Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 84.425, Department of Education, Education Stabilization Fund and Assistance Listing Number 84.010A, Department of Education, Title I Grants to Local Educational Agencies Federal Award Identification Number and Year: 213716, 231530 and 241530 Pass-through Entity – Michigan Department of Education Finding Type – Material weakness over compliance Repeat Finding - No Criteria – Per 2 CFR 200.512 (a) (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. Per 2 CFR 200.501 (b), 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. Condition – The data collection form was not submitted within the required time as required by 2 CFR 200.512 for the year ended June 30, 2023. Identification of How Questioned Costs Were Computed – N/A Questioned Costs – None Cause – The Academy’s books and records for the 2023 fiscal year were not reconciled or closed in a timely manner. The data collection form was not submitted within the required time. Effect – Data collection form were not submitted on time. Recommendation – We recommend that the Academy develop a reliable system to close the financial records in a timely manner. View of Responsible Officials and Corrective Action Plan – Management agrees with the finding. See corrective action plan.
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 84.425, Department of Education, Education Stabilization Fund and Assistance Listing Number 84.010A, Department of Education, Title I Grants to Local Educational Agencies Federal Award Identification Number and Year: 213716, 231530 and 241530 Pass-through Entity – Michigan Department of Education Finding Type – Material weakness over compliance Repeat Finding - No Criteria – Per 2 CFR 200.512 (a) (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. Per 2 CFR 200.501 (b), 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. Condition – The data collection form was not submitted within the required time as required by 2 CFR 200.512 for the year ended June 30, 2023. Identification of How Questioned Costs Were Computed – N/A Questioned Costs – None Cause – The Academy’s books and records for the 2023 fiscal year were not reconciled or closed in a timely manner. The data collection form was not submitted within the required time. Effect – Data collection form were not submitted on time. Recommendation – We recommend that the Academy develop a reliable system to close the financial records in a timely manner. View of Responsible Officials and Corrective Action Plan – Management agrees with the finding. See corrective action plan.
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 84.425, Department of Education, Education Stabilization Fund and Assistance Listing Number 84.010A, Department of Education, Title I Grants to Local Educational Agencies Federal Award Identification Number and Year: 213716, 231530 and 241530 Pass-through Entity – Michigan Department of Education Finding Type – Material weakness over compliance Repeat Finding - No Criteria – Per 2 CFR 200.512 (a) (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. Per 2 CFR 200.501 (b), 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. Condition – The data collection form was not submitted within the required time as required by 2 CFR 200.512 for the year ended June 30, 2023. Identification of How Questioned Costs Were Computed – N/A Questioned Costs – None Cause – The Academy’s books and records for the 2023 fiscal year were not reconciled or closed in a timely manner. The data collection form was not submitted within the required time. Effect – Data collection form were not submitted on time. Recommendation – We recommend that the Academy develop a reliable system to close the financial records in a timely manner. View of Responsible Officials and Corrective Action Plan – Management agrees with the finding. See corrective action plan.
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 84.425, Department of Education, Education Stabilization Fund and Assistance Listing Number 84.010A, Department of Education, Title I Grants to Local Educational Agencies Federal Award Identification Number and Year: 213716, 231530 and 241530 Pass-through Entity – Michigan Department of Education Finding Type – Material weakness over compliance Repeat Finding - No Criteria – Per 2 CFR 200.512 (a) (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. Per 2 CFR 200.501 (b), 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. Condition – The data collection form was not submitted within the required time as required by 2 CFR 200.512 for the year ended June 30, 2023. Identification of How Questioned Costs Were Computed – N/A Questioned Costs – None Cause – The Academy’s books and records for the 2023 fiscal year were not reconciled or closed in a timely manner. The data collection form was not submitted within the required time. Effect – Data collection form were not submitted on time. Recommendation – We recommend that the Academy develop a reliable system to close the financial records in a timely manner. View of Responsible Officials and Corrective Action Plan – Management agrees with the finding. See corrective action plan.
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 84.425, Department of Education, Education Stabilization Fund and Assistance Listing Number 84.010A, Department of Education, Title I Grants to Local Educational Agencies Federal Award Identification Number and Year: 213716, 231530 and 241530 Pass-through Entity – Michigan Department of Education Finding Type – Material weakness over compliance Repeat Finding - No Criteria – Per 2 CFR 200.512 (a) (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. Per 2 CFR 200.501 (b), 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. Condition – The data collection form was not submitted within the required time as required by 2 CFR 200.512 for the year ended June 30, 2023. Identification of How Questioned Costs Were Computed – N/A Questioned Costs – None Cause – The Academy’s books and records for the 2023 fiscal year were not reconciled or closed in a timely manner. The data collection form was not submitted within the required time. Effect – Data collection form were not submitted on time. Recommendation – We recommend that the Academy develop a reliable system to close the financial records in a timely manner. View of Responsible Officials and Corrective Action Plan – Management agrees with the finding. See corrective action plan.
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 84.425, Department of Education, Education Stabilization Fund and Assistance Listing Number 84.010A, Department of Education, Title I Grants to Local Educational Agencies Federal Award Identification Number and Year: 213716, 231530 and 241530 Pass-through Entity – Michigan Department of Education Finding Type – Material weakness over compliance Repeat Finding - No Criteria – Per 2 CFR 200.512 (a) (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. Per 2 CFR 200.501 (b), 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. Condition – The data collection form was not submitted within the required time as required by 2 CFR 200.512 for the year ended June 30, 2023. Identification of How Questioned Costs Were Computed – N/A Questioned Costs – None Cause – The Academy’s books and records for the 2023 fiscal year were not reconciled or closed in a timely manner. The data collection form was not submitted within the required time. Effect – Data collection form were not submitted on time. Recommendation – We recommend that the Academy develop a reliable system to close the financial records in a timely manner. View of Responsible Officials and Corrective Action Plan – Management agrees with the finding. See corrective action plan.
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 84.425, Department of Education, Education Stabilization Fund Federal Award Identification Number and Year: 213713 Pass-through Entity – Michigan Department of Education Finding Type – Material weakness over compliance Repeat Finding - No Criteria – Per 2 CFR 200.512 (a) (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. Per 2 CFR 200.501 (b), 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. Condition – The data collection form was not submitted within the required time as required by 2 CFR 200.512 for the year ended June 30, 2023. Identification of How Questioned Costs Were Computed – N/A Questioned Costs – None Cause – The Academy’s books and records for the 2023 fiscal year were not reconciled or closed in a timely manner. The data collection form was not submitted within the required time. Effect – Data collection form was not submitted on time. Recommendation – We recommend that the Academy develop a reliable system to close the financial records in a timely manner. View of Responsible Officials and Corrective Action Plan – Management agrees with the finding. See corrective action plan.
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 84.425, Department of Education, Education Stabilization Fund Federal Award Identification Number and Year: 213713 Pass-through Entity – Michigan Department of Education Finding Type – Material weakness over compliance Repeat Finding - No Criteria – Per 2 CFR 200.512 (a) (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. Per 2 CFR 200.501 (b), 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. Condition – The data collection form was not submitted within the required time as required by 2 CFR 200.512 for the year ended June 30, 2023. Identification of How Questioned Costs Were Computed – N/A Questioned Costs – None Cause – The Academy’s books and records for the 2023 fiscal year were not reconciled or closed in a timely manner. The data collection form was not submitted within the required time. Effect – Data collection form was not submitted on time. Recommendation – We recommend that the Academy develop a reliable system to close the financial records in a timely manner. View of Responsible Officials and Corrective Action Plan – Management agrees with the finding. See corrective action plan.
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 84.425, Department of Education, Education Stabilization Fund Federal Award Identification Number and Year: 213713 Pass-through Entity – Michigan Department of Education Finding Type – Material weakness over compliance Repeat Finding - No Criteria – Per 2 CFR 200.512 (a) (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. Per 2 CFR 200.501 (b), 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. Condition – The data collection form was not submitted within the required time as required by 2 CFR 200.512 for the year ended June 30, 2023. Identification of How Questioned Costs Were Computed – N/A Questioned Costs – None Cause – The Academy’s books and records for the 2023 fiscal year were not reconciled or closed in a timely manner. The data collection form was not submitted within the required time. Effect – Data collection form was not submitted on time. Recommendation – We recommend that the Academy develop a reliable system to close the financial records in a timely manner. View of Responsible Officials and Corrective Action Plan – Management agrees with the finding. See corrective action plan.
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 84.425, Department of Education, Education Stabilization Fund Federal Award Identification Number and Year: 213713 Pass-through Entity – Michigan Department of Education Finding Type – Material weakness over compliance Repeat Finding - No Criteria – Per 2 CFR 200.512 (a) (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. Per 2 CFR 200.501 (b), 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. Condition – The data collection form was not submitted within the required time as required by 2 CFR 200.512 for the year ended June 30, 2023. Identification of How Questioned Costs Were Computed – N/A Questioned Costs – None Cause – The Academy’s books and records for the 2023 fiscal year were not reconciled or closed in a timely manner. The data collection form was not submitted within the required time. Effect – Data collection form was not submitted on time. Recommendation – We recommend that the Academy develop a reliable system to close the financial records in a timely manner. View of Responsible Officials and Corrective Action Plan – Management agrees with the finding. See corrective action plan.
Criteria: Per 2 CFR 200.501, all entities that spend $750,000 or more in federal grant funds in a fiscal year must submit an audit. The single audit report is required to be electronically submitted to the Federal Audit Clearinghouse the earlier of thirty days after receipt of the report or nine months after the fiscal year end. Statement of condition: The Institution’s single audit report package for the period ending June 30, 2023, was due the earlier of January 13, 2024, or March 30, 2024. Statement of cause: The single audit report package was electronically submitted to the Federal Audit Clearinghouse on May 1, 2024. Effect: The Institution is not qualified as a low-risk auditee because of the late submission. Effect: The Institution is not qualified as a low-risk auditee because of the late submission. Questioned costs: None Judgement of prevalence and consequence: Finding represents an isolated instance. Repeat finding: Not a repeat finding. Recommendation: Upon receipt of the single audit report, the Institution is advised to identify the date the report is required to be electronically submitted to the Federal Audit Clearinghouse and confirm the single audit report package was timely submitted to prevent future occurrences of this audit finding. View of responsible officials of the auditee: The Institution agrees with the fining and recommendation.
Criteria: Per 2 CFR 200.501, all entities that spend $750,000 or more in federal grant funds in a fiscal year must submit an audit. The single audit report is required to be electronically submitted to the Federal Audit Clearinghouse the earlier of thirty days after receipt of the report or nine months after the fiscal year end. Statement of condition: The Institution’s single audit report package for the period ending June 30, 2023, was due the earlier of January 13, 2024, or March 30, 2024. Statement of cause: The single audit report package was electronically submitted to the Federal Audit Clearinghouse on May 1, 2024. Effect: The Institution is not qualified as a low-risk auditee because of the late submission. Effect: The Institution is not qualified as a low-risk auditee because of the late submission. Questioned costs: None Judgement of prevalence and consequence: Finding represents an isolated instance. Repeat finding: Not a repeat finding. Recommendation: Upon receipt of the single audit report, the Institution is advised to identify the date the report is required to be electronically submitted to the Federal Audit Clearinghouse and confirm the single audit report package was timely submitted to prevent future occurrences of this audit finding. View of responsible officials of the auditee: The Institution agrees with the fining and recommendation.
Criteria: Per 2 CFR 200.501, all entities that spend $750,000 or more in federal grant funds in a fiscal year must submit an audit. The single audit report is required to be electronically submitted to the Federal Audit Clearinghouse the earlier of thirty days after receipt of the report or nine months after the fiscal year end. Statement of condition: The Institution’s single audit report package for the period ending June 30, 2023, was due the earlier of January 13, 2024, or March 30, 2024. Statement of cause: The single audit report package was electronically submitted to the Federal Audit Clearinghouse on May 1, 2024. Effect: The Institution is not qualified as a low-risk auditee because of the late submission. Effect: The Institution is not qualified as a low-risk auditee because of the late submission. Questioned costs: None Judgement of prevalence and consequence: Finding represents an isolated instance. Repeat finding: Not a repeat finding. Recommendation: Upon receipt of the single audit report, the Institution is advised to identify the date the report is required to be electronically submitted to the Federal Audit Clearinghouse and confirm the single audit report package was timely submitted to prevent future occurrences of this audit finding. View of responsible officials of the auditee: The Institution agrees with the fining and recommendation.
Federal program: All federal awards provided to subrecipients. FY/Federal Award ID#: FY2024/All federal awards provided to subrecipients. Federal agency: All federal awards provided to subrecipients. Pass thru entity: All federal awards provided to subrecipients. Criteria: per 24 CFR 574.500 -- Responsibility for grant administration: (a) General. Grantees are responsible for ensuring that grants are administered 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 program monitoring and evaluation 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 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 did not comprehensively asses all subrecipients using riskbased/ subrecipient monitoring policies and procedures. Questioned Costs: None noted. Cause: Staff were not aware of the extent of the requirements to monitor program and fiscal compliance of project sponsors and document results and evidence of compliance or non-compliance. Therefore, a number of project sponsors/subrecipients were not monitored. 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 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. Views of Responsible Officials: The Foundation has updated its Quality Management Plan to include comprehensive subrecipient monitoring policies. The 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#: FY2024/All federal awards provided to subrecipients. Federal agency: All federal awards provided to subrecipients. Pass thru entity: All federal awards provided to subrecipients. Criteria: per 24 CFR 574.500 -- Responsibility for grant administration: (a) General. Grantees are responsible for ensuring that grants are administered 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 program monitoring and evaluation 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 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 did not comprehensively asses all subrecipients using riskbased/ subrecipient monitoring policies and procedures. Questioned Costs: None noted. Cause: Staff were not aware of the extent of the requirements to monitor program and fiscal compliance of project sponsors and document results and evidence of compliance or non-compliance. Therefore, a number of project sponsors/subrecipients were not monitored. 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 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. Views of Responsible Officials: The Foundation has updated its Quality Management Plan to include comprehensive subrecipient monitoring policies. The 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#: FY2024/All federal awards provided to subrecipients. Federal agency: All federal awards provided to subrecipients. Pass thru entity: All federal awards provided to subrecipients. Criteria: per 24 CFR 574.500 -- Responsibility for grant administration: (a) General. Grantees are responsible for ensuring that grants are administered 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 program monitoring and evaluation 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 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 did not comprehensively asses all subrecipients using riskbased/ subrecipient monitoring policies and procedures. Questioned Costs: None noted. Cause: Staff were not aware of the extent of the requirements to monitor program and fiscal compliance of project sponsors and document results and evidence of compliance or non-compliance. Therefore, a number of project sponsors/subrecipients were not monitored. 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 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. Views of Responsible Officials: The Foundation has updated its Quality Management Plan to include comprehensive subrecipient monitoring policies. The 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#: FY2024/All federal awards provided to subrecipients. Federal agency: All federal awards provided to subrecipients. Pass thru entity: All federal awards provided to subrecipients. Criteria: per 24 CFR 574.500 -- Responsibility for grant administration: (a) General. Grantees are responsible for ensuring that grants are administered 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 program monitoring and evaluation 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 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 did not comprehensively asses all subrecipients using riskbased/ subrecipient monitoring policies and procedures. Questioned Costs: None noted. Cause: Staff were not aware of the extent of the requirements to monitor program and fiscal compliance of project sponsors and document results and evidence of compliance or non-compliance. Therefore, a number of project sponsors/subrecipients were not monitored. 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 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. Views of Responsible Officials: The Foundation has updated its Quality Management Plan to include comprehensive subrecipient monitoring policies. The 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#: FY2024/All federal awards provided to subrecipients. Federal agency: All federal awards provided to subrecipients. Pass thru entity: All federal awards provided to subrecipients. Criteria: per 24 CFR 574.500 -- Responsibility for grant administration: (a) General. Grantees are responsible for ensuring that grants are administered 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 program monitoring and evaluation 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 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 did not comprehensively asses all subrecipients using riskbased/ subrecipient monitoring policies and procedures. Questioned Costs: None noted. Cause: Staff were not aware of the extent of the requirements to monitor program and fiscal compliance of project sponsors and document results and evidence of compliance or non-compliance. Therefore, a number of project sponsors/subrecipients were not monitored. 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 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. Views of Responsible Officials: The Foundation has updated its Quality Management Plan to include comprehensive subrecipient monitoring policies. The 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#: FY2024/All federal awards provided to subrecipients. Federal agency: All federal awards provided to subrecipients. Pass thru entity: All federal awards provided to subrecipients. Criteria: per 24 CFR 574.500 -- Responsibility for grant administration: (a) General. Grantees are responsible for ensuring that grants are administered 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 program monitoring and evaluation 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 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 did not comprehensively asses all subrecipients using riskbased/ subrecipient monitoring policies and procedures. Questioned Costs: None noted. Cause: Staff were not aware of the extent of the requirements to monitor program and fiscal compliance of project sponsors and document results and evidence of compliance or non-compliance. Therefore, a number of project sponsors/subrecipients were not monitored. 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 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. Views of Responsible Officials: The Foundation has updated its Quality Management Plan to include comprehensive subrecipient monitoring policies. The 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#: FY2024/All federal awards provided to subrecipients. Federal agency: All federal awards provided to subrecipients. Pass thru entity: All federal awards provided to subrecipients. Criteria: per 24 CFR 574.500 -- Responsibility for grant administration: (a) General. Grantees are responsible for ensuring that grants are administered 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 program monitoring and evaluation 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 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 did not comprehensively asses all subrecipients using riskbased/ subrecipient monitoring policies and procedures. Questioned Costs: None noted. Cause: Staff were not aware of the extent of the requirements to monitor program and fiscal compliance of project sponsors and document results and evidence of compliance or non-compliance. Therefore, a number of project sponsors/subrecipients were not monitored. 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 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. Views of Responsible Officials: The Foundation has updated its Quality Management Plan to include comprehensive subrecipient monitoring policies. The 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#: FY2024/All federal awards provided to subrecipients. Federal agency: All federal awards provided to subrecipients. Pass thru entity: All federal awards provided to subrecipients. Criteria: per 24 CFR 574.500 -- Responsibility for grant administration: (a) General. Grantees are responsible for ensuring that grants are administered 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 program monitoring and evaluation 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 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 did not comprehensively asses all subrecipients using riskbased/ subrecipient monitoring policies and procedures. Questioned Costs: None noted. Cause: Staff were not aware of the extent of the requirements to monitor program and fiscal compliance of project sponsors and document results and evidence of compliance or non-compliance. Therefore, a number of project sponsors/subrecipients were not monitored. 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 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. Views of Responsible Officials: The Foundation has updated its Quality Management Plan to include comprehensive subrecipient monitoring policies. The 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#: FY2024/All federal awards provided to subrecipients. Federal agency: All federal awards provided to subrecipients. Pass thru entity: All federal awards provided to subrecipients. Criteria: per 24 CFR 574.500 -- Responsibility for grant administration: (a) General. Grantees are responsible for ensuring that grants are administered 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 program monitoring and evaluation 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 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 did not comprehensively asses all subrecipients using riskbased/ subrecipient monitoring policies and procedures. Questioned Costs: None noted. Cause: Staff were not aware of the extent of the requirements to monitor program and fiscal compliance of project sponsors and document results and evidence of compliance or non-compliance. Therefore, a number of project sponsors/subrecipients were not monitored. 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 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. Views of Responsible Officials: The Foundation has updated its Quality Management Plan to include comprehensive subrecipient monitoring policies. The 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#: FY2024/All federal awards provided to subrecipients. Federal agency: All federal awards provided to subrecipients. Pass thru entity: All federal awards provided to subrecipients. Criteria: per 24 CFR 574.500 -- Responsibility for grant administration: (a) General. Grantees are responsible for ensuring that grants are administered 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 program monitoring and evaluation 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 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 did not comprehensively asses all subrecipients using riskbased/ subrecipient monitoring policies and procedures. Questioned Costs: None noted. Cause: Staff were not aware of the extent of the requirements to monitor program and fiscal compliance of project sponsors and document results and evidence of compliance or non-compliance. Therefore, a number of project sponsors/subrecipients were not monitored. 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 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. Views of Responsible Officials: The Foundation has updated its Quality Management Plan to include comprehensive subrecipient monitoring policies. The 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#: FY2024/All federal awards provided to subrecipients. Federal agency: All federal awards provided to subrecipients. Pass thru entity: All federal awards provided to subrecipients. Criteria: per 24 CFR 574.500 -- Responsibility for grant administration: (a) General. Grantees are responsible for ensuring that grants are administered 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 program monitoring and evaluation 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 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 did not comprehensively asses all subrecipients using riskbased/ subrecipient monitoring policies and procedures. Questioned Costs: None noted. Cause: Staff were not aware of the extent of the requirements to monitor program and fiscal compliance of project sponsors and document results and evidence of compliance or non-compliance. Therefore, a number of project sponsors/subrecipients were not monitored. 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 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. Views of Responsible Officials: The Foundation has updated its Quality Management Plan to include comprehensive subrecipient monitoring policies. The 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#: FY2024/All federal awards provided to subrecipients. Federal agency: All federal awards provided to subrecipients. Pass thru entity: All federal awards provided to subrecipients. Criteria: per 24 CFR 574.500 -- Responsibility for grant administration: (a) General. Grantees are responsible for ensuring that grants are administered 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 program monitoring and evaluation 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 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 did not comprehensively asses all subrecipients using riskbased/ subrecipient monitoring policies and procedures. Questioned Costs: None noted. Cause: Staff were not aware of the extent of the requirements to monitor program and fiscal compliance of project sponsors and document results and evidence of compliance or non-compliance. Therefore, a number of project sponsors/subrecipients were not monitored. 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 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. Views of Responsible Officials: The Foundation has updated its Quality Management Plan to include comprehensive subrecipient monitoring policies. The 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.
Criteria or specific requirement: 2 CFR Part 200, Subpart F requires the pass-through entity to 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. Per 2 CFR 200.303, non-federal entities receiving federal awards must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: Kansas Division of Emergency Management (Management) did not track, determine or monitor the audit verification requirement for its subrecipients in a timely manner. Questioned costs: None Context: For 18 of 22 subrecipients selected for testing (82%), Management did not timely verify subrecipients were audited in accordance with Subpart F. Management did not send the annual audit letter to the subrecipients on a timely basis or provide an adequate documentation for the audit verification to verify this was conducted during the fiscal year ended June 30, 2024. Cause: Procedures and controls were not sufficient to ensure that it verified that subrecipients were audited in accordance with Subpart F timely. Effect: Without being able to verify through supporting documentation that subrecipients have obtained audits as required by Subpart F and management met the requirements in 2 CFR Part 200 Subpart F and 2 CFR 200.303,, there is an increased risk that subrecipients could be inappropriately spending and/or inaccurately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by Management on a timely basis. Repeat Finding: No. Recommendation: We recommend that the agency review its procedures for monitoring of annual audits for subrecipients to ensure that subrecipients are audited in accordance with Subpart F timely and that supporting documentation is maintained to evidence this was done timely. We recommend that a clear timeline and tracking for this monitoring be added to the policies and procedures. Views of responsible officials: Management does not agree with this finding. Explanation of disagreement with audit finding: • KDEM manages the grant expenditures during the entire lifespan of the project. Scope of work is matched with actual expenses and validated before sending to FEMA for close-out. • KDEM’s audit tracker identifies when audit letters were sent and can be verified through email verification sent to sub-recipients. • There is no regulation stipulating what is “timely”. KDEM verifies audits annually. Auditor’s Concluding Remarks: Management’s response did not persuade the auditor to revise the finding. Sufficient supporting evidence to demonstrate when the audit letters were sent and returned was not provided during the single audit testing process. We also did not see a detailed timeline and tracking process documented in policies and procedures to support evidence of compliance with these requirements.
Criteria or specific requirement: 2 CFR Part 200, Subpart F requires the pass-through entity to 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. Per 2 CFR 200.303, non-federal entities receiving federal awards must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: Kansas Division of Emergency Management (Management) did not track, determine or monitor the audit verification requirement for its subrecipients in a timely manner. Questioned costs: None Context: For 18 of 22 subrecipients selected for testing (82%), Management did not timely verify subrecipients were audited in accordance with Subpart F. Management did not send the annual audit letter to the subrecipients on a timely basis or provide an adequate documentation for the audit verification to verify this was conducted during the fiscal year ended June 30, 2024. Cause: Procedures and controls were not sufficient to ensure that it verified that subrecipients were audited in accordance with Subpart F timely. Effect: Without being able to verify through supporting documentation that subrecipients have obtained audits as required by Subpart F and management met the requirements in 2 CFR Part 200 Subpart F and 2 CFR 200.303,, there is an increased risk that subrecipients could be inappropriately spending and/or inaccurately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by Management on a timely basis. Repeat Finding: No. Recommendation: We recommend that the agency review its procedures for monitoring of annual audits for subrecipients to ensure that subrecipients are audited in accordance with Subpart F timely and that supporting documentation is maintained to evidence this was done timely. We recommend that a clear timeline and tracking for this monitoring be added to the policies and procedures. Views of responsible officials: Management does not agree with this finding. Explanation of disagreement with audit finding: • KDEM manages the grant expenditures during the entire lifespan of the project. Scope of work is matched with actual expenses and validated before sending to FEMA for close-out. • KDEM’s audit tracker identifies when audit letters were sent and can be verified through email verification sent to sub-recipients. • There is no regulation stipulating what is “timely”. KDEM verifies audits annually. Auditor’s Concluding Remarks: Management’s response did not persuade the auditor to revise the finding. Sufficient supporting evidence to demonstrate when the audit letters were sent and returned was not provided during the single audit testing process. We also did not see a detailed timeline and tracking process documented in policies and procedures to support evidence of compliance with these requirements.
Various Agencies Finding 2024 ¬– 015: ALN 10.565, 10.568, 10.569 – Food Distribution Cluster ALN 15.252 – Abandoned Mine Land Reclamation (AMLR) ALN 21.027 – COVID 19 – Coronavirus State and Local Fiscal Recovery Funds 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 Program ALN 84.425U – COVID 19 – Education Stabilization Fund – ARP ESSER ALN 84.425V – COVID 19 – Education Stabilization Fund – ARP EANS Program ALN 84.425W – COVID 19 – Education Stabilization Fund – ARP ESSER HCY ALN 93.044, 93.045, 93.053 – Aging Cluster (including COVID-19) ALN 93.558 – Temporary Assistance for Needy Families ALN 93.667 – Social Services Block Grant A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2023-024) Federal Grant Number(s) and Year(s): 228PA100I1003 (6/13/2022 – 6/30/2025), 231PA445Q2204 (10/01/2022 – 9/30/2023), 231PA825Y8005 (10/01/2022 – 9/30/2023), 231PA825Y8105 (10/01/2022 – 9/30/2023), 241PA825Y8005 (10/01/2023 – 9/30/2024), 241PA825Y8105 (10/01/2023 – 9/30/2024), S18AF20004 (11/01/2017 – 10/31/2025), S19AF20004 (12/01/2018 – 11/30/2025), S21AF10015 (1/01/2021 – 12/31/2023), S22AF00017 (1/01/2022 – 12/31/2024), S23AF00002 (11/01/2022 – 10/31/2027), TN75GJE1S7G3 (3/03/2021 – 12/31/2024), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021– 9/30/2024), S425D210028 (1/05/2021 – 9/30/2024), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2024), S425V210037 (11/16/2021 – 9/30/2024), S425C210013 (3/13/2020 – 9/30/2024), 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 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), 2401PAOACM (10/01/2023 – 9/30/2025), 2401PAOAHD (10/01/2023 – 9/30/2025), 2401PAOANS (10/01/2023 – 9/30/2025), 2401PAOASS (10/01/2023 – 9/30/2025), 2101PATANF (10/01/2020 – 9/30/2021), 2201PATANF (10/01/2021 – 9/30/2022), 2301PATANF (10/01/2022 – 9/30/2023), 2401PATANF (10/01/2023 – 9/30/2024), 2301PASOSR (10/01/2022 – 9/30/2024), 2401PASOSR (10/01/2023 – 9/30/2025), 2301PATANF (10/01/2022 – 9/30/2024), 2401PATANF (10/01/2023 – 9/30/2025) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters for Abandoned Mine Land Reclamation (AMLR), Temporary Assistance for Needy Families, Coronavirus State and Local Fiscal Recovery Funds, and Social Services Block Grant Material Weakness in Internal Control over Compliance, Material Noncompliance for Food Distribution Cluster, Education Stabilization Fund, and Aging Cluster 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) Acceptance date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance Finding 2024 ¬– 015: (continued) 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 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, 2024 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, 2023 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2024. We also evaluated the Commonwealth’s review of 45 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, 2024 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 17.6 months to over 18 months after the FAC Acceptance date for two out of two audit reports with findings. There was also a delay in PDOA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. • 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 8.7 months to over 16 months after the FAC Acceptance date for four out of four audit reports with findings. • Department of Education (PDE): The time period for making a management decision on findings was approximately 7.8 months to over 12 months after the FAC Acceptance date for seven out of 22 audit reports with findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 11.6 months to over 12 months after the FAC Acceptance date for two out of two audit reports with findings. Our testing disclosed for the two late audit reports, DEP made management decisions timely. However, DEP did not notify the subrecipients of the management decisions within the required six month time period after the audit reports FAC Acceptance date. • Department of Human Services (DHS): The time period for making a management decision on findings was approximately 7.2 months after the FAC Acceptance date for one out of two audit reports with findings. Our testing disclosed for the one late audit report DHS made a management decision timely. However, DHS did not notify the subrecipient of the management decision within the required six month time period after the audit reports FAC Acceptance date. Criteria: 2 CFR §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: Finding 2024 ¬– 015: (continued) (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 §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 §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 §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]. 2 CFR §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. Finding 2024 ¬– 015: (continued) (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. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Finding 2024 ¬– 015: (continued) 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. (6) 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. 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, 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. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, and untimely review of the SEFA or alternate procedures be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. Finding 2024 ¬– 015: (continued) DHS Response: DHS agrees that there was an exception where human error caused a management decision on one single audit report to be issued untimely; in this instance, the decision itself was made timely but was not communicated in a timely manner. DHS disagrees that an isolated incident due to human error signifies a weakness in internal controls. This was not a systemic issue and therefore should not have been considered a significant deficiency in internal controls, and DHS should not have been included in this finding. Auditors’ Conclusion: The agency responses from PDOA, PDA, PDE, and DEP indicate agreement with the finding. DHS agrees that an error occurred resulting in untimely submission of one management decision, DHS disagrees that the error represents a significant deficiency. We acknowledge the error occurred due to an oversight and is not a systemic error, however, the error resulted in noncompliance with one of two audit reports that required timely management decisions. We will evaluate corrective action in the subsequent audit. The finding remains as stated. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2024 ¬– 015: ALN 10.565, 10.568, 10.569 – Food Distribution Cluster ALN 15.252 – Abandoned Mine Land Reclamation (AMLR) ALN 21.027 – COVID 19 – Coronavirus State and Local Fiscal Recovery Funds 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 Program ALN 84.425U – COVID 19 – Education Stabilization Fund – ARP ESSER ALN 84.425V – COVID 19 – Education Stabilization Fund – ARP EANS Program ALN 84.425W – COVID 19 – Education Stabilization Fund – ARP ESSER HCY ALN 93.044, 93.045, 93.053 – Aging Cluster (including COVID-19) ALN 93.558 – Temporary Assistance for Needy Families ALN 93.667 – Social Services Block Grant A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2023-024) Federal Grant Number(s) and Year(s): 228PA100I1003 (6/13/2022 – 6/30/2025), 231PA445Q2204 (10/01/2022 – 9/30/2023), 231PA825Y8005 (10/01/2022 – 9/30/2023), 231PA825Y8105 (10/01/2022 – 9/30/2023), 241PA825Y8005 (10/01/2023 – 9/30/2024), 241PA825Y8105 (10/01/2023 – 9/30/2024), S18AF20004 (11/01/2017 – 10/31/2025), S19AF20004 (12/01/2018 – 11/30/2025), S21AF10015 (1/01/2021 – 12/31/2023), S22AF00017 (1/01/2022 – 12/31/2024), S23AF00002 (11/01/2022 – 10/31/2027), TN75GJE1S7G3 (3/03/2021 – 12/31/2024), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021– 9/30/2024), S425D210028 (1/05/2021 – 9/30/2024), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2024), S425V210037 (11/16/2021 – 9/30/2024), S425C210013 (3/13/2020 – 9/30/2024), 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 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), 2401PAOACM (10/01/2023 – 9/30/2025), 2401PAOAHD (10/01/2023 – 9/30/2025), 2401PAOANS (10/01/2023 – 9/30/2025), 2401PAOASS (10/01/2023 – 9/30/2025), 2101PATANF (10/01/2020 – 9/30/2021), 2201PATANF (10/01/2021 – 9/30/2022), 2301PATANF (10/01/2022 – 9/30/2023), 2401PATANF (10/01/2023 – 9/30/2024), 2301PASOSR (10/01/2022 – 9/30/2024), 2401PASOSR (10/01/2023 – 9/30/2025), 2301PATANF (10/01/2022 – 9/30/2024), 2401PATANF (10/01/2023 – 9/30/2025) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters for Abandoned Mine Land Reclamation (AMLR), Temporary Assistance for Needy Families, Coronavirus State and Local Fiscal Recovery Funds, and Social Services Block Grant Material Weakness in Internal Control over Compliance, Material Noncompliance for Food Distribution Cluster, Education Stabilization Fund, and Aging Cluster 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) Acceptance date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance Finding 2024 ¬– 015: (continued) 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 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, 2024 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, 2023 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2024. We also evaluated the Commonwealth’s review of 45 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, 2024 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 17.6 months to over 18 months after the FAC Acceptance date for two out of two audit reports with findings. There was also a delay in PDOA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. • 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 8.7 months to over 16 months after the FAC Acceptance date for four out of four audit reports with findings. • Department of Education (PDE): The time period for making a management decision on findings was approximately 7.8 months to over 12 months after the FAC Acceptance date for seven out of 22 audit reports with findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 11.6 months to over 12 months after the FAC Acceptance date for two out of two audit reports with findings. Our testing disclosed for the two late audit reports, DEP made management decisions timely. However, DEP did not notify the subrecipients of the management decisions within the required six month time period after the audit reports FAC Acceptance date. • Department of Human Services (DHS): The time period for making a management decision on findings was approximately 7.2 months after the FAC Acceptance date for one out of two audit reports with findings. Our testing disclosed for the one late audit report DHS made a management decision timely. However, DHS did not notify the subrecipient of the management decision within the required six month time period after the audit reports FAC Acceptance date. Criteria: 2 CFR §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: Finding 2024 ¬– 015: (continued) (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 §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 §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 §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]. 2 CFR §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. Finding 2024 ¬– 015: (continued) (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. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Finding 2024 ¬– 015: (continued) 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. (6) 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. 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, 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. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, and untimely review of the SEFA or alternate procedures be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. Finding 2024 ¬– 015: (continued) DHS Response: DHS agrees that there was an exception where human error caused a management decision on one single audit report to be issued untimely; in this instance, the decision itself was made timely but was not communicated in a timely manner. DHS disagrees that an isolated incident due to human error signifies a weakness in internal controls. This was not a systemic issue and therefore should not have been considered a significant deficiency in internal controls, and DHS should not have been included in this finding. Auditors’ Conclusion: The agency responses from PDOA, PDA, PDE, and DEP indicate agreement with the finding. DHS agrees that an error occurred resulting in untimely submission of one management decision, DHS disagrees that the error represents a significant deficiency. We acknowledge the error occurred due to an oversight and is not a systemic error, however, the error resulted in noncompliance with one of two audit reports that required timely management decisions. We will evaluate corrective action in the subsequent audit. The finding remains as stated. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2024 ¬– 015: ALN 10.565, 10.568, 10.569 – Food Distribution Cluster ALN 15.252 – Abandoned Mine Land Reclamation (AMLR) ALN 21.027 – COVID 19 – Coronavirus State and Local Fiscal Recovery Funds 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 Program ALN 84.425U – COVID 19 – Education Stabilization Fund – ARP ESSER ALN 84.425V – COVID 19 – Education Stabilization Fund – ARP EANS Program ALN 84.425W – COVID 19 – Education Stabilization Fund – ARP ESSER HCY ALN 93.044, 93.045, 93.053 – Aging Cluster (including COVID-19) ALN 93.558 – Temporary Assistance for Needy Families ALN 93.667 – Social Services Block Grant A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2023-024) Federal Grant Number(s) and Year(s): 228PA100I1003 (6/13/2022 – 6/30/2025), 231PA445Q2204 (10/01/2022 – 9/30/2023), 231PA825Y8005 (10/01/2022 – 9/30/2023), 231PA825Y8105 (10/01/2022 – 9/30/2023), 241PA825Y8005 (10/01/2023 – 9/30/2024), 241PA825Y8105 (10/01/2023 – 9/30/2024), S18AF20004 (11/01/2017 – 10/31/2025), S19AF20004 (12/01/2018 – 11/30/2025), S21AF10015 (1/01/2021 – 12/31/2023), S22AF00017 (1/01/2022 – 12/31/2024), S23AF00002 (11/01/2022 – 10/31/2027), TN75GJE1S7G3 (3/03/2021 – 12/31/2024), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021– 9/30/2024), S425D210028 (1/05/2021 – 9/30/2024), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2024), S425V210037 (11/16/2021 – 9/30/2024), S425C210013 (3/13/2020 – 9/30/2024), 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 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), 2401PAOACM (10/01/2023 – 9/30/2025), 2401PAOAHD (10/01/2023 – 9/30/2025), 2401PAOANS (10/01/2023 – 9/30/2025), 2401PAOASS (10/01/2023 – 9/30/2025), 2101PATANF (10/01/2020 – 9/30/2021), 2201PATANF (10/01/2021 – 9/30/2022), 2301PATANF (10/01/2022 – 9/30/2023), 2401PATANF (10/01/2023 – 9/30/2024), 2301PASOSR (10/01/2022 – 9/30/2024), 2401PASOSR (10/01/2023 – 9/30/2025), 2301PATANF (10/01/2022 – 9/30/2024), 2401PATANF (10/01/2023 – 9/30/2025) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters for Abandoned Mine Land Reclamation (AMLR), Temporary Assistance for Needy Families, Coronavirus State and Local Fiscal Recovery Funds, and Social Services Block Grant Material Weakness in Internal Control over Compliance, Material Noncompliance for Food Distribution Cluster, Education Stabilization Fund, and Aging Cluster 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) Acceptance date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance Finding 2024 ¬– 015: (continued) 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 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, 2024 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, 2023 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2024. We also evaluated the Commonwealth’s review of 45 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, 2024 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 17.6 months to over 18 months after the FAC Acceptance date for two out of two audit reports with findings. There was also a delay in PDOA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. • 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 8.7 months to over 16 months after the FAC Acceptance date for four out of four audit reports with findings. • Department of Education (PDE): The time period for making a management decision on findings was approximately 7.8 months to over 12 months after the FAC Acceptance date for seven out of 22 audit reports with findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 11.6 months to over 12 months after the FAC Acceptance date for two out of two audit reports with findings. Our testing disclosed for the two late audit reports, DEP made management decisions timely. However, DEP did not notify the subrecipients of the management decisions within the required six month time period after the audit reports FAC Acceptance date. • Department of Human Services (DHS): The time period for making a management decision on findings was approximately 7.2 months after the FAC Acceptance date for one out of two audit reports with findings. Our testing disclosed for the one late audit report DHS made a management decision timely. However, DHS did not notify the subrecipient of the management decision within the required six month time period after the audit reports FAC Acceptance date. Criteria: 2 CFR §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: Finding 2024 ¬– 015: (continued) (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 §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 §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 §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]. 2 CFR §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. Finding 2024 ¬– 015: (continued) (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. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Finding 2024 ¬– 015: (continued) 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. (6) 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. 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, 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. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, and untimely review of the SEFA or alternate procedures be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. Finding 2024 ¬– 015: (continued) DHS Response: DHS agrees that there was an exception where human error caused a management decision on one single audit report to be issued untimely; in this instance, the decision itself was made timely but was not communicated in a timely manner. DHS disagrees that an isolated incident due to human error signifies a weakness in internal controls. This was not a systemic issue and therefore should not have been considered a significant deficiency in internal controls, and DHS should not have been included in this finding. Auditors’ Conclusion: The agency responses from PDOA, PDA, PDE, and DEP indicate agreement with the finding. DHS agrees that an error occurred resulting in untimely submission of one management decision, DHS disagrees that the error represents a significant deficiency. We acknowledge the error occurred due to an oversight and is not a systemic error, however, the error resulted in noncompliance with one of two audit reports that required timely management decisions. We will evaluate corrective action in the subsequent audit. The finding remains as stated. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2024 ¬– 015: ALN 10.565, 10.568, 10.569 – Food Distribution Cluster ALN 15.252 – Abandoned Mine Land Reclamation (AMLR) ALN 21.027 – COVID 19 – Coronavirus State and Local Fiscal Recovery Funds 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 Program ALN 84.425U – COVID 19 – Education Stabilization Fund – ARP ESSER ALN 84.425V – COVID 19 – Education Stabilization Fund – ARP EANS Program ALN 84.425W – COVID 19 – Education Stabilization Fund – ARP ESSER HCY ALN 93.044, 93.045, 93.053 – Aging Cluster (including COVID-19) ALN 93.558 – Temporary Assistance for Needy Families ALN 93.667 – Social Services Block Grant A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2023-024) Federal Grant Number(s) and Year(s): 228PA100I1003 (6/13/2022 – 6/30/2025), 231PA445Q2204 (10/01/2022 – 9/30/2023), 231PA825Y8005 (10/01/2022 – 9/30/2023), 231PA825Y8105 (10/01/2022 – 9/30/2023), 241PA825Y8005 (10/01/2023 – 9/30/2024), 241PA825Y8105 (10/01/2023 – 9/30/2024), S18AF20004 (11/01/2017 – 10/31/2025), S19AF20004 (12/01/2018 – 11/30/2025), S21AF10015 (1/01/2021 – 12/31/2023), S22AF00017 (1/01/2022 – 12/31/2024), S23AF00002 (11/01/2022 – 10/31/2027), TN75GJE1S7G3 (3/03/2021 – 12/31/2024), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021– 9/30/2024), S425D210028 (1/05/2021 – 9/30/2024), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2024), S425V210037 (11/16/2021 – 9/30/2024), S425C210013 (3/13/2020 – 9/30/2024), 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 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), 2401PAOACM (10/01/2023 – 9/30/2025), 2401PAOAHD (10/01/2023 – 9/30/2025), 2401PAOANS (10/01/2023 – 9/30/2025), 2401PAOASS (10/01/2023 – 9/30/2025), 2101PATANF (10/01/2020 – 9/30/2021), 2201PATANF (10/01/2021 – 9/30/2022), 2301PATANF (10/01/2022 – 9/30/2023), 2401PATANF (10/01/2023 – 9/30/2024), 2301PASOSR (10/01/2022 – 9/30/2024), 2401PASOSR (10/01/2023 – 9/30/2025), 2301PATANF (10/01/2022 – 9/30/2024), 2401PATANF (10/01/2023 – 9/30/2025) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters for Abandoned Mine Land Reclamation (AMLR), Temporary Assistance for Needy Families, Coronavirus State and Local Fiscal Recovery Funds, and Social Services Block Grant Material Weakness in Internal Control over Compliance, Material Noncompliance for Food Distribution Cluster, Education Stabilization Fund, and Aging Cluster 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) Acceptance date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance Finding 2024 ¬– 015: (continued) 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 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, 2024 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, 2023 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2024. We also evaluated the Commonwealth’s review of 45 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, 2024 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 17.6 months to over 18 months after the FAC Acceptance date for two out of two audit reports with findings. There was also a delay in PDOA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. • 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 8.7 months to over 16 months after the FAC Acceptance date for four out of four audit reports with findings. • Department of Education (PDE): The time period for making a management decision on findings was approximately 7.8 months to over 12 months after the FAC Acceptance date for seven out of 22 audit reports with findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 11.6 months to over 12 months after the FAC Acceptance date for two out of two audit reports with findings. Our testing disclosed for the two late audit reports, DEP made management decisions timely. However, DEP did not notify the subrecipients of the management decisions within the required six month time period after the audit reports FAC Acceptance date. • Department of Human Services (DHS): The time period for making a management decision on findings was approximately 7.2 months after the FAC Acceptance date for one out of two audit reports with findings. Our testing disclosed for the one late audit report DHS made a management decision timely. However, DHS did not notify the subrecipient of the management decision within the required six month time period after the audit reports FAC Acceptance date. Criteria: 2 CFR §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: Finding 2024 ¬– 015: (continued) (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 §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 §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 §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]. 2 CFR §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. Finding 2024 ¬– 015: (continued) (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. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Finding 2024 ¬– 015: (continued) 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. (6) 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. 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, 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. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, and untimely review of the SEFA or alternate procedures be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. Finding 2024 ¬– 015: (continued) DHS Response: DHS agrees that there was an exception where human error caused a management decision on one single audit report to be issued untimely; in this instance, the decision itself was made timely but was not communicated in a timely manner. DHS disagrees that an isolated incident due to human error signifies a weakness in internal controls. This was not a systemic issue and therefore should not have been considered a significant deficiency in internal controls, and DHS should not have been included in this finding. Auditors’ Conclusion: The agency responses from PDOA, PDA, PDE, and DEP indicate agreement with the finding. DHS agrees that an error occurred resulting in untimely submission of one management decision, DHS disagrees that the error represents a significant deficiency. We acknowledge the error occurred due to an oversight and is not a systemic error, however, the error resulted in noncompliance with one of two audit reports that required timely management decisions. We will evaluate corrective action in the subsequent audit. The finding remains as stated. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2024 ¬– 015: ALN 10.565, 10.568, 10.569 – Food Distribution Cluster ALN 15.252 – Abandoned Mine Land Reclamation (AMLR) ALN 21.027 – COVID 19 – Coronavirus State and Local Fiscal Recovery Funds 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 Program ALN 84.425U – COVID 19 – Education Stabilization Fund – ARP ESSER ALN 84.425V – COVID 19 – Education Stabilization Fund – ARP EANS Program ALN 84.425W – COVID 19 – Education Stabilization Fund – ARP ESSER HCY ALN 93.044, 93.045, 93.053 – Aging Cluster (including COVID-19) ALN 93.558 – Temporary Assistance for Needy Families ALN 93.667 – Social Services Block Grant A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2023-024) Federal Grant Number(s) and Year(s): 228PA100I1003 (6/13/2022 – 6/30/2025), 231PA445Q2204 (10/01/2022 – 9/30/2023), 231PA825Y8005 (10/01/2022 – 9/30/2023), 231PA825Y8105 (10/01/2022 – 9/30/2023), 241PA825Y8005 (10/01/2023 – 9/30/2024), 241PA825Y8105 (10/01/2023 – 9/30/2024), S18AF20004 (11/01/2017 – 10/31/2025), S19AF20004 (12/01/2018 – 11/30/2025), S21AF10015 (1/01/2021 – 12/31/2023), S22AF00017 (1/01/2022 – 12/31/2024), S23AF00002 (11/01/2022 – 10/31/2027), TN75GJE1S7G3 (3/03/2021 – 12/31/2024), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021– 9/30/2024), S425D210028 (1/05/2021 – 9/30/2024), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2024), S425V210037 (11/16/2021 – 9/30/2024), S425C210013 (3/13/2020 – 9/30/2024), 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 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), 2401PAOACM (10/01/2023 – 9/30/2025), 2401PAOAHD (10/01/2023 – 9/30/2025), 2401PAOANS (10/01/2023 – 9/30/2025), 2401PAOASS (10/01/2023 – 9/30/2025), 2101PATANF (10/01/2020 – 9/30/2021), 2201PATANF (10/01/2021 – 9/30/2022), 2301PATANF (10/01/2022 – 9/30/2023), 2401PATANF (10/01/2023 – 9/30/2024), 2301PASOSR (10/01/2022 – 9/30/2024), 2401PASOSR (10/01/2023 – 9/30/2025), 2301PATANF (10/01/2022 – 9/30/2024), 2401PATANF (10/01/2023 – 9/30/2025) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters for Abandoned Mine Land Reclamation (AMLR), Temporary Assistance for Needy Families, Coronavirus State and Local Fiscal Recovery Funds, and Social Services Block Grant Material Weakness in Internal Control over Compliance, Material Noncompliance for Food Distribution Cluster, Education Stabilization Fund, and Aging Cluster 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) Acceptance date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance Finding 2024 ¬– 015: (continued) 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 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, 2024 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, 2023 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2024. We also evaluated the Commonwealth’s review of 45 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, 2024 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 17.6 months to over 18 months after the FAC Acceptance date for two out of two audit reports with findings. There was also a delay in PDOA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. • 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 8.7 months to over 16 months after the FAC Acceptance date for four out of four audit reports with findings. • Department of Education (PDE): The time period for making a management decision on findings was approximately 7.8 months to over 12 months after the FAC Acceptance date for seven out of 22 audit reports with findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 11.6 months to over 12 months after the FAC Acceptance date for two out of two audit reports with findings. Our testing disclosed for the two late audit reports, DEP made management decisions timely. However, DEP did not notify the subrecipients of the management decisions within the required six month time period after the audit reports FAC Acceptance date. • Department of Human Services (DHS): The time period for making a management decision on findings was approximately 7.2 months after the FAC Acceptance date for one out of two audit reports with findings. Our testing disclosed for the one late audit report DHS made a management decision timely. However, DHS did not notify the subrecipient of the management decision within the required six month time period after the audit reports FAC Acceptance date. Criteria: 2 CFR §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: Finding 2024 ¬– 015: (continued) (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 §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 §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 §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]. 2 CFR §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. Finding 2024 ¬– 015: (continued) (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. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Finding 2024 ¬– 015: (continued) 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. (6) 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. 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, 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. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, and untimely review of the SEFA or alternate procedures be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. Finding 2024 ¬– 015: (continued) DHS Response: DHS agrees that there was an exception where human error caused a management decision on one single audit report to be issued untimely; in this instance, the decision itself was made timely but was not communicated in a timely manner. DHS disagrees that an isolated incident due to human error signifies a weakness in internal controls. This was not a systemic issue and therefore should not have been considered a significant deficiency in internal controls, and DHS should not have been included in this finding. Auditors’ Conclusion: The agency responses from PDOA, PDA, PDE, and DEP indicate agreement with the finding. DHS agrees that an error occurred resulting in untimely submission of one management decision, DHS disagrees that the error represents a significant deficiency. We acknowledge the error occurred due to an oversight and is not a systemic error, however, the error resulted in noncompliance with one of two audit reports that required timely management decisions. We will evaluate corrective action in the subsequent audit. The finding remains as stated. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2024 ¬– 015: ALN 10.565, 10.568, 10.569 – Food Distribution Cluster ALN 15.252 – Abandoned Mine Land Reclamation (AMLR) ALN 21.027 – COVID 19 – Coronavirus State and Local Fiscal Recovery Funds 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 Program ALN 84.425U – COVID 19 – Education Stabilization Fund – ARP ESSER ALN 84.425V – COVID 19 – Education Stabilization Fund – ARP EANS Program ALN 84.425W – COVID 19 – Education Stabilization Fund – ARP ESSER HCY ALN 93.044, 93.045, 93.053 – Aging Cluster (including COVID-19) ALN 93.558 – Temporary Assistance for Needy Families ALN 93.667 – Social Services Block Grant A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2023-024) Federal Grant Number(s) and Year(s): 228PA100I1003 (6/13/2022 – 6/30/2025), 231PA445Q2204 (10/01/2022 – 9/30/2023), 231PA825Y8005 (10/01/2022 – 9/30/2023), 231PA825Y8105 (10/01/2022 – 9/30/2023), 241PA825Y8005 (10/01/2023 – 9/30/2024), 241PA825Y8105 (10/01/2023 – 9/30/2024), S18AF20004 (11/01/2017 – 10/31/2025), S19AF20004 (12/01/2018 – 11/30/2025), S21AF10015 (1/01/2021 – 12/31/2023), S22AF00017 (1/01/2022 – 12/31/2024), S23AF00002 (11/01/2022 – 10/31/2027), TN75GJE1S7G3 (3/03/2021 – 12/31/2024), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021– 9/30/2024), S425D210028 (1/05/2021 – 9/30/2024), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2024), S425V210037 (11/16/2021 – 9/30/2024), S425C210013 (3/13/2020 – 9/30/2024), 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 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), 2401PAOACM (10/01/2023 – 9/30/2025), 2401PAOAHD (10/01/2023 – 9/30/2025), 2401PAOANS (10/01/2023 – 9/30/2025), 2401PAOASS (10/01/2023 – 9/30/2025), 2101PATANF (10/01/2020 – 9/30/2021), 2201PATANF (10/01/2021 – 9/30/2022), 2301PATANF (10/01/2022 – 9/30/2023), 2401PATANF (10/01/2023 – 9/30/2024), 2301PASOSR (10/01/2022 – 9/30/2024), 2401PASOSR (10/01/2023 – 9/30/2025), 2301PATANF (10/01/2022 – 9/30/2024), 2401PATANF (10/01/2023 – 9/30/2025) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters for Abandoned Mine Land Reclamation (AMLR), Temporary Assistance for Needy Families, Coronavirus State and Local Fiscal Recovery Funds, and Social Services Block Grant Material Weakness in Internal Control over Compliance, Material Noncompliance for Food Distribution Cluster, Education Stabilization Fund, and Aging Cluster 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) Acceptance date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance Finding 2024 ¬– 015: (continued) 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 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, 2024 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, 2023 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2024. We also evaluated the Commonwealth’s review of 45 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, 2024 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 17.6 months to over 18 months after the FAC Acceptance date for two out of two audit reports with findings. There was also a delay in PDOA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. • 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 8.7 months to over 16 months after the FAC Acceptance date for four out of four audit reports with findings. • Department of Education (PDE): The time period for making a management decision on findings was approximately 7.8 months to over 12 months after the FAC Acceptance date for seven out of 22 audit reports with findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 11.6 months to over 12 months after the FAC Acceptance date for two out of two audit reports with findings. Our testing disclosed for the two late audit reports, DEP made management decisions timely. However, DEP did not notify the subrecipients of the management decisions within the required six month time period after the audit reports FAC Acceptance date. • Department of Human Services (DHS): The time period for making a management decision on findings was approximately 7.2 months after the FAC Acceptance date for one out of two audit reports with findings. Our testing disclosed for the one late audit report DHS made a management decision timely. However, DHS did not notify the subrecipient of the management decision within the required six month time period after the audit reports FAC Acceptance date. Criteria: 2 CFR §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: Finding 2024 ¬– 015: (continued) (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 §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 §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 §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]. 2 CFR §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. Finding 2024 ¬– 015: (continued) (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. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Finding 2024 ¬– 015: (continued) 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. (6) 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. 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, 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. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, and untimely review of the SEFA or alternate procedures be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. Finding 2024 ¬– 015: (continued) DHS Response: DHS agrees that there was an exception where human error caused a management decision on one single audit report to be issued untimely; in this instance, the decision itself was made timely but was not communicated in a timely manner. DHS disagrees that an isolated incident due to human error signifies a weakness in internal controls. This was not a systemic issue and therefore should not have been considered a significant deficiency in internal controls, and DHS should not have been included in this finding. Auditors’ Conclusion: The agency responses from PDOA, PDA, PDE, and DEP indicate agreement with the finding. DHS agrees that an error occurred resulting in untimely submission of one management decision, DHS disagrees that the error represents a significant deficiency. We acknowledge the error occurred due to an oversight and is not a systemic error, however, the error resulted in noncompliance with one of two audit reports that required timely management decisions. We will evaluate corrective action in the subsequent audit. The finding remains as stated. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2024 ¬– 015: ALN 10.565, 10.568, 10.569 – Food Distribution Cluster ALN 15.252 – Abandoned Mine Land Reclamation (AMLR) ALN 21.027 – COVID 19 – Coronavirus State and Local Fiscal Recovery Funds 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 Program ALN 84.425U – COVID 19 – Education Stabilization Fund – ARP ESSER ALN 84.425V – COVID 19 – Education Stabilization Fund – ARP EANS Program ALN 84.425W – COVID 19 – Education Stabilization Fund – ARP ESSER HCY ALN 93.044, 93.045, 93.053 – Aging Cluster (including COVID-19) ALN 93.558 – Temporary Assistance for Needy Families ALN 93.667 – Social Services Block Grant A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2023-024) Federal Grant Number(s) and Year(s): 228PA100I1003 (6/13/2022 – 6/30/2025), 231PA445Q2204 (10/01/2022 – 9/30/2023), 231PA825Y8005 (10/01/2022 – 9/30/2023), 231PA825Y8105 (10/01/2022 – 9/30/2023), 241PA825Y8005 (10/01/2023 – 9/30/2024), 241PA825Y8105 (10/01/2023 – 9/30/2024), S18AF20004 (11/01/2017 – 10/31/2025), S19AF20004 (12/01/2018 – 11/30/2025), S21AF10015 (1/01/2021 – 12/31/2023), S22AF00017 (1/01/2022 – 12/31/2024), S23AF00002 (11/01/2022 – 10/31/2027), TN75GJE1S7G3 (3/03/2021 – 12/31/2024), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021– 9/30/2024), S425D210028 (1/05/2021 – 9/30/2024), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2024), S425V210037 (11/16/2021 – 9/30/2024), S425C210013 (3/13/2020 – 9/30/2024), 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 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), 2401PAOACM (10/01/2023 – 9/30/2025), 2401PAOAHD (10/01/2023 – 9/30/2025), 2401PAOANS (10/01/2023 – 9/30/2025), 2401PAOASS (10/01/2023 – 9/30/2025), 2101PATANF (10/01/2020 – 9/30/2021), 2201PATANF (10/01/2021 – 9/30/2022), 2301PATANF (10/01/2022 – 9/30/2023), 2401PATANF (10/01/2023 – 9/30/2024), 2301PASOSR (10/01/2022 – 9/30/2024), 2401PASOSR (10/01/2023 – 9/30/2025), 2301PATANF (10/01/2022 – 9/30/2024), 2401PATANF (10/01/2023 – 9/30/2025) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters for Abandoned Mine Land Reclamation (AMLR), Temporary Assistance for Needy Families, Coronavirus State and Local Fiscal Recovery Funds, and Social Services Block Grant Material Weakness in Internal Control over Compliance, Material Noncompliance for Food Distribution Cluster, Education Stabilization Fund, and Aging Cluster 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) Acceptance date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance Finding 2024 ¬– 015: (continued) 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 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, 2024 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, 2023 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2024. We also evaluated the Commonwealth’s review of 45 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, 2024 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 17.6 months to over 18 months after the FAC Acceptance date for two out of two audit reports with findings. There was also a delay in PDOA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. • 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 8.7 months to over 16 months after the FAC Acceptance date for four out of four audit reports with findings. • Department of Education (PDE): The time period for making a management decision on findings was approximately 7.8 months to over 12 months after the FAC Acceptance date for seven out of 22 audit reports with findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 11.6 months to over 12 months after the FAC Acceptance date for two out of two audit reports with findings. Our testing disclosed for the two late audit reports, DEP made management decisions timely. However, DEP did not notify the subrecipients of the management decisions within the required six month time period after the audit reports FAC Acceptance date. • Department of Human Services (DHS): The time period for making a management decision on findings was approximately 7.2 months after the FAC Acceptance date for one out of two audit reports with findings. Our testing disclosed for the one late audit report DHS made a management decision timely. However, DHS did not notify the subrecipient of the management decision within the required six month time period after the audit reports FAC Acceptance date. Criteria: 2 CFR §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: Finding 2024 ¬– 015: (continued) (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 §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 §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 §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]. 2 CFR §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. Finding 2024 ¬– 015: (continued) (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. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Finding 2024 ¬– 015: (continued) 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. (6) 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. 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, 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. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, and untimely review of the SEFA or alternate procedures be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. Finding 2024 ¬– 015: (continued) DHS Response: DHS agrees that there was an exception where human error caused a management decision on one single audit report to be issued untimely; in this instance, the decision itself was made timely but was not communicated in a timely manner. DHS disagrees that an isolated incident due to human error signifies a weakness in internal controls. This was not a systemic issue and therefore should not have been considered a significant deficiency in internal controls, and DHS should not have been included in this finding. Auditors’ Conclusion: The agency responses from PDOA, PDA, PDE, and DEP indicate agreement with the finding. DHS agrees that an error occurred resulting in untimely submission of one management decision, DHS disagrees that the error represents a significant deficiency. We acknowledge the error occurred due to an oversight and is not a systemic error, however, the error resulted in noncompliance with one of two audit reports that required timely management decisions. We will evaluate corrective action in the subsequent audit. The finding remains as stated. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2024 ¬– 015: ALN 10.565, 10.568, 10.569 – Food Distribution Cluster ALN 15.252 – Abandoned Mine Land Reclamation (AMLR) ALN 21.027 – COVID 19 – Coronavirus State and Local Fiscal Recovery Funds 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 Program ALN 84.425U – COVID 19 – Education Stabilization Fund – ARP ESSER ALN 84.425V – COVID 19 – Education Stabilization Fund – ARP EANS Program ALN 84.425W – COVID 19 – Education Stabilization Fund – ARP ESSER HCY ALN 93.044, 93.045, 93.053 – Aging Cluster (including COVID-19) ALN 93.558 – Temporary Assistance for Needy Families ALN 93.667 – Social Services Block Grant A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2023-024) Federal Grant Number(s) and Year(s): 228PA100I1003 (6/13/2022 – 6/30/2025), 231PA445Q2204 (10/01/2022 – 9/30/2023), 231PA825Y8005 (10/01/2022 – 9/30/2023), 231PA825Y8105 (10/01/2022 – 9/30/2023), 241PA825Y8005 (10/01/2023 – 9/30/2024), 241PA825Y8105 (10/01/2023 – 9/30/2024), S18AF20004 (11/01/2017 – 10/31/2025), S19AF20004 (12/01/2018 – 11/30/2025), S21AF10015 (1/01/2021 – 12/31/2023), S22AF00017 (1/01/2022 – 12/31/2024), S23AF00002 (11/01/2022 – 10/31/2027), TN75GJE1S7G3 (3/03/2021 – 12/31/2024), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021– 9/30/2024), S425D210028 (1/05/2021 – 9/30/2024), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2024), S425V210037 (11/16/2021 – 9/30/2024), S425C210013 (3/13/2020 – 9/30/2024), 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 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), 2401PAOACM (10/01/2023 – 9/30/2025), 2401PAOAHD (10/01/2023 – 9/30/2025), 2401PAOANS (10/01/2023 – 9/30/2025), 2401PAOASS (10/01/2023 – 9/30/2025), 2101PATANF (10/01/2020 – 9/30/2021), 2201PATANF (10/01/2021 – 9/30/2022), 2301PATANF (10/01/2022 – 9/30/2023), 2401PATANF (10/01/2023 – 9/30/2024), 2301PASOSR (10/01/2022 – 9/30/2024), 2401PASOSR (10/01/2023 – 9/30/2025), 2301PATANF (10/01/2022 – 9/30/2024), 2401PATANF (10/01/2023 – 9/30/2025) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters for Abandoned Mine Land Reclamation (AMLR), Temporary Assistance for Needy Families, Coronavirus State and Local Fiscal Recovery Funds, and Social Services Block Grant Material Weakness in Internal Control over Compliance, Material Noncompliance for Food Distribution Cluster, Education Stabilization Fund, and Aging Cluster 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) Acceptance date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance Finding 2024 ¬– 015: (continued) 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 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, 2024 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, 2023 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2024. We also evaluated the Commonwealth’s review of 45 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, 2024 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 17.6 months to over 18 months after the FAC Acceptance date for two out of two audit reports with findings. There was also a delay in PDOA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. • 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 8.7 months to over 16 months after the FAC Acceptance date for four out of four audit reports with findings. • Department of Education (PDE): The time period for making a management decision on findings was approximately 7.8 months to over 12 months after the FAC Acceptance date for seven out of 22 audit reports with findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 11.6 months to over 12 months after the FAC Acceptance date for two out of two audit reports with findings. Our testing disclosed for the two late audit reports, DEP made management decisions timely. However, DEP did not notify the subrecipients of the management decisions within the required six month time period after the audit reports FAC Acceptance date. • Department of Human Services (DHS): The time period for making a management decision on findings was approximately 7.2 months after the FAC Acceptance date for one out of two audit reports with findings. Our testing disclosed for the one late audit report DHS made a management decision timely. However, DHS did not notify the subrecipient of the management decision within the required six month time period after the audit reports FAC Acceptance date. Criteria: 2 CFR §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: Finding 2024 ¬– 015: (continued) (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 §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 §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 §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]. 2 CFR §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. Finding 2024 ¬– 015: (continued) (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. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Finding 2024 ¬– 015: (continued) 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. (6) 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. 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, 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. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, and untimely review of the SEFA or alternate procedures be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. Finding 2024 ¬– 015: (continued) DHS Response: DHS agrees that there was an exception where human error caused a management decision on one single audit report to be issued untimely; in this instance, the decision itself was made timely but was not communicated in a timely manner. DHS disagrees that an isolated incident due to human error signifies a weakness in internal controls. This was not a systemic issue and therefore should not have been considered a significant deficiency in internal controls, and DHS should not have been included in this finding. Auditors’ Conclusion: The agency responses from PDOA, PDA, PDE, and DEP indicate agreement with the finding. DHS agrees that an error occurred resulting in untimely submission of one management decision, DHS disagrees that the error represents a significant deficiency. We acknowledge the error occurred due to an oversight and is not a systemic error, however, the error resulted in noncompliance with one of two audit reports that required timely management decisions. We will evaluate corrective action in the subsequent audit. The finding remains as stated. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2024 ¬– 015: ALN 10.565, 10.568, 10.569 – Food Distribution Cluster ALN 15.252 – Abandoned Mine Land Reclamation (AMLR) ALN 21.027 – COVID 19 – Coronavirus State and Local Fiscal Recovery Funds 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 Program ALN 84.425U – COVID 19 – Education Stabilization Fund – ARP ESSER ALN 84.425V – COVID 19 – Education Stabilization Fund – ARP EANS Program ALN 84.425W – COVID 19 – Education Stabilization Fund – ARP ESSER HCY ALN 93.044, 93.045, 93.053 – Aging Cluster (including COVID-19) ALN 93.558 – Temporary Assistance for Needy Families ALN 93.667 – Social Services Block Grant A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2023-024) Federal Grant Number(s) and Year(s): 228PA100I1003 (6/13/2022 – 6/30/2025), 231PA445Q2204 (10/01/2022 – 9/30/2023), 231PA825Y8005 (10/01/2022 – 9/30/2023), 231PA825Y8105 (10/01/2022 – 9/30/2023), 241PA825Y8005 (10/01/2023 – 9/30/2024), 241PA825Y8105 (10/01/2023 – 9/30/2024), S18AF20004 (11/01/2017 – 10/31/2025), S19AF20004 (12/01/2018 – 11/30/2025), S21AF10015 (1/01/2021 – 12/31/2023), S22AF00017 (1/01/2022 – 12/31/2024), S23AF00002 (11/01/2022 – 10/31/2027), TN75GJE1S7G3 (3/03/2021 – 12/31/2024), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021– 9/30/2024), S425D210028 (1/05/2021 – 9/30/2024), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2024), S425V210037 (11/16/2021 – 9/30/2024), S425C210013 (3/13/2020 – 9/30/2024), 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 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), 2401PAOACM (10/01/2023 – 9/30/2025), 2401PAOAHD (10/01/2023 – 9/30/2025), 2401PAOANS (10/01/2023 – 9/30/2025), 2401PAOASS (10/01/2023 – 9/30/2025), 2101PATANF (10/01/2020 – 9/30/2021), 2201PATANF (10/01/2021 – 9/30/2022), 2301PATANF (10/01/2022 – 9/30/2023), 2401PATANF (10/01/2023 – 9/30/2024), 2301PASOSR (10/01/2022 – 9/30/2024), 2401PASOSR (10/01/2023 – 9/30/2025), 2301PATANF (10/01/2022 – 9/30/2024), 2401PATANF (10/01/2023 – 9/30/2025) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters for Abandoned Mine Land Reclamation (AMLR), Temporary Assistance for Needy Families, Coronavirus State and Local Fiscal Recovery Funds, and Social Services Block Grant Material Weakness in Internal Control over Compliance, Material Noncompliance for Food Distribution Cluster, Education Stabilization Fund, and Aging Cluster 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) Acceptance date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance Finding 2024 ¬– 015: (continued) 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 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, 2024 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, 2023 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2024. We also evaluated the Commonwealth’s review of 45 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, 2024 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 17.6 months to over 18 months after the FAC Acceptance date for two out of two audit reports with findings. There was also a delay in PDOA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. • 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 8.7 months to over 16 months after the FAC Acceptance date for four out of four audit reports with findings. • Department of Education (PDE): The time period for making a management decision on findings was approximately 7.8 months to over 12 months after the FAC Acceptance date for seven out of 22 audit reports with findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 11.6 months to over 12 months after the FAC Acceptance date for two out of two audit reports with findings. Our testing disclosed for the two late audit reports, DEP made management decisions timely. However, DEP did not notify the subrecipients of the management decisions within the required six month time period after the audit reports FAC Acceptance date. • Department of Human Services (DHS): The time period for making a management decision on findings was approximately 7.2 months after the FAC Acceptance date for one out of two audit reports with findings. Our testing disclosed for the one late audit report DHS made a management decision timely. However, DHS did not notify the subrecipient of the management decision within the required six month time period after the audit reports FAC Acceptance date. Criteria: 2 CFR §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: Finding 2024 ¬– 015: (continued) (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 §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 §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 §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]. 2 CFR §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. Finding 2024 ¬– 015: (continued) (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. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Finding 2024 ¬– 015: (continued) 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. (6) 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. 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, 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. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, and untimely review of the SEFA or alternate procedures be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. Finding 2024 ¬– 015: (continued) DHS Response: DHS agrees that there was an exception where human error caused a management decision on one single audit report to be issued untimely; in this instance, the decision itself was made timely but was not communicated in a timely manner. DHS disagrees that an isolated incident due to human error signifies a weakness in internal controls. This was not a systemic issue and therefore should not have been considered a significant deficiency in internal controls, and DHS should not have been included in this finding. Auditors’ Conclusion: The agency responses from PDOA, PDA, PDE, and DEP indicate agreement with the finding. DHS agrees that an error occurred resulting in untimely submission of one management decision, DHS disagrees that the error represents a significant deficiency. We acknowledge the error occurred due to an oversight and is not a systemic error, however, the error resulted in noncompliance with one of two audit reports that required timely management decisions. We will evaluate corrective action in the subsequent audit. The finding remains as stated. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2024 ¬– 015: ALN 10.565, 10.568, 10.569 – Food Distribution Cluster ALN 15.252 – Abandoned Mine Land Reclamation (AMLR) ALN 21.027 – COVID 19 – Coronavirus State and Local Fiscal Recovery Funds 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 Program ALN 84.425U – COVID 19 – Education Stabilization Fund – ARP ESSER ALN 84.425V – COVID 19 – Education Stabilization Fund – ARP EANS Program ALN 84.425W – COVID 19 – Education Stabilization Fund – ARP ESSER HCY ALN 93.044, 93.045, 93.053 – Aging Cluster (including COVID-19) ALN 93.558 – Temporary Assistance for Needy Families ALN 93.667 – Social Services Block Grant A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2023-024) Federal Grant Number(s) and Year(s): 228PA100I1003 (6/13/2022 – 6/30/2025), 231PA445Q2204 (10/01/2022 – 9/30/2023), 231PA825Y8005 (10/01/2022 – 9/30/2023), 231PA825Y8105 (10/01/2022 – 9/30/2023), 241PA825Y8005 (10/01/2023 – 9/30/2024), 241PA825Y8105 (10/01/2023 – 9/30/2024), S18AF20004 (11/01/2017 – 10/31/2025), S19AF20004 (12/01/2018 – 11/30/2025), S21AF10015 (1/01/2021 – 12/31/2023), S22AF00017 (1/01/2022 – 12/31/2024), S23AF00002 (11/01/2022 – 10/31/2027), TN75GJE1S7G3 (3/03/2021 – 12/31/2024), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021– 9/30/2024), S425D210028 (1/05/2021 – 9/30/2024), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2024), S425V210037 (11/16/2021 – 9/30/2024), S425C210013 (3/13/2020 – 9/30/2024), 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 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), 2401PAOACM (10/01/2023 – 9/30/2025), 2401PAOAHD (10/01/2023 – 9/30/2025), 2401PAOANS (10/01/2023 – 9/30/2025), 2401PAOASS (10/01/2023 – 9/30/2025), 2101PATANF (10/01/2020 – 9/30/2021), 2201PATANF (10/01/2021 – 9/30/2022), 2301PATANF (10/01/2022 – 9/30/2023), 2401PATANF (10/01/2023 – 9/30/2024), 2301PASOSR (10/01/2022 – 9/30/2024), 2401PASOSR (10/01/2023 – 9/30/2025), 2301PATANF (10/01/2022 – 9/30/2024), 2401PATANF (10/01/2023 – 9/30/2025) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters for Abandoned Mine Land Reclamation (AMLR), Temporary Assistance for Needy Families, Coronavirus State and Local Fiscal Recovery Funds, and Social Services Block Grant Material Weakness in Internal Control over Compliance, Material Noncompliance for Food Distribution Cluster, Education Stabilization Fund, and Aging Cluster 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) Acceptance date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance Finding 2024 ¬– 015: (continued) 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 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, 2024 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, 2023 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2024. We also evaluated the Commonwealth’s review of 45 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, 2024 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 17.6 months to over 18 months after the FAC Acceptance date for two out of two audit reports with findings. There was also a delay in PDOA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. • 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 8.7 months to over 16 months after the FAC Acceptance date for four out of four audit reports with findings. • Department of Education (PDE): The time period for making a management decision on findings was approximately 7.8 months to over 12 months after the FAC Acceptance date for seven out of 22 audit reports with findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 11.6 months to over 12 months after the FAC Acceptance date for two out of two audit reports with findings. Our testing disclosed for the two late audit reports, DEP made management decisions timely. However, DEP did not notify the subrecipients of the management decisions within the required six month time period after the audit reports FAC Acceptance date. • Department of Human Services (DHS): The time period for making a management decision on findings was approximately 7.2 months after the FAC Acceptance date for one out of two audit reports with findings. Our testing disclosed for the one late audit report DHS made a management decision timely. However, DHS did not notify the subrecipient of the management decision within the required six month time period after the audit reports FAC Acceptance date. Criteria: 2 CFR §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: Finding 2024 ¬– 015: (continued) (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 §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 §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 §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]. 2 CFR §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. Finding 2024 ¬– 015: (continued) (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. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Finding 2024 ¬– 015: (continued) 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. (6) 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. 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, 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. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, and untimely review of the SEFA or alternate procedures be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. Finding 2024 ¬– 015: (continued) DHS Response: DHS agrees that there was an exception where human error caused a management decision on one single audit report to be issued untimely; in this instance, the decision itself was made timely but was not communicated in a timely manner. DHS disagrees that an isolated incident due to human error signifies a weakness in internal controls. This was not a systemic issue and therefore should not have been considered a significant deficiency in internal controls, and DHS should not have been included in this finding. Auditors’ Conclusion: The agency responses from PDOA, PDA, PDE, and DEP indicate agreement with the finding. DHS agrees that an error occurred resulting in untimely submission of one management decision, DHS disagrees that the error represents a significant deficiency. We acknowledge the error occurred due to an oversight and is not a systemic error, however, the error resulted in noncompliance with one of two audit reports that required timely management decisions. We will evaluate corrective action in the subsequent audit. The finding remains as stated. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2024 ¬– 015: ALN 10.565, 10.568, 10.569 – Food Distribution Cluster ALN 15.252 – Abandoned Mine Land Reclamation (AMLR) ALN 21.027 – COVID 19 – Coronavirus State and Local Fiscal Recovery Funds 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 Program ALN 84.425U – COVID 19 – Education Stabilization Fund – ARP ESSER ALN 84.425V – COVID 19 – Education Stabilization Fund – ARP EANS Program ALN 84.425W – COVID 19 – Education Stabilization Fund – ARP ESSER HCY ALN 93.044, 93.045, 93.053 – Aging Cluster (including COVID-19) ALN 93.558 – Temporary Assistance for Needy Families ALN 93.667 – Social Services Block Grant A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2023-024) Federal Grant Number(s) and Year(s): 228PA100I1003 (6/13/2022 – 6/30/2025), 231PA445Q2204 (10/01/2022 – 9/30/2023), 231PA825Y8005 (10/01/2022 – 9/30/2023), 231PA825Y8105 (10/01/2022 – 9/30/2023), 241PA825Y8005 (10/01/2023 – 9/30/2024), 241PA825Y8105 (10/01/2023 – 9/30/2024), S18AF20004 (11/01/2017 – 10/31/2025), S19AF20004 (12/01/2018 – 11/30/2025), S21AF10015 (1/01/2021 – 12/31/2023), S22AF00017 (1/01/2022 – 12/31/2024), S23AF00002 (11/01/2022 – 10/31/2027), TN75GJE1S7G3 (3/03/2021 – 12/31/2024), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021– 9/30/2024), S425D210028 (1/05/2021 – 9/30/2024), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2024), S425V210037 (11/16/2021 – 9/30/2024), S425C210013 (3/13/2020 – 9/30/2024), 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 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), 2401PAOACM (10/01/2023 – 9/30/2025), 2401PAOAHD (10/01/2023 – 9/30/2025), 2401PAOANS (10/01/2023 – 9/30/2025), 2401PAOASS (10/01/2023 – 9/30/2025), 2101PATANF (10/01/2020 – 9/30/2021), 2201PATANF (10/01/2021 – 9/30/2022), 2301PATANF (10/01/2022 – 9/30/2023), 2401PATANF (10/01/2023 – 9/30/2024), 2301PASOSR (10/01/2022 – 9/30/2024), 2401PASOSR (10/01/2023 – 9/30/2025), 2301PATANF (10/01/2022 – 9/30/2024), 2401PATANF (10/01/2023 – 9/30/2025) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters for Abandoned Mine Land Reclamation (AMLR), Temporary Assistance for Needy Families, Coronavirus State and Local Fiscal Recovery Funds, and Social Services Block Grant Material Weakness in Internal Control over Compliance, Material Noncompliance for Food Distribution Cluster, Education Stabilization Fund, and Aging Cluster 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) Acceptance date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance Finding 2024 ¬– 015: (continued) 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 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, 2024 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, 2023 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2024. We also evaluated the Commonwealth’s review of 45 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, 2024 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 17.6 months to over 18 months after the FAC Acceptance date for two out of two audit reports with findings. There was also a delay in PDOA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. • 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 8.7 months to over 16 months after the FAC Acceptance date for four out of four audit reports with findings. • Department of Education (PDE): The time period for making a management decision on findings was approximately 7.8 months to over 12 months after the FAC Acceptance date for seven out of 22 audit reports with findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 11.6 months to over 12 months after the FAC Acceptance date for two out of two audit reports with findings. Our testing disclosed for the two late audit reports, DEP made management decisions timely. However, DEP did not notify the subrecipients of the management decisions within the required six month time period after the audit reports FAC Acceptance date. • Department of Human Services (DHS): The time period for making a management decision on findings was approximately 7.2 months after the FAC Acceptance date for one out of two audit reports with findings. Our testing disclosed for the one late audit report DHS made a management decision timely. However, DHS did not notify the subrecipient of the management decision within the required six month time period after the audit reports FAC Acceptance date. Criteria: 2 CFR §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: Finding 2024 ¬– 015: (continued) (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 §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 §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 §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]. 2 CFR §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. Finding 2024 ¬– 015: (continued) (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. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Finding 2024 ¬– 015: (continued) 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. (6) 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. 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, 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. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, and untimely review of the SEFA or alternate procedures be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. Finding 2024 ¬– 015: (continued) DHS Response: DHS agrees that there was an exception where human error caused a management decision on one single audit report to be issued untimely; in this instance, the decision itself was made timely but was not communicated in a timely manner. DHS disagrees that an isolated incident due to human error signifies a weakness in internal controls. This was not a systemic issue and therefore should not have been considered a significant deficiency in internal controls, and DHS should not have been included in this finding. Auditors’ Conclusion: The agency responses from PDOA, PDA, PDE, and DEP indicate agreement with the finding. DHS agrees that an error occurred resulting in untimely submission of one management decision, DHS disagrees that the error represents a significant deficiency. We acknowledge the error occurred due to an oversight and is not a systemic error, however, the error resulted in noncompliance with one of two audit reports that required timely management decisions. We will evaluate corrective action in the subsequent audit. The finding remains as stated. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2024 ¬– 015: ALN 10.565, 10.568, 10.569 – Food Distribution Cluster ALN 15.252 – Abandoned Mine Land Reclamation (AMLR) ALN 21.027 – COVID 19 – Coronavirus State and Local Fiscal Recovery Funds 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 Program ALN 84.425U – COVID 19 – Education Stabilization Fund – ARP ESSER ALN 84.425V – COVID 19 – Education Stabilization Fund – ARP EANS Program ALN 84.425W – COVID 19 – Education Stabilization Fund – ARP ESSER HCY ALN 93.044, 93.045, 93.053 – Aging Cluster (including COVID-19) ALN 93.558 – Temporary Assistance for Needy Families ALN 93.667 – Social Services Block Grant A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2023-024) Federal Grant Number(s) and Year(s): 228PA100I1003 (6/13/2022 – 6/30/2025), 231PA445Q2204 (10/01/2022 – 9/30/2023), 231PA825Y8005 (10/01/2022 – 9/30/2023), 231PA825Y8105 (10/01/2022 – 9/30/2023), 241PA825Y8005 (10/01/2023 – 9/30/2024), 241PA825Y8105 (10/01/2023 – 9/30/2024), S18AF20004 (11/01/2017 – 10/31/2025), S19AF20004 (12/01/2018 – 11/30/2025), S21AF10015 (1/01/2021 – 12/31/2023), S22AF00017 (1/01/2022 – 12/31/2024), S23AF00002 (11/01/2022 – 10/31/2027), TN75GJE1S7G3 (3/03/2021 – 12/31/2024), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021– 9/30/2024), S425D210028 (1/05/2021 – 9/30/2024), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2024), S425V210037 (11/16/2021 – 9/30/2024), S425C210013 (3/13/2020 – 9/30/2024), 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 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), 2401PAOACM (10/01/2023 – 9/30/2025), 2401PAOAHD (10/01/2023 – 9/30/2025), 2401PAOANS (10/01/2023 – 9/30/2025), 2401PAOASS (10/01/2023 – 9/30/2025), 2101PATANF (10/01/2020 – 9/30/2021), 2201PATANF (10/01/2021 – 9/30/2022), 2301PATANF (10/01/2022 – 9/30/2023), 2401PATANF (10/01/2023 – 9/30/2024), 2301PASOSR (10/01/2022 – 9/30/2024), 2401PASOSR (10/01/2023 – 9/30/2025), 2301PATANF (10/01/2022 – 9/30/2024), 2401PATANF (10/01/2023 – 9/30/2025) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters for Abandoned Mine Land Reclamation (AMLR), Temporary Assistance for Needy Families, Coronavirus State and Local Fiscal Recovery Funds, and Social Services Block Grant Material Weakness in Internal Control over Compliance, Material Noncompliance for Food Distribution Cluster, Education Stabilization Fund, and Aging Cluster 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) Acceptance date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance Finding 2024 ¬– 015: (continued) 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 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, 2024 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, 2023 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2024. We also evaluated the Commonwealth’s review of 45 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, 2024 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 17.6 months to over 18 months after the FAC Acceptance date for two out of two audit reports with findings. There was also a delay in PDOA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. • 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 8.7 months to over 16 months after the FAC Acceptance date for four out of four audit reports with findings. • Department of Education (PDE): The time period for making a management decision on findings was approximately 7.8 months to over 12 months after the FAC Acceptance date for seven out of 22 audit reports with findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 11.6 months to over 12 months after the FAC Acceptance date for two out of two audit reports with findings. Our testing disclosed for the two late audit reports, DEP made management decisions timely. However, DEP did not notify the subrecipients of the management decisions within the required six month time period after the audit reports FAC Acceptance date. • Department of Human Services (DHS): The time period for making a management decision on findings was approximately 7.2 months after the FAC Acceptance date for one out of two audit reports with findings. Our testing disclosed for the one late audit report DHS made a management decision timely. However, DHS did not notify the subrecipient of the management decision within the required six month time period after the audit reports FAC Acceptance date. Criteria: 2 CFR §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: Finding 2024 ¬– 015: (continued) (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 §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 §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 §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]. 2 CFR §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. Finding 2024 ¬– 015: (continued) (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. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Finding 2024 ¬– 015: (continued) 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. (6) 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. 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, 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. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, and untimely review of the SEFA or alternate procedures be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. Finding 2024 ¬– 015: (continued) DHS Response: DHS agrees that there was an exception where human error caused a management decision on one single audit report to be issued untimely; in this instance, the decision itself was made timely but was not communicated in a timely manner. DHS disagrees that an isolated incident due to human error signifies a weakness in internal controls. This was not a systemic issue and therefore should not have been considered a significant deficiency in internal controls, and DHS should not have been included in this finding. Auditors’ Conclusion: The agency responses from PDOA, PDA, PDE, and DEP indicate agreement with the finding. DHS agrees that an error occurred resulting in untimely submission of one management decision, DHS disagrees that the error represents a significant deficiency. We acknowledge the error occurred due to an oversight and is not a systemic error, however, the error resulted in noncompliance with one of two audit reports that required timely management decisions. We will evaluate corrective action in the subsequent audit. The finding remains as stated. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2024 ¬– 015: ALN 10.565, 10.568, 10.569 – Food Distribution Cluster ALN 15.252 – Abandoned Mine Land Reclamation (AMLR) ALN 21.027 – COVID 19 – Coronavirus State and Local Fiscal Recovery Funds 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 Program ALN 84.425U – COVID 19 – Education Stabilization Fund – ARP ESSER ALN 84.425V – COVID 19 – Education Stabilization Fund – ARP EANS Program ALN 84.425W – COVID 19 – Education Stabilization Fund – ARP ESSER HCY ALN 93.044, 93.045, 93.053 – Aging Cluster (including COVID-19) ALN 93.558 – Temporary Assistance for Needy Families ALN 93.667 – Social Services Block Grant A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2023-024) Federal Grant Number(s) and Year(s): 228PA100I1003 (6/13/2022 – 6/30/2025), 231PA445Q2204 (10/01/2022 – 9/30/2023), 231PA825Y8005 (10/01/2022 – 9/30/2023), 231PA825Y8105 (10/01/2022 – 9/30/2023), 241PA825Y8005 (10/01/2023 – 9/30/2024), 241PA825Y8105 (10/01/2023 – 9/30/2024), S18AF20004 (11/01/2017 – 10/31/2025), S19AF20004 (12/01/2018 – 11/30/2025), S21AF10015 (1/01/2021 – 12/31/2023), S22AF00017 (1/01/2022 – 12/31/2024), S23AF00002 (11/01/2022 – 10/31/2027), TN75GJE1S7G3 (3/03/2021 – 12/31/2024), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021– 9/30/2024), S425D210028 (1/05/2021 – 9/30/2024), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2024), S425V210037 (11/16/2021 – 9/30/2024), S425C210013 (3/13/2020 – 9/30/2024), 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 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), 2401PAOACM (10/01/2023 – 9/30/2025), 2401PAOAHD (10/01/2023 – 9/30/2025), 2401PAOANS (10/01/2023 – 9/30/2025), 2401PAOASS (10/01/2023 – 9/30/2025), 2101PATANF (10/01/2020 – 9/30/2021), 2201PATANF (10/01/2021 – 9/30/2022), 2301PATANF (10/01/2022 – 9/30/2023), 2401PATANF (10/01/2023 – 9/30/2024), 2301PASOSR (10/01/2022 – 9/30/2024), 2401PASOSR (10/01/2023 – 9/30/2025), 2301PATANF (10/01/2022 – 9/30/2024), 2401PATANF (10/01/2023 – 9/30/2025) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters for Abandoned Mine Land Reclamation (AMLR), Temporary Assistance for Needy Families, Coronavirus State and Local Fiscal Recovery Funds, and Social Services Block Grant Material Weakness in Internal Control over Compliance, Material Noncompliance for Food Distribution Cluster, Education Stabilization Fund, and Aging Cluster 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) Acceptance date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance Finding 2024 ¬– 015: (continued) 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 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, 2024 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, 2023 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2024. We also evaluated the Commonwealth’s review of 45 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, 2024 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 17.6 months to over 18 months after the FAC Acceptance date for two out of two audit reports with findings. There was also a delay in PDOA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. • 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 8.7 months to over 16 months after the FAC Acceptance date for four out of four audit reports with findings. • Department of Education (PDE): The time period for making a management decision on findings was approximately 7.8 months to over 12 months after the FAC Acceptance date for seven out of 22 audit reports with findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 11.6 months to over 12 months after the FAC Acceptance date for two out of two audit reports with findings. Our testing disclosed for the two late audit reports, DEP made management decisions timely. However, DEP did not notify the subrecipients of the management decisions within the required six month time period after the audit reports FAC Acceptance date. • Department of Human Services (DHS): The time period for making a management decision on findings was approximately 7.2 months after the FAC Acceptance date for one out of two audit reports with findings. Our testing disclosed for the one late audit report DHS made a management decision timely. However, DHS did not notify the subrecipient of the management decision within the required six month time period after the audit reports FAC Acceptance date. Criteria: 2 CFR §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: Finding 2024 ¬– 015: (continued) (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 §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 §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 §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]. 2 CFR §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. Finding 2024 ¬– 015: (continued) (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. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Finding 2024 ¬– 015: (continued) 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. (6) 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. 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, 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. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, and untimely review of the SEFA or alternate procedures be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. Finding 2024 ¬– 015: (continued) DHS Response: DHS agrees that there was an exception where human error caused a management decision on one single audit report to be issued untimely; in this instance, the decision itself was made timely but was not communicated in a timely manner. DHS disagrees that an isolated incident due to human error signifies a weakness in internal controls. This was not a systemic issue and therefore should not have been considered a significant deficiency in internal controls, and DHS should not have been included in this finding. Auditors’ Conclusion: The agency responses from PDOA, PDA, PDE, and DEP indicate agreement with the finding. DHS agrees that an error occurred resulting in untimely submission of one management decision, DHS disagrees that the error represents a significant deficiency. We acknowledge the error occurred due to an oversight and is not a systemic error, however, the error resulted in noncompliance with one of two audit reports that required timely management decisions. We will evaluate corrective action in the subsequent audit. The finding remains as stated. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2024 ¬– 015: ALN 10.565, 10.568, 10.569 – Food Distribution Cluster ALN 15.252 – Abandoned Mine Land Reclamation (AMLR) ALN 21.027 – COVID 19 – Coronavirus State and Local Fiscal Recovery Funds 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 Program ALN 84.425U – COVID 19 – Education Stabilization Fund – ARP ESSER ALN 84.425V – COVID 19 – Education Stabilization Fund – ARP EANS Program ALN 84.425W – COVID 19 – Education Stabilization Fund – ARP ESSER HCY ALN 93.044, 93.045, 93.053 – Aging Cluster (including COVID-19) ALN 93.558 – Temporary Assistance for Needy Families ALN 93.667 – Social Services Block Grant A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2023-024) Federal Grant Number(s) and Year(s): 228PA100I1003 (6/13/2022 – 6/30/2025), 231PA445Q2204 (10/01/2022 – 9/30/2023), 231PA825Y8005 (10/01/2022 – 9/30/2023), 231PA825Y8105 (10/01/2022 – 9/30/2023), 241PA825Y8005 (10/01/2023 – 9/30/2024), 241PA825Y8105 (10/01/2023 – 9/30/2024), S18AF20004 (11/01/2017 – 10/31/2025), S19AF20004 (12/01/2018 – 11/30/2025), S21AF10015 (1/01/2021 – 12/31/2023), S22AF00017 (1/01/2022 – 12/31/2024), S23AF00002 (11/01/2022 – 10/31/2027), TN75GJE1S7G3 (3/03/2021 – 12/31/2024), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021– 9/30/2024), S425D210028 (1/05/2021 – 9/30/2024), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2024), S425V210037 (11/16/2021 – 9/30/2024), S425C210013 (3/13/2020 – 9/30/2024), 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 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), 2401PAOACM (10/01/2023 – 9/30/2025), 2401PAOAHD (10/01/2023 – 9/30/2025), 2401PAOANS (10/01/2023 – 9/30/2025), 2401PAOASS (10/01/2023 – 9/30/2025), 2101PATANF (10/01/2020 – 9/30/2021), 2201PATANF (10/01/2021 – 9/30/2022), 2301PATANF (10/01/2022 – 9/30/2023), 2401PATANF (10/01/2023 – 9/30/2024), 2301PASOSR (10/01/2022 – 9/30/2024), 2401PASOSR (10/01/2023 – 9/30/2025), 2301PATANF (10/01/2022 – 9/30/2024), 2401PATANF (10/01/2023 – 9/30/2025) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters for Abandoned Mine Land Reclamation (AMLR), Temporary Assistance for Needy Families, Coronavirus State and Local Fiscal Recovery Funds, and Social Services Block Grant Material Weakness in Internal Control over Compliance, Material Noncompliance for Food Distribution Cluster, Education Stabilization Fund, and Aging Cluster 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) Acceptance date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance Finding 2024 ¬– 015: (continued) 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 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, 2024 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, 2023 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2024. We also evaluated the Commonwealth’s review of 45 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, 2024 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 17.6 months to over 18 months after the FAC Acceptance date for two out of two audit reports with findings. There was also a delay in PDOA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. • 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 8.7 months to over 16 months after the FAC Acceptance date for four out of four audit reports with findings. • Department of Education (PDE): The time period for making a management decision on findings was approximately 7.8 months to over 12 months after the FAC Acceptance date for seven out of 22 audit reports with findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 11.6 months to over 12 months after the FAC Acceptance date for two out of two audit reports with findings. Our testing disclosed for the two late audit reports, DEP made management decisions timely. However, DEP did not notify the subrecipients of the management decisions within the required six month time period after the audit reports FAC Acceptance date. • Department of Human Services (DHS): The time period for making a management decision on findings was approximately 7.2 months after the FAC Acceptance date for one out of two audit reports with findings. Our testing disclosed for the one late audit report DHS made a management decision timely. However, DHS did not notify the subrecipient of the management decision within the required six month time period after the audit reports FAC Acceptance date. Criteria: 2 CFR §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: Finding 2024 ¬– 015: (continued) (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 §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 §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 §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]. 2 CFR §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. Finding 2024 ¬– 015: (continued) (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. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Finding 2024 ¬– 015: (continued) 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. (6) 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. 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, 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. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, and untimely review of the SEFA or alternate procedures be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. Finding 2024 ¬– 015: (continued) DHS Response: DHS agrees that there was an exception where human error caused a management decision on one single audit report to be issued untimely; in this instance, the decision itself was made timely but was not communicated in a timely manner. DHS disagrees that an isolated incident due to human error signifies a weakness in internal controls. This was not a systemic issue and therefore should not have been considered a significant deficiency in internal controls, and DHS should not have been included in this finding. Auditors’ Conclusion: The agency responses from PDOA, PDA, PDE, and DEP indicate agreement with the finding. DHS agrees that an error occurred resulting in untimely submission of one management decision, DHS disagrees that the error represents a significant deficiency. We acknowledge the error occurred due to an oversight and is not a systemic error, however, the error resulted in noncompliance with one of two audit reports that required timely management decisions. We will evaluate corrective action in the subsequent audit. The finding remains as stated. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2024 ¬– 015: ALN 10.565, 10.568, 10.569 – Food Distribution Cluster ALN 15.252 – Abandoned Mine Land Reclamation (AMLR) ALN 21.027 – COVID 19 – Coronavirus State and Local Fiscal Recovery Funds 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 Program ALN 84.425U – COVID 19 – Education Stabilization Fund – ARP ESSER ALN 84.425V – COVID 19 – Education Stabilization Fund – ARP EANS Program ALN 84.425W – COVID 19 – Education Stabilization Fund – ARP ESSER HCY ALN 93.044, 93.045, 93.053 – Aging Cluster (including COVID-19) ALN 93.558 – Temporary Assistance for Needy Families ALN 93.667 – Social Services Block Grant A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2023-024) Federal Grant Number(s) and Year(s): 228PA100I1003 (6/13/2022 – 6/30/2025), 231PA445Q2204 (10/01/2022 – 9/30/2023), 231PA825Y8005 (10/01/2022 – 9/30/2023), 231PA825Y8105 (10/01/2022 – 9/30/2023), 241PA825Y8005 (10/01/2023 – 9/30/2024), 241PA825Y8105 (10/01/2023 – 9/30/2024), S18AF20004 (11/01/2017 – 10/31/2025), S19AF20004 (12/01/2018 – 11/30/2025), S21AF10015 (1/01/2021 – 12/31/2023), S22AF00017 (1/01/2022 – 12/31/2024), S23AF00002 (11/01/2022 – 10/31/2027), TN75GJE1S7G3 (3/03/2021 – 12/31/2024), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021– 9/30/2024), S425D210028 (1/05/2021 – 9/30/2024), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2024), S425V210037 (11/16/2021 – 9/30/2024), S425C210013 (3/13/2020 – 9/30/2024), 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 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), 2401PAOACM (10/01/2023 – 9/30/2025), 2401PAOAHD (10/01/2023 – 9/30/2025), 2401PAOANS (10/01/2023 – 9/30/2025), 2401PAOASS (10/01/2023 – 9/30/2025), 2101PATANF (10/01/2020 – 9/30/2021), 2201PATANF (10/01/2021 – 9/30/2022), 2301PATANF (10/01/2022 – 9/30/2023), 2401PATANF (10/01/2023 – 9/30/2024), 2301PASOSR (10/01/2022 – 9/30/2024), 2401PASOSR (10/01/2023 – 9/30/2025), 2301PATANF (10/01/2022 – 9/30/2024), 2401PATANF (10/01/2023 – 9/30/2025) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters for Abandoned Mine Land Reclamation (AMLR), Temporary Assistance for Needy Families, Coronavirus State and Local Fiscal Recovery Funds, and Social Services Block Grant Material Weakness in Internal Control over Compliance, Material Noncompliance for Food Distribution Cluster, Education Stabilization Fund, and Aging Cluster 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) Acceptance date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance Finding 2024 ¬– 015: (continued) 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 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, 2024 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, 2023 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2024. We also evaluated the Commonwealth’s review of 45 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, 2024 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 17.6 months to over 18 months after the FAC Acceptance date for two out of two audit reports with findings. There was also a delay in PDOA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. • 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 8.7 months to over 16 months after the FAC Acceptance date for four out of four audit reports with findings. • Department of Education (PDE): The time period for making a management decision on findings was approximately 7.8 months to over 12 months after the FAC Acceptance date for seven out of 22 audit reports with findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 11.6 months to over 12 months after the FAC Acceptance date for two out of two audit reports with findings. Our testing disclosed for the two late audit reports, DEP made management decisions timely. However, DEP did not notify the subrecipients of the management decisions within the required six month time period after the audit reports FAC Acceptance date. • Department of Human Services (DHS): The time period for making a management decision on findings was approximately 7.2 months after the FAC Acceptance date for one out of two audit reports with findings. Our testing disclosed for the one late audit report DHS made a management decision timely. However, DHS did not notify the subrecipient of the management decision within the required six month time period after the audit reports FAC Acceptance date. Criteria: 2 CFR §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: Finding 2024 ¬– 015: (continued) (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 §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 §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 §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]. 2 CFR §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. Finding 2024 ¬– 015: (continued) (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. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Finding 2024 ¬– 015: (continued) 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. (6) 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. 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, 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. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, and untimely review of the SEFA or alternate procedures be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. Finding 2024 ¬– 015: (continued) DHS Response: DHS agrees that there was an exception where human error caused a management decision on one single audit report to be issued untimely; in this instance, the decision itself was made timely but was not communicated in a timely manner. DHS disagrees that an isolated incident due to human error signifies a weakness in internal controls. This was not a systemic issue and therefore should not have been considered a significant deficiency in internal controls, and DHS should not have been included in this finding. Auditors’ Conclusion: The agency responses from PDOA, PDA, PDE, and DEP indicate agreement with the finding. DHS agrees that an error occurred resulting in untimely submission of one management decision, DHS disagrees that the error represents a significant deficiency. We acknowledge the error occurred due to an oversight and is not a systemic error, however, the error resulted in noncompliance with one of two audit reports that required timely management decisions. We will evaluate corrective action in the subsequent audit. The finding remains as stated. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2024 ¬– 015: ALN 10.565, 10.568, 10.569 – Food Distribution Cluster ALN 15.252 – Abandoned Mine Land Reclamation (AMLR) ALN 21.027 – COVID 19 – Coronavirus State and Local Fiscal Recovery Funds 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 Program ALN 84.425U – COVID 19 – Education Stabilization Fund – ARP ESSER ALN 84.425V – COVID 19 – Education Stabilization Fund – ARP EANS Program ALN 84.425W – COVID 19 – Education Stabilization Fund – ARP ESSER HCY ALN 93.044, 93.045, 93.053 – Aging Cluster (including COVID-19) ALN 93.558 – Temporary Assistance for Needy Families ALN 93.667 – Social Services Block Grant A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2023-024) Federal Grant Number(s) and Year(s): 228PA100I1003 (6/13/2022 – 6/30/2025), 231PA445Q2204 (10/01/2022 – 9/30/2023), 231PA825Y8005 (10/01/2022 – 9/30/2023), 231PA825Y8105 (10/01/2022 – 9/30/2023), 241PA825Y8005 (10/01/2023 – 9/30/2024), 241PA825Y8105 (10/01/2023 – 9/30/2024), S18AF20004 (11/01/2017 – 10/31/2025), S19AF20004 (12/01/2018 – 11/30/2025), S21AF10015 (1/01/2021 – 12/31/2023), S22AF00017 (1/01/2022 – 12/31/2024), S23AF00002 (11/01/2022 – 10/31/2027), TN75GJE1S7G3 (3/03/2021 – 12/31/2024), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021– 9/30/2024), S425D210028 (1/05/2021 – 9/30/2024), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2024), S425V210037 (11/16/2021 – 9/30/2024), S425C210013 (3/13/2020 – 9/30/2024), 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 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), 2401PAOACM (10/01/2023 – 9/30/2025), 2401PAOAHD (10/01/2023 – 9/30/2025), 2401PAOANS (10/01/2023 – 9/30/2025), 2401PAOASS (10/01/2023 – 9/30/2025), 2101PATANF (10/01/2020 – 9/30/2021), 2201PATANF (10/01/2021 – 9/30/2022), 2301PATANF (10/01/2022 – 9/30/2023), 2401PATANF (10/01/2023 – 9/30/2024), 2301PASOSR (10/01/2022 – 9/30/2024), 2401PASOSR (10/01/2023 – 9/30/2025), 2301PATANF (10/01/2022 – 9/30/2024), 2401PATANF (10/01/2023 – 9/30/2025) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters for Abandoned Mine Land Reclamation (AMLR), Temporary Assistance for Needy Families, Coronavirus State and Local Fiscal Recovery Funds, and Social Services Block Grant Material Weakness in Internal Control over Compliance, Material Noncompliance for Food Distribution Cluster, Education Stabilization Fund, and Aging Cluster 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) Acceptance date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance Finding 2024 ¬– 015: (continued) 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 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, 2024 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, 2023 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2024. We also evaluated the Commonwealth’s review of 45 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, 2024 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 17.6 months to over 18 months after the FAC Acceptance date for two out of two audit reports with findings. There was also a delay in PDOA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. • 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 8.7 months to over 16 months after the FAC Acceptance date for four out of four audit reports with findings. • Department of Education (PDE): The time period for making a management decision on findings was approximately 7.8 months to over 12 months after the FAC Acceptance date for seven out of 22 audit reports with findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 11.6 months to over 12 months after the FAC Acceptance date for two out of two audit reports with findings. Our testing disclosed for the two late audit reports, DEP made management decisions timely. However, DEP did not notify the subrecipients of the management decisions within the required six month time period after the audit reports FAC Acceptance date. • Department of Human Services (DHS): The time period for making a management decision on findings was approximately 7.2 months after the FAC Acceptance date for one out of two audit reports with findings. Our testing disclosed for the one late audit report DHS made a management decision timely. However, DHS did not notify the subrecipient of the management decision within the required six month time period after the audit reports FAC Acceptance date. Criteria: 2 CFR §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: Finding 2024 ¬– 015: (continued) (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 §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 §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 §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]. 2 CFR §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. Finding 2024 ¬– 015: (continued) (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. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Finding 2024 ¬– 015: (continued) 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. (6) 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. 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, 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. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, and untimely review of the SEFA or alternate procedures be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. Finding 2024 ¬– 015: (continued) DHS Response: DHS agrees that there was an exception where human error caused a management decision on one single audit report to be issued untimely; in this instance, the decision itself was made timely but was not communicated in a timely manner. DHS disagrees that an isolated incident due to human error signifies a weakness in internal controls. This was not a systemic issue and therefore should not have been considered a significant deficiency in internal controls, and DHS should not have been included in this finding. Auditors’ Conclusion: The agency responses from PDOA, PDA, PDE, and DEP indicate agreement with the finding. DHS agrees that an error occurred resulting in untimely submission of one management decision, DHS disagrees that the error represents a significant deficiency. We acknowledge the error occurred due to an oversight and is not a systemic error, however, the error resulted in noncompliance with one of two audit reports that required timely management decisions. We will evaluate corrective action in the subsequent audit. The finding remains as stated. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2024 ¬– 015: ALN 10.565, 10.568, 10.569 – Food Distribution Cluster ALN 15.252 – Abandoned Mine Land Reclamation (AMLR) ALN 21.027 – COVID 19 – Coronavirus State and Local Fiscal Recovery Funds 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 Program ALN 84.425U – COVID 19 – Education Stabilization Fund – ARP ESSER ALN 84.425V – COVID 19 – Education Stabilization Fund – ARP EANS Program ALN 84.425W – COVID 19 – Education Stabilization Fund – ARP ESSER HCY ALN 93.044, 93.045, 93.053 – Aging Cluster (including COVID-19) ALN 93.558 – Temporary Assistance for Needy Families ALN 93.667 – Social Services Block Grant A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2023-024) Federal Grant Number(s) and Year(s): 228PA100I1003 (6/13/2022 – 6/30/2025), 231PA445Q2204 (10/01/2022 – 9/30/2023), 231PA825Y8005 (10/01/2022 – 9/30/2023), 231PA825Y8105 (10/01/2022 – 9/30/2023), 241PA825Y8005 (10/01/2023 – 9/30/2024), 241PA825Y8105 (10/01/2023 – 9/30/2024), S18AF20004 (11/01/2017 – 10/31/2025), S19AF20004 (12/01/2018 – 11/30/2025), S21AF10015 (1/01/2021 – 12/31/2023), S22AF00017 (1/01/2022 – 12/31/2024), S23AF00002 (11/01/2022 – 10/31/2027), TN75GJE1S7G3 (3/03/2021 – 12/31/2024), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021– 9/30/2024), S425D210028 (1/05/2021 – 9/30/2024), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2024), S425V210037 (11/16/2021 – 9/30/2024), S425C210013 (3/13/2020 – 9/30/2024), 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 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), 2401PAOACM (10/01/2023 – 9/30/2025), 2401PAOAHD (10/01/2023 – 9/30/2025), 2401PAOANS (10/01/2023 – 9/30/2025), 2401PAOASS (10/01/2023 – 9/30/2025), 2101PATANF (10/01/2020 – 9/30/2021), 2201PATANF (10/01/2021 – 9/30/2022), 2301PATANF (10/01/2022 – 9/30/2023), 2401PATANF (10/01/2023 – 9/30/2024), 2301PASOSR (10/01/2022 – 9/30/2024), 2401PASOSR (10/01/2023 – 9/30/2025), 2301PATANF (10/01/2022 – 9/30/2024), 2401PATANF (10/01/2023 – 9/30/2025) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters for Abandoned Mine Land Reclamation (AMLR), Temporary Assistance for Needy Families, Coronavirus State and Local Fiscal Recovery Funds, and Social Services Block Grant Material Weakness in Internal Control over Compliance, Material Noncompliance for Food Distribution Cluster, Education Stabilization Fund, and Aging Cluster 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) Acceptance date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance Finding 2024 ¬– 015: (continued) 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 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, 2024 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, 2023 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2024. We also evaluated the Commonwealth’s review of 45 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, 2024 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 17.6 months to over 18 months after the FAC Acceptance date for two out of two audit reports with findings. There was also a delay in PDOA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. • 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 8.7 months to over 16 months after the FAC Acceptance date for four out of four audit reports with findings. • Department of Education (PDE): The time period for making a management decision on findings was approximately 7.8 months to over 12 months after the FAC Acceptance date for seven out of 22 audit reports with findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 11.6 months to over 12 months after the FAC Acceptance date for two out of two audit reports with findings. Our testing disclosed for the two late audit reports, DEP made management decisions timely. However, DEP did not notify the subrecipients of the management decisions within the required six month time period after the audit reports FAC Acceptance date. • Department of Human Services (DHS): The time period for making a management decision on findings was approximately 7.2 months after the FAC Acceptance date for one out of two audit reports with findings. Our testing disclosed for the one late audit report DHS made a management decision timely. However, DHS did not notify the subrecipient of the management decision within the required six month time period after the audit reports FAC Acceptance date. Criteria: 2 CFR §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: Finding 2024 ¬– 015: (continued) (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 §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 §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 §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]. 2 CFR §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. Finding 2024 ¬– 015: (continued) (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. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Finding 2024 ¬– 015: (continued) 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. (6) 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. 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, 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. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, and untimely review of the SEFA or alternate procedures be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. Finding 2024 ¬– 015: (continued) DHS Response: DHS agrees that there was an exception where human error caused a management decision on one single audit report to be issued untimely; in this instance, the decision itself was made timely but was not communicated in a timely manner. DHS disagrees that an isolated incident due to human error signifies a weakness in internal controls. This was not a systemic issue and therefore should not have been considered a significant deficiency in internal controls, and DHS should not have been included in this finding. Auditors’ Conclusion: The agency responses from PDOA, PDA, PDE, and DEP indicate agreement with the finding. DHS agrees that an error occurred resulting in untimely submission of one management decision, DHS disagrees that the error represents a significant deficiency. We acknowledge the error occurred due to an oversight and is not a systemic error, however, the error resulted in noncompliance with one of two audit reports that required timely management decisions. We will evaluate corrective action in the subsequent audit. The finding remains as stated. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2024 ¬– 015: ALN 10.565, 10.568, 10.569 – Food Distribution Cluster ALN 15.252 – Abandoned Mine Land Reclamation (AMLR) ALN 21.027 – COVID 19 – Coronavirus State and Local Fiscal Recovery Funds 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 Program ALN 84.425U – COVID 19 – Education Stabilization Fund – ARP ESSER ALN 84.425V – COVID 19 – Education Stabilization Fund – ARP EANS Program ALN 84.425W – COVID 19 – Education Stabilization Fund – ARP ESSER HCY ALN 93.044, 93.045, 93.053 – Aging Cluster (including COVID-19) ALN 93.558 – Temporary Assistance for Needy Families ALN 93.667 – Social Services Block Grant A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2023-024) Federal Grant Number(s) and Year(s): 228PA100I1003 (6/13/2022 – 6/30/2025), 231PA445Q2204 (10/01/2022 – 9/30/2023), 231PA825Y8005 (10/01/2022 – 9/30/2023), 231PA825Y8105 (10/01/2022 – 9/30/2023), 241PA825Y8005 (10/01/2023 – 9/30/2024), 241PA825Y8105 (10/01/2023 – 9/30/2024), S18AF20004 (11/01/2017 – 10/31/2025), S19AF20004 (12/01/2018 – 11/30/2025), S21AF10015 (1/01/2021 – 12/31/2023), S22AF00017 (1/01/2022 – 12/31/2024), S23AF00002 (11/01/2022 – 10/31/2027), TN75GJE1S7G3 (3/03/2021 – 12/31/2024), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021– 9/30/2024), S425D210028 (1/05/2021 – 9/30/2024), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2024), S425V210037 (11/16/2021 – 9/30/2024), S425C210013 (3/13/2020 – 9/30/2024), 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 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), 2401PAOACM (10/01/2023 – 9/30/2025), 2401PAOAHD (10/01/2023 – 9/30/2025), 2401PAOANS (10/01/2023 – 9/30/2025), 2401PAOASS (10/01/2023 – 9/30/2025), 2101PATANF (10/01/2020 – 9/30/2021), 2201PATANF (10/01/2021 – 9/30/2022), 2301PATANF (10/01/2022 – 9/30/2023), 2401PATANF (10/01/2023 – 9/30/2024), 2301PASOSR (10/01/2022 – 9/30/2024), 2401PASOSR (10/01/2023 – 9/30/2025), 2301PATANF (10/01/2022 – 9/30/2024), 2401PATANF (10/01/2023 – 9/30/2025) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters for Abandoned Mine Land Reclamation (AMLR), Temporary Assistance for Needy Families, Coronavirus State and Local Fiscal Recovery Funds, and Social Services Block Grant Material Weakness in Internal Control over Compliance, Material Noncompliance for Food Distribution Cluster, Education Stabilization Fund, and Aging Cluster 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) Acceptance date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance Finding 2024 ¬– 015: (continued) 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 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, 2024 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, 2023 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2024. We also evaluated the Commonwealth’s review of 45 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, 2024 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 17.6 months to over 18 months after the FAC Acceptance date for two out of two audit reports with findings. There was also a delay in PDOA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. • 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 8.7 months to over 16 months after the FAC Acceptance date for four out of four audit reports with findings. • Department of Education (PDE): The time period for making a management decision on findings was approximately 7.8 months to over 12 months after the FAC Acceptance date for seven out of 22 audit reports with findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 11.6 months to over 12 months after the FAC Acceptance date for two out of two audit reports with findings. Our testing disclosed for the two late audit reports, DEP made management decisions timely. However, DEP did not notify the subrecipients of the management decisions within the required six month time period after the audit reports FAC Acceptance date. • Department of Human Services (DHS): The time period for making a management decision on findings was approximately 7.2 months after the FAC Acceptance date for one out of two audit reports with findings. Our testing disclosed for the one late audit report DHS made a management decision timely. However, DHS did not notify the subrecipient of the management decision within the required six month time period after the audit reports FAC Acceptance date. Criteria: 2 CFR §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: Finding 2024 ¬– 015: (continued) (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 §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 §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 §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]. 2 CFR §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. Finding 2024 ¬– 015: (continued) (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. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Finding 2024 ¬– 015: (continued) 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. (6) 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. 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, 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. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, and untimely review of the SEFA or alternate procedures be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. Finding 2024 ¬– 015: (continued) DHS Response: DHS agrees that there was an exception where human error caused a management decision on one single audit report to be issued untimely; in this instance, the decision itself was made timely but was not communicated in a timely manner. DHS disagrees that an isolated incident due to human error signifies a weakness in internal controls. This was not a systemic issue and therefore should not have been considered a significant deficiency in internal controls, and DHS should not have been included in this finding. Auditors’ Conclusion: The agency responses from PDOA, PDA, PDE, and DEP indicate agreement with the finding. DHS agrees that an error occurred resulting in untimely submission of one management decision, DHS disagrees that the error represents a significant deficiency. We acknowledge the error occurred due to an oversight and is not a systemic error, however, the error resulted in noncompliance with one of two audit reports that required timely management decisions. We will evaluate corrective action in the subsequent audit. The finding remains as stated. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2024 ¬– 015: ALN 10.565, 10.568, 10.569 – Food Distribution Cluster ALN 15.252 – Abandoned Mine Land Reclamation (AMLR) ALN 21.027 – COVID 19 – Coronavirus State and Local Fiscal Recovery Funds 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 Program ALN 84.425U – COVID 19 – Education Stabilization Fund – ARP ESSER ALN 84.425V – COVID 19 – Education Stabilization Fund – ARP EANS Program ALN 84.425W – COVID 19 – Education Stabilization Fund – ARP ESSER HCY ALN 93.044, 93.045, 93.053 – Aging Cluster (including COVID-19) ALN 93.558 – Temporary Assistance for Needy Families ALN 93.667 – Social Services Block Grant A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2023-024) Federal Grant Number(s) and Year(s): 228PA100I1003 (6/13/2022 – 6/30/2025), 231PA445Q2204 (10/01/2022 – 9/30/2023), 231PA825Y8005 (10/01/2022 – 9/30/2023), 231PA825Y8105 (10/01/2022 – 9/30/2023), 241PA825Y8005 (10/01/2023 – 9/30/2024), 241PA825Y8105 (10/01/2023 – 9/30/2024), S18AF20004 (11/01/2017 – 10/31/2025), S19AF20004 (12/01/2018 – 11/30/2025), S21AF10015 (1/01/2021 – 12/31/2023), S22AF00017 (1/01/2022 – 12/31/2024), S23AF00002 (11/01/2022 – 10/31/2027), TN75GJE1S7G3 (3/03/2021 – 12/31/2024), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021– 9/30/2024), S425D210028 (1/05/2021 – 9/30/2024), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2024), S425V210037 (11/16/2021 – 9/30/2024), S425C210013 (3/13/2020 – 9/30/2024), 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 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), 2401PAOACM (10/01/2023 – 9/30/2025), 2401PAOAHD (10/01/2023 – 9/30/2025), 2401PAOANS (10/01/2023 – 9/30/2025), 2401PAOASS (10/01/2023 – 9/30/2025), 2101PATANF (10/01/2020 – 9/30/2021), 2201PATANF (10/01/2021 – 9/30/2022), 2301PATANF (10/01/2022 – 9/30/2023), 2401PATANF (10/01/2023 – 9/30/2024), 2301PASOSR (10/01/2022 – 9/30/2024), 2401PASOSR (10/01/2023 – 9/30/2025), 2301PATANF (10/01/2022 – 9/30/2024), 2401PATANF (10/01/2023 – 9/30/2025) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters for Abandoned Mine Land Reclamation (AMLR), Temporary Assistance for Needy Families, Coronavirus State and Local Fiscal Recovery Funds, and Social Services Block Grant Material Weakness in Internal Control over Compliance, Material Noncompliance for Food Distribution Cluster, Education Stabilization Fund, and Aging Cluster 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) Acceptance date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance Finding 2024 ¬– 015: (continued) 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 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, 2024 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, 2023 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2024. We also evaluated the Commonwealth’s review of 45 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, 2024 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 17.6 months to over 18 months after the FAC Acceptance date for two out of two audit reports with findings. There was also a delay in PDOA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. • 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 8.7 months to over 16 months after the FAC Acceptance date for four out of four audit reports with findings. • Department of Education (PDE): The time period for making a management decision on findings was approximately 7.8 months to over 12 months after the FAC Acceptance date for seven out of 22 audit reports with findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 11.6 months to over 12 months after the FAC Acceptance date for two out of two audit reports with findings. Our testing disclosed for the two late audit reports, DEP made management decisions timely. However, DEP did not notify the subrecipients of the management decisions within the required six month time period after the audit reports FAC Acceptance date. • Department of Human Services (DHS): The time period for making a management decision on findings was approximately 7.2 months after the FAC Acceptance date for one out of two audit reports with findings. Our testing disclosed for the one late audit report DHS made a management decision timely. However, DHS did not notify the subrecipient of the management decision within the required six month time period after the audit reports FAC Acceptance date. Criteria: 2 CFR §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: Finding 2024 ¬– 015: (continued) (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 §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 §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 §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]. 2 CFR §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. Finding 2024 ¬– 015: (continued) (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. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Finding 2024 ¬– 015: (continued) 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. (6) 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. 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, 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. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, and untimely review of the SEFA or alternate procedures be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. Finding 2024 ¬– 015: (continued) DHS Response: DHS agrees that there was an exception where human error caused a management decision on one single audit report to be issued untimely; in this instance, the decision itself was made timely but was not communicated in a timely manner. DHS disagrees that an isolated incident due to human error signifies a weakness in internal controls. This was not a systemic issue and therefore should not have been considered a significant deficiency in internal controls, and DHS should not have been included in this finding. Auditors’ Conclusion: The agency responses from PDOA, PDA, PDE, and DEP indicate agreement with the finding. DHS agrees that an error occurred resulting in untimely submission of one management decision, DHS disagrees that the error represents a significant deficiency. We acknowledge the error occurred due to an oversight and is not a systemic error, however, the error resulted in noncompliance with one of two audit reports that required timely management decisions. We will evaluate corrective action in the subsequent audit. The finding remains as stated. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2024 ¬– 015: ALN 10.565, 10.568, 10.569 – Food Distribution Cluster ALN 15.252 – Abandoned Mine Land Reclamation (AMLR) ALN 21.027 – COVID 19 – Coronavirus State and Local Fiscal Recovery Funds 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 Program ALN 84.425U – COVID 19 – Education Stabilization Fund – ARP ESSER ALN 84.425V – COVID 19 – Education Stabilization Fund – ARP EANS Program ALN 84.425W – COVID 19 – Education Stabilization Fund – ARP ESSER HCY ALN 93.044, 93.045, 93.053 – Aging Cluster (including COVID-19) ALN 93.558 – Temporary Assistance for Needy Families ALN 93.667 – Social Services Block Grant A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2023-024) Federal Grant Number(s) and Year(s): 228PA100I1003 (6/13/2022 – 6/30/2025), 231PA445Q2204 (10/01/2022 – 9/30/2023), 231PA825Y8005 (10/01/2022 – 9/30/2023), 231PA825Y8105 (10/01/2022 – 9/30/2023), 241PA825Y8005 (10/01/2023 – 9/30/2024), 241PA825Y8105 (10/01/2023 – 9/30/2024), S18AF20004 (11/01/2017 – 10/31/2025), S19AF20004 (12/01/2018 – 11/30/2025), S21AF10015 (1/01/2021 – 12/31/2023), S22AF00017 (1/01/2022 – 12/31/2024), S23AF00002 (11/01/2022 – 10/31/2027), TN75GJE1S7G3 (3/03/2021 – 12/31/2024), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021– 9/30/2024), S425D210028 (1/05/2021 – 9/30/2024), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2024), S425V210037 (11/16/2021 – 9/30/2024), S425C210013 (3/13/2020 – 9/30/2024), 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 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), 2401PAOACM (10/01/2023 – 9/30/2025), 2401PAOAHD (10/01/2023 – 9/30/2025), 2401PAOANS (10/01/2023 – 9/30/2025), 2401PAOASS (10/01/2023 – 9/30/2025), 2101PATANF (10/01/2020 – 9/30/2021), 2201PATANF (10/01/2021 – 9/30/2022), 2301PATANF (10/01/2022 – 9/30/2023), 2401PATANF (10/01/2023 – 9/30/2024), 2301PASOSR (10/01/2022 – 9/30/2024), 2401PASOSR (10/01/2023 – 9/30/2025), 2301PATANF (10/01/2022 – 9/30/2024), 2401PATANF (10/01/2023 – 9/30/2025) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters for Abandoned Mine Land Reclamation (AMLR), Temporary Assistance for Needy Families, Coronavirus State and Local Fiscal Recovery Funds, and Social Services Block Grant Material Weakness in Internal Control over Compliance, Material Noncompliance for Food Distribution Cluster, Education Stabilization Fund, and Aging Cluster 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) Acceptance date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance Finding 2024 ¬– 015: (continued) 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 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, 2024 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, 2023 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2024. We also evaluated the Commonwealth’s review of 45 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, 2024 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 17.6 months to over 18 months after the FAC Acceptance date for two out of two audit reports with findings. There was also a delay in PDOA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. • 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 8.7 months to over 16 months after the FAC Acceptance date for four out of four audit reports with findings. • Department of Education (PDE): The time period for making a management decision on findings was approximately 7.8 months to over 12 months after the FAC Acceptance date for seven out of 22 audit reports with findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 11.6 months to over 12 months after the FAC Acceptance date for two out of two audit reports with findings. Our testing disclosed for the two late audit reports, DEP made management decisions timely. However, DEP did not notify the subrecipients of the management decisions within the required six month time period after the audit reports FAC Acceptance date. • Department of Human Services (DHS): The time period for making a management decision on findings was approximately 7.2 months after the FAC Acceptance date for one out of two audit reports with findings. Our testing disclosed for the one late audit report DHS made a management decision timely. However, DHS did not notify the subrecipient of the management decision within the required six month time period after the audit reports FAC Acceptance date. Criteria: 2 CFR §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: Finding 2024 ¬– 015: (continued) (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 §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 §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 §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]. 2 CFR §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. Finding 2024 ¬– 015: (continued) (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. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Finding 2024 ¬– 015: (continued) 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. (6) 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. 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, 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. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, and untimely review of the SEFA or alternate procedures be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. Finding 2024 ¬– 015: (continued) DHS Response: DHS agrees that there was an exception where human error caused a management decision on one single audit report to be issued untimely; in this instance, the decision itself was made timely but was not communicated in a timely manner. DHS disagrees that an isolated incident due to human error signifies a weakness in internal controls. This was not a systemic issue and therefore should not have been considered a significant deficiency in internal controls, and DHS should not have been included in this finding. Auditors’ Conclusion: The agency responses from PDOA, PDA, PDE, and DEP indicate agreement with the finding. DHS agrees that an error occurred resulting in untimely submission of one management decision, DHS disagrees that the error represents a significant deficiency. We acknowledge the error occurred due to an oversight and is not a systemic error, however, the error resulted in noncompliance with one of two audit reports that required timely management decisions. We will evaluate corrective action in the subsequent audit. The finding remains as stated. Questioned Costs: The amount of questioned costs cannot be determined.
CONDITION Career and Technical Education is not verifying every subrecipient is audited and reviewing audit findings as required by 2 CFR 200, Subpart F. Subsequently, by not verifying every subrecipient is audited, Career and Technical Education is not ensuring their responsibilities for issuing management decisions are performed, if any findings are identified in the audits. CRITERIA All pass-through entities must: • 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 terms and conditions of the subaward, and that the subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include, in part, 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; 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 2 CFR 200.521; and ensuring audit findings specifically related to the subaward are resolved (2 CFR 200.332(d)). • Verify that every subrecipient is audited as required by 2 CFR 200, Subpart F, when it is expected that the subrecipient's Federal award expended during the respective fiscal year equaled or exceeded the $750,000 threshold set forth in 2 CFR 200.501 (2 CFR 200.332(f). Federal regulation, 2 CFR 200.303, requires non-Federal entities, in part, to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. CAUSE Career and Technical Education has not established processes to identify which subrecipients are subject to required audits or to obtain and review Uniform Guidance Single Audit reports. In addition, Career and Technical Education has not developed a tracking system to ensure timely submission of required audit reports and to ensure timely and appropriate corrective action is taken on all deficiencies. EFFECT Subrecipient noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward, including audit findings pertaining to the Federal award, may go undetected and unresolved. CONTEXT Career and Technical Education awarded subawards, individually up to $10 million, to 13 subrecipients totaling $74.6 million for 19 different multi-purpose community facility projects. Career and Technical Education has had prior experience with these subrecipients. Projects were included in the state’s program plan that was reviewed and approved by U.S. Treasury. Career and Technical Education imposed specific subaward conditions upon each subrecipient requiring payments as reimbursements rather than advance payments. Career and Technical Education performs ongoing monitoring procedures through review and approval of subrecipient requests for reimbursements, which includes reviewing invoices and contractor progress billings for unallowable expenses, prior to disbursing Capital Project Funds. Lastly, Career and Technical Education conducts annual on-site visits of started projects until completed to visually inspect projects are being completed as planned. Where sampling was performed, the audit used a non-statistical sampling method. This finding, in combination with the finding regarding required communication of award information to the subrecipients (Finding 2024-04), results in a modified opinion for the subrecipient monitoring compliance requirement. IDENTIFICATION AS A REPEAT FINDING Not a repeat finding. RECOMMENDATION We recommend Career and Technical Education establish processes to identify which subrecipients are subject to required audits and to obtain and review Uniform Guidance Single Audit reports, including developing a tracking system to ensure timely submission of required audit reports and timely and appropriate corrective action is taken on all deficiencies. We also recommend Career and Technical Education verify every subrecipient is audited as required by 2 CFR 200, Subpart F; follow-up and ensure that subrecipients take timely and appropriate action on all deficiencies of the Federal award; and issue management decisions and ensure audit findings have been resolved. CAREER AND TECHNICAL EDUCATION RESPONSE The Department agrees with this recommendation See “Management’s Response and Corrective Action” section of this report.
Program: AL 97.036 – Disaster Grants – Public Assistance (Presidentially Declared Disasters) – Subrecipient Monitoring Grant Number & Year: 4616-DR-NE, declared September 6, 2021; 4420-DR-NE, declared March 21, 2019; 4641-DR-NE, declared February 23, 2022; 4662-DR-NE, declared July 27, 2022; 4521-DR-NE, declared April 4, 2020 Federal Grantor Agency: U.S. Department of Homeland Security Criteria: 2 CFR § 200.332 (January 1, 2024) states, in relevant part, the following: All pass-through entities must: * * * * (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, 2024) 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 . . . .” A good internal control plan includes procedures to ensure subrecipient audits are reviewed timely. Condition: The Agency did not ensure subrecipients obtained Single audits. A similar finding was noted in the prior audit. Repeat Finding: 2023-063 Questioned Costs: None Statistical Sample: No Context: We selected three subrecipients for testing that would have required a Single audit based on the amount of funds received from the Agency during the subrecipient’s previous fiscal year. One of the three subrecipients received $12,604,747 in disaster grant funds passed through the Agency during the subrecipient’s fiscal year 2023, but did not submit a Single audit and the Agency had not followed up with the subrecipient. Cause: Employee oversight. The subrecipient returned a certification stating that they did not require a Single audit, and the Agency failed to verify the certification was proper. 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 obtained and reviewed timely. Management Response: Military (NEMA) agrees with the finding and has implemented the corrective action plan.
Finding 2024 - 001 Lack of Subrecipient Monitoring Procedures – Verification of Audits Information on the Federal Programs: 19.511 Criteria: Per 2 CFR § 200.332(f), pass-through entities must ensure that subrecipients expending $750,000 or more in Federal awards during the subrecipient’s fiscal year undergo a single or program-specific audit as required by 2 CFR § 200.501. Additionally, per 2 CFR § 200.332(d), passthrough entities must monitor subrecipients to ensure compliance with Federal statutes, regulations, and the terms and conditions of the subaward. Condition: During the audit, it was noted that the entity does not have a formalized process in place to verify whether subrecipients required to undergo a single audit have completed and submitted the audit as required. Specifically, there was no documented evidence that the entity reviewed audit reports or followed up on subrecipient audit compliance. Cause: The entity has not established or implemented adequate policies and procedures to monitor subrecipient compliance with audit requirements under the Uniform Guidance. Effect or Potential Effect: Failure to verify and review subrecipient audit reports increases the risk that noncompliance, questioned costs, or internal control deficiencies at the subrecipient level go undetected, potentially resulting in unallowable costs or noncompliance with Federal regulations. Questioned Costs: None noted at this time; however, the lack of monitoring increases the risk of unallowable costs in Federal programs. Context: BRAC USA has one primary subrecipient for which a single audit was not performed prior to our audit fieldwork. Identification as a Repeat Finding, if Applicable: Not a repeat finding. Recommendation: We recommend that the entity develop and implement formal written procedures to ensure subrecipient audit requirements are met. These procedures should include: Identifying subrecipients required to undergo a single audit. Requiring subrecipients to submit audit reports and management letters annually. Reviewing subrecipient audit reports to identify findings that may impact the entity. Establishing follow-up procedures to address and resolve subrecipient audit findings. Maintaining documentation of audit verification and any corrective actions taken.