565, 10.568, and 10.569 – Food Distribution Cluster ALN 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children ALN 10.558 – Child and Adult Care Food Program ALN 84.010 – Title I Grants to Local Educational Agencies ALN 84.027 and 84.173¬ – Special Education Cluster (IDEA) (including COVID-19) ALN 84.367 – Supporting Effective Instruction State Grants ALN 84.425C – COVID-19 – Education Stabilization Fund - GEER Fund ALN 84.425D – COVID-19 – Education Stabilization Fund - ESSER Fund ALN 84.425R – COVID-19 – Education Stabilization Fund - CRRSA EANS ALN 84.425U – COVID-19 – Education Stabilization Fund - ARP ESSER ALN 84.425V – COVID-19 – Education Stabilization Fund - ARP EANS ALN 93.044, 93.045, and 93.053 – Aging Cluster (including COVID-19) ALN 93.323 – Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2022-014) Federal Grant Number(s) and Year(s): 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC5 (12/27/2020 – 9/30/2023), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAOACM (10/01/2020 – 9/30/2023), 2101PAOAHD (10/01/2020 – 9/30/2023), 2101PAOANS (10/01/2020 – 9/30/2023), 2101PAOASS (10/01/2020 – 9/30/2023), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2101PAVAC5 (4/01/2021 – 9/30/2023), 2201PAOACM (10/01/2021 – 9/30/2023), 2201PAOAHD (10/01/2021 – 9/30/2023), 2201PAOANS (10/01/2021 – 9/30/2023), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD 10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA365N8903 (1/01/2022 – 9/30/2023), 231PA365N8903 (10/01/2022 – 9/30/2024), 231PA305L1603 (10/01/2022 – 9/30/2023), 221PA305L1603 (10/01/2021 – 9/30/2022), 221PA825Y8005 (10/01/2021 – 9/30/2022), 231PA825Y8005 (10/01/2022 – 9/30/2023), 221PA825Y8105 (10/01/2021 – 9/30/2022), 231PA825Y8105 (10/01/2022 – 9/30/2023), 201PA715W5003 (10/01/2019 – 9/30/2023), 211PA715W5003 (10/01/2020 – 9/30/2024), 221PA705W1003 (10/01/2021 – 9/30/2022), 221PA705W1006 (10/01/2021 – 9/30/2022), 221PA715W5003 (10/01/2021 – 9/30/2024), 231PA705W1003 (10/01/2022 – 9/30/2023), 231PA705W1006 (10/01/2022 – 9/30/2023), 231PA715W5003 (10/01/2022 – 9/30/2025), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA315N1050 (10/01/2021 – 9/30/2023), 231PA315N1050 (10/01/2022 – 9/30/2024), 221PA305N2020 (10/01/2021 – 9/30/2022), 231PA305N2020 (10/01/2022 – 9/30/2023), S010A190038 (7/01/2019 – 9/30/2022), S010A200038 (7/01/2020 – 9/30/2022), S010A210038 (7/01/2021 – 9/30/2022), S010A220038 (7/01/2022 – 9/30/2024), S367A150051 (7/01/2015 – 9/30/2017), S367A190051 (7/01/2019 – 9/30/2021), S367A200051 (7/01/2020 – 9/30/2022), S367A210051 (7/01/2021 – 9/30/2023), S367A220051 (7/01/2022 – 9 /30/2024), H027A200093 (7/01/2020 – 9/30/2022), H027A210093 (7/01/2021 – 9/30/2023), H027A220093 (7/01/2022 – 9/30/2024), H027X210093 (7/01/2021 – 9/30/2023), H173A200090 (7/01/2020 – 9/30/2022), H173A210090 (7/01/2021 – 9/30/2023), H173A220090 (7/01/2022 – 9/30/2024), H173X210090 (7/01/2021 – 9/30/2023), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021 – 9/30/2023), S425D210028 (1/05/2021 – 9/30/2023), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2023), S425V210037 (11/16/2021 – 9/30/2023), S425C210013 (3/13/2020 – 9/30/2023), S425D200028 (3/13/2020 – 9/30/2022), NU50CK000527 (8/01/2019 – 7/31/2024) Finding 2023 – 024: (continued) Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2023 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2022 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2023. We also evaluated the Commonwealth’s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2023 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 10.5 months after the FAC MDL start date for the one audit report with findings. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 12 months to over 18 months after the FAC MDL start date for three out of three audit reports with findings. There was also a delay in PDA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Our testing disclosed one audit report submitted to the FAC over nine months late that included $19.4 million in subrecipient expenditures passed through PDA. In addition, our testing disclosed that PDA subgranted federal funds totaling approximately $4.8 million to five subrecipients during the fiscal year ended June 30, 2022, for which Single Audits were not submitted to the FAC as of our January 2024 testing date. This was over 16 or 10 months after the respective, September 30, 2022 or March 31, 2023 due dates. • Department of Education (PDE): The time period for making a management decision on findings was approximately 9.3 to over 16.9 months after the FAC MDL start date for 14 out of 22 audit reports with findings. One of the 14 audit reports was improperly classified on PDE’s audit tracking list as not having federal award findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Health (DOH): The time period for making a management decision on findings was over 11 months after the FAC MDL start date for two out of two audit reports with findings. One audit report with the late management decision on findings was excluded from DOH’s tracking list. Finding 2023 – 024: (continued) Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR Section 200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR Section 200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR Section 200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. Finding 2023 – 024: (continued) 2 CFR Section 200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. Finding 2023 – 024: (continued) (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08 in order to ensure compliance with federal audit submission requirements. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Finding 2023 – 024: (continued) Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08. DOH Response: DOH agrees with the finding. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding and will be hiring a complement position to ensure compliance in the future. PDE Response: PDE agrees with the finding. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2023 – 024: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 – Child Nutrition Cluster (including COVID-19) ALN 10.565, 10.568, and 10.569 – Food Distribution Cluster ALN 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children ALN 10.558 – Child and Adult Care Food Program ALN 84.010 – Title I Grants to Local Educational Agencies ALN 84.027 and 84.173¬ – Special Education Cluster (IDEA) (including COVID-19) ALN 84.367 – Supporting Effective Instruction State Grants ALN 84.425C – COVID-19 – Education Stabilization Fund - GEER Fund ALN 84.425D – COVID-19 – Education Stabilization Fund - ESSER Fund ALN 84.425R – COVID-19 – Education Stabilization Fund - CRRSA EANS ALN 84.425U – COVID-19 – Education Stabilization Fund - ARP ESSER ALN 84.425V – COVID-19 – Education Stabilization Fund - ARP EANS ALN 93.044, 93.045, and 93.053 – Aging Cluster (including COVID-19) ALN 93.323 – Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2022-014) Federal Grant Number(s) and Year(s): 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC5 (12/27/2020 – 9/30/2023), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAOACM (10/01/2020 – 9/30/2023), 2101PAOAHD (10/01/2020 – 9/30/2023), 2101PAOANS (10/01/2020 – 9/30/2023), 2101PAOASS (10/01/2020 – 9/30/2023), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2101PAVAC5 (4/01/2021 – 9/30/2023), 2201PAOACM (10/01/2021 – 9/30/2023), 2201PAOAHD (10/01/2021 – 9/30/2023), 2201PAOANS (10/01/2021 – 9/30/2023), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD 10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA365N8903 (1/01/2022 – 9/30/2023), 231PA365N8903 (10/01/2022 – 9/30/2024), 231PA305L1603 (10/01/2022 – 9/30/2023), 221PA305L1603 (10/01/2021 – 9/30/2022), 221PA825Y8005 (10/01/2021 – 9/30/2022), 231PA825Y8005 (10/01/2022 – 9/30/2023), 221PA825Y8105 (10/01/2021 – 9/30/2022), 231PA825Y8105 (10/01/2022 – 9/30/2023), 201PA715W5003 (10/01/2019 – 9/30/2023), 211PA715W5003 (10/01/2020 – 9/30/2024), 221PA705W1003 (10/01/2021 – 9/30/2022), 221PA705W1006 (10/01/2021 – 9/30/2022), 221PA715W5003 (10/01/2021 – 9/30/2024), 231PA705W1003 (10/01/2022 – 9/30/2023), 231PA705W1006 (10/01/2022 – 9/30/2023), 231PA715W5003 (10/01/2022 – 9/30/2025), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA315N1050 (10/01/2021 – 9/30/2023), 231PA315N1050 (10/01/2022 – 9/30/2024), 221PA305N2020 (10/01/2021 – 9/30/2022), 231PA305N2020 (10/01/2022 – 9/30/2023), S010A190038 (7/01/2019 – 9/30/2022), S010A200038 (7/01/2020 – 9/30/2022), S010A210038 (7/01/2021 – 9/30/2022), S010A220038 (7/01/2022 – 9/30/2024), S367A150051 (7/01/2015 – 9/30/2017), S367A190051 (7/01/2019 – 9/30/2021), S367A200051 (7/01/2020 – 9/30/2022), S367A210051 (7/01/2021 – 9/30/2023), S367A220051 (7/01/2022 – 9 /30/2024), H027A200093 (7/01/2020 – 9/30/2022), H027A210093 (7/01/2021 – 9/30/2023), H027A220093 (7/01/2022 – 9/30/2024), H027X210093 (7/01/2021 – 9/30/2023), H173A200090 (7/01/2020 – 9/30/2022), H173A210090 (7/01/2021 – 9/30/2023), H173A220090 (7/01/2022 – 9/30/2024), H173X210090 (7/01/2021 – 9/30/2023), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021 – 9/30/2023), S425D210028 (1/05/2021 – 9/30/2023), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2023), S425V210037 (11/16/2021 – 9/30/2023), S425C210013 (3/13/2020 – 9/30/2023), S425D200028 (3/13/2020 – 9/30/2022), NU50CK000527 (8/01/2019 – 7/31/2024) Finding 2023 – 024: (continued) Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2023 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2022 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2023. We also evaluated the Commonwealth’s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2023 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 10.5 months after the FAC MDL start date for the one audit report with findings. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 12 months to over 18 months after the FAC MDL start date for three out of three audit reports with findings. There was also a delay in PDA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Our testing disclosed one audit report submitted to the FAC over nine months late that included $19.4 million in subrecipient expenditures passed through PDA. In addition, our testing disclosed that PDA subgranted federal funds totaling approximately $4.8 million to five subrecipients during the fiscal year ended June 30, 2022, for which Single Audits were not submitted to the FAC as of our January 2024 testing date. This was over 16 or 10 months after the respective, September 30, 2022 or March 31, 2023 due dates. • Department of Education (PDE): The time period for making a management decision on findings was approximately 9.3 to over 16.9 months after the FAC MDL start date for 14 out of 22 audit reports with findings. One of the 14 audit reports was improperly classified on PDE’s audit tracking list as not having federal award findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Health (DOH): The time period for making a management decision on findings was over 11 months after the FAC MDL start date for two out of two audit reports with findings. One audit report with the late management decision on findings was excluded from DOH’s tracking list. Finding 2023 – 024: (continued) Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR Section 200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR Section 200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR Section 200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. Finding 2023 – 024: (continued) 2 CFR Section 200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. Finding 2023 – 024: (continued) (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08 in order to ensure compliance with federal audit submission requirements. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Finding 2023 – 024: (continued) Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08. DOH Response: DOH agrees with the finding. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding and will be hiring a complement position to ensure compliance in the future. PDE Response: PDE agrees with the finding. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2023 – 024: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 – Child Nutrition Cluster (including COVID-19) ALN 10.565, 10.568, and 10.569 – Food Distribution Cluster ALN 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children ALN 10.558 – Child and Adult Care Food Program ALN 84.010 – Title I Grants to Local Educational Agencies ALN 84.027 and 84.173¬ – Special Education Cluster (IDEA) (including COVID-19) ALN 84.367 – Supporting Effective Instruction State Grants ALN 84.425C – COVID-19 – Education Stabilization Fund - GEER Fund ALN 84.425D – COVID-19 – Education Stabilization Fund - ESSER Fund ALN 84.425R – COVID-19 – Education Stabilization Fund - CRRSA EANS ALN 84.425U – COVID-19 – Education Stabilization Fund - ARP ESSER ALN 84.425V – COVID-19 – Education Stabilization Fund - ARP EANS ALN 93.044, 93.045, and 93.053 – Aging Cluster (including COVID-19) ALN 93.323 – Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2022-014) Federal Grant Number(s) and Year(s): 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC5 (12/27/2020 – 9/30/2023), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAOACM (10/01/2020 – 9/30/2023), 2101PAOAHD (10/01/2020 – 9/30/2023), 2101PAOANS (10/01/2020 – 9/30/2023), 2101PAOASS (10/01/2020 – 9/30/2023), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2101PAVAC5 (4/01/2021 – 9/30/2023), 2201PAOACM (10/01/2021 – 9/30/2023), 2201PAOAHD (10/01/2021 – 9/30/2023), 2201PAOANS (10/01/2021 – 9/30/2023), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD 10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA365N8903 (1/01/2022 – 9/30/2023), 231PA365N8903 (10/01/2022 – 9/30/2024), 231PA305L1603 (10/01/2022 – 9/30/2023), 221PA305L1603 (10/01/2021 – 9/30/2022), 221PA825Y8005 (10/01/2021 – 9/30/2022), 231PA825Y8005 (10/01/2022 – 9/30/2023), 221PA825Y8105 (10/01/2021 – 9/30/2022), 231PA825Y8105 (10/01/2022 – 9/30/2023), 201PA715W5003 (10/01/2019 – 9/30/2023), 211PA715W5003 (10/01/2020 – 9/30/2024), 221PA705W1003 (10/01/2021 – 9/30/2022), 221PA705W1006 (10/01/2021 – 9/30/2022), 221PA715W5003 (10/01/2021 – 9/30/2024), 231PA705W1003 (10/01/2022 – 9/30/2023), 231PA705W1006 (10/01/2022 – 9/30/2023), 231PA715W5003 (10/01/2022 – 9/30/2025), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA315N1050 (10/01/2021 – 9/30/2023), 231PA315N1050 (10/01/2022 – 9/30/2024), 221PA305N2020 (10/01/2021 – 9/30/2022), 231PA305N2020 (10/01/2022 – 9/30/2023), S010A190038 (7/01/2019 – 9/30/2022), S010A200038 (7/01/2020 – 9/30/2022), S010A210038 (7/01/2021 – 9/30/2022), S010A220038 (7/01/2022 – 9/30/2024), S367A150051 (7/01/2015 – 9/30/2017), S367A190051 (7/01/2019 – 9/30/2021), S367A200051 (7/01/2020 – 9/30/2022), S367A210051 (7/01/2021 – 9/30/2023), S367A220051 (7/01/2022 – 9 /30/2024), H027A200093 (7/01/2020 – 9/30/2022), H027A210093 (7/01/2021 – 9/30/2023), H027A220093 (7/01/2022 – 9/30/2024), H027X210093 (7/01/2021 – 9/30/2023), H173A200090 (7/01/2020 – 9/30/2022), H173A210090 (7/01/2021 – 9/30/2023), H173A220090 (7/01/2022 – 9/30/2024), H173X210090 (7/01/2021 – 9/30/2023), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021 – 9/30/2023), S425D210028 (1/05/2021 – 9/30/2023), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2023), S425V210037 (11/16/2021 – 9/30/2023), S425C210013 (3/13/2020 – 9/30/2023), S425D200028 (3/13/2020 – 9/30/2022), NU50CK000527 (8/01/2019 – 7/31/2024) Finding 2023 – 024: (continued) Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2023 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2022 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2023. We also evaluated the Commonwealth’s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2023 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 10.5 months after the FAC MDL start date for the one audit report with findings. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 12 months to over 18 months after the FAC MDL start date for three out of three audit reports with findings. There was also a delay in PDA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Our testing disclosed one audit report submitted to the FAC over nine months late that included $19.4 million in subrecipient expenditures passed through PDA. In addition, our testing disclosed that PDA subgranted federal funds totaling approximately $4.8 million to five subrecipients during the fiscal year ended June 30, 2022, for which Single Audits were not submitted to the FAC as of our January 2024 testing date. This was over 16 or 10 months after the respective, September 30, 2022 or March 31, 2023 due dates. • Department of Education (PDE): The time period for making a management decision on findings was approximately 9.3 to over 16.9 months after the FAC MDL start date for 14 out of 22 audit reports with findings. One of the 14 audit reports was improperly classified on PDE’s audit tracking list as not having federal award findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Health (DOH): The time period for making a management decision on findings was over 11 months after the FAC MDL start date for two out of two audit reports with findings. One audit report with the late management decision on findings was excluded from DOH’s tracking list. Finding 2023 – 024: (continued) Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR Section 200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR Section 200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR Section 200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. Finding 2023 – 024: (continued) 2 CFR Section 200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. Finding 2023 – 024: (continued) (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08 in order to ensure compliance with federal audit submission requirements. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Finding 2023 – 024: (continued) Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08. DOH Response: DOH agrees with the finding. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding and will be hiring a complement position to ensure compliance in the future. PDE Response: PDE agrees with the finding. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2023 – 024: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 – Child Nutrition Cluster (including COVID-19) ALN 10.565, 10.568, and 10.569 – Food Distribution Cluster ALN 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children ALN 10.558 – Child and Adult Care Food Program ALN 84.010 – Title I Grants to Local Educational Agencies ALN 84.027 and 84.173¬ – Special Education Cluster (IDEA) (including COVID-19) ALN 84.367 – Supporting Effective Instruction State Grants ALN 84.425C – COVID-19 – Education Stabilization Fund - GEER Fund ALN 84.425D – COVID-19 – Education Stabilization Fund - ESSER Fund ALN 84.425R – COVID-19 – Education Stabilization Fund - CRRSA EANS ALN 84.425U – COVID-19 – Education Stabilization Fund - ARP ESSER ALN 84.425V – COVID-19 – Education Stabilization Fund - ARP EANS ALN 93.044, 93.045, and 93.053 – Aging Cluster (including COVID-19) ALN 93.323 – Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2022-014) Federal Grant Number(s) and Year(s): 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC5 (12/27/2020 – 9/30/2023), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAOACM (10/01/2020 – 9/30/2023), 2101PAOAHD (10/01/2020 – 9/30/2023), 2101PAOANS (10/01/2020 – 9/30/2023), 2101PAOASS (10/01/2020 – 9/30/2023), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2101PAVAC5 (4/01/2021 – 9/30/2023), 2201PAOACM (10/01/2021 – 9/30/2023), 2201PAOAHD (10/01/2021 – 9/30/2023), 2201PAOANS (10/01/2021 – 9/30/2023), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD 10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA365N8903 (1/01/2022 – 9/30/2023), 231PA365N8903 (10/01/2022 – 9/30/2024), 231PA305L1603 (10/01/2022 – 9/30/2023), 221PA305L1603 (10/01/2021 – 9/30/2022), 221PA825Y8005 (10/01/2021 – 9/30/2022), 231PA825Y8005 (10/01/2022 – 9/30/2023), 221PA825Y8105 (10/01/2021 – 9/30/2022), 231PA825Y8105 (10/01/2022 – 9/30/2023), 201PA715W5003 (10/01/2019 – 9/30/2023), 211PA715W5003 (10/01/2020 – 9/30/2024), 221PA705W1003 (10/01/2021 – 9/30/2022), 221PA705W1006 (10/01/2021 – 9/30/2022), 221PA715W5003 (10/01/2021 – 9/30/2024), 231PA705W1003 (10/01/2022 – 9/30/2023), 231PA705W1006 (10/01/2022 – 9/30/2023), 231PA715W5003 (10/01/2022 – 9/30/2025), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA315N1050 (10/01/2021 – 9/30/2023), 231PA315N1050 (10/01/2022 – 9/30/2024), 221PA305N2020 (10/01/2021 – 9/30/2022), 231PA305N2020 (10/01/2022 – 9/30/2023), S010A190038 (7/01/2019 – 9/30/2022), S010A200038 (7/01/2020 – 9/30/2022), S010A210038 (7/01/2021 – 9/30/2022), S010A220038 (7/01/2022 – 9/30/2024), S367A150051 (7/01/2015 – 9/30/2017), S367A190051 (7/01/2019 – 9/30/2021), S367A200051 (7/01/2020 – 9/30/2022), S367A210051 (7/01/2021 – 9/30/2023), S367A220051 (7/01/2022 – 9 /30/2024), H027A200093 (7/01/2020 – 9/30/2022), H027A210093 (7/01/2021 – 9/30/2023), H027A220093 (7/01/2022 – 9/30/2024), H027X210093 (7/01/2021 – 9/30/2023), H173A200090 (7/01/2020 – 9/30/2022), H173A210090 (7/01/2021 – 9/30/2023), H173A220090 (7/01/2022 – 9/30/2024), H173X210090 (7/01/2021 – 9/30/2023), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021 – 9/30/2023), S425D210028 (1/05/2021 – 9/30/2023), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2023), S425V210037 (11/16/2021 – 9/30/2023), S425C210013 (3/13/2020 – 9/30/2023), S425D200028 (3/13/2020 – 9/30/2022), NU50CK000527 (8/01/2019 – 7/31/2024) Finding 2023 – 024: (continued) Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2023 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2022 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2023. We also evaluated the Commonwealth’s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2023 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 10.5 months after the FAC MDL start date for the one audit report with findings. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 12 months to over 18 months after the FAC MDL start date for three out of three audit reports with findings. There was also a delay in PDA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Our testing disclosed one audit report submitted to the FAC over nine months late that included $19.4 million in subrecipient expenditures passed through PDA. In addition, our testing disclosed that PDA subgranted federal funds totaling approximately $4.8 million to five subrecipients during the fiscal year ended June 30, 2022, for which Single Audits were not submitted to the FAC as of our January 2024 testing date. This was over 16 or 10 months after the respective, September 30, 2022 or March 31, 2023 due dates. • Department of Education (PDE): The time period for making a management decision on findings was approximately 9.3 to over 16.9 months after the FAC MDL start date for 14 out of 22 audit reports with findings. One of the 14 audit reports was improperly classified on PDE’s audit tracking list as not having federal award findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Health (DOH): The time period for making a management decision on findings was over 11 months after the FAC MDL start date for two out of two audit reports with findings. One audit report with the late management decision on findings was excluded from DOH’s tracking list. Finding 2023 – 024: (continued) Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR Section 200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR Section 200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR Section 200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. Finding 2023 – 024: (continued) 2 CFR Section 200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. Finding 2023 – 024: (continued) (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08 in order to ensure compliance with federal audit submission requirements. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Finding 2023 – 024: (continued) Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08. DOH Response: DOH agrees with the finding. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding and will be hiring a complement position to ensure compliance in the future. PDE Response: PDE agrees with the finding. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2023 – 024: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 – Child Nutrition Cluster (including COVID-19) ALN 10.565, 10.568, and 10.569 – Food Distribution Cluster ALN 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children ALN 10.558 – Child and Adult Care Food Program ALN 84.010 – Title I Grants to Local Educational Agencies ALN 84.027 and 84.173¬ – Special Education Cluster (IDEA) (including COVID-19) ALN 84.367 – Supporting Effective Instruction State Grants ALN 84.425C – COVID-19 – Education Stabilization Fund - GEER Fund ALN 84.425D – COVID-19 – Education Stabilization Fund - ESSER Fund ALN 84.425R – COVID-19 – Education Stabilization Fund - CRRSA EANS ALN 84.425U – COVID-19 – Education Stabilization Fund - ARP ESSER ALN 84.425V – COVID-19 – Education Stabilization Fund - ARP EANS ALN 93.044, 93.045, and 93.053 – Aging Cluster (including COVID-19) ALN 93.323 – Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2022-014) Federal Grant Number(s) and Year(s): 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC5 (12/27/2020 – 9/30/2023), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAOACM (10/01/2020 – 9/30/2023), 2101PAOAHD (10/01/2020 – 9/30/2023), 2101PAOANS (10/01/2020 – 9/30/2023), 2101PAOASS (10/01/2020 – 9/30/2023), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2101PAVAC5 (4/01/2021 – 9/30/2023), 2201PAOACM (10/01/2021 – 9/30/2023), 2201PAOAHD (10/01/2021 – 9/30/2023), 2201PAOANS (10/01/2021 – 9/30/2023), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD 10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA365N8903 (1/01/2022 – 9/30/2023), 231PA365N8903 (10/01/2022 – 9/30/2024), 231PA305L1603 (10/01/2022 – 9/30/2023), 221PA305L1603 (10/01/2021 – 9/30/2022), 221PA825Y8005 (10/01/2021 – 9/30/2022), 231PA825Y8005 (10/01/2022 – 9/30/2023), 221PA825Y8105 (10/01/2021 – 9/30/2022), 231PA825Y8105 (10/01/2022 – 9/30/2023), 201PA715W5003 (10/01/2019 – 9/30/2023), 211PA715W5003 (10/01/2020 – 9/30/2024), 221PA705W1003 (10/01/2021 – 9/30/2022), 221PA705W1006 (10/01/2021 – 9/30/2022), 221PA715W5003 (10/01/2021 – 9/30/2024), 231PA705W1003 (10/01/2022 – 9/30/2023), 231PA705W1006 (10/01/2022 – 9/30/2023), 231PA715W5003 (10/01/2022 – 9/30/2025), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA315N1050 (10/01/2021 – 9/30/2023), 231PA315N1050 (10/01/2022 – 9/30/2024), 221PA305N2020 (10/01/2021 – 9/30/2022), 231PA305N2020 (10/01/2022 – 9/30/2023), S010A190038 (7/01/2019 – 9/30/2022), S010A200038 (7/01/2020 – 9/30/2022), S010A210038 (7/01/2021 – 9/30/2022), S010A220038 (7/01/2022 – 9/30/2024), S367A150051 (7/01/2015 – 9/30/2017), S367A190051 (7/01/2019 – 9/30/2021), S367A200051 (7/01/2020 – 9/30/2022), S367A210051 (7/01/2021 – 9/30/2023), S367A220051 (7/01/2022 – 9 /30/2024), H027A200093 (7/01/2020 – 9/30/2022), H027A210093 (7/01/2021 – 9/30/2023), H027A220093 (7/01/2022 – 9/30/2024), H027X210093 (7/01/2021 – 9/30/2023), H173A200090 (7/01/2020 – 9/30/2022), H173A210090 (7/01/2021 – 9/30/2023), H173A220090 (7/01/2022 – 9/30/2024), H173X210090 (7/01/2021 – 9/30/2023), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021 – 9/30/2023), S425D210028 (1/05/2021 – 9/30/2023), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2023), S425V210037 (11/16/2021 – 9/30/2023), S425C210013 (3/13/2020 – 9/30/2023), S425D200028 (3/13/2020 – 9/30/2022), NU50CK000527 (8/01/2019 – 7/31/2024) Finding 2023 – 024: (continued) Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2023 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2022 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2023. We also evaluated the Commonwealth’s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2023 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 10.5 months after the FAC MDL start date for the one audit report with findings. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 12 months to over 18 months after the FAC MDL start date for three out of three audit reports with findings. There was also a delay in PDA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Our testing disclosed one audit report submitted to the FAC over nine months late that included $19.4 million in subrecipient expenditures passed through PDA. In addition, our testing disclosed that PDA subgranted federal funds totaling approximately $4.8 million to five subrecipients during the fiscal year ended June 30, 2022, for which Single Audits were not submitted to the FAC as of our January 2024 testing date. This was over 16 or 10 months after the respective, September 30, 2022 or March 31, 2023 due dates. • Department of Education (PDE): The time period for making a management decision on findings was approximately 9.3 to over 16.9 months after the FAC MDL start date for 14 out of 22 audit reports with findings. One of the 14 audit reports was improperly classified on PDE’s audit tracking list as not having federal award findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Health (DOH): The time period for making a management decision on findings was over 11 months after the FAC MDL start date for two out of two audit reports with findings. One audit report with the late management decision on findings was excluded from DOH’s tracking list. Finding 2023 – 024: (continued) Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR Section 200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR Section 200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR Section 200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. Finding 2023 – 024: (continued) 2 CFR Section 200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. Finding 2023 – 024: (continued) (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08 in order to ensure compliance with federal audit submission requirements. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Finding 2023 – 024: (continued) Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08. DOH Response: DOH agrees with the finding. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding and will be hiring a complement position to ensure compliance in the future. PDE Response: PDE agrees with the finding. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2023 – 024: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 – Child Nutrition Cluster (including COVID-19) ALN 10.565, 10.568, and 10.569 – Food Distribution Cluster ALN 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children ALN 10.558 – Child and Adult Care Food Program ALN 84.010 – Title I Grants to Local Educational Agencies ALN 84.027 and 84.173¬ – Special Education Cluster (IDEA) (including COVID-19) ALN 84.367 – Supporting Effective Instruction State Grants ALN 84.425C – COVID-19 – Education Stabilization Fund - GEER Fund ALN 84.425D – COVID-19 – Education Stabilization Fund - ESSER Fund ALN 84.425R – COVID-19 – Education Stabilization Fund - CRRSA EANS ALN 84.425U – COVID-19 – Education Stabilization Fund - ARP ESSER ALN 84.425V – COVID-19 – Education Stabilization Fund - ARP EANS ALN 93.044, 93.045, and 93.053 – Aging Cluster (including COVID-19) ALN 93.323 – Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2022-014) Federal Grant Number(s) and Year(s): 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC5 (12/27/2020 – 9/30/2023), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAOACM (10/01/2020 – 9/30/2023), 2101PAOAHD (10/01/2020 – 9/30/2023), 2101PAOANS (10/01/2020 – 9/30/2023), 2101PAOASS (10/01/2020 – 9/30/2023), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2101PAVAC5 (4/01/2021 – 9/30/2023), 2201PAOACM (10/01/2021 – 9/30/2023), 2201PAOAHD (10/01/2021 – 9/30/2023), 2201PAOANS (10/01/2021 – 9/30/2023), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD 10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA365N8903 (1/01/2022 – 9/30/2023), 231PA365N8903 (10/01/2022 – 9/30/2024), 231PA305L1603 (10/01/2022 – 9/30/2023), 221PA305L1603 (10/01/2021 – 9/30/2022), 221PA825Y8005 (10/01/2021 – 9/30/2022), 231PA825Y8005 (10/01/2022 – 9/30/2023), 221PA825Y8105 (10/01/2021 – 9/30/2022), 231PA825Y8105 (10/01/2022 – 9/30/2023), 201PA715W5003 (10/01/2019 – 9/30/2023), 211PA715W5003 (10/01/2020 – 9/30/2024), 221PA705W1003 (10/01/2021 – 9/30/2022), 221PA705W1006 (10/01/2021 – 9/30/2022), 221PA715W5003 (10/01/2021 – 9/30/2024), 231PA705W1003 (10/01/2022 – 9/30/2023), 231PA705W1006 (10/01/2022 – 9/30/2023), 231PA715W5003 (10/01/2022 – 9/30/2025), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA315N1050 (10/01/2021 – 9/30/2023), 231PA315N1050 (10/01/2022 – 9/30/2024), 221PA305N2020 (10/01/2021 – 9/30/2022), 231PA305N2020 (10/01/2022 – 9/30/2023), S010A190038 (7/01/2019 – 9/30/2022), S010A200038 (7/01/2020 – 9/30/2022), S010A210038 (7/01/2021 – 9/30/2022), S010A220038 (7/01/2022 – 9/30/2024), S367A150051 (7/01/2015 – 9/30/2017), S367A190051 (7/01/2019 – 9/30/2021), S367A200051 (7/01/2020 – 9/30/2022), S367A210051 (7/01/2021 – 9/30/2023), S367A220051 (7/01/2022 – 9 /30/2024), H027A200093 (7/01/2020 – 9/30/2022), H027A210093 (7/01/2021 – 9/30/2023), H027A220093 (7/01/2022 – 9/30/2024), H027X210093 (7/01/2021 – 9/30/2023), H173A200090 (7/01/2020 – 9/30/2022), H173A210090 (7/01/2021 – 9/30/2023), H173A220090 (7/01/2022 – 9/30/2024), H173X210090 (7/01/2021 – 9/30/2023), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021 – 9/30/2023), S425D210028 (1/05/2021 – 9/30/2023), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2023), S425V210037 (11/16/2021 – 9/30/2023), S425C210013 (3/13/2020 – 9/30/2023), S425D200028 (3/13/2020 – 9/30/2022), NU50CK000527 (8/01/2019 – 7/31/2024) Finding 2023 – 024: (continued) Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2023 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2022 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2023. We also evaluated the Commonwealth’s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2023 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 10.5 months after the FAC MDL start date for the one audit report with findings. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 12 months to over 18 months after the FAC MDL start date for three out of three audit reports with findings. There was also a delay in PDA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Our testing disclosed one audit report submitted to the FAC over nine months late that included $19.4 million in subrecipient expenditures passed through PDA. In addition, our testing disclosed that PDA subgranted federal funds totaling approximately $4.8 million to five subrecipients during the fiscal year ended June 30, 2022, for which Single Audits were not submitted to the FAC as of our January 2024 testing date. This was over 16 or 10 months after the respective, September 30, 2022 or March 31, 2023 due dates. • Department of Education (PDE): The time period for making a management decision on findings was approximately 9.3 to over 16.9 months after the FAC MDL start date for 14 out of 22 audit reports with findings. One of the 14 audit reports was improperly classified on PDE’s audit tracking list as not having federal award findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Health (DOH): The time period for making a management decision on findings was over 11 months after the FAC MDL start date for two out of two audit reports with findings. One audit report with the late management decision on findings was excluded from DOH’s tracking list. Finding 2023 – 024: (continued) Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR Section 200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR Section 200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR Section 200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. Finding 2023 – 024: (continued) 2 CFR Section 200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. Finding 2023 – 024: (continued) (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08 in order to ensure compliance with federal audit submission requirements. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Finding 2023 – 024: (continued) Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08. DOH Response: DOH agrees with the finding. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding and will be hiring a complement position to ensure compliance in the future. PDE Response: PDE agrees with the finding. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2023 – 024: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 – Child Nutrition Cluster (including COVID-19) ALN 10.565, 10.568, and 10.569 – Food Distribution Cluster ALN 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children ALN 10.558 – Child and Adult Care Food Program ALN 84.010 – Title I Grants to Local Educational Agencies ALN 84.027 and 84.173¬ – Special Education Cluster (IDEA) (including COVID-19) ALN 84.367 – Supporting Effective Instruction State Grants ALN 84.425C – COVID-19 – Education Stabilization Fund - GEER Fund ALN 84.425D – COVID-19 – Education Stabilization Fund - ESSER Fund ALN 84.425R – COVID-19 – Education Stabilization Fund - CRRSA EANS ALN 84.425U – COVID-19 – Education Stabilization Fund - ARP ESSER ALN 84.425V – COVID-19 – Education Stabilization Fund - ARP EANS ALN 93.044, 93.045, and 93.053 – Aging Cluster (including COVID-19) ALN 93.323 – Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2022-014) Federal Grant Number(s) and Year(s): 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC5 (12/27/2020 – 9/30/2023), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAOACM (10/01/2020 – 9/30/2023), 2101PAOAHD (10/01/2020 – 9/30/2023), 2101PAOANS (10/01/2020 – 9/30/2023), 2101PAOASS (10/01/2020 – 9/30/2023), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2101PAVAC5 (4/01/2021 – 9/30/2023), 2201PAOACM (10/01/2021 – 9/30/2023), 2201PAOAHD (10/01/2021 – 9/30/2023), 2201PAOANS (10/01/2021 – 9/30/2023), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD 10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA365N8903 (1/01/2022 – 9/30/2023), 231PA365N8903 (10/01/2022 – 9/30/2024), 231PA305L1603 (10/01/2022 – 9/30/2023), 221PA305L1603 (10/01/2021 – 9/30/2022), 221PA825Y8005 (10/01/2021 – 9/30/2022), 231PA825Y8005 (10/01/2022 – 9/30/2023), 221PA825Y8105 (10/01/2021 – 9/30/2022), 231PA825Y8105 (10/01/2022 – 9/30/2023), 201PA715W5003 (10/01/2019 – 9/30/2023), 211PA715W5003 (10/01/2020 – 9/30/2024), 221PA705W1003 (10/01/2021 – 9/30/2022), 221PA705W1006 (10/01/2021 – 9/30/2022), 221PA715W5003 (10/01/2021 – 9/30/2024), 231PA705W1003 (10/01/2022 – 9/30/2023), 231PA705W1006 (10/01/2022 – 9/30/2023), 231PA715W5003 (10/01/2022 – 9/30/2025), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA315N1050 (10/01/2021 – 9/30/2023), 231PA315N1050 (10/01/2022 – 9/30/2024), 221PA305N2020 (10/01/2021 – 9/30/2022), 231PA305N2020 (10/01/2022 – 9/30/2023), S010A190038 (7/01/2019 – 9/30/2022), S010A200038 (7/01/2020 – 9/30/2022), S010A210038 (7/01/2021 – 9/30/2022), S010A220038 (7/01/2022 – 9/30/2024), S367A150051 (7/01/2015 – 9/30/2017), S367A190051 (7/01/2019 – 9/30/2021), S367A200051 (7/01/2020 – 9/30/2022), S367A210051 (7/01/2021 – 9/30/2023), S367A220051 (7/01/2022 – 9 /30/2024), H027A200093 (7/01/2020 – 9/30/2022), H027A210093 (7/01/2021 – 9/30/2023), H027A220093 (7/01/2022 – 9/30/2024), H027X210093 (7/01/2021 – 9/30/2023), H173A200090 (7/01/2020 – 9/30/2022), H173A210090 (7/01/2021 – 9/30/2023), H173A220090 (7/01/2022 – 9/30/2024), H173X210090 (7/01/2021 – 9/30/2023), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021 – 9/30/2023), S425D210028 (1/05/2021 – 9/30/2023), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2023), S425V210037 (11/16/2021 – 9/30/2023), S425C210013 (3/13/2020 – 9/30/2023), S425D200028 (3/13/2020 – 9/30/2022), NU50CK000527 (8/01/2019 – 7/31/2024) Finding 2023 – 024: (continued) Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2023 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2022 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2023. We also evaluated the Commonwealth’s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2023 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 10.5 months after the FAC MDL start date for the one audit report with findings. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 12 months to over 18 months after the FAC MDL start date for three out of three audit reports with findings. There was also a delay in PDA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Our testing disclosed one audit report submitted to the FAC over nine months late that included $19.4 million in subrecipient expenditures passed through PDA. In addition, our testing disclosed that PDA subgranted federal funds totaling approximately $4.8 million to five subrecipients during the fiscal year ended June 30, 2022, for which Single Audits were not submitted to the FAC as of our January 2024 testing date. This was over 16 or 10 months after the respective, September 30, 2022 or March 31, 2023 due dates. • Department of Education (PDE): The time period for making a management decision on findings was approximately 9.3 to over 16.9 months after the FAC MDL start date for 14 out of 22 audit reports with findings. One of the 14 audit reports was improperly classified on PDE’s audit tracking list as not having federal award findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Health (DOH): The time period for making a management decision on findings was over 11 months after the FAC MDL start date for two out of two audit reports with findings. One audit report with the late management decision on findings was excluded from DOH’s tracking list. Finding 2023 – 024: (continued) Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR Section 200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR Section 200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR Section 200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. Finding 2023 – 024: (continued) 2 CFR Section 200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. Finding 2023 – 024: (continued) (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08 in order to ensure compliance with federal audit submission requirements. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Finding 2023 – 024: (continued) Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08. DOH Response: DOH agrees with the finding. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding and will be hiring a complement position to ensure compliance in the future. PDE Response: PDE agrees with the finding. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2023 – 024: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 – Child Nutrition Cluster (including COVID-19) ALN 10.565, 10.568, and 10.569 – Food Distribution Cluster ALN 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children ALN 10.558 – Child and Adult Care Food Program ALN 84.010 – Title I Grants to Local Educational Agencies ALN 84.027 and 84.173¬ – Special Education Cluster (IDEA) (including COVID-19) ALN 84.367 – Supporting Effective Instruction State Grants ALN 84.425C – COVID-19 – Education Stabilization Fund - GEER Fund ALN 84.425D – COVID-19 – Education Stabilization Fund - ESSER Fund ALN 84.425R – COVID-19 – Education Stabilization Fund - CRRSA EANS ALN 84.425U – COVID-19 – Education Stabilization Fund - ARP ESSER ALN 84.425V – COVID-19 – Education Stabilization Fund - ARP EANS ALN 93.044, 93.045, and 93.053 – Aging Cluster (including COVID-19) ALN 93.323 – Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2022-014) Federal Grant Number(s) and Year(s): 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC5 (12/27/2020 – 9/30/2023), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAOACM (10/01/2020 – 9/30/2023), 2101PAOAHD (10/01/2020 – 9/30/2023), 2101PAOANS (10/01/2020 – 9/30/2023), 2101PAOASS (10/01/2020 – 9/30/2023), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2101PAVAC5 (4/01/2021 – 9/30/2023), 2201PAOACM (10/01/2021 – 9/30/2023), 2201PAOAHD (10/01/2021 – 9/30/2023), 2201PAOANS (10/01/2021 – 9/30/2023), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD 10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA365N8903 (1/01/2022 – 9/30/2023), 231PA365N8903 (10/01/2022 – 9/30/2024), 231PA305L1603 (10/01/2022 – 9/30/2023), 221PA305L1603 (10/01/2021 – 9/30/2022), 221PA825Y8005 (10/01/2021 – 9/30/2022), 231PA825Y8005 (10/01/2022 – 9/30/2023), 221PA825Y8105 (10/01/2021 – 9/30/2022), 231PA825Y8105 (10/01/2022 – 9/30/2023), 201PA715W5003 (10/01/2019 – 9/30/2023), 211PA715W5003 (10/01/2020 – 9/30/2024), 221PA705W1003 (10/01/2021 – 9/30/2022), 221PA705W1006 (10/01/2021 – 9/30/2022), 221PA715W5003 (10/01/2021 – 9/30/2024), 231PA705W1003 (10/01/2022 – 9/30/2023), 231PA705W1006 (10/01/2022 – 9/30/2023), 231PA715W5003 (10/01/2022 – 9/30/2025), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA315N1050 (10/01/2021 – 9/30/2023), 231PA315N1050 (10/01/2022 – 9/30/2024), 221PA305N2020 (10/01/2021 – 9/30/2022), 231PA305N2020 (10/01/2022 – 9/30/2023), S010A190038 (7/01/2019 – 9/30/2022), S010A200038 (7/01/2020 – 9/30/2022), S010A210038 (7/01/2021 – 9/30/2022), S010A220038 (7/01/2022 – 9/30/2024), S367A150051 (7/01/2015 – 9/30/2017), S367A190051 (7/01/2019 – 9/30/2021), S367A200051 (7/01/2020 – 9/30/2022), S367A210051 (7/01/2021 – 9/30/2023), S367A220051 (7/01/2022 – 9 /30/2024), H027A200093 (7/01/2020 – 9/30/2022), H027A210093 (7/01/2021 – 9/30/2023), H027A220093 (7/01/2022 – 9/30/2024), H027X210093 (7/01/2021 – 9/30/2023), H173A200090 (7/01/2020 – 9/30/2022), H173A210090 (7/01/2021 – 9/30/2023), H173A220090 (7/01/2022 – 9/30/2024), H173X210090 (7/01/2021 – 9/30/2023), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021 – 9/30/2023), S425D210028 (1/05/2021 – 9/30/2023), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2023), S425V210037 (11/16/2021 – 9/30/2023), S425C210013 (3/13/2020 – 9/30/2023), S425D200028 (3/13/2020 – 9/30/2022), NU50CK000527 (8/01/2019 – 7/31/2024) Finding 2023 – 024: (continued) Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2023 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2022 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2023. We also evaluated the Commonwealth’s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2023 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 10.5 months after the FAC MDL start date for the one audit report with findings. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 12 months to over 18 months after the FAC MDL start date for three out of three audit reports with findings. There was also a delay in PDA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Our testing disclosed one audit report submitted to the FAC over nine months late that included $19.4 million in subrecipient expenditures passed through PDA. In addition, our testing disclosed that PDA subgranted federal funds totaling approximately $4.8 million to five subrecipients during the fiscal year ended June 30, 2022, for which Single Audits were not submitted to the FAC as of our January 2024 testing date. This was over 16 or 10 months after the respective, September 30, 2022 or March 31, 2023 due dates. • Department of Education (PDE): The time period for making a management decision on findings was approximately 9.3 to over 16.9 months after the FAC MDL start date for 14 out of 22 audit reports with findings. One of the 14 audit reports was improperly classified on PDE’s audit tracking list as not having federal award findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Health (DOH): The time period for making a management decision on findings was over 11 months after the FAC MDL start date for two out of two audit reports with findings. One audit report with the late management decision on findings was excluded from DOH’s tracking list. Finding 2023 – 024: (continued) Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR Section 200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR Section 200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR Section 200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. Finding 2023 – 024: (continued) 2 CFR Section 200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. Finding 2023 – 024: (continued) (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08 in order to ensure compliance with federal audit submission requirements. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Finding 2023 – 024: (continued) Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08. DOH Response: DOH agrees with the finding. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding and will be hiring a complement position to ensure compliance in the future. PDE Response: PDE agrees with the finding. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2023 – 024: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 – Child Nutrition Cluster (including COVID-19) ALN 10.565, 10.568, and 10.569 – Food Distribution Cluster ALN 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children ALN 10.558 – Child and Adult Care Food Program ALN 84.010 – Title I Grants to Local Educational Agencies ALN 84.027 and 84.173¬ – Special Education Cluster (IDEA) (including COVID-19) ALN 84.367 – Supporting Effective Instruction State Grants ALN 84.425C – COVID-19 – Education Stabilization Fund - GEER Fund ALN 84.425D – COVID-19 – Education Stabilization Fund - ESSER Fund ALN 84.425R – COVID-19 – Education Stabilization Fund - CRRSA EANS ALN 84.425U – COVID-19 – Education Stabilization Fund - ARP ESSER ALN 84.425V – COVID-19 – Education Stabilization Fund - ARP EANS ALN 93.044, 93.045, and 93.053 – Aging Cluster (including COVID-19) ALN 93.323 – Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2022-014) Federal Grant Number(s) and Year(s): 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC5 (12/27/2020 – 9/30/2023), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAOACM (10/01/2020 – 9/30/2023), 2101PAOAHD (10/01/2020 – 9/30/2023), 2101PAOANS (10/01/2020 – 9/30/2023), 2101PAOASS (10/01/2020 – 9/30/2023), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2101PAVAC5 (4/01/2021 – 9/30/2023), 2201PAOACM (10/01/2021 – 9/30/2023), 2201PAOAHD (10/01/2021 – 9/30/2023), 2201PAOANS (10/01/2021 – 9/30/2023), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD 10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA365N8903 (1/01/2022 – 9/30/2023), 231PA365N8903 (10/01/2022 – 9/30/2024), 231PA305L1603 (10/01/2022 – 9/30/2023), 221PA305L1603 (10/01/2021 – 9/30/2022), 221PA825Y8005 (10/01/2021 – 9/30/2022), 231PA825Y8005 (10/01/2022 – 9/30/2023), 221PA825Y8105 (10/01/2021 – 9/30/2022), 231PA825Y8105 (10/01/2022 – 9/30/2023), 201PA715W5003 (10/01/2019 – 9/30/2023), 211PA715W5003 (10/01/2020 – 9/30/2024), 221PA705W1003 (10/01/2021 – 9/30/2022), 221PA705W1006 (10/01/2021 – 9/30/2022), 221PA715W5003 (10/01/2021 – 9/30/2024), 231PA705W1003 (10/01/2022 – 9/30/2023), 231PA705W1006 (10/01/2022 – 9/30/2023), 231PA715W5003 (10/01/2022 – 9/30/2025), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA315N1050 (10/01/2021 – 9/30/2023), 231PA315N1050 (10/01/2022 – 9/30/2024), 221PA305N2020 (10/01/2021 – 9/30/2022), 231PA305N2020 (10/01/2022 – 9/30/2023), S010A190038 (7/01/2019 – 9/30/2022), S010A200038 (7/01/2020 – 9/30/2022), S010A210038 (7/01/2021 – 9/30/2022), S010A220038 (7/01/2022 – 9/30/2024), S367A150051 (7/01/2015 – 9/30/2017), S367A190051 (7/01/2019 – 9/30/2021), S367A200051 (7/01/2020 – 9/30/2022), S367A210051 (7/01/2021 – 9/30/2023), S367A220051 (7/01/2022 – 9 /30/2024), H027A200093 (7/01/2020 – 9/30/2022), H027A210093 (7/01/2021 – 9/30/2023), H027A220093 (7/01/2022 – 9/30/2024), H027X210093 (7/01/2021 – 9/30/2023), H173A200090 (7/01/2020 – 9/30/2022), H173A210090 (7/01/2021 – 9/30/2023), H173A220090 (7/01/2022 – 9/30/2024), H173X210090 (7/01/2021 – 9/30/2023), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021 – 9/30/2023), S425D210028 (1/05/2021 – 9/30/2023), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2023), S425V210037 (11/16/2021 – 9/30/2023), S425C210013 (3/13/2020 – 9/30/2023), S425D200028 (3/13/2020 – 9/30/2022), NU50CK000527 (8/01/2019 – 7/31/2024) Finding 2023 – 024: (continued) Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2023 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2022 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2023. We also evaluated the Commonwealth’s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2023 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 10.5 months after the FAC MDL start date for the one audit report with findings. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 12 months to over 18 months after the FAC MDL start date for three out of three audit reports with findings. There was also a delay in PDA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Our testing disclosed one audit report submitted to the FAC over nine months late that included $19.4 million in subrecipient expenditures passed through PDA. In addition, our testing disclosed that PDA subgranted federal funds totaling approximately $4.8 million to five subrecipients during the fiscal year ended June 30, 2022, for which Single Audits were not submitted to the FAC as of our January 2024 testing date. This was over 16 or 10 months after the respective, September 30, 2022 or March 31, 2023 due dates. • Department of Education (PDE): The time period for making a management decision on findings was approximately 9.3 to over 16.9 months after the FAC MDL start date for 14 out of 22 audit reports with findings. One of the 14 audit reports was improperly classified on PDE’s audit tracking list as not having federal award findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Health (DOH): The time period for making a management decision on findings was over 11 months after the FAC MDL start date for two out of two audit reports with findings. One audit report with the late management decision on findings was excluded from DOH’s tracking list. Finding 2023 – 024: (continued) Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR Section 200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR Section 200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR Section 200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. Finding 2023 – 024: (continued) 2 CFR Section 200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. Finding 2023 – 024: (continued) (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08 in order to ensure compliance with federal audit submission requirements. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Finding 2023 – 024: (continued) Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08. DOH Response: DOH agrees with the finding. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding and will be hiring a complement position to ensure compliance in the future. PDE Response: PDE agrees with the finding. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2023 – 024: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 – Child Nutrition Cluster (including COVID-19) ALN 10.565, 10.568, and 10.569 – Food Distribution Cluster ALN 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children ALN 10.558 – Child and Adult Care Food Program ALN 84.010 – Title I Grants to Local Educational Agencies ALN 84.027 and 84.173¬ – Special Education Cluster (IDEA) (including COVID-19) ALN 84.367 – Supporting Effective Instruction State Grants ALN 84.425C – COVID-19 – Education Stabilization Fund - GEER Fund ALN 84.425D – COVID-19 – Education Stabilization Fund - ESSER Fund ALN 84.425R – COVID-19 – Education Stabilization Fund - CRRSA EANS ALN 84.425U – COVID-19 – Education Stabilization Fund - ARP ESSER ALN 84.425V – COVID-19 – Education Stabilization Fund - ARP EANS ALN 93.044, 93.045, and 93.053 – Aging Cluster (including COVID-19) ALN 93.323 – Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2022-014) Federal Grant Number(s) and Year(s): 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC5 (12/27/2020 – 9/30/2023), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAOACM (10/01/2020 – 9/30/2023), 2101PAOAHD (10/01/2020 – 9/30/2023), 2101PAOANS (10/01/2020 – 9/30/2023), 2101PAOASS (10/01/2020 – 9/30/2023), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2101PAVAC5 (4/01/2021 – 9/30/2023), 2201PAOACM (10/01/2021 – 9/30/2023), 2201PAOAHD (10/01/2021 – 9/30/2023), 2201PAOANS (10/01/2021 – 9/30/2023), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD 10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA365N8903 (1/01/2022 – 9/30/2023), 231PA365N8903 (10/01/2022 – 9/30/2024), 231PA305L1603 (10/01/2022 – 9/30/2023), 221PA305L1603 (10/01/2021 – 9/30/2022), 221PA825Y8005 (10/01/2021 – 9/30/2022), 231PA825Y8005 (10/01/2022 – 9/30/2023), 221PA825Y8105 (10/01/2021 – 9/30/2022), 231PA825Y8105 (10/01/2022 – 9/30/2023), 201PA715W5003 (10/01/2019 – 9/30/2023), 211PA715W5003 (10/01/2020 – 9/30/2024), 221PA705W1003 (10/01/2021 – 9/30/2022), 221PA705W1006 (10/01/2021 – 9/30/2022), 221PA715W5003 (10/01/2021 – 9/30/2024), 231PA705W1003 (10/01/2022 – 9/30/2023), 231PA705W1006 (10/01/2022 – 9/30/2023), 231PA715W5003 (10/01/2022 – 9/30/2025), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA315N1050 (10/01/2021 – 9/30/2023), 231PA315N1050 (10/01/2022 – 9/30/2024), 221PA305N2020 (10/01/2021 – 9/30/2022), 231PA305N2020 (10/01/2022 – 9/30/2023), S010A190038 (7/01/2019 – 9/30/2022), S010A200038 (7/01/2020 – 9/30/2022), S010A210038 (7/01/2021 – 9/30/2022), S010A220038 (7/01/2022 – 9/30/2024), S367A150051 (7/01/2015 – 9/30/2017), S367A190051 (7/01/2019 – 9/30/2021), S367A200051 (7/01/2020 – 9/30/2022), S367A210051 (7/01/2021 – 9/30/2023), S367A220051 (7/01/2022 – 9 /30/2024), H027A200093 (7/01/2020 – 9/30/2022), H027A210093 (7/01/2021 – 9/30/2023), H027A220093 (7/01/2022 – 9/30/2024), H027X210093 (7/01/2021 – 9/30/2023), H173A200090 (7/01/2020 – 9/30/2022), H173A210090 (7/01/2021 – 9/30/2023), H173A220090 (7/01/2022 – 9/30/2024), H173X210090 (7/01/2021 – 9/30/2023), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021 – 9/30/2023), S425D210028 (1/05/2021 – 9/30/2023), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2023), S425V210037 (11/16/2021 – 9/30/2023), S425C210013 (3/13/2020 – 9/30/2023), S425D200028 (3/13/2020 – 9/30/2022), NU50CK000527 (8/01/2019 – 7/31/2024) Finding 2023 – 024: (continued) Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2023 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2022 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2023. We also evaluated the Commonwealth’s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2023 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 10.5 months after the FAC MDL start date for the one audit report with findings. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 12 months to over 18 months after the FAC MDL start date for three out of three audit reports with findings. There was also a delay in PDA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Our testing disclosed one audit report submitted to the FAC over nine months late that included $19.4 million in subrecipient expenditures passed through PDA. In addition, our testing disclosed that PDA subgranted federal funds totaling approximately $4.8 million to five subrecipients during the fiscal year ended June 30, 2022, for which Single Audits were not submitted to the FAC as of our January 2024 testing date. This was over 16 or 10 months after the respective, September 30, 2022 or March 31, 2023 due dates. • Department of Education (PDE): The time period for making a management decision on findings was approximately 9.3 to over 16.9 months after the FAC MDL start date for 14 out of 22 audit reports with findings. One of the 14 audit reports was improperly classified on PDE’s audit tracking list as not having federal award findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Health (DOH): The time period for making a management decision on findings was over 11 months after the FAC MDL start date for two out of two audit reports with findings. One audit report with the late management decision on findings was excluded from DOH’s tracking list. Finding 2023 – 024: (continued) Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR Section 200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR Section 200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR Section 200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. Finding 2023 – 024: (continued) 2 CFR Section 200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. Finding 2023 – 024: (continued) (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08 in order to ensure compliance with federal audit submission requirements. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Finding 2023 – 024: (continued) Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08. DOH Response: DOH agrees with the finding. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding and will be hiring a complement position to ensure compliance in the future. PDE Response: PDE agrees with the finding. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2023 – 024: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 – Child Nutrition Cluster (including COVID-19) ALN 10.565, 10.568, and 10.569 – Food Distribution Cluster ALN 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children ALN 10.558 – Child and Adult Care Food Program ALN 84.010 – Title I Grants to Local Educational Agencies ALN 84.027 and 84.173¬ – Special Education Cluster (IDEA) (including COVID-19) ALN 84.367 – Supporting Effective Instruction State Grants ALN 84.425C – COVID-19 – Education Stabilization Fund - GEER Fund ALN 84.425D – COVID-19 – Education Stabilization Fund - ESSER Fund ALN 84.425R – COVID-19 – Education Stabilization Fund - CRRSA EANS ALN 84.425U – COVID-19 – Education Stabilization Fund - ARP ESSER ALN 84.425V – COVID-19 – Education Stabilization Fund - ARP EANS ALN 93.044, 93.045, and 93.053 – Aging Cluster (including COVID-19) ALN 93.323 – Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2022-014) Federal Grant Number(s) and Year(s): 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC5 (12/27/2020 – 9/30/2023), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAOACM (10/01/2020 – 9/30/2023), 2101PAOAHD (10/01/2020 – 9/30/2023), 2101PAOANS (10/01/2020 – 9/30/2023), 2101PAOASS (10/01/2020 – 9/30/2023), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2101PAVAC5 (4/01/2021 – 9/30/2023), 2201PAOACM (10/01/2021 – 9/30/2023), 2201PAOAHD (10/01/2021 – 9/30/2023), 2201PAOANS (10/01/2021 – 9/30/2023), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD 10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA365N8903 (1/01/2022 – 9/30/2023), 231PA365N8903 (10/01/2022 – 9/30/2024), 231PA305L1603 (10/01/2022 – 9/30/2023), 221PA305L1603 (10/01/2021 – 9/30/2022), 221PA825Y8005 (10/01/2021 – 9/30/2022), 231PA825Y8005 (10/01/2022 – 9/30/2023), 221PA825Y8105 (10/01/2021 – 9/30/2022), 231PA825Y8105 (10/01/2022 – 9/30/2023), 201PA715W5003 (10/01/2019 – 9/30/2023), 211PA715W5003 (10/01/2020 – 9/30/2024), 221PA705W1003 (10/01/2021 – 9/30/2022), 221PA705W1006 (10/01/2021 – 9/30/2022), 221PA715W5003 (10/01/2021 – 9/30/2024), 231PA705W1003 (10/01/2022 – 9/30/2023), 231PA705W1006 (10/01/2022 – 9/30/2023), 231PA715W5003 (10/01/2022 – 9/30/2025), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA315N1050 (10/01/2021 – 9/30/2023), 231PA315N1050 (10/01/2022 – 9/30/2024), 221PA305N2020 (10/01/2021 – 9/30/2022), 231PA305N2020 (10/01/2022 – 9/30/2023), S010A190038 (7/01/2019 – 9/30/2022), S010A200038 (7/01/2020 – 9/30/2022), S010A210038 (7/01/2021 – 9/30/2022), S010A220038 (7/01/2022 – 9/30/2024), S367A150051 (7/01/2015 – 9/30/2017), S367A190051 (7/01/2019 – 9/30/2021), S367A200051 (7/01/2020 – 9/30/2022), S367A210051 (7/01/2021 – 9/30/2023), S367A220051 (7/01/2022 – 9 /30/2024), H027A200093 (7/01/2020 – 9/30/2022), H027A210093 (7/01/2021 – 9/30/2023), H027A220093 (7/01/2022 – 9/30/2024), H027X210093 (7/01/2021 – 9/30/2023), H173A200090 (7/01/2020 – 9/30/2022), H173A210090 (7/01/2021 – 9/30/2023), H173A220090 (7/01/2022 – 9/30/2024), H173X210090 (7/01/2021 – 9/30/2023), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021 – 9/30/2023), S425D210028 (1/05/2021 – 9/30/2023), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2023), S425V210037 (11/16/2021 – 9/30/2023), S425C210013 (3/13/2020 – 9/30/2023), S425D200028 (3/13/2020 – 9/30/2022), NU50CK000527 (8/01/2019 – 7/31/2024) Finding 2023 – 024: (continued) Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2023 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2022 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2023. We also evaluated the Commonwealth’s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2023 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 10.5 months after the FAC MDL start date for the one audit report with findings. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 12 months to over 18 months after the FAC MDL start date for three out of three audit reports with findings. There was also a delay in PDA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Our testing disclosed one audit report submitted to the FAC over nine months late that included $19.4 million in subrecipient expenditures passed through PDA. In addition, our testing disclosed that PDA subgranted federal funds totaling approximately $4.8 million to five subrecipients during the fiscal year ended June 30, 2022, for which Single Audits were not submitted to the FAC as of our January 2024 testing date. This was over 16 or 10 months after the respective, September 30, 2022 or March 31, 2023 due dates. • Department of Education (PDE): The time period for making a management decision on findings was approximately 9.3 to over 16.9 months after the FAC MDL start date for 14 out of 22 audit reports with findings. One of the 14 audit reports was improperly classified on PDE’s audit tracking list as not having federal award findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Health (DOH): The time period for making a management decision on findings was over 11 months after the FAC MDL start date for two out of two audit reports with findings. One audit report with the late management decision on findings was excluded from DOH’s tracking list. Finding 2023 – 024: (continued) Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR Section 200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR Section 200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR Section 200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. Finding 2023 – 024: (continued) 2 CFR Section 200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. Finding 2023 – 024: (continued) (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08 in order to ensure compliance with federal audit submission requirements. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Finding 2023 – 024: (continued) Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08. DOH Response: DOH agrees with the finding. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding and will be hiring a complement position to ensure compliance in the future. PDE Response: PDE agrees with the finding. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2023 – 024: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 – Child Nutrition Cluster (including COVID-19) ALN 10.565, 10.568, and 10.569 – Food Distribution Cluster ALN 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children ALN 10.558 – Child and Adult Care Food Program ALN 84.010 – Title I Grants to Local Educational Agencies ALN 84.027 and 84.173¬ – Special Education Cluster (IDEA) (including COVID-19) ALN 84.367 – Supporting Effective Instruction State Grants ALN 84.425C – COVID-19 – Education Stabilization Fund - GEER Fund ALN 84.425D – COVID-19 – Education Stabilization Fund - ESSER Fund ALN 84.425R – COVID-19 – Education Stabilization Fund - CRRSA EANS ALN 84.425U – COVID-19 – Education Stabilization Fund - ARP ESSER ALN 84.425V – COVID-19 – Education Stabilization Fund - ARP EANS ALN 93.044, 93.045, and 93.053 – Aging Cluster (including COVID-19) ALN 93.323 – Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2022-014) Federal Grant Number(s) and Year(s): 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC5 (12/27/2020 – 9/30/2023), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAOACM (10/01/2020 – 9/30/2023), 2101PAOAHD (10/01/2020 – 9/30/2023), 2101PAOANS (10/01/2020 – 9/30/2023), 2101PAOASS (10/01/2020 – 9/30/2023), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2101PAVAC5 (4/01/2021 – 9/30/2023), 2201PAOACM (10/01/2021 – 9/30/2023), 2201PAOAHD (10/01/2021 – 9/30/2023), 2201PAOANS (10/01/2021 – 9/30/2023), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD 10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA365N8903 (1/01/2022 – 9/30/2023), 231PA365N8903 (10/01/2022 – 9/30/2024), 231PA305L1603 (10/01/2022 – 9/30/2023), 221PA305L1603 (10/01/2021 – 9/30/2022), 221PA825Y8005 (10/01/2021 – 9/30/2022), 231PA825Y8005 (10/01/2022 – 9/30/2023), 221PA825Y8105 (10/01/2021 – 9/30/2022), 231PA825Y8105 (10/01/2022 – 9/30/2023), 201PA715W5003 (10/01/2019 – 9/30/2023), 211PA715W5003 (10/01/2020 – 9/30/2024), 221PA705W1003 (10/01/2021 – 9/30/2022), 221PA705W1006 (10/01/2021 – 9/30/2022), 221PA715W5003 (10/01/2021 – 9/30/2024), 231PA705W1003 (10/01/2022 – 9/30/2023), 231PA705W1006 (10/01/2022 – 9/30/2023), 231PA715W5003 (10/01/2022 – 9/30/2025), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA315N1050 (10/01/2021 – 9/30/2023), 231PA315N1050 (10/01/2022 – 9/30/2024), 221PA305N2020 (10/01/2021 – 9/30/2022), 231PA305N2020 (10/01/2022 – 9/30/2023), S010A190038 (7/01/2019 – 9/30/2022), S010A200038 (7/01/2020 – 9/30/2022), S010A210038 (7/01/2021 – 9/30/2022), S010A220038 (7/01/2022 – 9/30/2024), S367A150051 (7/01/2015 – 9/30/2017), S367A190051 (7/01/2019 – 9/30/2021), S367A200051 (7/01/2020 – 9/30/2022), S367A210051 (7/01/2021 – 9/30/2023), S367A220051 (7/01/2022 – 9 /30/2024), H027A200093 (7/01/2020 – 9/30/2022), H027A210093 (7/01/2021 – 9/30/2023), H027A220093 (7/01/2022 – 9/30/2024), H027X210093 (7/01/2021 – 9/30/2023), H173A200090 (7/01/2020 – 9/30/2022), H173A210090 (7/01/2021 – 9/30/2023), H173A220090 (7/01/2022 – 9/30/2024), H173X210090 (7/01/2021 – 9/30/2023), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021 – 9/30/2023), S425D210028 (1/05/2021 – 9/30/2023), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2023), S425V210037 (11/16/2021 – 9/30/2023), S425C210013 (3/13/2020 – 9/30/2023), S425D200028 (3/13/2020 – 9/30/2022), NU50CK000527 (8/01/2019 – 7/31/2024) Finding 2023 – 024: (continued) Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2023 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2022 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2023. We also evaluated the Commonwealth’s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2023 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 10.5 months after the FAC MDL start date for the one audit report with findings. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 12 months to over 18 months after the FAC MDL start date for three out of three audit reports with findings. There was also a delay in PDA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Our testing disclosed one audit report submitted to the FAC over nine months late that included $19.4 million in subrecipient expenditures passed through PDA. In addition, our testing disclosed that PDA subgranted federal funds totaling approximately $4.8 million to five subrecipients during the fiscal year ended June 30, 2022, for which Single Audits were not submitted to the FAC as of our January 2024 testing date. This was over 16 or 10 months after the respective, September 30, 2022 or March 31, 2023 due dates. • Department of Education (PDE): The time period for making a management decision on findings was approximately 9.3 to over 16.9 months after the FAC MDL start date for 14 out of 22 audit reports with findings. One of the 14 audit reports was improperly classified on PDE’s audit tracking list as not having federal award findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Health (DOH): The time period for making a management decision on findings was over 11 months after the FAC MDL start date for two out of two audit reports with findings. One audit report with the late management decision on findings was excluded from DOH’s tracking list. Finding 2023 – 024: (continued) Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR Section 200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR Section 200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR Section 200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. Finding 2023 – 024: (continued) 2 CFR Section 200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. Finding 2023 – 024: (continued) (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08 in order to ensure compliance with federal audit submission requirements. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Finding 2023 – 024: (continued) Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08. DOH Response: DOH agrees with the finding. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding and will be hiring a complement position to ensure compliance in the future. PDE Response: PDE agrees with the finding. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2023 – 024: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 – Child Nutrition Cluster (including COVID-19) ALN 10.565, 10.568, and 10.569 – Food Distribution Cluster ALN 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children ALN 10.558 – Child and Adult Care Food Program ALN 84.010 – Title I Grants to Local Educational Agencies ALN 84.027 and 84.173¬ – Special Education Cluster (IDEA) (including COVID-19) ALN 84.367 – Supporting Effective Instruction State Grants ALN 84.425C – COVID-19 – Education Stabilization Fund - GEER Fund ALN 84.425D – COVID-19 – Education Stabilization Fund - ESSER Fund ALN 84.425R – COVID-19 – Education Stabilization Fund - CRRSA EANS ALN 84.425U – COVID-19 – Education Stabilization Fund - ARP ESSER ALN 84.425V – COVID-19 – Education Stabilization Fund - ARP EANS ALN 93.044, 93.045, and 93.053 – Aging Cluster (including COVID-19) ALN 93.323 – Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2022-014) Federal Grant Number(s) and Year(s): 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC5 (12/27/2020 – 9/30/2023), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAOACM (10/01/2020 – 9/30/2023), 2101PAOAHD (10/01/2020 – 9/30/2023), 2101PAOANS (10/01/2020 – 9/30/2023), 2101PAOASS (10/01/2020 – 9/30/2023), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2101PAVAC5 (4/01/2021 – 9/30/2023), 2201PAOACM (10/01/2021 – 9/30/2023), 2201PAOAHD (10/01/2021 – 9/30/2023), 2201PAOANS (10/01/2021 – 9/30/2023), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD 10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA365N8903 (1/01/2022 – 9/30/2023), 231PA365N8903 (10/01/2022 – 9/30/2024), 231PA305L1603 (10/01/2022 – 9/30/2023), 221PA305L1603 (10/01/2021 – 9/30/2022), 221PA825Y8005 (10/01/2021 – 9/30/2022), 231PA825Y8005 (10/01/2022 – 9/30/2023), 221PA825Y8105 (10/01/2021 – 9/30/2022), 231PA825Y8105 (10/01/2022 – 9/30/2023), 201PA715W5003 (10/01/2019 – 9/30/2023), 211PA715W5003 (10/01/2020 – 9/30/2024), 221PA705W1003 (10/01/2021 – 9/30/2022), 221PA705W1006 (10/01/2021 – 9/30/2022), 221PA715W5003 (10/01/2021 – 9/30/2024), 231PA705W1003 (10/01/2022 – 9/30/2023), 231PA705W1006 (10/01/2022 – 9/30/2023), 231PA715W5003 (10/01/2022 – 9/30/2025), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA315N1050 (10/01/2021 – 9/30/2023), 231PA315N1050 (10/01/2022 – 9/30/2024), 221PA305N2020 (10/01/2021 – 9/30/2022), 231PA305N2020 (10/01/2022 – 9/30/2023), S010A190038 (7/01/2019 – 9/30/2022), S010A200038 (7/01/2020 – 9/30/2022), S010A210038 (7/01/2021 – 9/30/2022), S010A220038 (7/01/2022 – 9/30/2024), S367A150051 (7/01/2015 – 9/30/2017), S367A190051 (7/01/2019 – 9/30/2021), S367A200051 (7/01/2020 – 9/30/2022), S367A210051 (7/01/2021 – 9/30/2023), S367A220051 (7/01/2022 – 9 /30/2024), H027A200093 (7/01/2020 – 9/30/2022), H027A210093 (7/01/2021 – 9/30/2023), H027A220093 (7/01/2022 – 9/30/2024), H027X210093 (7/01/2021 – 9/30/2023), H173A200090 (7/01/2020 – 9/30/2022), H173A210090 (7/01/2021 – 9/30/2023), H173A220090 (7/01/2022 – 9/30/2024), H173X210090 (7/01/2021 – 9/30/2023), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021 – 9/30/2023), S425D210028 (1/05/2021 – 9/30/2023), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2023), S425V210037 (11/16/2021 – 9/30/2023), S425C210013 (3/13/2020 – 9/30/2023), S425D200028 (3/13/2020 – 9/30/2022), NU50CK000527 (8/01/2019 – 7/31/2024) Finding 2023 – 024: (continued) Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2023 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2022 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2023. We also evaluated the Commonwealth’s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2023 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 10.5 months after the FAC MDL start date for the one audit report with findings. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 12 months to over 18 months after the FAC MDL start date for three out of three audit reports with findings. There was also a delay in PDA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Our testing disclosed one audit report submitted to the FAC over nine months late that included $19.4 million in subrecipient expenditures passed through PDA. In addition, our testing disclosed that PDA subgranted federal funds totaling approximately $4.8 million to five subrecipients during the fiscal year ended June 30, 2022, for which Single Audits were not submitted to the FAC as of our January 2024 testing date. This was over 16 or 10 months after the respective, September 30, 2022 or March 31, 2023 due dates. • Department of Education (PDE): The time period for making a management decision on findings was approximately 9.3 to over 16.9 months after the FAC MDL start date for 14 out of 22 audit reports with findings. One of the 14 audit reports was improperly classified on PDE’s audit tracking list as not having federal award findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Health (DOH): The time period for making a management decision on findings was over 11 months after the FAC MDL start date for two out of two audit reports with findings. One audit report with the late management decision on findings was excluded from DOH’s tracking list. Finding 2023 – 024: (continued) Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR Section 200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR Section 200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR Section 200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. Finding 2023 – 024: (continued) 2 CFR Section 200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. Finding 2023 – 024: (continued) (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08 in order to ensure compliance with federal audit submission requirements. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Finding 2023 – 024: (continued) Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08. DOH Response: DOH agrees with the finding. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding and will be hiring a complement position to ensure compliance in the future. PDE Response: PDE agrees with the finding. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2023 – 024: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 – Child Nutrition Cluster (including COVID-19) ALN 10.565, 10.568, and 10.569 – Food Distribution Cluster ALN 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children ALN 10.558 – Child and Adult Care Food Program ALN 84.010 – Title I Grants to Local Educational Agencies ALN 84.027 and 84.173¬ – Special Education Cluster (IDEA) (including COVID-19) ALN 84.367 – Supporting Effective Instruction State Grants ALN 84.425C – COVID-19 – Education Stabilization Fund - GEER Fund ALN 84.425D – COVID-19 – Education Stabilization Fund - ESSER Fund ALN 84.425R – COVID-19 – Education Stabilization Fund - CRRSA EANS ALN 84.425U – COVID-19 – Education Stabilization Fund - ARP ESSER ALN 84.425V – COVID-19 – Education Stabilization Fund - ARP EANS ALN 93.044, 93.045, and 93.053 – Aging Cluster (including COVID-19) ALN 93.323 – Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2022-014) Federal Grant Number(s) and Year(s): 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC5 (12/27/2020 – 9/30/2023), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAOACM (10/01/2020 – 9/30/2023), 2101PAOAHD (10/01/2020 – 9/30/2023), 2101PAOANS (10/01/2020 – 9/30/2023), 2101PAOASS (10/01/2020 – 9/30/2023), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2101PAVAC5 (4/01/2021 – 9/30/2023), 2201PAOACM (10/01/2021 – 9/30/2023), 2201PAOAHD (10/01/2021 – 9/30/2023), 2201PAOANS (10/01/2021 – 9/30/2023), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD 10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA365N8903 (1/01/2022 – 9/30/2023), 231PA365N8903 (10/01/2022 – 9/30/2024), 231PA305L1603 (10/01/2022 – 9/30/2023), 221PA305L1603 (10/01/2021 – 9/30/2022), 221PA825Y8005 (10/01/2021 – 9/30/2022), 231PA825Y8005 (10/01/2022 – 9/30/2023), 221PA825Y8105 (10/01/2021 – 9/30/2022), 231PA825Y8105 (10/01/2022 – 9/30/2023), 201PA715W5003 (10/01/2019 – 9/30/2023), 211PA715W5003 (10/01/2020 – 9/30/2024), 221PA705W1003 (10/01/2021 – 9/30/2022), 221PA705W1006 (10/01/2021 – 9/30/2022), 221PA715W5003 (10/01/2021 – 9/30/2024), 231PA705W1003 (10/01/2022 – 9/30/2023), 231PA705W1006 (10/01/2022 – 9/30/2023), 231PA715W5003 (10/01/2022 – 9/30/2025), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA315N1050 (10/01/2021 – 9/30/2023), 231PA315N1050 (10/01/2022 – 9/30/2024), 221PA305N2020 (10/01/2021 – 9/30/2022), 231PA305N2020 (10/01/2022 – 9/30/2023), S010A190038 (7/01/2019 – 9/30/2022), S010A200038 (7/01/2020 – 9/30/2022), S010A210038 (7/01/2021 – 9/30/2022), S010A220038 (7/01/2022 – 9/30/2024), S367A150051 (7/01/2015 – 9/30/2017), S367A190051 (7/01/2019 – 9/30/2021), S367A200051 (7/01/2020 – 9/30/2022), S367A210051 (7/01/2021 – 9/30/2023), S367A220051 (7/01/2022 – 9 /30/2024), H027A200093 (7/01/2020 – 9/30/2022), H027A210093 (7/01/2021 – 9/30/2023), H027A220093 (7/01/2022 – 9/30/2024), H027X210093 (7/01/2021 – 9/30/2023), H173A200090 (7/01/2020 – 9/30/2022), H173A210090 (7/01/2021 – 9/30/2023), H173A220090 (7/01/2022 – 9/30/2024), H173X210090 (7/01/2021 – 9/30/2023), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021 – 9/30/2023), S425D210028 (1/05/2021 – 9/30/2023), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2023), S425V210037 (11/16/2021 – 9/30/2023), S425C210013 (3/13/2020 – 9/30/2023), S425D200028 (3/13/2020 – 9/30/2022), NU50CK000527 (8/01/2019 – 7/31/2024) Finding 2023 – 024: (continued) Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2023 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2022 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2023. We also evaluated the Commonwealth’s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2023 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 10.5 months after the FAC MDL start date for the one audit report with findings. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 12 months to over 18 months after the FAC MDL start date for three out of three audit reports with findings. There was also a delay in PDA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Our testing disclosed one audit report submitted to the FAC over nine months late that included $19.4 million in subrecipient expenditures passed through PDA. In addition, our testing disclosed that PDA subgranted federal funds totaling approximately $4.8 million to five subrecipients during the fiscal year ended June 30, 2022, for which Single Audits were not submitted to the FAC as of our January 2024 testing date. This was over 16 or 10 months after the respective, September 30, 2022 or March 31, 2023 due dates. • Department of Education (PDE): The time period for making a management decision on findings was approximately 9.3 to over 16.9 months after the FAC MDL start date for 14 out of 22 audit reports with findings. One of the 14 audit reports was improperly classified on PDE’s audit tracking list as not having federal award findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Health (DOH): The time period for making a management decision on findings was over 11 months after the FAC MDL start date for two out of two audit reports with findings. One audit report with the late management decision on findings was excluded from DOH’s tracking list. Finding 2023 – 024: (continued) Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR Section 200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR Section 200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR Section 200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. Finding 2023 – 024: (continued) 2 CFR Section 200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. Finding 2023 – 024: (continued) (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08 in order to ensure compliance with federal audit submission requirements. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Finding 2023 – 024: (continued) Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08. DOH Response: DOH agrees with the finding. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding and will be hiring a complement position to ensure compliance in the future. PDE Response: PDE agrees with the finding. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2023 – 024: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 – Child Nutrition Cluster (including COVID-19) ALN 10.565, 10.568, and 10.569 – Food Distribution Cluster ALN 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children ALN 10.558 – Child and Adult Care Food Program ALN 84.010 – Title I Grants to Local Educational Agencies ALN 84.027 and 84.173¬ – Special Education Cluster (IDEA) (including COVID-19) ALN 84.367 – Supporting Effective Instruction State Grants ALN 84.425C – COVID-19 – Education Stabilization Fund - GEER Fund ALN 84.425D – COVID-19 – Education Stabilization Fund - ESSER Fund ALN 84.425R – COVID-19 – Education Stabilization Fund - CRRSA EANS ALN 84.425U – COVID-19 – Education Stabilization Fund - ARP ESSER ALN 84.425V – COVID-19 – Education Stabilization Fund - ARP EANS ALN 93.044, 93.045, and 93.053 – Aging Cluster (including COVID-19) ALN 93.323 – Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2022-014) Federal Grant Number(s) and Year(s): 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC5 (12/27/2020 – 9/30/2023), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAOACM (10/01/2020 – 9/30/2023), 2101PAOAHD (10/01/2020 – 9/30/2023), 2101PAOANS (10/01/2020 – 9/30/2023), 2101PAOASS (10/01/2020 – 9/30/2023), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2101PAVAC5 (4/01/2021 – 9/30/2023), 2201PAOACM (10/01/2021 – 9/30/2023), 2201PAOAHD (10/01/2021 – 9/30/2023), 2201PAOANS (10/01/2021 – 9/30/2023), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD 10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA365N8903 (1/01/2022 – 9/30/2023), 231PA365N8903 (10/01/2022 – 9/30/2024), 231PA305L1603 (10/01/2022 – 9/30/2023), 221PA305L1603 (10/01/2021 – 9/30/2022), 221PA825Y8005 (10/01/2021 – 9/30/2022), 231PA825Y8005 (10/01/2022 – 9/30/2023), 221PA825Y8105 (10/01/2021 – 9/30/2022), 231PA825Y8105 (10/01/2022 – 9/30/2023), 201PA715W5003 (10/01/2019 – 9/30/2023), 211PA715W5003 (10/01/2020 – 9/30/2024), 221PA705W1003 (10/01/2021 – 9/30/2022), 221PA705W1006 (10/01/2021 – 9/30/2022), 221PA715W5003 (10/01/2021 – 9/30/2024), 231PA705W1003 (10/01/2022 – 9/30/2023), 231PA705W1006 (10/01/2022 – 9/30/2023), 231PA715W5003 (10/01/2022 – 9/30/2025), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA315N1050 (10/01/2021 – 9/30/2023), 231PA315N1050 (10/01/2022 – 9/30/2024), 221PA305N2020 (10/01/2021 – 9/30/2022), 231PA305N2020 (10/01/2022 – 9/30/2023), S010A190038 (7/01/2019 – 9/30/2022), S010A200038 (7/01/2020 – 9/30/2022), S010A210038 (7/01/2021 – 9/30/2022), S010A220038 (7/01/2022 – 9/30/2024), S367A150051 (7/01/2015 – 9/30/2017), S367A190051 (7/01/2019 – 9/30/2021), S367A200051 (7/01/2020 – 9/30/2022), S367A210051 (7/01/2021 – 9/30/2023), S367A220051 (7/01/2022 – 9 /30/2024), H027A200093 (7/01/2020 – 9/30/2022), H027A210093 (7/01/2021 – 9/30/2023), H027A220093 (7/01/2022 – 9/30/2024), H027X210093 (7/01/2021 – 9/30/2023), H173A200090 (7/01/2020 – 9/30/2022), H173A210090 (7/01/2021 – 9/30/2023), H173A220090 (7/01/2022 – 9/30/2024), H173X210090 (7/01/2021 – 9/30/2023), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021 – 9/30/2023), S425D210028 (1/05/2021 – 9/30/2023), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2023), S425V210037 (11/16/2021 – 9/30/2023), S425C210013 (3/13/2020 – 9/30/2023), S425D200028 (3/13/2020 – 9/30/2022), NU50CK000527 (8/01/2019 – 7/31/2024) Finding 2023 – 024: (continued) Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2023 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2022 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2023. We also evaluated the Commonwealth’s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2023 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 10.5 months after the FAC MDL start date for the one audit report with findings. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 12 months to over 18 months after the FAC MDL start date for three out of three audit reports with findings. There was also a delay in PDA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Our testing disclosed one audit report submitted to the FAC over nine months late that included $19.4 million in subrecipient expenditures passed through PDA. In addition, our testing disclosed that PDA subgranted federal funds totaling approximately $4.8 million to five subrecipients during the fiscal year ended June 30, 2022, for which Single Audits were not submitted to the FAC as of our January 2024 testing date. This was over 16 or 10 months after the respective, September 30, 2022 or March 31, 2023 due dates. • Department of Education (PDE): The time period for making a management decision on findings was approximately 9.3 to over 16.9 months after the FAC MDL start date for 14 out of 22 audit reports with findings. One of the 14 audit reports was improperly classified on PDE’s audit tracking list as not having federal award findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Health (DOH): The time period for making a management decision on findings was over 11 months after the FAC MDL start date for two out of two audit reports with findings. One audit report with the late management decision on findings was excluded from DOH’s tracking list. Finding 2023 – 024: (continued) Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR Section 200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR Section 200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR Section 200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. Finding 2023 – 024: (continued) 2 CFR Section 200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. Finding 2023 – 024: (continued) (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08 in order to ensure compliance with federal audit submission requirements. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Finding 2023 – 024: (continued) Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08. DOH Response: DOH agrees with the finding. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding and will be hiring a complement position to ensure compliance in the future. PDE Response: PDE agrees with the finding. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2023 – 024: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 – Child Nutrition Cluster (including COVID-19) ALN 10.565, 10.568, and 10.569 – Food Distribution Cluster ALN 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children ALN 10.558 – Child and Adult Care Food Program ALN 84.010 – Title I Grants to Local Educational Agencies ALN 84.027 and 84.173¬ – Special Education Cluster (IDEA) (including COVID-19) ALN 84.367 – Supporting Effective Instruction State Grants ALN 84.425C – COVID-19 – Education Stabilization Fund - GEER Fund ALN 84.425D – COVID-19 – Education Stabilization Fund - ESSER Fund ALN 84.425R – COVID-19 – Education Stabilization Fund - CRRSA EANS ALN 84.425U – COVID-19 – Education Stabilization Fund - ARP ESSER ALN 84.425V – COVID-19 – Education Stabilization Fund - ARP EANS ALN 93.044, 93.045, and 93.053 – Aging Cluster (including COVID-19) ALN 93.323 – Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2022-014) Federal Grant Number(s) and Year(s): 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC5 (12/27/2020 – 9/30/2023), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAOACM (10/01/2020 – 9/30/2023), 2101PAOAHD (10/01/2020 – 9/30/2023), 2101PAOANS (10/01/2020 – 9/30/2023), 2101PAOASS (10/01/2020 – 9/30/2023), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2101PAVAC5 (4/01/2021 – 9/30/2023), 2201PAOACM (10/01/2021 – 9/30/2023), 2201PAOAHD (10/01/2021 – 9/30/2023), 2201PAOANS (10/01/2021 – 9/30/2023), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD 10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA365N8903 (1/01/2022 – 9/30/2023), 231PA365N8903 (10/01/2022 – 9/30/2024), 231PA305L1603 (10/01/2022 – 9/30/2023), 221PA305L1603 (10/01/2021 – 9/30/2022), 221PA825Y8005 (10/01/2021 – 9/30/2022), 231PA825Y8005 (10/01/2022 – 9/30/2023), 221PA825Y8105 (10/01/2021 – 9/30/2022), 231PA825Y8105 (10/01/2022 – 9/30/2023), 201PA715W5003 (10/01/2019 – 9/30/2023), 211PA715W5003 (10/01/2020 – 9/30/2024), 221PA705W1003 (10/01/2021 – 9/30/2022), 221PA705W1006 (10/01/2021 – 9/30/2022), 221PA715W5003 (10/01/2021 – 9/30/2024), 231PA705W1003 (10/01/2022 – 9/30/2023), 231PA705W1006 (10/01/2022 – 9/30/2023), 231PA715W5003 (10/01/2022 – 9/30/2025), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA315N1050 (10/01/2021 – 9/30/2023), 231PA315N1050 (10/01/2022 – 9/30/2024), 221PA305N2020 (10/01/2021 – 9/30/2022), 231PA305N2020 (10/01/2022 – 9/30/2023), S010A190038 (7/01/2019 – 9/30/2022), S010A200038 (7/01/2020 – 9/30/2022), S010A210038 (7/01/2021 – 9/30/2022), S010A220038 (7/01/2022 – 9/30/2024), S367A150051 (7/01/2015 – 9/30/2017), S367A190051 (7/01/2019 – 9/30/2021), S367A200051 (7/01/2020 – 9/30/2022), S367A210051 (7/01/2021 – 9/30/2023), S367A220051 (7/01/2022 – 9 /30/2024), H027A200093 (7/01/2020 – 9/30/2022), H027A210093 (7/01/2021 – 9/30/2023), H027A220093 (7/01/2022 – 9/30/2024), H027X210093 (7/01/2021 – 9/30/2023), H173A200090 (7/01/2020 – 9/30/2022), H173A210090 (7/01/2021 – 9/30/2023), H173A220090 (7/01/2022 – 9/30/2024), H173X210090 (7/01/2021 – 9/30/2023), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021 – 9/30/2023), S425D210028 (1/05/2021 – 9/30/2023), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2023), S425V210037 (11/16/2021 – 9/30/2023), S425C210013 (3/13/2020 – 9/30/2023), S425D200028 (3/13/2020 – 9/30/2022), NU50CK000527 (8/01/2019 – 7/31/2024) Finding 2023 – 024: (continued) Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2023 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2022 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2023. We also evaluated the Commonwealth’s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2023 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 10.5 months after the FAC MDL start date for the one audit report with findings. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 12 months to over 18 months after the FAC MDL start date for three out of three audit reports with findings. There was also a delay in PDA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Our testing disclosed one audit report submitted to the FAC over nine months late that included $19.4 million in subrecipient expenditures passed through PDA. In addition, our testing disclosed that PDA subgranted federal funds totaling approximately $4.8 million to five subrecipients during the fiscal year ended June 30, 2022, for which Single Audits were not submitted to the FAC as of our January 2024 testing date. This was over 16 or 10 months after the respective, September 30, 2022 or March 31, 2023 due dates. • Department of Education (PDE): The time period for making a management decision on findings was approximately 9.3 to over 16.9 months after the FAC MDL start date for 14 out of 22 audit reports with findings. One of the 14 audit reports was improperly classified on PDE’s audit tracking list as not having federal award findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Health (DOH): The time period for making a management decision on findings was over 11 months after the FAC MDL start date for two out of two audit reports with findings. One audit report with the late management decision on findings was excluded from DOH’s tracking list. Finding 2023 – 024: (continued) Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR Section 200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR Section 200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR Section 200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. Finding 2023 – 024: (continued) 2 CFR Section 200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. Finding 2023 – 024: (continued) (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08 in order to ensure compliance with federal audit submission requirements. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Finding 2023 – 024: (continued) Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08. DOH Response: DOH agrees with the finding. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding and will be hiring a complement position to ensure compliance in the future. PDE Response: PDE agrees with the finding. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2023 – 024: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 – Child Nutrition Cluster (including COVID-19) ALN 10.565, 10.568, and 10.569 – Food Distribution Cluster ALN 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children ALN 10.558 – Child and Adult Care Food Program ALN 84.010 – Title I Grants to Local Educational Agencies ALN 84.027 and 84.173¬ – Special Education Cluster (IDEA) (including COVID-19) ALN 84.367 – Supporting Effective Instruction State Grants ALN 84.425C – COVID-19 – Education Stabilization Fund - GEER Fund ALN 84.425D – COVID-19 – Education Stabilization Fund - ESSER Fund ALN 84.425R – COVID-19 – Education Stabilization Fund - CRRSA EANS ALN 84.425U – COVID-19 – Education Stabilization Fund - ARP ESSER ALN 84.425V – COVID-19 – Education Stabilization Fund - ARP EANS ALN 93.044, 93.045, and 93.053 – Aging Cluster (including COVID-19) ALN 93.323 – Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2022-014) Federal Grant Number(s) and Year(s): 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC5 (12/27/2020 – 9/30/2023), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAOACM (10/01/2020 – 9/30/2023), 2101PAOAHD (10/01/2020 – 9/30/2023), 2101PAOANS (10/01/2020 – 9/30/2023), 2101PAOASS (10/01/2020 – 9/30/2023), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2101PAVAC5 (4/01/2021 – 9/30/2023), 2201PAOACM (10/01/2021 – 9/30/2023), 2201PAOAHD (10/01/2021 – 9/30/2023), 2201PAOANS (10/01/2021 – 9/30/2023), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD 10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA365N8903 (1/01/2022 – 9/30/2023), 231PA365N8903 (10/01/2022 – 9/30/2024), 231PA305L1603 (10/01/2022 – 9/30/2023), 221PA305L1603 (10/01/2021 – 9/30/2022), 221PA825Y8005 (10/01/2021 – 9/30/2022), 231PA825Y8005 (10/01/2022 – 9/30/2023), 221PA825Y8105 (10/01/2021 – 9/30/2022), 231PA825Y8105 (10/01/2022 – 9/30/2023), 201PA715W5003 (10/01/2019 – 9/30/2023), 211PA715W5003 (10/01/2020 – 9/30/2024), 221PA705W1003 (10/01/2021 – 9/30/2022), 221PA705W1006 (10/01/2021 – 9/30/2022), 221PA715W5003 (10/01/2021 – 9/30/2024), 231PA705W1003 (10/01/2022 – 9/30/2023), 231PA705W1006 (10/01/2022 – 9/30/2023), 231PA715W5003 (10/01/2022 – 9/30/2025), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA315N1050 (10/01/2021 – 9/30/2023), 231PA315N1050 (10/01/2022 – 9/30/2024), 221PA305N2020 (10/01/2021 – 9/30/2022), 231PA305N2020 (10/01/2022 – 9/30/2023), S010A190038 (7/01/2019 – 9/30/2022), S010A200038 (7/01/2020 – 9/30/2022), S010A210038 (7/01/2021 – 9/30/2022), S010A220038 (7/01/2022 – 9/30/2024), S367A150051 (7/01/2015 – 9/30/2017), S367A190051 (7/01/2019 – 9/30/2021), S367A200051 (7/01/2020 – 9/30/2022), S367A210051 (7/01/2021 – 9/30/2023), S367A220051 (7/01/2022 – 9 /30/2024), H027A200093 (7/01/2020 – 9/30/2022), H027A210093 (7/01/2021 – 9/30/2023), H027A220093 (7/01/2022 – 9/30/2024), H027X210093 (7/01/2021 – 9/30/2023), H173A200090 (7/01/2020 – 9/30/2022), H173A210090 (7/01/2021 – 9/30/2023), H173A220090 (7/01/2022 – 9/30/2024), H173X210090 (7/01/2021 – 9/30/2023), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021 – 9/30/2023), S425D210028 (1/05/2021 – 9/30/2023), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2023), S425V210037 (11/16/2021 – 9/30/2023), S425C210013 (3/13/2020 – 9/30/2023), S425D200028 (3/13/2020 – 9/30/2022), NU50CK000527 (8/01/2019 – 7/31/2024) Finding 2023 – 024: (continued) Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2023 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2022 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2023. We also evaluated the Commonwealth’s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2023 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 10.5 months after the FAC MDL start date for the one audit report with findings. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 12 months to over 18 months after the FAC MDL start date for three out of three audit reports with findings. There was also a delay in PDA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Our testing disclosed one audit report submitted to the FAC over nine months late that included $19.4 million in subrecipient expenditures passed through PDA. In addition, our testing disclosed that PDA subgranted federal funds totaling approximately $4.8 million to five subrecipients during the fiscal year ended June 30, 2022, for which Single Audits were not submitted to the FAC as of our January 2024 testing date. This was over 16 or 10 months after the respective, September 30, 2022 or March 31, 2023 due dates. • Department of Education (PDE): The time period for making a management decision on findings was approximately 9.3 to over 16.9 months after the FAC MDL start date for 14 out of 22 audit reports with findings. One of the 14 audit reports was improperly classified on PDE’s audit tracking list as not having federal award findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Health (DOH): The time period for making a management decision on findings was over 11 months after the FAC MDL start date for two out of two audit reports with findings. One audit report with the late management decision on findings was excluded from DOH’s tracking list. Finding 2023 – 024: (continued) Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR Section 200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR Section 200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR Section 200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. Finding 2023 – 024: (continued) 2 CFR Section 200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. Finding 2023 – 024: (continued) (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08 in order to ensure compliance with federal audit submission requirements. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Finding 2023 – 024: (continued) Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08. DOH Response: DOH agrees with the finding. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding and will be hiring a complement position to ensure compliance in the future. PDE Response: PDE agrees with the finding. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2023 – 024: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 – Child Nutrition Cluster (including COVID-19) ALN 10.565, 10.568, and 10.569 – Food Distribution Cluster ALN 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children ALN 10.558 – Child and Adult Care Food Program ALN 84.010 – Title I Grants to Local Educational Agencies ALN 84.027 and 84.173¬ – Special Education Cluster (IDEA) (including COVID-19) ALN 84.367 – Supporting Effective Instruction State Grants ALN 84.425C – COVID-19 – Education Stabilization Fund - GEER Fund ALN 84.425D – COVID-19 – Education Stabilization Fund - ESSER Fund ALN 84.425R – COVID-19 – Education Stabilization Fund - CRRSA EANS ALN 84.425U – COVID-19 – Education Stabilization Fund - ARP ESSER ALN 84.425V – COVID-19 – Education Stabilization Fund - ARP EANS ALN 93.044, 93.045, and 93.053 – Aging Cluster (including COVID-19) ALN 93.323 – Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2022-014) Federal Grant Number(s) and Year(s): 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC5 (12/27/2020 – 9/30/2023), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAOACM (10/01/2020 – 9/30/2023), 2101PAOAHD (10/01/2020 – 9/30/2023), 2101PAOANS (10/01/2020 – 9/30/2023), 2101PAOASS (10/01/2020 – 9/30/2023), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2101PAVAC5 (4/01/2021 – 9/30/2023), 2201PAOACM (10/01/2021 – 9/30/2023), 2201PAOAHD (10/01/2021 – 9/30/2023), 2201PAOANS (10/01/2021 – 9/30/2023), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD 10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA365N8903 (1/01/2022 – 9/30/2023), 231PA365N8903 (10/01/2022 – 9/30/2024), 231PA305L1603 (10/01/2022 – 9/30/2023), 221PA305L1603 (10/01/2021 – 9/30/2022), 221PA825Y8005 (10/01/2021 – 9/30/2022), 231PA825Y8005 (10/01/2022 – 9/30/2023), 221PA825Y8105 (10/01/2021 – 9/30/2022), 231PA825Y8105 (10/01/2022 – 9/30/2023), 201PA715W5003 (10/01/2019 – 9/30/2023), 211PA715W5003 (10/01/2020 – 9/30/2024), 221PA705W1003 (10/01/2021 – 9/30/2022), 221PA705W1006 (10/01/2021 – 9/30/2022), 221PA715W5003 (10/01/2021 – 9/30/2024), 231PA705W1003 (10/01/2022 – 9/30/2023), 231PA705W1006 (10/01/2022 – 9/30/2023), 231PA715W5003 (10/01/2022 – 9/30/2025), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA315N1050 (10/01/2021 – 9/30/2023), 231PA315N1050 (10/01/2022 – 9/30/2024), 221PA305N2020 (10/01/2021 – 9/30/2022), 231PA305N2020 (10/01/2022 – 9/30/2023), S010A190038 (7/01/2019 – 9/30/2022), S010A200038 (7/01/2020 – 9/30/2022), S010A210038 (7/01/2021 – 9/30/2022), S010A220038 (7/01/2022 – 9/30/2024), S367A150051 (7/01/2015 – 9/30/2017), S367A190051 (7/01/2019 – 9/30/2021), S367A200051 (7/01/2020 – 9/30/2022), S367A210051 (7/01/2021 – 9/30/2023), S367A220051 (7/01/2022 – 9 /30/2024), H027A200093 (7/01/2020 – 9/30/2022), H027A210093 (7/01/2021 – 9/30/2023), H027A220093 (7/01/2022 – 9/30/2024), H027X210093 (7/01/2021 – 9/30/2023), H173A200090 (7/01/2020 – 9/30/2022), H173A210090 (7/01/2021 – 9/30/2023), H173A220090 (7/01/2022 – 9/30/2024), H173X210090 (7/01/2021 – 9/30/2023), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021 – 9/30/2023), S425D210028 (1/05/2021 – 9/30/2023), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2023), S425V210037 (11/16/2021 – 9/30/2023), S425C210013 (3/13/2020 – 9/30/2023), S425D200028 (3/13/2020 – 9/30/2022), NU50CK000527 (8/01/2019 – 7/31/2024) Finding 2023 – 024: (continued) Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2023 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2022 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2023. We also evaluated the Commonwealth’s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2023 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 10.5 months after the FAC MDL start date for the one audit report with findings. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 12 months to over 18 months after the FAC MDL start date for three out of three audit reports with findings. There was also a delay in PDA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Our testing disclosed one audit report submitted to the FAC over nine months late that included $19.4 million in subrecipient expenditures passed through PDA. In addition, our testing disclosed that PDA subgranted federal funds totaling approximately $4.8 million to five subrecipients during the fiscal year ended June 30, 2022, for which Single Audits were not submitted to the FAC as of our January 2024 testing date. This was over 16 or 10 months after the respective, September 30, 2022 or March 31, 2023 due dates. • Department of Education (PDE): The time period for making a management decision on findings was approximately 9.3 to over 16.9 months after the FAC MDL start date for 14 out of 22 audit reports with findings. One of the 14 audit reports was improperly classified on PDE’s audit tracking list as not having federal award findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Health (DOH): The time period for making a management decision on findings was over 11 months after the FAC MDL start date for two out of two audit reports with findings. One audit report with the late management decision on findings was excluded from DOH’s tracking list. Finding 2023 – 024: (continued) Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR Section 200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR Section 200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR Section 200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. Finding 2023 – 024: (continued) 2 CFR Section 200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. Finding 2023 – 024: (continued) (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08 in order to ensure compliance with federal audit submission requirements. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Finding 2023 – 024: (continued) Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08. DOH Response: DOH agrees with the finding. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding and will be hiring a complement position to ensure compliance in the future. PDE Response: PDE agrees with the finding. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2023 – 024: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 – Child Nutrition Cluster (including COVID-19) ALN 10.565, 10.568, and 10.569 – Food Distribution Cluster ALN 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children ALN 10.558 – Child and Adult Care Food Program ALN 84.010 – Title I Grants to Local Educational Agencies ALN 84.027 and 84.173¬ – Special Education Cluster (IDEA) (including COVID-19) ALN 84.367 – Supporting Effective Instruction State Grants ALN 84.425C – COVID-19 – Education Stabilization Fund - GEER Fund ALN 84.425D – COVID-19 – Education Stabilization Fund - ESSER Fund ALN 84.425R – COVID-19 – Education Stabilization Fund - CRRSA EANS ALN 84.425U – COVID-19 – Education Stabilization Fund - ARP ESSER ALN 84.425V – COVID-19 – Education Stabilization Fund - ARP EANS ALN 93.044, 93.045, and 93.053 – Aging Cluster (including COVID-19) ALN 93.323 – Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2022-014) Federal Grant Number(s) and Year(s): 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC5 (12/27/2020 – 9/30/2023), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAOACM (10/01/2020 – 9/30/2023), 2101PAOAHD (10/01/2020 – 9/30/2023), 2101PAOANS (10/01/2020 – 9/30/2023), 2101PAOASS (10/01/2020 – 9/30/2023), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2101PAVAC5 (4/01/2021 – 9/30/2023), 2201PAOACM (10/01/2021 – 9/30/2023), 2201PAOAHD (10/01/2021 – 9/30/2023), 2201PAOANS (10/01/2021 – 9/30/2023), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD 10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA365N8903 (1/01/2022 – 9/30/2023), 231PA365N8903 (10/01/2022 – 9/30/2024), 231PA305L1603 (10/01/2022 – 9/30/2023), 221PA305L1603 (10/01/2021 – 9/30/2022), 221PA825Y8005 (10/01/2021 – 9/30/2022), 231PA825Y8005 (10/01/2022 – 9/30/2023), 221PA825Y8105 (10/01/2021 – 9/30/2022), 231PA825Y8105 (10/01/2022 – 9/30/2023), 201PA715W5003 (10/01/2019 – 9/30/2023), 211PA715W5003 (10/01/2020 – 9/30/2024), 221PA705W1003 (10/01/2021 – 9/30/2022), 221PA705W1006 (10/01/2021 – 9/30/2022), 221PA715W5003 (10/01/2021 – 9/30/2024), 231PA705W1003 (10/01/2022 – 9/30/2023), 231PA705W1006 (10/01/2022 – 9/30/2023), 231PA715W5003 (10/01/2022 – 9/30/2025), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA315N1050 (10/01/2021 – 9/30/2023), 231PA315N1050 (10/01/2022 – 9/30/2024), 221PA305N2020 (10/01/2021 – 9/30/2022), 231PA305N2020 (10/01/2022 – 9/30/2023), S010A190038 (7/01/2019 – 9/30/2022), S010A200038 (7/01/2020 – 9/30/2022), S010A210038 (7/01/2021 – 9/30/2022), S010A220038 (7/01/2022 – 9/30/2024), S367A150051 (7/01/2015 – 9/30/2017), S367A190051 (7/01/2019 – 9/30/2021), S367A200051 (7/01/2020 – 9/30/2022), S367A210051 (7/01/2021 – 9/30/2023), S367A220051 (7/01/2022 – 9 /30/2024), H027A200093 (7/01/2020 – 9/30/2022), H027A210093 (7/01/2021 – 9/30/2023), H027A220093 (7/01/2022 – 9/30/2024), H027X210093 (7/01/2021 – 9/30/2023), H173A200090 (7/01/2020 – 9/30/2022), H173A210090 (7/01/2021 – 9/30/2023), H173A220090 (7/01/2022 – 9/30/2024), H173X210090 (7/01/2021 – 9/30/2023), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021 – 9/30/2023), S425D210028 (1/05/2021 – 9/30/2023), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2023), S425V210037 (11/16/2021 – 9/30/2023), S425C210013 (3/13/2020 – 9/30/2023), S425D200028 (3/13/2020 – 9/30/2022), NU50CK000527 (8/01/2019 – 7/31/2024) Finding 2023 – 024: (continued) Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2023 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2022 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2023. We also evaluated the Commonwealth’s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2023 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 10.5 months after the FAC MDL start date for the one audit report with findings. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 12 months to over 18 months after the FAC MDL start date for three out of three audit reports with findings. There was also a delay in PDA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Our testing disclosed one audit report submitted to the FAC over nine months late that included $19.4 million in subrecipient expenditures passed through PDA. In addition, our testing disclosed that PDA subgranted federal funds totaling approximately $4.8 million to five subrecipients during the fiscal year ended June 30, 2022, for which Single Audits were not submitted to the FAC as of our January 2024 testing date. This was over 16 or 10 months after the respective, September 30, 2022 or March 31, 2023 due dates. • Department of Education (PDE): The time period for making a management decision on findings was approximately 9.3 to over 16.9 months after the FAC MDL start date for 14 out of 22 audit reports with findings. One of the 14 audit reports was improperly classified on PDE’s audit tracking list as not having federal award findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Health (DOH): The time period for making a management decision on findings was over 11 months after the FAC MDL start date for two out of two audit reports with findings. One audit report with the late management decision on findings was excluded from DOH’s tracking list. Finding 2023 – 024: (continued) Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR Section 200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR Section 200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR Section 200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. Finding 2023 – 024: (continued) 2 CFR Section 200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. Finding 2023 – 024: (continued) (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08 in order to ensure compliance with federal audit submission requirements. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Finding 2023 – 024: (continued) Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08. DOH Response: DOH agrees with the finding. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding and will be hiring a complement position to ensure compliance in the future. PDE Response: PDE agrees with the finding. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2023 – 024: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 – Child Nutrition Cluster (including COVID-19) ALN 10.565, 10.568, and 10.569 – Food Distribution Cluster ALN 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children ALN 10.558 – Child and Adult Care Food Program ALN 84.010 – Title I Grants to Local Educational Agencies ALN 84.027 and 84.173¬ – Special Education Cluster (IDEA) (including COVID-19) ALN 84.367 – Supporting Effective Instruction State Grants ALN 84.425C – COVID-19 – Education Stabilization Fund - GEER Fund ALN 84.425D – COVID-19 – Education Stabilization Fund - ESSER Fund ALN 84.425R – COVID-19 – Education Stabilization Fund - CRRSA EANS ALN 84.425U – COVID-19 – Education Stabilization Fund - ARP ESSER ALN 84.425V – COVID-19 – Education Stabilization Fund - ARP EANS ALN 93.044, 93.045, and 93.053 – Aging Cluster (including COVID-19) ALN 93.323 – Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2022-014) Federal Grant Number(s) and Year(s): 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC5 (12/27/2020 – 9/30/2023), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAOACM (10/01/2020 – 9/30/2023), 2101PAOAHD (10/01/2020 – 9/30/2023), 2101PAOANS (10/01/2020 – 9/30/2023), 2101PAOASS (10/01/2020 – 9/30/2023), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2101PAVAC5 (4/01/2021 – 9/30/2023), 2201PAOACM (10/01/2021 – 9/30/2023), 2201PAOAHD (10/01/2021 – 9/30/2023), 2201PAOANS (10/01/2021 – 9/30/2023), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD 10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA365N8903 (1/01/2022 – 9/30/2023), 231PA365N8903 (10/01/2022 – 9/30/2024), 231PA305L1603 (10/01/2022 – 9/30/2023), 221PA305L1603 (10/01/2021 – 9/30/2022), 221PA825Y8005 (10/01/2021 – 9/30/2022), 231PA825Y8005 (10/01/2022 – 9/30/2023), 221PA825Y8105 (10/01/2021 – 9/30/2022), 231PA825Y8105 (10/01/2022 – 9/30/2023), 201PA715W5003 (10/01/2019 – 9/30/2023), 211PA715W5003 (10/01/2020 – 9/30/2024), 221PA705W1003 (10/01/2021 – 9/30/2022), 221PA705W1006 (10/01/2021 – 9/30/2022), 221PA715W5003 (10/01/2021 – 9/30/2024), 231PA705W1003 (10/01/2022 – 9/30/2023), 231PA705W1006 (10/01/2022 – 9/30/2023), 231PA715W5003 (10/01/2022 – 9/30/2025), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA315N1050 (10/01/2021 – 9/30/2023), 231PA315N1050 (10/01/2022 – 9/30/2024), 221PA305N2020 (10/01/2021 – 9/30/2022), 231PA305N2020 (10/01/2022 – 9/30/2023), S010A190038 (7/01/2019 – 9/30/2022), S010A200038 (7/01/2020 – 9/30/2022), S010A210038 (7/01/2021 – 9/30/2022), S010A220038 (7/01/2022 – 9/30/2024), S367A150051 (7/01/2015 – 9/30/2017), S367A190051 (7/01/2019 – 9/30/2021), S367A200051 (7/01/2020 – 9/30/2022), S367A210051 (7/01/2021 – 9/30/2023), S367A220051 (7/01/2022 – 9 /30/2024), H027A200093 (7/01/2020 – 9/30/2022), H027A210093 (7/01/2021 – 9/30/2023), H027A220093 (7/01/2022 – 9/30/2024), H027X210093 (7/01/2021 – 9/30/2023), H173A200090 (7/01/2020 – 9/30/2022), H173A210090 (7/01/2021 – 9/30/2023), H173A220090 (7/01/2022 – 9/30/2024), H173X210090 (7/01/2021 – 9/30/2023), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021 – 9/30/2023), S425D210028 (1/05/2021 – 9/30/2023), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2023), S425V210037 (11/16/2021 – 9/30/2023), S425C210013 (3/13/2020 – 9/30/2023), S425D200028 (3/13/2020 – 9/30/2022), NU50CK000527 (8/01/2019 – 7/31/2024) Finding 2023 – 024: (continued) Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2023 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2022 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2023. We also evaluated the Commonwealth’s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2023 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 10.5 months after the FAC MDL start date for the one audit report with findings. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 12 months to over 18 months after the FAC MDL start date for three out of three audit reports with findings. There was also a delay in PDA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Our testing disclosed one audit report submitted to the FAC over nine months late that included $19.4 million in subrecipient expenditures passed through PDA. In addition, our testing disclosed that PDA subgranted federal funds totaling approximately $4.8 million to five subrecipients during the fiscal year ended June 30, 2022, for which Single Audits were not submitted to the FAC as of our January 2024 testing date. This was over 16 or 10 months after the respective, September 30, 2022 or March 31, 2023 due dates. • Department of Education (PDE): The time period for making a management decision on findings was approximately 9.3 to over 16.9 months after the FAC MDL start date for 14 out of 22 audit reports with findings. One of the 14 audit reports was improperly classified on PDE’s audit tracking list as not having federal award findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Health (DOH): The time period for making a management decision on findings was over 11 months after the FAC MDL start date for two out of two audit reports with findings. One audit report with the late management decision on findings was excluded from DOH’s tracking list. Finding 2023 – 024: (continued) Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR Section 200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR Section 200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR Section 200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. Finding 2023 – 024: (continued) 2 CFR Section 200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. Finding 2023 – 024: (continued) (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08 in order to ensure compliance with federal audit submission requirements. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Finding 2023 – 024: (continued) Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08. DOH Response: DOH agrees with the finding. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding and will be hiring a complement position to ensure compliance in the future. PDE Response: PDE agrees with the finding. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2023 – 024: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 – Child Nutrition Cluster (including COVID-19) ALN 10.565, 10.568, and 10.569 – Food Distribution Cluster ALN 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children ALN 10.558 – Child and Adult Care Food Program ALN 84.010 – Title I Grants to Local Educational Agencies ALN 84.027 and 84.173¬ – Special Education Cluster (IDEA) (including COVID-19) ALN 84.367 – Supporting Effective Instruction State Grants ALN 84.425C – COVID-19 – Education Stabilization Fund - GEER Fund ALN 84.425D – COVID-19 – Education Stabilization Fund - ESSER Fund ALN 84.425R – COVID-19 – Education Stabilization Fund - CRRSA EANS ALN 84.425U – COVID-19 – Education Stabilization Fund - ARP ESSER ALN 84.425V – COVID-19 – Education Stabilization Fund - ARP EANS ALN 93.044, 93.045, and 93.053 – Aging Cluster (including COVID-19) ALN 93.323 – Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2022-014) Federal Grant Number(s) and Year(s): 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC5 (12/27/2020 – 9/30/2023), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAOACM (10/01/2020 – 9/30/2023), 2101PAOAHD (10/01/2020 – 9/30/2023), 2101PAOANS (10/01/2020 – 9/30/2023), 2101PAOASS (10/01/2020 – 9/30/2023), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2101PAVAC5 (4/01/2021 – 9/30/2023), 2201PAOACM (10/01/2021 – 9/30/2023), 2201PAOAHD (10/01/2021 – 9/30/2023), 2201PAOANS (10/01/2021 – 9/30/2023), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD 10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA365N8903 (1/01/2022 – 9/30/2023), 231PA365N8903 (10/01/2022 – 9/30/2024), 231PA305L1603 (10/01/2022 – 9/30/2023), 221PA305L1603 (10/01/2021 – 9/30/2022), 221PA825Y8005 (10/01/2021 – 9/30/2022), 231PA825Y8005 (10/01/2022 – 9/30/2023), 221PA825Y8105 (10/01/2021 – 9/30/2022), 231PA825Y8105 (10/01/2022 – 9/30/2023), 201PA715W5003 (10/01/2019 – 9/30/2023), 211PA715W5003 (10/01/2020 – 9/30/2024), 221PA705W1003 (10/01/2021 – 9/30/2022), 221PA705W1006 (10/01/2021 – 9/30/2022), 221PA715W5003 (10/01/2021 – 9/30/2024), 231PA705W1003 (10/01/2022 – 9/30/2023), 231PA705W1006 (10/01/2022 – 9/30/2023), 231PA715W5003 (10/01/2022 – 9/30/2025), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA315N1050 (10/01/2021 – 9/30/2023), 231PA315N1050 (10/01/2022 – 9/30/2024), 221PA305N2020 (10/01/2021 – 9/30/2022), 231PA305N2020 (10/01/2022 – 9/30/2023), S010A190038 (7/01/2019 – 9/30/2022), S010A200038 (7/01/2020 – 9/30/2022), S010A210038 (7/01/2021 – 9/30/2022), S010A220038 (7/01/2022 – 9/30/2024), S367A150051 (7/01/2015 – 9/30/2017), S367A190051 (7/01/2019 – 9/30/2021), S367A200051 (7/01/2020 – 9/30/2022), S367A210051 (7/01/2021 – 9/30/2023), S367A220051 (7/01/2022 – 9 /30/2024), H027A200093 (7/01/2020 – 9/30/2022), H027A210093 (7/01/2021 – 9/30/2023), H027A220093 (7/01/2022 – 9/30/2024), H027X210093 (7/01/2021 – 9/30/2023), H173A200090 (7/01/2020 – 9/30/2022), H173A210090 (7/01/2021 – 9/30/2023), H173A220090 (7/01/2022 – 9/30/2024), H173X210090 (7/01/2021 – 9/30/2023), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021 – 9/30/2023), S425D210028 (1/05/2021 – 9/30/2023), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2023), S425V210037 (11/16/2021 – 9/30/2023), S425C210013 (3/13/2020 – 9/30/2023), S425D200028 (3/13/2020 – 9/30/2022), NU50CK000527 (8/01/2019 – 7/31/2024) Finding 2023 – 024: (continued) Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2023 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2022 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2023. We also evaluated the Commonwealth’s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2023 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 10.5 months after the FAC MDL start date for the one audit report with findings. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 12 months to over 18 months after the FAC MDL start date for three out of three audit reports with findings. There was also a delay in PDA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Our testing disclosed one audit report submitted to the FAC over nine months late that included $19.4 million in subrecipient expenditures passed through PDA. In addition, our testing disclosed that PDA subgranted federal funds totaling approximately $4.8 million to five subrecipients during the fiscal year ended June 30, 2022, for which Single Audits were not submitted to the FAC as of our January 2024 testing date. This was over 16 or 10 months after the respective, September 30, 2022 or March 31, 2023 due dates. • Department of Education (PDE): The time period for making a management decision on findings was approximately 9.3 to over 16.9 months after the FAC MDL start date for 14 out of 22 audit reports with findings. One of the 14 audit reports was improperly classified on PDE’s audit tracking list as not having federal award findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Health (DOH): The time period for making a management decision on findings was over 11 months after the FAC MDL start date for two out of two audit reports with findings. One audit report with the late management decision on findings was excluded from DOH’s tracking list. Finding 2023 – 024: (continued) Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR Section 200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR Section 200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR Section 200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. Finding 2023 – 024: (continued) 2 CFR Section 200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. Finding 2023 – 024: (continued) (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08 in order to ensure compliance with federal audit submission requirements. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Finding 2023 – 024: (continued) Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08. DOH Response: DOH agrees with the finding. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding and will be hiring a complement position to ensure compliance in the future. PDE Response: PDE agrees with the finding. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2023 – 024: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 – Child Nutrition Cluster (including COVID-19) ALN 10.565, 10.568, and 10.569 – Food Distribution Cluster ALN 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children ALN 10.558 – Child and Adult Care Food Program ALN 84.010 – Title I Grants to Local Educational Agencies ALN 84.027 and 84.173¬ – Special Education Cluster (IDEA) (including COVID-19) ALN 84.367 – Supporting Effective Instruction State Grants ALN 84.425C – COVID-19 – Education Stabilization Fund - GEER Fund ALN 84.425D – COVID-19 – Education Stabilization Fund - ESSER Fund ALN 84.425R – COVID-19 – Education Stabilization Fund - CRRSA EANS ALN 84.425U – COVID-19 – Education Stabilization Fund - ARP ESSER ALN 84.425V – COVID-19 – Education Stabilization Fund - ARP EANS ALN 93.044, 93.045, and 93.053 – Aging Cluster (including COVID-19) ALN 93.323 – Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2022-014) Federal Grant Number(s) and Year(s): 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC5 (12/27/2020 – 9/30/2023), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAOACM (10/01/2020 – 9/30/2023), 2101PAOAHD (10/01/2020 – 9/30/2023), 2101PAOANS (10/01/2020 – 9/30/2023), 2101PAOASS (10/01/2020 – 9/30/2023), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2101PAVAC5 (4/01/2021 – 9/30/2023), 2201PAOACM (10/01/2021 – 9/30/2023), 2201PAOAHD (10/01/2021 – 9/30/2023), 2201PAOANS (10/01/2021 – 9/30/2023), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD 10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA365N8903 (1/01/2022 – 9/30/2023), 231PA365N8903 (10/01/2022 – 9/30/2024), 231PA305L1603 (10/01/2022 – 9/30/2023), 221PA305L1603 (10/01/2021 – 9/30/2022), 221PA825Y8005 (10/01/2021 – 9/30/2022), 231PA825Y8005 (10/01/2022 – 9/30/2023), 221PA825Y8105 (10/01/2021 – 9/30/2022), 231PA825Y8105 (10/01/2022 – 9/30/2023), 201PA715W5003 (10/01/2019 – 9/30/2023), 211PA715W5003 (10/01/2020 – 9/30/2024), 221PA705W1003 (10/01/2021 – 9/30/2022), 221PA705W1006 (10/01/2021 – 9/30/2022), 221PA715W5003 (10/01/2021 – 9/30/2024), 231PA705W1003 (10/01/2022 – 9/30/2023), 231PA705W1006 (10/01/2022 – 9/30/2023), 231PA715W5003 (10/01/2022 – 9/30/2025), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA315N1050 (10/01/2021 – 9/30/2023), 231PA315N1050 (10/01/2022 – 9/30/2024), 221PA305N2020 (10/01/2021 – 9/30/2022), 231PA305N2020 (10/01/2022 – 9/30/2023), S010A190038 (7/01/2019 – 9/30/2022), S010A200038 (7/01/2020 – 9/30/2022), S010A210038 (7/01/2021 – 9/30/2022), S010A220038 (7/01/2022 – 9/30/2024), S367A150051 (7/01/2015 – 9/30/2017), S367A190051 (7/01/2019 – 9/30/2021), S367A200051 (7/01/2020 – 9/30/2022), S367A210051 (7/01/2021 – 9/30/2023), S367A220051 (7/01/2022 – 9 /30/2024), H027A200093 (7/01/2020 – 9/30/2022), H027A210093 (7/01/2021 – 9/30/2023), H027A220093 (7/01/2022 – 9/30/2024), H027X210093 (7/01/2021 – 9/30/2023), H173A200090 (7/01/2020 – 9/30/2022), H173A210090 (7/01/2021 – 9/30/2023), H173A220090 (7/01/2022 – 9/30/2024), H173X210090 (7/01/2021 – 9/30/2023), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021 – 9/30/2023), S425D210028 (1/05/2021 – 9/30/2023), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2023), S425V210037 (11/16/2021 – 9/30/2023), S425C210013 (3/13/2020 – 9/30/2023), S425D200028 (3/13/2020 – 9/30/2022), NU50CK000527 (8/01/2019 – 7/31/2024) Finding 2023 – 024: (continued) Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2023 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2022 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2023. We also evaluated the Commonwealth’s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2023 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 10.5 months after the FAC MDL start date for the one audit report with findings. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 12 months to over 18 months after the FAC MDL start date for three out of three audit reports with findings. There was also a delay in PDA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Our testing disclosed one audit report submitted to the FAC over nine months late that included $19.4 million in subrecipient expenditures passed through PDA. In addition, our testing disclosed that PDA subgranted federal funds totaling approximately $4.8 million to five subrecipients during the fiscal year ended June 30, 2022, for which Single Audits were not submitted to the FAC as of our January 2024 testing date. This was over 16 or 10 months after the respective, September 30, 2022 or March 31, 2023 due dates. • Department of Education (PDE): The time period for making a management decision on findings was approximately 9.3 to over 16.9 months after the FAC MDL start date for 14 out of 22 audit reports with findings. One of the 14 audit reports was improperly classified on PDE’s audit tracking list as not having federal award findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Health (DOH): The time period for making a management decision on findings was over 11 months after the FAC MDL start date for two out of two audit reports with findings. One audit report with the late management decision on findings was excluded from DOH’s tracking list. Finding 2023 – 024: (continued) Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR Section 200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR Section 200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR Section 200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. Finding 2023 – 024: (continued) 2 CFR Section 200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. Finding 2023 – 024: (continued) (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08 in order to ensure compliance with federal audit submission requirements. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Finding 2023 – 024: (continued) Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08. DOH Response: DOH agrees with the finding. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding and will be hiring a complement position to ensure compliance in the future. PDE Response: PDE agrees with the finding. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2023 – 024: ALN 10.553, 10.555, 10.556, 10.559, and 10.582 – Child Nutrition Cluster (including COVID-19) ALN 10.565, 10.568, and 10.569 – Food Distribution Cluster ALN 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children ALN 10.558 – Child and Adult Care Food Program ALN 84.010 – Title I Grants to Local Educational Agencies ALN 84.027 and 84.173¬ – Special Education Cluster (IDEA) (including COVID-19) ALN 84.367 – Supporting Effective Instruction State Grants ALN 84.425C – COVID-19 – Education Stabilization Fund - GEER Fund ALN 84.425D – COVID-19 – Education Stabilization Fund - ESSER Fund ALN 84.425R – COVID-19 – Education Stabilization Fund - CRRSA EANS ALN 84.425U – COVID-19 – Education Stabilization Fund - ARP ESSER ALN 84.425V – COVID-19 – Education Stabilization Fund - ARP EANS ALN 93.044, 93.045, and 93.053 – Aging Cluster (including COVID-19) ALN 93.323 – Epidemiology and Laboratory Capacity for Infectious Diseases (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2022-014) Federal Grant Number(s) and Year(s): 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC5 (12/27/2020 – 9/30/2023), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAOACM (10/01/2020 – 9/30/2023), 2101PAOAHD (10/01/2020 – 9/30/2023), 2101PAOANS (10/01/2020 – 9/30/2023), 2101PAOASS (10/01/2020 – 9/30/2023), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2101PAVAC5 (4/01/2021 – 9/30/2023), 2201PAOACM (10/01/2021 – 9/30/2023), 2201PAOAHD (10/01/2021 – 9/30/2023), 2201PAOANS (10/01/2021 – 9/30/2023), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD 10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA365N8903 (1/01/2022 – 9/30/2023), 231PA365N8903 (10/01/2022 – 9/30/2024), 231PA305L1603 (10/01/2022 – 9/30/2023), 221PA305L1603 (10/01/2021 – 9/30/2022), 221PA825Y8005 (10/01/2021 – 9/30/2022), 231PA825Y8005 (10/01/2022 – 9/30/2023), 221PA825Y8105 (10/01/2021 – 9/30/2022), 231PA825Y8105 (10/01/2022 – 9/30/2023), 201PA715W5003 (10/01/2019 – 9/30/2023), 211PA715W5003 (10/01/2020 – 9/30/2024), 221PA705W1003 (10/01/2021 – 9/30/2022), 221PA705W1006 (10/01/2021 – 9/30/2022), 221PA715W5003 (10/01/2021 – 9/30/2024), 231PA705W1003 (10/01/2022 – 9/30/2023), 231PA705W1006 (10/01/2022 – 9/30/2023), 231PA715W5003 (10/01/2022 – 9/30/2025), 221PA305N1099 (10/01/2021 – 9/30/2022), 231PA305N1099 (10/01/2022 – 9/30/2023), 221PA315N1050 (10/01/2021 – 9/30/2023), 231PA315N1050 (10/01/2022 – 9/30/2024), 221PA305N2020 (10/01/2021 – 9/30/2022), 231PA305N2020 (10/01/2022 – 9/30/2023), S010A190038 (7/01/2019 – 9/30/2022), S010A200038 (7/01/2020 – 9/30/2022), S010A210038 (7/01/2021 – 9/30/2022), S010A220038 (7/01/2022 – 9/30/2024), S367A150051 (7/01/2015 – 9/30/2017), S367A190051 (7/01/2019 – 9/30/2021), S367A200051 (7/01/2020 – 9/30/2022), S367A210051 (7/01/2021 – 9/30/2023), S367A220051 (7/01/2022 – 9 /30/2024), H027A200093 (7/01/2020 – 9/30/2022), H027A210093 (7/01/2021 – 9/30/2023), H027A220093 (7/01/2022 – 9/30/2024), H027X210093 (7/01/2021 – 9/30/2023), H173A200090 (7/01/2020 – 9/30/2022), H173A210090 (7/01/2021 – 9/30/2023), H173A220090 (7/01/2022 – 9/30/2024), H173X210090 (7/01/2021 – 9/30/2023), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021 – 9/30/2023), S425D210028 (1/05/2021 – 9/30/2023), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2023), S425V210037 (11/16/2021 – 9/30/2023), S425C210013 (3/13/2020 – 9/30/2023), S425D200028 (3/13/2020 – 9/30/2022), NU50CK000527 (8/01/2019 – 7/31/2024) Finding 2023 – 024: (continued) Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Management Decision Letter (MDL) start date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency in order to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2023 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2022 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2023. We also evaluated the Commonwealth’s review of 44 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2023 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 10.5 months after the FAC MDL start date for the one audit report with findings. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 12 months to over 18 months after the FAC MDL start date for three out of three audit reports with findings. There was also a delay in PDA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. Our testing disclosed one audit report submitted to the FAC over nine months late that included $19.4 million in subrecipient expenditures passed through PDA. In addition, our testing disclosed that PDA subgranted federal funds totaling approximately $4.8 million to five subrecipients during the fiscal year ended June 30, 2022, for which Single Audits were not submitted to the FAC as of our January 2024 testing date. This was over 16 or 10 months after the respective, September 30, 2022 or March 31, 2023 due dates. • Department of Education (PDE): The time period for making a management decision on findings was approximately 9.3 to over 16.9 months after the FAC MDL start date for 14 out of 22 audit reports with findings. One of the 14 audit reports was improperly classified on PDE’s audit tracking list as not having federal award findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Health (DOH): The time period for making a management decision on findings was over 11 months after the FAC MDL start date for two out of two audit reports with findings. One audit report with the late management decision on findings was excluded from DOH’s tracking list. Finding 2023 – 024: (continued) Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR Section 200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR Section 200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR Section 200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. Finding 2023 – 024: (continued) 2 CFR Section 200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. Finding 2023 – 024: (continued) (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (7) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Regarding late and outstanding audit report submissions, the Commonwealth agencies did not appear to be timely implementing remedial action steps in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08 in order to ensure compliance with federal audit submission requirements. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely and the late Single Audit report submissions, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Finally, additional federal pass-through funds may be unaudited in the future without timely and effective remedial action from Commonwealth agencies to enforce compliance. Finding 2023 – 024: (continued) Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, untimely review of the SEFA or alternate procedures, and late audit report submissions be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. Commonwealth agencies should promptly pursue outstanding audits and implement remedial action steps on a timely basis in accordance with 2 CFR Section 200.339 and Commonwealth Management Directive 325.08. DOH Response: DOH agrees with the finding. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding and will be hiring a complement position to ensure compliance in the future. PDE Response: PDE agrees with the finding. Questioned Costs: The amount of questioned costs cannot be determined.
Federal program: All federal awards provided to subrecipients. FY/Federal Award ID#: FY2023/All federal awards provided to subrecipients. Federal agency: All federal awards provided by subrecipients. Pass thru entity: All federal awards provided by subrecipients. Criteria: Per 24 CFR 574.500 -- Responsibility for grant administration: (a)General. Grantees are responsible for ensuring that grants are administrated in accordance with the requirements of this part and other applicable laws. Grantees are responsible for ensuring that their respective subrecipients carry out activities in compliance with all applicable requirements. (b)Grant agreement. The grant agreement will provide that the grantee agrees, and will ensure that each subrecipient agrees, to: (1) Operate the program in accordance with the provisions of these regulations and other applicable HUD regulations; (2) Conduct an ongoing assessment of the housing assistance and supportive services required by the participants in the program; (3) Assure the adequate provision of supportive services to the participants in the program; and (4) Comply with such other terms and conditions, including recordkeeping and reports (which must include racial and ethnic data on participants) for the program monitoring and elevation purposes, as HUD may establish for purposes of carrying out the program in an effective and efficient manner. And 24 CFR 574.500 - Applicability of Uniform Administrative Requirements as per 2 CFR 200.332(F) Requirements for pass-through entities. Verify that every subrecipient is audited as required by Subpart F of this part when it is expected that the subrecipients Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in 200.501. Condition: The foundation is not in compliance with recordkeeping for program monitoring and evaluation, as the Foundation does not have comprehensive risk-based/subrecipient monitoring policies and procedures. Questioned Costs: None noted. Cause: Staff were not aware of requirements to monitor program and fiscal compliance of project sponsors and document results and evidence of compliance or non-compliance. Effect: Granting agencies cannot determine whether the Foundation is ensuring that the project sponsor is carrying out activities in compliance with all applicable requirements. Recommendation: The Foundation provide written policies and procedures for the project sponsor monitoring and oversight, create a risk analysis form/process for all funded project sponsors and create a timeline to monitor project sponsors based on the risk analysis completed. View of Responsible Officials: The Foundation has updated its Quality Management Plan to include comprehensive subrecipient monitoring policies. The Foundations Quality Management team is working with all programming to implement a robust monitoring process, including risk assessments, adherence to grantor regulations, service delivery, and program outcomes.
Federal program: All federal awards provided to subrecipients. FY/Federal Award ID#: FY2023/All federal awards provided to subrecipients. Federal agency: All federal awards provided by subrecipients. Pass thru entity: All federal awards provided by subrecipients. Criteria: Per 24 CFR 574.500 -- Responsibility for grant administration: (a)General. Grantees are responsible for ensuring that grants are administrated in accordance with the requirements of this part and other applicable laws. Grantees are responsible for ensuring that their respective subrecipients carry out activities in compliance with all applicable requirements. (b)Grant agreement. The grant agreement will provide that the grantee agrees, and will ensure that each subrecipient agrees, to: (1) Operate the program in accordance with the provisions of these regulations and other applicable HUD regulations; (2) Conduct an ongoing assessment of the housing assistance and supportive services required by the participants in the program; (3) Assure the adequate provision of supportive services to the participants in the program; and (4) Comply with such other terms and conditions, including recordkeeping and reports (which must include racial and ethnic data on participants) for the program monitoring and elevation purposes, as HUD may establish for purposes of carrying out the program in an effective and efficient manner. And 24 CFR 574.500 - Applicability of Uniform Administrative Requirements as per 2 CFR 200.332(F) Requirements for pass-through entities. Verify that every subrecipient is audited as required by Subpart F of this part when it is expected that the subrecipients Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in 200.501. Condition: The foundation is not in compliance with recordkeeping for program monitoring and evaluation, as the Foundation does not have comprehensive risk-based/subrecipient monitoring policies and procedures. Questioned Costs: None noted. Cause: Staff were not aware of requirements to monitor program and fiscal compliance of project sponsors and document results and evidence of compliance or non-compliance. Effect: Granting agencies cannot determine whether the Foundation is ensuring that the project sponsor is carrying out activities in compliance with all applicable requirements. Recommendation: The Foundation provide written policies and procedures for the project sponsor monitoring and oversight, create a risk analysis form/process for all funded project sponsors and create a timeline to monitor project sponsors based on the risk analysis completed. View of Responsible Officials: The Foundation has updated its Quality Management Plan to include comprehensive subrecipient monitoring policies. The Foundations Quality Management team is working with all programming to implement a robust monitoring process, including risk assessments, adherence to grantor regulations, service delivery, and program outcomes.
Federal program: All federal awards provided to subrecipients. FY/Federal Award ID#: FY2023/All federal awards provided to subrecipients. Federal agency: All federal awards provided by subrecipients. Pass thru entity: All federal awards provided by subrecipients. Criteria: Per 24 CFR 574.500 -- Responsibility for grant administration: (a)General. Grantees are responsible for ensuring that grants are administrated in accordance with the requirements of this part and other applicable laws. Grantees are responsible for ensuring that their respective subrecipients carry out activities in compliance with all applicable requirements. (b)Grant agreement. The grant agreement will provide that the grantee agrees, and will ensure that each subrecipient agrees, to: (1) Operate the program in accordance with the provisions of these regulations and other applicable HUD regulations; (2) Conduct an ongoing assessment of the housing assistance and supportive services required by the participants in the program; (3) Assure the adequate provision of supportive services to the participants in the program; and (4) Comply with such other terms and conditions, including recordkeeping and reports (which must include racial and ethnic data on participants) for the program monitoring and elevation purposes, as HUD may establish for purposes of carrying out the program in an effective and efficient manner. And 24 CFR 574.500 - Applicability of Uniform Administrative Requirements as per 2 CFR 200.332(F) Requirements for pass-through entities. Verify that every subrecipient is audited as required by Subpart F of this part when it is expected that the subrecipients Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in 200.501. Condition: The foundation is not in compliance with recordkeeping for program monitoring and evaluation, as the Foundation does not have comprehensive risk-based/subrecipient monitoring policies and procedures. Questioned Costs: None noted. Cause: Staff were not aware of requirements to monitor program and fiscal compliance of project sponsors and document results and evidence of compliance or non-compliance. Effect: Granting agencies cannot determine whether the Foundation is ensuring that the project sponsor is carrying out activities in compliance with all applicable requirements. Recommendation: The Foundation provide written policies and procedures for the project sponsor monitoring and oversight, create a risk analysis form/process for all funded project sponsors and create a timeline to monitor project sponsors based on the risk analysis completed. View of Responsible Officials: The Foundation has updated its Quality Management Plan to include comprehensive subrecipient monitoring policies. The Foundations Quality Management team is working with all programming to implement a robust monitoring process, including risk assessments, adherence to grantor regulations, service delivery, and program outcomes.
Federal program: All federal awards provided to subrecipients. FY/Federal Award ID#: FY2023/All federal awards provided to subrecipients. Federal agency: All federal awards provided by subrecipients. Pass thru entity: All federal awards provided by subrecipients. Criteria: Per 24 CFR 574.500 -- Responsibility for grant administration: (a)General. Grantees are responsible for ensuring that grants are administrated in accordance with the requirements of this part and other applicable laws. Grantees are responsible for ensuring that their respective subrecipients carry out activities in compliance with all applicable requirements. (b)Grant agreement. The grant agreement will provide that the grantee agrees, and will ensure that each subrecipient agrees, to: (1) Operate the program in accordance with the provisions of these regulations and other applicable HUD regulations; (2) Conduct an ongoing assessment of the housing assistance and supportive services required by the participants in the program; (3) Assure the adequate provision of supportive services to the participants in the program; and (4) Comply with such other terms and conditions, including recordkeeping and reports (which must include racial and ethnic data on participants) for the program monitoring and elevation purposes, as HUD may establish for purposes of carrying out the program in an effective and efficient manner. And 24 CFR 574.500 - Applicability of Uniform Administrative Requirements as per 2 CFR 200.332(F) Requirements for pass-through entities. Verify that every subrecipient is audited as required by Subpart F of this part when it is expected that the subrecipients Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in 200.501. Condition: The foundation is not in compliance with recordkeeping for program monitoring and evaluation, as the Foundation does not have comprehensive risk-based/subrecipient monitoring policies and procedures. Questioned Costs: None noted. Cause: Staff were not aware of requirements to monitor program and fiscal compliance of project sponsors and document results and evidence of compliance or non-compliance. Effect: Granting agencies cannot determine whether the Foundation is ensuring that the project sponsor is carrying out activities in compliance with all applicable requirements. Recommendation: The Foundation provide written policies and procedures for the project sponsor monitoring and oversight, create a risk analysis form/process for all funded project sponsors and create a timeline to monitor project sponsors based on the risk analysis completed. View of Responsible Officials: The Foundation has updated its Quality Management Plan to include comprehensive subrecipient monitoring policies. The Foundations Quality Management team is working with all programming to implement a robust monitoring process, including risk assessments, adherence to grantor regulations, service delivery, and program outcomes.
Federal program: All federal awards provided to subrecipients. FY/Federal Award ID#: FY2023/All federal awards provided to subrecipients. Federal agency: All federal awards provided by subrecipients. Pass thru entity: All federal awards provided by subrecipients. Criteria: Per 24 CFR 574.500 -- Responsibility for grant administration: (a)General. Grantees are responsible for ensuring that grants are administrated in accordance with the requirements of this part and other applicable laws. Grantees are responsible for ensuring that their respective subrecipients carry out activities in compliance with all applicable requirements. (b)Grant agreement. The grant agreement will provide that the grantee agrees, and will ensure that each subrecipient agrees, to: (1) Operate the program in accordance with the provisions of these regulations and other applicable HUD regulations; (2) Conduct an ongoing assessment of the housing assistance and supportive services required by the participants in the program; (3) Assure the adequate provision of supportive services to the participants in the program; and (4) Comply with such other terms and conditions, including recordkeeping and reports (which must include racial and ethnic data on participants) for the program monitoring and elevation purposes, as HUD may establish for purposes of carrying out the program in an effective and efficient manner. And 24 CFR 574.500 - Applicability of Uniform Administrative Requirements as per 2 CFR 200.332(F) Requirements for pass-through entities. Verify that every subrecipient is audited as required by Subpart F of this part when it is expected that the subrecipients Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in 200.501. Condition: The foundation is not in compliance with recordkeeping for program monitoring and evaluation, as the Foundation does not have comprehensive risk-based/subrecipient monitoring policies and procedures. Questioned Costs: None noted. Cause: Staff were not aware of requirements to monitor program and fiscal compliance of project sponsors and document results and evidence of compliance or non-compliance. Effect: Granting agencies cannot determine whether the Foundation is ensuring that the project sponsor is carrying out activities in compliance with all applicable requirements. Recommendation: The Foundation provide written policies and procedures for the project sponsor monitoring and oversight, create a risk analysis form/process for all funded project sponsors and create a timeline to monitor project sponsors based on the risk analysis completed. View of Responsible Officials: The Foundation has updated its Quality Management Plan to include comprehensive subrecipient monitoring policies. The Foundations Quality Management team is working with all programming to implement a robust monitoring process, including risk assessments, adherence to grantor regulations, service delivery, and program outcomes.
Federal program: All federal awards provided to subrecipients. FY/Federal Award ID#: FY2023/All federal awards provided to subrecipients. Federal agency: All federal awards provided by subrecipients. Pass thru entity: All federal awards provided by subrecipients. Criteria: Per 24 CFR 574.500 -- Responsibility for grant administration: (a)General. Grantees are responsible for ensuring that grants are administrated in accordance with the requirements of this part and other applicable laws. Grantees are responsible for ensuring that their respective subrecipients carry out activities in compliance with all applicable requirements. (b)Grant agreement. The grant agreement will provide that the grantee agrees, and will ensure that each subrecipient agrees, to: (1) Operate the program in accordance with the provisions of these regulations and other applicable HUD regulations; (2) Conduct an ongoing assessment of the housing assistance and supportive services required by the participants in the program; (3) Assure the adequate provision of supportive services to the participants in the program; and (4) Comply with such other terms and conditions, including recordkeeping and reports (which must include racial and ethnic data on participants) for the program monitoring and elevation purposes, as HUD may establish for purposes of carrying out the program in an effective and efficient manner. And 24 CFR 574.500 - Applicability of Uniform Administrative Requirements as per 2 CFR 200.332(F) Requirements for pass-through entities. Verify that every subrecipient is audited as required by Subpart F of this part when it is expected that the subrecipients Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in 200.501. Condition: The foundation is not in compliance with recordkeeping for program monitoring and evaluation, as the Foundation does not have comprehensive risk-based/subrecipient monitoring policies and procedures. Questioned Costs: None noted. Cause: Staff were not aware of requirements to monitor program and fiscal compliance of project sponsors and document results and evidence of compliance or non-compliance. Effect: Granting agencies cannot determine whether the Foundation is ensuring that the project sponsor is carrying out activities in compliance with all applicable requirements. Recommendation: The Foundation provide written policies and procedures for the project sponsor monitoring and oversight, create a risk analysis form/process for all funded project sponsors and create a timeline to monitor project sponsors based on the risk analysis completed. View of Responsible Officials: The Foundation has updated its Quality Management Plan to include comprehensive subrecipient monitoring policies. The Foundations Quality Management team is working with all programming to implement a robust monitoring process, including risk assessments, adherence to grantor regulations, service delivery, and program outcomes.
Federal program: All federal awards provided to subrecipients. FY/Federal Award ID#: FY2023/All federal awards provided to subrecipients. Federal agency: All federal awards provided by subrecipients. Pass thru entity: All federal awards provided by subrecipients. Criteria: Per 24 CFR 574.500 -- Responsibility for grant administration: (a)General. Grantees are responsible for ensuring that grants are administrated in accordance with the requirements of this part and other applicable laws. Grantees are responsible for ensuring that their respective subrecipients carry out activities in compliance with all applicable requirements. (b)Grant agreement. The grant agreement will provide that the grantee agrees, and will ensure that each subrecipient agrees, to: (1) Operate the program in accordance with the provisions of these regulations and other applicable HUD regulations; (2) Conduct an ongoing assessment of the housing assistance and supportive services required by the participants in the program; (3) Assure the adequate provision of supportive services to the participants in the program; and (4) Comply with such other terms and conditions, including recordkeeping and reports (which must include racial and ethnic data on participants) for the program monitoring and elevation purposes, as HUD may establish for purposes of carrying out the program in an effective and efficient manner. And 24 CFR 574.500 - Applicability of Uniform Administrative Requirements as per 2 CFR 200.332(F) Requirements for pass-through entities. Verify that every subrecipient is audited as required by Subpart F of this part when it is expected that the subrecipients Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in 200.501. Condition: The foundation is not in compliance with recordkeeping for program monitoring and evaluation, as the Foundation does not have comprehensive risk-based/subrecipient monitoring policies and procedures. Questioned Costs: None noted. Cause: Staff were not aware of requirements to monitor program and fiscal compliance of project sponsors and document results and evidence of compliance or non-compliance. Effect: Granting agencies cannot determine whether the Foundation is ensuring that the project sponsor is carrying out activities in compliance with all applicable requirements. Recommendation: The Foundation provide written policies and procedures for the project sponsor monitoring and oversight, create a risk analysis form/process for all funded project sponsors and create a timeline to monitor project sponsors based on the risk analysis completed. View of Responsible Officials: The Foundation has updated its Quality Management Plan to include comprehensive subrecipient monitoring policies. The Foundations Quality Management team is working with all programming to implement a robust monitoring process, including risk assessments, adherence to grantor regulations, service delivery, and program outcomes.
Federal program: All federal awards provided to subrecipients. FY/Federal Award ID#: FY2023/All federal awards provided to subrecipients. Federal agency: All federal awards provided by subrecipients. Pass thru entity: All federal awards provided by subrecipients. Criteria: Per 24 CFR 574.500 -- Responsibility for grant administration: (a)General. Grantees are responsible for ensuring that grants are administrated in accordance with the requirements of this part and other applicable laws. Grantees are responsible for ensuring that their respective subrecipients carry out activities in compliance with all applicable requirements. (b)Grant agreement. The grant agreement will provide that the grantee agrees, and will ensure that each subrecipient agrees, to: (1) Operate the program in accordance with the provisions of these regulations and other applicable HUD regulations; (2) Conduct an ongoing assessment of the housing assistance and supportive services required by the participants in the program; (3) Assure the adequate provision of supportive services to the participants in the program; and (4) Comply with such other terms and conditions, including recordkeeping and reports (which must include racial and ethnic data on participants) for the program monitoring and elevation purposes, as HUD may establish for purposes of carrying out the program in an effective and efficient manner. And 24 CFR 574.500 - Applicability of Uniform Administrative Requirements as per 2 CFR 200.332(F) Requirements for pass-through entities. Verify that every subrecipient is audited as required by Subpart F of this part when it is expected that the subrecipients Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in 200.501. Condition: The foundation is not in compliance with recordkeeping for program monitoring and evaluation, as the Foundation does not have comprehensive risk-based/subrecipient monitoring policies and procedures. Questioned Costs: None noted. Cause: Staff were not aware of requirements to monitor program and fiscal compliance of project sponsors and document results and evidence of compliance or non-compliance. Effect: Granting agencies cannot determine whether the Foundation is ensuring that the project sponsor is carrying out activities in compliance with all applicable requirements. Recommendation: The Foundation provide written policies and procedures for the project sponsor monitoring and oversight, create a risk analysis form/process for all funded project sponsors and create a timeline to monitor project sponsors based on the risk analysis completed. View of Responsible Officials: The Foundation has updated its Quality Management Plan to include comprehensive subrecipient monitoring policies. The Foundations Quality Management team is working with all programming to implement a robust monitoring process, including risk assessments, adherence to grantor regulations, service delivery, and program outcomes.
Federal program: All federal awards provided to subrecipients. FY/Federal Award ID#: FY2023/All federal awards provided to subrecipients. Federal agency: All federal awards provided by subrecipients. Pass thru entity: All federal awards provided by subrecipients. Criteria: Per 24 CFR 574.500 -- Responsibility for grant administration: (a)General. Grantees are responsible for ensuring that grants are administrated in accordance with the requirements of this part and other applicable laws. Grantees are responsible for ensuring that their respective subrecipients carry out activities in compliance with all applicable requirements. (b)Grant agreement. The grant agreement will provide that the grantee agrees, and will ensure that each subrecipient agrees, to: (1) Operate the program in accordance with the provisions of these regulations and other applicable HUD regulations; (2) Conduct an ongoing assessment of the housing assistance and supportive services required by the participants in the program; (3) Assure the adequate provision of supportive services to the participants in the program; and (4) Comply with such other terms and conditions, including recordkeeping and reports (which must include racial and ethnic data on participants) for the program monitoring and elevation purposes, as HUD may establish for purposes of carrying out the program in an effective and efficient manner. And 24 CFR 574.500 - Applicability of Uniform Administrative Requirements as per 2 CFR 200.332(F) Requirements for pass-through entities. Verify that every subrecipient is audited as required by Subpart F of this part when it is expected that the subrecipients Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in 200.501. Condition: The foundation is not in compliance with recordkeeping for program monitoring and evaluation, as the Foundation does not have comprehensive risk-based/subrecipient monitoring policies and procedures. Questioned Costs: None noted. Cause: Staff were not aware of requirements to monitor program and fiscal compliance of project sponsors and document results and evidence of compliance or non-compliance. Effect: Granting agencies cannot determine whether the Foundation is ensuring that the project sponsor is carrying out activities in compliance with all applicable requirements. Recommendation: The Foundation provide written policies and procedures for the project sponsor monitoring and oversight, create a risk analysis form/process for all funded project sponsors and create a timeline to monitor project sponsors based on the risk analysis completed. View of Responsible Officials: The Foundation has updated its Quality Management Plan to include comprehensive subrecipient monitoring policies. The Foundations Quality Management team is working with all programming to implement a robust monitoring process, including risk assessments, adherence to grantor regulations, service delivery, and program outcomes.
Federal program: All federal awards provided to subrecipients. FY/Federal Award ID#: FY2023/All federal awards provided to subrecipients. Federal agency: All federal awards provided by subrecipients. Pass thru entity: All federal awards provided by subrecipients. Criteria: Per 24 CFR 574.500 -- Responsibility for grant administration: (a)General. Grantees are responsible for ensuring that grants are administrated in accordance with the requirements of this part and other applicable laws. Grantees are responsible for ensuring that their respective subrecipients carry out activities in compliance with all applicable requirements. (b)Grant agreement. The grant agreement will provide that the grantee agrees, and will ensure that each subrecipient agrees, to: (1) Operate the program in accordance with the provisions of these regulations and other applicable HUD regulations; (2) Conduct an ongoing assessment of the housing assistance and supportive services required by the participants in the program; (3) Assure the adequate provision of supportive services to the participants in the program; and (4) Comply with such other terms and conditions, including recordkeeping and reports (which must include racial and ethnic data on participants) for the program monitoring and elevation purposes, as HUD may establish for purposes of carrying out the program in an effective and efficient manner. And 24 CFR 574.500 - Applicability of Uniform Administrative Requirements as per 2 CFR 200.332(F) Requirements for pass-through entities. Verify that every subrecipient is audited as required by Subpart F of this part when it is expected that the subrecipients Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in 200.501. Condition: The foundation is not in compliance with recordkeeping for program monitoring and evaluation, as the Foundation does not have comprehensive risk-based/subrecipient monitoring policies and procedures. Questioned Costs: None noted. Cause: Staff were not aware of requirements to monitor program and fiscal compliance of project sponsors and document results and evidence of compliance or non-compliance. Effect: Granting agencies cannot determine whether the Foundation is ensuring that the project sponsor is carrying out activities in compliance with all applicable requirements. Recommendation: The Foundation provide written policies and procedures for the project sponsor monitoring and oversight, create a risk analysis form/process for all funded project sponsors and create a timeline to monitor project sponsors based on the risk analysis completed. View of Responsible Officials: The Foundation has updated its Quality Management Plan to include comprehensive subrecipient monitoring policies. The Foundations Quality Management team is working with all programming to implement a robust monitoring process, including risk assessments, adherence to grantor regulations, service delivery, and program outcomes.
Federal program: All federal awards provided to subrecipients. FY/Federal Award ID#: FY2023/All federal awards provided to subrecipients. Federal agency: All federal awards provided by subrecipients. Pass thru entity: All federal awards provided by subrecipients. Criteria: Per 24 CFR 574.500 -- Responsibility for grant administration: (a)General. Grantees are responsible for ensuring that grants are administrated in accordance with the requirements of this part and other applicable laws. Grantees are responsible for ensuring that their respective subrecipients carry out activities in compliance with all applicable requirements. (b)Grant agreement. The grant agreement will provide that the grantee agrees, and will ensure that each subrecipient agrees, to: (1) Operate the program in accordance with the provisions of these regulations and other applicable HUD regulations; (2) Conduct an ongoing assessment of the housing assistance and supportive services required by the participants in the program; (3) Assure the adequate provision of supportive services to the participants in the program; and (4) Comply with such other terms and conditions, including recordkeeping and reports (which must include racial and ethnic data on participants) for the program monitoring and elevation purposes, as HUD may establish for purposes of carrying out the program in an effective and efficient manner. And 24 CFR 574.500 - Applicability of Uniform Administrative Requirements as per 2 CFR 200.332(F) Requirements for pass-through entities. Verify that every subrecipient is audited as required by Subpart F of this part when it is expected that the subrecipients Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in 200.501. Condition: The foundation is not in compliance with recordkeeping for program monitoring and evaluation, as the Foundation does not have comprehensive risk-based/subrecipient monitoring policies and procedures. Questioned Costs: None noted. Cause: Staff were not aware of requirements to monitor program and fiscal compliance of project sponsors and document results and evidence of compliance or non-compliance. Effect: Granting agencies cannot determine whether the Foundation is ensuring that the project sponsor is carrying out activities in compliance with all applicable requirements. Recommendation: The Foundation provide written policies and procedures for the project sponsor monitoring and oversight, create a risk analysis form/process for all funded project sponsors and create a timeline to monitor project sponsors based on the risk analysis completed. View of Responsible Officials: The Foundation has updated its Quality Management Plan to include comprehensive subrecipient monitoring policies. The Foundations Quality Management team is working with all programming to implement a robust monitoring process, including risk assessments, adherence to grantor regulations, service delivery, and program outcomes.
Federal program: All federal awards provided to subrecipients. FY/Federal Award ID#: FY2023/All federal awards provided to subrecipients. Federal agency: All federal awards provided by subrecipients. Pass thru entity: All federal awards provided by subrecipients. Criteria: Per 24 CFR 574.500 -- Responsibility for grant administration: (a)General. Grantees are responsible for ensuring that grants are administrated in accordance with the requirements of this part and other applicable laws. Grantees are responsible for ensuring that their respective subrecipients carry out activities in compliance with all applicable requirements. (b)Grant agreement. The grant agreement will provide that the grantee agrees, and will ensure that each subrecipient agrees, to: (1) Operate the program in accordance with the provisions of these regulations and other applicable HUD regulations; (2) Conduct an ongoing assessment of the housing assistance and supportive services required by the participants in the program; (3) Assure the adequate provision of supportive services to the participants in the program; and (4) Comply with such other terms and conditions, including recordkeeping and reports (which must include racial and ethnic data on participants) for the program monitoring and elevation purposes, as HUD may establish for purposes of carrying out the program in an effective and efficient manner. And 24 CFR 574.500 - Applicability of Uniform Administrative Requirements as per 2 CFR 200.332(F) Requirements for pass-through entities. Verify that every subrecipient is audited as required by Subpart F of this part when it is expected that the subrecipients Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in 200.501. Condition: The foundation is not in compliance with recordkeeping for program monitoring and evaluation, as the Foundation does not have comprehensive risk-based/subrecipient monitoring policies and procedures. Questioned Costs: None noted. Cause: Staff were not aware of requirements to monitor program and fiscal compliance of project sponsors and document results and evidence of compliance or non-compliance. Effect: Granting agencies cannot determine whether the Foundation is ensuring that the project sponsor is carrying out activities in compliance with all applicable requirements. Recommendation: The Foundation provide written policies and procedures for the project sponsor monitoring and oversight, create a risk analysis form/process for all funded project sponsors and create a timeline to monitor project sponsors based on the risk analysis completed. View of Responsible Officials: The Foundation has updated its Quality Management Plan to include comprehensive subrecipient monitoring policies. The Foundations Quality Management team is working with all programming to implement a robust monitoring process, including risk assessments, adherence to grantor regulations, service delivery, and program outcomes.