2023-004 – Schedule of Expenditures of Federal Awards Federal Agency: U.S. Department of Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Federal Assistance Listing Number: 21.027 Award Period: 7/1/2022 – 6/30/2023 Type of Finding: Other Noncompliance and Material Weakness in Internal Control Over Compliance Criteria or Specific Requirement: Uniform guidance requires the auditee to prepare a schedule of expenditures of federal awards (SEFA) which must include the total federal awards expended as determined in accordance with sub-section 200.502. 2 CFR 200.510. A non-federal entity must maintain effective internal control over the federal award (2 CFR 200.303). Condition: During our testing of the SEFA it was identified that there were missing federal expenditures, expenditures included in error that were not related to a federal grant, and amounts reported as subrecipient pass through expenses in error. Questioned Costs: N/A. Context: Federal expenses were omitted from the schedule totaling $5,648,252 of federal passthrough funds. In addition, $3,848,887 were erroneously included in the SEFA that did not meet the definition of federal funds and management included approximately $2,487,864 in pass-through funds to subrecipients in error. The SEFA was revised to correct these errors. Cause: The University’s policies and procedures were not followed or not adequate to ensure a complete and accurate SEFA. Effect: The SEFA did not include correct amounts for the fiscal year ended June 30, 2023. Repeat Finding: No. Recommendation: We recommend that the University reevaluate its policies and controls related to the preparation of the SEFA to ensure its complete and accurate. Views of Responsible Officials: There is no disagreement with the audit finding and the University is in the process of implementing corrective procedures.
FINDING 2023-201 The Coronavirus State and Local Fiscal Recovery Fund (CSLFRF) was understated by $18 million on the Schedule of Expenditures of Federal Awards (SEFA) Closing Package. Type of Finding: Significant Deficiency, SEFA Misstatement Assistance Listing Title: State and Local Fiscal Recovery Fund Assistance Listing Number: 21.027 Federal Award Number: SLFRP0142 Program Year: March 3, 2021 – December 31, 2024 Federal Agency: Department of Treasury Compliance Requirement: U.S. Code of Federal Regulations (CRF) 2 CFR 200.510(b) Questioned Costs: None Criteria: The Internal Control Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) identifies control activities that help ensure management directives are carried out throughout the operation. Verifications, approvals, and authorizations are all control activities that support this objective. The U.S. Code of Federal Regulations (CFR), 2 CFR 200.303, states that the non-federal entity 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. Additionally, 2 CFR 200.510 requires the State to prepare a SEFA, which must include the total federal awards expended for each individual federal award program. The Office of the State Controller requires agencies to complete the SEFA closing package and uses this information to compile the statewide SEFA. Condition: The Department underreported $18 million in federal expenditures incurred under the CSLFRF program on the SEFA closing package. The expenditures were incurred for COVID-related claims covered under the State’s health plan using CSLFRF funds and should have been reported on the closing package. Cause: The CSLFRF funds were deposited to and expended from a non-federal fund. The SEFA closing package was prepared using similar procedures as the previous year by reporting federal expenditures included in federal funds. This approach did not consider that federal funds might have been expended through other means, and they were not reported. Additionally, there was staff turnover in a key financial position that contributed to this error. Effect: In the absence of the audit work completed and the resulting revised submission by the Department, the statewide SEFA would have included an understatement of $18 million for the Coronavirus State and Local Fiscal Recovery Fund, Assistance Listing number 21.027. Recommendation: We recommend that the Department strengthen the design and implementation of internal controls to ensure all federal funds are properly accounted for and those expenditures are included in the SEFA closing package. Management’s View: The Department of Administrations agrees that the SEF A was prepared using procedures similar to prior years, which failed to capture the expenditures related to the CSLFRF as those funds were deposited into a non-federal fund as directed by the legislature in HB752. Corrective Action: Prior to the issuance of this memo, the Department transferred the remaining $6,969,325.15 of CSLFRF funds into a separate reporting program. The Department will process quarterly reconciliations utilizing the quarterly reports from the insurance carrier. These transactions will then be queried each year, similar to other federal funding sources, and reported on the SEFA. Future federal awards will be deposited into a federal funding source or clearly delineated from non-federal funding sources to ensure proper reporting on the SEFA. Auditor’s Concluding Remarks: We thank the Department for its cooperation and assistance throughout the audit.
FINDING 2023-202 Closing package submissions and revisions completed prior to the draft of the Schedule of Expenditures of Federal Awards (SEFA) being submitted for audit were not included in the schedule resulting in misstatements. Type of Finding: Significant Deficiency, SEFA Misstatement Assistance Listing Title: Coronavirus State and Local Fiscal Recovery Fund; Medical Assistance Program; and Children’s Health Insurance Fund Assistance Listing Number: 21.027; 93.778; 93.767 Federal Award Number: Various Program Year: Various Federal Agency: Various Compliance Requirement: U.S. Code of Federal Regulations (CFR) 200.510(b) Questioned Costs: None Criteria: The Internal Control Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) provides a basis for organizations to design internal control procedures to ensure reliable financial reporting, effective and efficient operations, and compliance with applicable laws and regulations. Components of this framework include risk assessment, control activities, and information and communication. Risk assessment is the identification and analysis of various risks entities face because of changing economic, industry, regulatory, and operating conditions and provides a basis to develop appropriate responses to manage those risks. Control activities are policies and procedures that help ensure management directives are carried out and risks are mitigated. Verifications, approvals, reconciliations, authorizations, and segregation of duties are all control activities that support this objective. Information and communication relate to obtaining quality information and effective internal and external communication of that information to achieve management objectives. Management objectives should include the preparation and fair presentation of the SEFA in relation to the basic financial statements as a whole and in compliance with requirements contained in the U.S. Code of Federal Regulations (CFR), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) (2 CFR §200.510(b)), which states it must include: • Total federal awards expended as determined in accordance with 2 CFR §200.502. • Total amount provided to subrecipients from each federal program. Condition: The SEFA submitted for audit purposes included misstatements for Direct Awards for Assistance Listing (AL) number 21.027 (Coronavirus State and Local Fiscal Recovery Fund (CSLFRF)), 93.778 (Medical Assistance Program (Medicaid)), and 93.767 (Children’s Health Insurance Program (CHIP)). We noted the following errors in Direct Award Expenditures: • AL number 21.027 was understated $21,358,086 for Direct Award Expenditures reported by the Department of Health and Welfare and by an additional $500,000 reported by the Department of Correction. • AL number 93.778 was understated by $25,108,923 for Direct Expenditures reported by the Department of Health and Welfare. • AL number 93.767 was overstated by $3,469,677 for Direct Expenditures reported by the Department of Health and Welfare. Cause: Each year, State agencies report total federal awards expended on a closing package. The Office uses these closing packages to compile the SEFA. The Office’s review procedures over this process did not include the revised closing package submitted by the Department of Health and Welfare or the revisions communicated between the Office and the Department of Corrections. These revisions occurred prior to the draft of the SEFA submitted for audit. Effect: The SEFA submitted for audit contained misstatements; however, these errors have been corrected. In the absence of audit work completed, the statewide SEFA would have included an understatement of $21,858,086 for the CSLFRF program; an understatement of $25,108,923for the Medicaid program; and an overstatement of $3,469,677 for the CHIP program. Recommendation: We recommend that the Office design and implement procedures to ensure amounts reported on closing package submissions and later revisions are properly reviewed and reported on the statewide SEFA. Management’s View: The Office aAgrees with this finding. Corrective Action: An agency submitted a revised SEFA template in November 2023. We inadvertently excluded those revisions from the draft of the SEFA provided for audit. To prevent this error from happening again, we will document each agency that submits a revised SEFA template(s) on our SEFA review checklist. This will require the preparer and reviewer(s) to verify and sign off on changes made to the SEFA master file. Errors identified were corrected before issuance of the Single Audit report. Corrective actions will be implemented for fiscal year 2024 reporting. Auditor’s Concluding Remarks: We thank the Office for its cooperation and assistance throughout the audit.
FINDING 2023-202 Closing package submissions and revisions completed prior to the draft of the Schedule of Expenditures of Federal Awards (SEFA) being submitted for audit were not included in the schedule resulting in misstatements. Type of Finding: Significant Deficiency, SEFA Misstatement Assistance Listing Title: Coronavirus State and Local Fiscal Recovery Fund; Medical Assistance Program; and Children’s Health Insurance Fund Assistance Listing Number: 21.027; 93.778; 93.767 Federal Award Number: Various Program Year: Various Federal Agency: Various Compliance Requirement: U.S. Code of Federal Regulations (CFR) 200.510(b) Questioned Costs: None Criteria: The Internal Control Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) provides a basis for organizations to design internal control procedures to ensure reliable financial reporting, effective and efficient operations, and compliance with applicable laws and regulations. Components of this framework include risk assessment, control activities, and information and communication. Risk assessment is the identification and analysis of various risks entities face because of changing economic, industry, regulatory, and operating conditions and provides a basis to develop appropriate responses to manage those risks. Control activities are policies and procedures that help ensure management directives are carried out and risks are mitigated. Verifications, approvals, reconciliations, authorizations, and segregation of duties are all control activities that support this objective. Information and communication relate to obtaining quality information and effective internal and external communication of that information to achieve management objectives. Management objectives should include the preparation and fair presentation of the SEFA in relation to the basic financial statements as a whole and in compliance with requirements contained in the U.S. Code of Federal Regulations (CFR), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) (2 CFR §200.510(b)), which states it must include: • Total federal awards expended as determined in accordance with 2 CFR §200.502. • Total amount provided to subrecipients from each federal program. Condition: The SEFA submitted for audit purposes included misstatements for Direct Awards for Assistance Listing (AL) number 21.027 (Coronavirus State and Local Fiscal Recovery Fund (CSLFRF)), 93.778 (Medical Assistance Program (Medicaid)), and 93.767 (Children’s Health Insurance Program (CHIP)). We noted the following errors in Direct Award Expenditures: • AL number 21.027 was understated $21,358,086 for Direct Award Expenditures reported by the Department of Health and Welfare and by an additional $500,000 reported by the Department of Correction. • AL number 93.778 was understated by $25,108,923 for Direct Expenditures reported by the Department of Health and Welfare. • AL number 93.767 was overstated by $3,469,677 for Direct Expenditures reported by the Department of Health and Welfare. Cause: Each year, State agencies report total federal awards expended on a closing package. The Office uses these closing packages to compile the SEFA. The Office’s review procedures over this process did not include the revised closing package submitted by the Department of Health and Welfare or the revisions communicated between the Office and the Department of Corrections. These revisions occurred prior to the draft of the SEFA submitted for audit. Effect: The SEFA submitted for audit contained misstatements; however, these errors have been corrected. In the absence of audit work completed, the statewide SEFA would have included an understatement of $21,858,086 for the CSLFRF program; an understatement of $25,108,923for the Medicaid program; and an overstatement of $3,469,677 for the CHIP program. Recommendation: We recommend that the Office design and implement procedures to ensure amounts reported on closing package submissions and later revisions are properly reviewed and reported on the statewide SEFA. Management’s View: The Office aAgrees with this finding. Corrective Action: An agency submitted a revised SEFA template in November 2023. We inadvertently excluded those revisions from the draft of the SEFA provided for audit. To prevent this error from happening again, we will document each agency that submits a revised SEFA template(s) on our SEFA review checklist. This will require the preparer and reviewer(s) to verify and sign off on changes made to the SEFA master file. Errors identified were corrected before issuance of the Single Audit report. Corrective actions will be implemented for fiscal year 2024 reporting. Auditor’s Concluding Remarks: We thank the Office for its cooperation and assistance throughout the audit.
FINDING 2023-202 Closing package submissions and revisions completed prior to the draft of the Schedule of Expenditures of Federal Awards (SEFA) being submitted for audit were not included in the schedule resulting in misstatements. Type of Finding: Significant Deficiency, SEFA Misstatement Assistance Listing Title: Coronavirus State and Local Fiscal Recovery Fund; Medical Assistance Program; and Children’s Health Insurance Fund Assistance Listing Number: 21.027; 93.778; 93.767 Federal Award Number: Various Program Year: Various Federal Agency: Various Compliance Requirement: U.S. Code of Federal Regulations (CFR) 200.510(b) Questioned Costs: None Criteria: The Internal Control Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) provides a basis for organizations to design internal control procedures to ensure reliable financial reporting, effective and efficient operations, and compliance with applicable laws and regulations. Components of this framework include risk assessment, control activities, and information and communication. Risk assessment is the identification and analysis of various risks entities face because of changing economic, industry, regulatory, and operating conditions and provides a basis to develop appropriate responses to manage those risks. Control activities are policies and procedures that help ensure management directives are carried out and risks are mitigated. Verifications, approvals, reconciliations, authorizations, and segregation of duties are all control activities that support this objective. Information and communication relate to obtaining quality information and effective internal and external communication of that information to achieve management objectives. Management objectives should include the preparation and fair presentation of the SEFA in relation to the basic financial statements as a whole and in compliance with requirements contained in the U.S. Code of Federal Regulations (CFR), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) (2 CFR §200.510(b)), which states it must include: • Total federal awards expended as determined in accordance with 2 CFR §200.502. • Total amount provided to subrecipients from each federal program. Condition: The SEFA submitted for audit purposes included misstatements for Direct Awards for Assistance Listing (AL) number 21.027 (Coronavirus State and Local Fiscal Recovery Fund (CSLFRF)), 93.778 (Medical Assistance Program (Medicaid)), and 93.767 (Children’s Health Insurance Program (CHIP)). We noted the following errors in Direct Award Expenditures: • AL number 21.027 was understated $21,358,086 for Direct Award Expenditures reported by the Department of Health and Welfare and by an additional $500,000 reported by the Department of Correction. • AL number 93.778 was understated by $25,108,923 for Direct Expenditures reported by the Department of Health and Welfare. • AL number 93.767 was overstated by $3,469,677 for Direct Expenditures reported by the Department of Health and Welfare. Cause: Each year, State agencies report total federal awards expended on a closing package. The Office uses these closing packages to compile the SEFA. The Office’s review procedures over this process did not include the revised closing package submitted by the Department of Health and Welfare or the revisions communicated between the Office and the Department of Corrections. These revisions occurred prior to the draft of the SEFA submitted for audit. Effect: The SEFA submitted for audit contained misstatements; however, these errors have been corrected. In the absence of audit work completed, the statewide SEFA would have included an understatement of $21,858,086 for the CSLFRF program; an understatement of $25,108,923for the Medicaid program; and an overstatement of $3,469,677 for the CHIP program. Recommendation: We recommend that the Office design and implement procedures to ensure amounts reported on closing package submissions and later revisions are properly reviewed and reported on the statewide SEFA. Management’s View: The Office aAgrees with this finding. Corrective Action: An agency submitted a revised SEFA template in November 2023. We inadvertently excluded those revisions from the draft of the SEFA provided for audit. To prevent this error from happening again, we will document each agency that submits a revised SEFA template(s) on our SEFA review checklist. This will require the preparer and reviewer(s) to verify and sign off on changes made to the SEFA master file. Errors identified were corrected before issuance of the Single Audit report. Corrective actions will be implemented for fiscal year 2024 reporting. Auditor’s Concluding Remarks: We thank the Office for its cooperation and assistance throughout the audit.
FINDING 2023-202 Closing package submissions and revisions completed prior to the draft of the Schedule of Expenditures of Federal Awards (SEFA) being submitted for audit were not included in the schedule resulting in misstatements. Type of Finding: Significant Deficiency, SEFA Misstatement Assistance Listing Title: Coronavirus State and Local Fiscal Recovery Fund; Medical Assistance Program; and Children’s Health Insurance Fund Assistance Listing Number: 21.027; 93.778; 93.767 Federal Award Number: Various Program Year: Various Federal Agency: Various Compliance Requirement: U.S. Code of Federal Regulations (CFR) 200.510(b) Questioned Costs: None Criteria: The Internal Control Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) provides a basis for organizations to design internal control procedures to ensure reliable financial reporting, effective and efficient operations, and compliance with applicable laws and regulations. Components of this framework include risk assessment, control activities, and information and communication. Risk assessment is the identification and analysis of various risks entities face because of changing economic, industry, regulatory, and operating conditions and provides a basis to develop appropriate responses to manage those risks. Control activities are policies and procedures that help ensure management directives are carried out and risks are mitigated. Verifications, approvals, reconciliations, authorizations, and segregation of duties are all control activities that support this objective. Information and communication relate to obtaining quality information and effective internal and external communication of that information to achieve management objectives. Management objectives should include the preparation and fair presentation of the SEFA in relation to the basic financial statements as a whole and in compliance with requirements contained in the U.S. Code of Federal Regulations (CFR), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) (2 CFR §200.510(b)), which states it must include: • Total federal awards expended as determined in accordance with 2 CFR §200.502. • Total amount provided to subrecipients from each federal program. Condition: The SEFA submitted for audit purposes included misstatements for Direct Awards for Assistance Listing (AL) number 21.027 (Coronavirus State and Local Fiscal Recovery Fund (CSLFRF)), 93.778 (Medical Assistance Program (Medicaid)), and 93.767 (Children’s Health Insurance Program (CHIP)). We noted the following errors in Direct Award Expenditures: • AL number 21.027 was understated $21,358,086 for Direct Award Expenditures reported by the Department of Health and Welfare and by an additional $500,000 reported by the Department of Correction. • AL number 93.778 was understated by $25,108,923 for Direct Expenditures reported by the Department of Health and Welfare. • AL number 93.767 was overstated by $3,469,677 for Direct Expenditures reported by the Department of Health and Welfare. Cause: Each year, State agencies report total federal awards expended on a closing package. The Office uses these closing packages to compile the SEFA. The Office’s review procedures over this process did not include the revised closing package submitted by the Department of Health and Welfare or the revisions communicated between the Office and the Department of Corrections. These revisions occurred prior to the draft of the SEFA submitted for audit. Effect: The SEFA submitted for audit contained misstatements; however, these errors have been corrected. In the absence of audit work completed, the statewide SEFA would have included an understatement of $21,858,086 for the CSLFRF program; an understatement of $25,108,923for the Medicaid program; and an overstatement of $3,469,677 for the CHIP program. Recommendation: We recommend that the Office design and implement procedures to ensure amounts reported on closing package submissions and later revisions are properly reviewed and reported on the statewide SEFA. Management’s View: The Office aAgrees with this finding. Corrective Action: An agency submitted a revised SEFA template in November 2023. We inadvertently excluded those revisions from the draft of the SEFA provided for audit. To prevent this error from happening again, we will document each agency that submits a revised SEFA template(s) on our SEFA review checklist. This will require the preparer and reviewer(s) to verify and sign off on changes made to the SEFA master file. Errors identified were corrected before issuance of the Single Audit report. Corrective actions will be implemented for fiscal year 2024 reporting. Auditor’s Concluding Remarks: We thank the Office for its cooperation and assistance throughout the audit.
Finding 2023-203 The Schedule of Expenditures of Federal Awards (SEFA) closing package originally submitted to the Office of the State Controller did not properly report expenditures for the Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) program. Type of Finding: Significant Deficiency, SEFA Misstatement Assistance Listing Title: Coronavirus State and Local Fiscal Recovery Fund Assistance Listing Number: 21.027 Federal Award Number: SLFRP0142 Program Year: March 3, 2021 – December 31, 2024 Federal Agency: Department of Treasury Compliance Requirement: U.S. Code of Federal Regulations (CFR) 2 CFR 200.510(b) Questioned Costs: None Criteria: The U.S. Code of Federal Regulations (CFR), 2 CFR 200.510(b), requires the State to prepare a Schedule of Expenditures of Federal Awards (SEFA) for the fiscal year that must include the total federal awards expended. State agencies are required to report federal expenditures incurred for each federal program during the State fiscal year to the Office of the State Controller (Office) through the SEFA closing package. The Office provides instructions on the completion of the closing package. The Uniform Guidance included in 2 CFR 200.303 requires that a non-federal entity receiving federal awards establish and maintain internal controls that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions in the federal award. The Internal Control Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) identifies control activities that help ensure management directives are carried out and risks are mitigated. These activities include things like approvals, authorizations, verifications, reconciliations, and segregation of duties. Condition: The Department did not identify expenditures accurately when completing the schedule of expenditures of federal awards closing package. The closing package includes different tabs to report total expenditures and expenditures made to subrecipients. Reported expenditures to subrecipients should be a subset of total expenditures. However, The Department reported zero total expenditures related to the Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) program but $10.5 million of expenditures to subrecipients. However, $10 million of that were funds that had been transferred to the Division of Public Works for the Wastewater Lagoon project. Because they are transferred from one state agency to another, these funds have not yet been expended by the State and, as such, should not be reported as expenditures. Cause: The Department did not appear to fully understand how to prepare the closing package, and it was not reviewed with enough detail or knowledge to identify the error. Effect: The statewide SEFA was understated by $500,000 that was truly expended, but only reported as a subrecipient expenditure and thus not included in total expenditures for the CSLFRF program. Recommendation: We recommend that the Department improve training and the review process for the SEFA closing package to ensure all amounts are correctly reported. Management’s View: The Department agrees with this finding. Corrective Action: After management review the department will improve training and process review of preparation of the SEFA closing package to ensure all amounts are correctly reported. This lack of understanding of the SEFA was due to staff turnover and lack of subject matter experts regarding the SEFA for Fiscal Year 2023. The agency will implement the following to fix this issue: a) Financial Manager (or delegate) expenditure detail report shall include grant fund 344 (ARPA grants), 348 fund (grants), and any additional funds designated by the legislature or agency, for the specific purpose of tracking federal grant funding. b) Once prepared by the Financial Manager (or delegate), review of the SEFA by the Financial Officer for completeness, verifying all required grant federal funds appropriated to the agency are included on the SEFA closing package. c) Financial Manager and Financial Officer meet to review the SEFA for agreement of grant expenditure amounts reported on the SEFA. Auditor’s Concluding Remarks: We thank the Department for its cooperation and assistance throughout the audit.
FINDING 2023-204 The Schedule of Expenditures of Federal Awards (SEFA) closing package understated the Education Stabilization Fund - Governor’s Emergency Education Relief (GEER II) by $1,039,753 and overstated the Education Stabilization Fund – Emergency Assistance to Non-Public Schools (EANS) program by the same amount. Related to Prior Finding: 2021-202 Type of Finding: Significant Deficiency, SEFA Misstatement Assistance Listing Title: Governors Emergency Education Relief Fund; Emergency Assistance for Non-Public Schools Assistance Listing Number: 84.425C; 84.425R Federal Award Number: S425C210043; S425R210024 Program Year: January 8, 2021 – September 30, 2023; February 11, 2021 – September 30, 2023 Federal Agency: Department of Education Compliance Requirement: SEFA MisstatementU.S. Code of Federal Regulations (CFR) 200.510(b) Questioned Costs: None Criteria: The Internal Control Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) provides a basis for organizations to design internal control procedures to ensure reliable financial reporting, effective and efficient operations, and compliance with applicable laws and regulations. Components of this framework include risk assessment, control activities, and information and communication. Risk assessment is the identification and analysis of various risks entities face because of changing economic, industry, regulatory, and operating conditions. It provides a basis to develop appropriate responses to manage those risks. Control activities are policies and procedures that help ensure management directives are carried out and risks are mitigated. Verifications, approvals, reconciliations, authorizations, and segregation of duties are all control activities that support this objective. Information and communication relate to obtaining quality information and effective internal and external communication of that information to achieve management objectives. Management objectives should include the preparation and fair presentation of the SEFA in relation to the basic financial statements as a whole and in compliance with requirements contained in the U.S. Code of Federal Regulations (CFR), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) (2 CFR § 200.510(b)), which states it must include: • Total federal awards expended as determined in accordance with 2 CFR § 200.502, and • Total amount provided to subrecipients from each federal program The Office of Management and Budget (OMB) Compliance Supplement also indicates that the SEFA should include the individual subprograms the funds were expended under, including each separate Assistance Listing (AL) number with the applicable alpha character. Condition: The Board completed a SEFA closing package to report federal grant expenditures. This closing package included errors in reporting for the Education Stabilization Fund. The Governor’s Emergency Education Relief (GEER II, Assistance Listing number 84.425C) expenditures were understated by $1,039,753 and the Coronavirus Response and Relief Supplemental Appropriations Act, 2021 – Emergency Assistance to Non-Public Schools (EANS, Assistance Listing number 84.425R) expenditures were overstated by $1,039,753. Cause: The State was given a specific period of time to obligate funds under the EANS program. Unobligated funds were then required to be reverted to the governor to be redistributed and used under the GEER II program. The Board had difficulty tracking available funds for each program. When preparing the SEFA, Board staff found errors in the total amounts reported for each program and made unsupported adjustments to these two programs. Effect: Total federal expenditures reported on the Board’s SEFA was correct. However, specific identification by program, as required, was understated by $1,039,753 for one program, and one program was overstated by the same amount. Recommendation: We recommend that the Board design and implement procedures to ensure federal expenditure amounts for each program are properly reported and proper adjustments are made prior to the reporting deadline. Management’s View: The Board agrees with the finding. Corrective Action: The Report states “the State was given a specific period of time to obligate funds under the EANS program. Unobligated funds were then required to be reverted to the governor to be redistributed and used under the GEER II program. The Board had difficulty tracking available funds for each program. When preparing the SEFA, Board staff found errors in the total amounts reported for each program and made unsupported adjustments to these two programs.” The Finding states that total federal expenditures reported on the Board’s SEFA was correct. However, specific identification by program, as required, was understated by $1,039,753 for one program, and overstated for another program, by the same amount. Patrick Coulson, Chief Financial Officer and Scott Christie, Financial Manager met with Amy Brown, LSO Audit Manager. Ms. Brown indicated that the EANS funds should have been moved from the State Department of Education (SDE) federal DoE G5 system to OSBE G5 system for better management of the funds. Mr. Christie asked Gideon Tolman, Chief Financial Officer for SDE whether the EANS funds in G5 would move to OSBE G5. Mr. Tolman said they would not. At this point OSBE was working with three PCAs used for the same Budget Unit and Fund for all GEER II funds: GEER II 29410, EANS 29710 and GEANS (which was created for the reverted EANS funds now GEER II funds). The GEER II PCA 29410 had a specific CFDA number based on the Grant Award Notification. EANS PCA 29710 had a specific CFDA number based on the example Grant Award Notification provided by SDE. OSBE was not aware of, nor was it provided, a unique CFDA number that should be used for the reverted EANS/GEER II funds. Mr. Christie considered the SDE EANS GEER funds the same as the OSBE GEER funds. In other words, once unobligated EANS moneys were reverted (by operation of law) to the Governor,1 all moneys in the GEER II fund were considered fungible.2 They were in the same OSBE appropriation, Budget Unit and Fund. The only distinction was that OSBE and SDE had access to separate buckets of GEER cash. When a large contract came up for payment on June 29th, Mr. Christie was also looking ahead at the implementation of the new statewide ERP Luma system. Mr. Christie wasn’t confident that Project Contracts had been set up correctly in Luma. Mr. Christie also understood that there would be considerably more work reconciling grant to cash balances in Luma compared to the legacy ERP system. For these reasons, on June 29th Mr. Christie drew down all the remaining GEER II funds to zero out that grant by the end of the fiscal year. When the coding for the contract payment came across, it was coded to PCA 29410, GEER II. OSBE could have coded the payment to either PCA 29450 or 29710, as they were now all considered GEER II funds. We do not believe that there were unsupported adjustments to these two programs. The adjustments were based on making sure the SEFA was accurate, and accuracy was confirmed in the Report: “total federal expenditures reported on the Board’s SEFA was [sic] correct.” We wanted to ensure we were not overstating the expenses for GEER II on the SEFA. We believe the adjustments can be, and have been, explained and are supported by the simple fact that one PCA was chosen instead of another for the same fungible GEER II funds. Nevertheless, we will agree with the audit finding. Corrective Action: The corrective action is to reclass any GEER II Project transactions in FY 2024 to EANS/GEER II Project. That will ensure there are no GEER II transactions in FY 2024 that would need to be adjusted. This was done on March 21, 2024. Auditor’s Concluding Remarks: We thank the Board for its cooperation and assistance throughout the audit. We continue to assert that the Board submitted the SEFA closing package with errors, and that it was not aware there were errors until the audit team identified them as part of the procedures completed for this audit. If adjustments were being made to ensure an accurate SEFA, they failed. Our statement that “total federal expenditures reported on the Board’s SEFA was correct” is related to the material accuracy of the SEFA as a whole. This finding identifies errors made in reporting required by the Office of Management and Budget, as communicated in the Compliance Supplement, where it states that that the SEFA should include the individual subprograms the funds were expended under, including each separate Assistance Listing number with the applicable alpha character. There are many requirements related to the presentation of the SEFA beyond total expenditures that are reviewed for accuracy, such as amounts paid to subrecipients, or COVID-19 and non-cash expenditures. The errors made by the Board were between programs with different applicable alpha characters, and those programs serve different purposes. Accurate reporting that meets all requirements is important to ensure compliance with the terms of the grant.
FINDING 2023-204 The Schedule of Expenditures of Federal Awards (SEFA) closing package understated the Education Stabilization Fund - Governor’s Emergency Education Relief (GEER II) by $1,039,753 and overstated the Education Stabilization Fund – Emergency Assistance to Non-Public Schools (EANS) program by the same amount. Related to Prior Finding: 2021-202 Type of Finding: Significant Deficiency, SEFA Misstatement Assistance Listing Title: Governors Emergency Education Relief Fund; Emergency Assistance for Non-Public Schools Assistance Listing Number: 84.425C; 84.425R Federal Award Number: S425C210043; S425R210024 Program Year: January 8, 2021 – September 30, 2023; February 11, 2021 – September 30, 2023 Federal Agency: Department of Education Compliance Requirement: SEFA MisstatementU.S. Code of Federal Regulations (CFR) 200.510(b) Questioned Costs: None Criteria: The Internal Control Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) provides a basis for organizations to design internal control procedures to ensure reliable financial reporting, effective and efficient operations, and compliance with applicable laws and regulations. Components of this framework include risk assessment, control activities, and information and communication. Risk assessment is the identification and analysis of various risks entities face because of changing economic, industry, regulatory, and operating conditions. It provides a basis to develop appropriate responses to manage those risks. Control activities are policies and procedures that help ensure management directives are carried out and risks are mitigated. Verifications, approvals, reconciliations, authorizations, and segregation of duties are all control activities that support this objective. Information and communication relate to obtaining quality information and effective internal and external communication of that information to achieve management objectives. Management objectives should include the preparation and fair presentation of the SEFA in relation to the basic financial statements as a whole and in compliance with requirements contained in the U.S. Code of Federal Regulations (CFR), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) (2 CFR § 200.510(b)), which states it must include: • Total federal awards expended as determined in accordance with 2 CFR § 200.502, and • Total amount provided to subrecipients from each federal program The Office of Management and Budget (OMB) Compliance Supplement also indicates that the SEFA should include the individual subprograms the funds were expended under, including each separate Assistance Listing (AL) number with the applicable alpha character. Condition: The Board completed a SEFA closing package to report federal grant expenditures. This closing package included errors in reporting for the Education Stabilization Fund. The Governor’s Emergency Education Relief (GEER II, Assistance Listing number 84.425C) expenditures were understated by $1,039,753 and the Coronavirus Response and Relief Supplemental Appropriations Act, 2021 – Emergency Assistance to Non-Public Schools (EANS, Assistance Listing number 84.425R) expenditures were overstated by $1,039,753. Cause: The State was given a specific period of time to obligate funds under the EANS program. Unobligated funds were then required to be reverted to the governor to be redistributed and used under the GEER II program. The Board had difficulty tracking available funds for each program. When preparing the SEFA, Board staff found errors in the total amounts reported for each program and made unsupported adjustments to these two programs. Effect: Total federal expenditures reported on the Board’s SEFA was correct. However, specific identification by program, as required, was understated by $1,039,753 for one program, and one program was overstated by the same amount. Recommendation: We recommend that the Board design and implement procedures to ensure federal expenditure amounts for each program are properly reported and proper adjustments are made prior to the reporting deadline. Management’s View: The Board agrees with the finding. Corrective Action: The Report states “the State was given a specific period of time to obligate funds under the EANS program. Unobligated funds were then required to be reverted to the governor to be redistributed and used under the GEER II program. The Board had difficulty tracking available funds for each program. When preparing the SEFA, Board staff found errors in the total amounts reported for each program and made unsupported adjustments to these two programs.” The Finding states that total federal expenditures reported on the Board’s SEFA was correct. However, specific identification by program, as required, was understated by $1,039,753 for one program, and overstated for another program, by the same amount. Patrick Coulson, Chief Financial Officer and Scott Christie, Financial Manager met with Amy Brown, LSO Audit Manager. Ms. Brown indicated that the EANS funds should have been moved from the State Department of Education (SDE) federal DoE G5 system to OSBE G5 system for better management of the funds. Mr. Christie asked Gideon Tolman, Chief Financial Officer for SDE whether the EANS funds in G5 would move to OSBE G5. Mr. Tolman said they would not. At this point OSBE was working with three PCAs used for the same Budget Unit and Fund for all GEER II funds: GEER II 29410, EANS 29710 and GEANS (which was created for the reverted EANS funds now GEER II funds). The GEER II PCA 29410 had a specific CFDA number based on the Grant Award Notification. EANS PCA 29710 had a specific CFDA number based on the example Grant Award Notification provided by SDE. OSBE was not aware of, nor was it provided, a unique CFDA number that should be used for the reverted EANS/GEER II funds. Mr. Christie considered the SDE EANS GEER funds the same as the OSBE GEER funds. In other words, once unobligated EANS moneys were reverted (by operation of law) to the Governor,1 all moneys in the GEER II fund were considered fungible.2 They were in the same OSBE appropriation, Budget Unit and Fund. The only distinction was that OSBE and SDE had access to separate buckets of GEER cash. When a large contract came up for payment on June 29th, Mr. Christie was also looking ahead at the implementation of the new statewide ERP Luma system. Mr. Christie wasn’t confident that Project Contracts had been set up correctly in Luma. Mr. Christie also understood that there would be considerably more work reconciling grant to cash balances in Luma compared to the legacy ERP system. For these reasons, on June 29th Mr. Christie drew down all the remaining GEER II funds to zero out that grant by the end of the fiscal year. When the coding for the contract payment came across, it was coded to PCA 29410, GEER II. OSBE could have coded the payment to either PCA 29450 or 29710, as they were now all considered GEER II funds. We do not believe that there were unsupported adjustments to these two programs. The adjustments were based on making sure the SEFA was accurate, and accuracy was confirmed in the Report: “total federal expenditures reported on the Board’s SEFA was [sic] correct.” We wanted to ensure we were not overstating the expenses for GEER II on the SEFA. We believe the adjustments can be, and have been, explained and are supported by the simple fact that one PCA was chosen instead of another for the same fungible GEER II funds. Nevertheless, we will agree with the audit finding. Corrective Action: The corrective action is to reclass any GEER II Project transactions in FY 2024 to EANS/GEER II Project. That will ensure there are no GEER II transactions in FY 2024 that would need to be adjusted. This was done on March 21, 2024. Auditor’s Concluding Remarks: We thank the Board for its cooperation and assistance throughout the audit. We continue to assert that the Board submitted the SEFA closing package with errors, and that it was not aware there were errors until the audit team identified them as part of the procedures completed for this audit. If adjustments were being made to ensure an accurate SEFA, they failed. Our statement that “total federal expenditures reported on the Board’s SEFA was correct” is related to the material accuracy of the SEFA as a whole. This finding identifies errors made in reporting required by the Office of Management and Budget, as communicated in the Compliance Supplement, where it states that that the SEFA should include the individual subprograms the funds were expended under, including each separate Assistance Listing number with the applicable alpha character. There are many requirements related to the presentation of the SEFA beyond total expenditures that are reviewed for accuracy, such as amounts paid to subrecipients, or COVID-19 and non-cash expenditures. The errors made by the Board were between programs with different applicable alpha characters, and those programs serve different purposes. Accurate reporting that meets all requirements is important to ensure compliance with the terms of the grant.
FINDING 2023-205 The Department understated total federal expenditures on the Schedule of Expenditures of Federal Awards (SEFA) closing package by $24,824,862 and understated amounts passed through to subrecipients by $39,901,202. Type of Finding: Significant Deficiency, SEFA Misstatement Assistance Listing Title: Coronavirus State and Local Fiscal Recovery Funds; Clean Water State Revolving Fund; Drinking Water State Revolving Fund; Water Pollution Control State, Interstate, and Tribal Program Support; State Public Water System Supervision; Nonpoint Source Implementation Grants; Pollution Prevention Grants; Deisel Emissions Reduction Act State Grants; Environmental Monitoring/Cleanup, Cultural and Resource Management, Emergency Response Research, Outreach, Technical Analysis Assistance Listing Number: 21.027; 66.458; 66.468; 66.419; 66.432; 66.460; 66.708; 66.040; 81.214 Federal Award Number: Various Program Year: Various Federal Agency: Various Compliance Requirement: U.S. Code of Federal Regulations (CFR) 200.510(b) Questioned Costs: None Criteria: The U.S. Code of Federal Regulations (CFR) 2 CFR 200.510(b) requires the State to prepare a Schedule of Expenditures of Federal Awards (SEFA) for the fiscal year that must include the total federal awards expended and the total amount provided to subrecipients from each federal program. State agencies are required to report this information to the Office of the State Controller (Office) through the SEFA closing package. The Office provides instructions on the completion of the closing package. The Uniform Guidance included in 2 CFR 200.303 requires that a nonfederal entity receiving federal awards establish and maintain internal controls that provide reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulation, and the terms and conditions in the federal award. The Internal Control Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) identifies internal control activities that help ensure management directives are carried out and risks are mitigated. These activities include approvals, authorizations, verifications, reconciliations, and segregation of duties. Condition: The Department completed a SEFA closing package to report various federal grant expenditures. We identified the following errors in the SEFA reporting that resulted in an understatement of $24,824,862 for total federal grant expenditures and an understatement of $39,901,202 in the amount reported as passed through to subrecipients: Cause: The Department has experienced significant turnover in fiscal personnel completing the closing packages. There were limited written instructions available to the new personnel to compile the correct information from the Department’s internal grant management system. Effect: The Statewide SEFA expenditures were understated by $24,824,862, and the amounts reported as disbursed to subrecipients were understated by $39,901,202. Recommendation: We recommend that the Department design and implement procedures to ensure the federal expenditures and amounts passed through to subrecipients are reported accurately for all federal programs. Management’s View: The department agrees with the audit findings that we under reported the total federal expenditures on the SEFA and the amounts passed through to subrecipients. Corrective Action: • Identify Root Causes: With the aid of LSO, we identified errors and are acting on a thorough analysis to pinpoint the root causes of the reporting errors on the Schedule of Expenditures of Federal Awards (SEFA) identified during the recent audit. As noted by the auditors, the errors were due to significant turnover-related knowledge gaps, staff being tasked with unfamiliar processes, lack of written desk manuals and other documentation, and issues with maintaining the internal reporting tool. This identification was completed by Rob Sepich, Chief Financial Officer, and Jeri Ann Fogg, Accounting Supervisor, in tandem with the audit. • Implement Training and Guidance: DEQ will provide comprehensive training sessions for staff involved in preparing and reviewing SEFA reports, considering the high turnover rate experienced in the department. We are in the process of developing detailed guidelines and documentation outlining SEFA reporting requirements, including specific instructions on categorizing federal awards, allowable expenditures, and reporting formats, to address any knowledge gaps resulting from turnover. As part of the statewide ERP move to LUMA from STARS, staff will utilize new reporting platforms and tools in LUMA to streamline SEFA reporting processes and mitigate potential errors associated with manual data entry or outdated systems. One significant improvement over our legacy reporting will be the use of front-end splits (FES) in LUMA that will automatically split out the state match from the federal component of our expenditures at the time in which they are spent, which was not as clearly defined under STARS. The new accounting system will be clearer to auditors and staff. Rob Sepich, Chief Financial Officer will create reconciliation reports for the SEFA by June 2024, with SEFA reporting compiled and completed in July 2024. • Enhance Internal Controls: Moving forward we will significantly strengthen internal controls and review processes to detect and prevent reporting errors in the future, particularly considering the turnover challenges. We anticipate requiring multiple additional review checkpoints and validation procedures within the new reporting platforms to verify the accuracy and completeness of SEFA data that will be reconciled before submission. We will also assign clear responsibilities and designate individuals responsible for overseeing SEFA reporting activities, ensuring continuity and consistency despite turnover and reduce the amount of unfamiliar work given to staff. This will include a review by Doug McRoberts, Grants Manager, Heather Hodges, Principal Budget Analyst, Rob Sepich, Chief Financial Officer, and Jeri Ann Fogg, Accounting Manager. Lastly, we are in the process of developing improved documentation on the new LUMA processes for our day-to-day operations so that we have up to date and accurate desk manuals should we experience additional turnover. These desk manuals are expected to be completed in June 2024. • Conduct Comprehensive Review: As part of the audit, we conducted a comprehensive review of the FY 2023 SEFA reports to identify any additional errors or discrepancies that may have been overlooked, considering the turnover-related knowledge gaps. The department was able to resubmit our SEFA closing package, including the list of sub recipients to the State Controller’s Office and LSO Auditors on March 9th, 2024 due to the efforts of Jeri Ann Fogg, Accounting Manager and Rob Sepich, Chief Financial Officer. • Continuous Monitoring and Improvement: We will establish a process for ongoing monitoring and periodic review of SEFA reporting activities, leveraging the capabilities of the new reporting platforms in LUMA to streamline processes and enhance accuracy. This will bring us closer to the work processes that other agencies do through the statewide reporting systems and reduce our dependency on reporting tools developed in-house that are unfamiliar to other state agencies. This should reduce the risk of losing key institutional knowledge during turnover and will make it easier for an employee with experience from another agency to be able to quickly pick up our reporting needs. To foster a culture of continuous improvement and knowledge sharing within the department, we will have additional meetings to encourage collaboration and communication to address SEFA reporting and ensure that we are not missing key input from staff. Auditor’s Concluding Remarks: We thank the Department for its cooperation and assistance throughout the audit.
FINDING 2023-205 The Department understated total federal expenditures on the Schedule of Expenditures of Federal Awards (SEFA) closing package by $24,824,862 and understated amounts passed through to subrecipients by $39,901,202. Type of Finding: Significant Deficiency, SEFA Misstatement Assistance Listing Title: Coronavirus State and Local Fiscal Recovery Funds; Clean Water State Revolving Fund; Drinking Water State Revolving Fund; Water Pollution Control State, Interstate, and Tribal Program Support; State Public Water System Supervision; Nonpoint Source Implementation Grants; Pollution Prevention Grants; Deisel Emissions Reduction Act State Grants; Environmental Monitoring/Cleanup, Cultural and Resource Management, Emergency Response Research, Outreach, Technical Analysis Assistance Listing Number: 21.027; 66.458; 66.468; 66.419; 66.432; 66.460; 66.708; 66.040; 81.214 Federal Award Number: Various Program Year: Various Federal Agency: Various Compliance Requirement: U.S. Code of Federal Regulations (CFR) 200.510(b) Questioned Costs: None Criteria: The U.S. Code of Federal Regulations (CFR) 2 CFR 200.510(b) requires the State to prepare a Schedule of Expenditures of Federal Awards (SEFA) for the fiscal year that must include the total federal awards expended and the total amount provided to subrecipients from each federal program. State agencies are required to report this information to the Office of the State Controller (Office) through the SEFA closing package. The Office provides instructions on the completion of the closing package. The Uniform Guidance included in 2 CFR 200.303 requires that a nonfederal entity receiving federal awards establish and maintain internal controls that provide reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulation, and the terms and conditions in the federal award. The Internal Control Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) identifies internal control activities that help ensure management directives are carried out and risks are mitigated. These activities include approvals, authorizations, verifications, reconciliations, and segregation of duties. Condition: The Department completed a SEFA closing package to report various federal grant expenditures. We identified the following errors in the SEFA reporting that resulted in an understatement of $24,824,862 for total federal grant expenditures and an understatement of $39,901,202 in the amount reported as passed through to subrecipients: Cause: The Department has experienced significant turnover in fiscal personnel completing the closing packages. There were limited written instructions available to the new personnel to compile the correct information from the Department’s internal grant management system. Effect: The Statewide SEFA expenditures were understated by $24,824,862, and the amounts reported as disbursed to subrecipients were understated by $39,901,202. Recommendation: We recommend that the Department design and implement procedures to ensure the federal expenditures and amounts passed through to subrecipients are reported accurately for all federal programs. Management’s View: The department agrees with the audit findings that we under reported the total federal expenditures on the SEFA and the amounts passed through to subrecipients. Corrective Action: • Identify Root Causes: With the aid of LSO, we identified errors and are acting on a thorough analysis to pinpoint the root causes of the reporting errors on the Schedule of Expenditures of Federal Awards (SEFA) identified during the recent audit. As noted by the auditors, the errors were due to significant turnover-related knowledge gaps, staff being tasked with unfamiliar processes, lack of written desk manuals and other documentation, and issues with maintaining the internal reporting tool. This identification was completed by Rob Sepich, Chief Financial Officer, and Jeri Ann Fogg, Accounting Supervisor, in tandem with the audit. • Implement Training and Guidance: DEQ will provide comprehensive training sessions for staff involved in preparing and reviewing SEFA reports, considering the high turnover rate experienced in the department. We are in the process of developing detailed guidelines and documentation outlining SEFA reporting requirements, including specific instructions on categorizing federal awards, allowable expenditures, and reporting formats, to address any knowledge gaps resulting from turnover. As part of the statewide ERP move to LUMA from STARS, staff will utilize new reporting platforms and tools in LUMA to streamline SEFA reporting processes and mitigate potential errors associated with manual data entry or outdated systems. One significant improvement over our legacy reporting will be the use of front-end splits (FES) in LUMA that will automatically split out the state match from the federal component of our expenditures at the time in which they are spent, which was not as clearly defined under STARS. The new accounting system will be clearer to auditors and staff. Rob Sepich, Chief Financial Officer will create reconciliation reports for the SEFA by June 2024, with SEFA reporting compiled and completed in July 2024. • Enhance Internal Controls: Moving forward we will significantly strengthen internal controls and review processes to detect and prevent reporting errors in the future, particularly considering the turnover challenges. We anticipate requiring multiple additional review checkpoints and validation procedures within the new reporting platforms to verify the accuracy and completeness of SEFA data that will be reconciled before submission. We will also assign clear responsibilities and designate individuals responsible for overseeing SEFA reporting activities, ensuring continuity and consistency despite turnover and reduce the amount of unfamiliar work given to staff. This will include a review by Doug McRoberts, Grants Manager, Heather Hodges, Principal Budget Analyst, Rob Sepich, Chief Financial Officer, and Jeri Ann Fogg, Accounting Manager. Lastly, we are in the process of developing improved documentation on the new LUMA processes for our day-to-day operations so that we have up to date and accurate desk manuals should we experience additional turnover. These desk manuals are expected to be completed in June 2024. • Conduct Comprehensive Review: As part of the audit, we conducted a comprehensive review of the FY 2023 SEFA reports to identify any additional errors or discrepancies that may have been overlooked, considering the turnover-related knowledge gaps. The department was able to resubmit our SEFA closing package, including the list of sub recipients to the State Controller’s Office and LSO Auditors on March 9th, 2024 due to the efforts of Jeri Ann Fogg, Accounting Manager and Rob Sepich, Chief Financial Officer. • Continuous Monitoring and Improvement: We will establish a process for ongoing monitoring and periodic review of SEFA reporting activities, leveraging the capabilities of the new reporting platforms in LUMA to streamline processes and enhance accuracy. This will bring us closer to the work processes that other agencies do through the statewide reporting systems and reduce our dependency on reporting tools developed in-house that are unfamiliar to other state agencies. This should reduce the risk of losing key institutional knowledge during turnover and will make it easier for an employee with experience from another agency to be able to quickly pick up our reporting needs. To foster a culture of continuous improvement and knowledge sharing within the department, we will have additional meetings to encourage collaboration and communication to address SEFA reporting and ensure that we are not missing key input from staff. Auditor’s Concluding Remarks: We thank the Department for its cooperation and assistance throughout the audit.
FINDING 2023-205 The Department understated total federal expenditures on the Schedule of Expenditures of Federal Awards (SEFA) closing package by $24,824,862 and understated amounts passed through to subrecipients by $39,901,202. Type of Finding: Significant Deficiency, SEFA Misstatement Assistance Listing Title: Coronavirus State and Local Fiscal Recovery Funds; Clean Water State Revolving Fund; Drinking Water State Revolving Fund; Water Pollution Control State, Interstate, and Tribal Program Support; State Public Water System Supervision; Nonpoint Source Implementation Grants; Pollution Prevention Grants; Deisel Emissions Reduction Act State Grants; Environmental Monitoring/Cleanup, Cultural and Resource Management, Emergency Response Research, Outreach, Technical Analysis Assistance Listing Number: 21.027; 66.458; 66.468; 66.419; 66.432; 66.460; 66.708; 66.040; 81.214 Federal Award Number: Various Program Year: Various Federal Agency: Various Compliance Requirement: U.S. Code of Federal Regulations (CFR) 200.510(b) Questioned Costs: None Criteria: The U.S. Code of Federal Regulations (CFR) 2 CFR 200.510(b) requires the State to prepare a Schedule of Expenditures of Federal Awards (SEFA) for the fiscal year that must include the total federal awards expended and the total amount provided to subrecipients from each federal program. State agencies are required to report this information to the Office of the State Controller (Office) through the SEFA closing package. The Office provides instructions on the completion of the closing package. The Uniform Guidance included in 2 CFR 200.303 requires that a nonfederal entity receiving federal awards establish and maintain internal controls that provide reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulation, and the terms and conditions in the federal award. The Internal Control Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) identifies internal control activities that help ensure management directives are carried out and risks are mitigated. These activities include approvals, authorizations, verifications, reconciliations, and segregation of duties. Condition: The Department completed a SEFA closing package to report various federal grant expenditures. We identified the following errors in the SEFA reporting that resulted in an understatement of $24,824,862 for total federal grant expenditures and an understatement of $39,901,202 in the amount reported as passed through to subrecipients: Cause: The Department has experienced significant turnover in fiscal personnel completing the closing packages. There were limited written instructions available to the new personnel to compile the correct information from the Department’s internal grant management system. Effect: The Statewide SEFA expenditures were understated by $24,824,862, and the amounts reported as disbursed to subrecipients were understated by $39,901,202. Recommendation: We recommend that the Department design and implement procedures to ensure the federal expenditures and amounts passed through to subrecipients are reported accurately for all federal programs. Management’s View: The department agrees with the audit findings that we under reported the total federal expenditures on the SEFA and the amounts passed through to subrecipients. Corrective Action: • Identify Root Causes: With the aid of LSO, we identified errors and are acting on a thorough analysis to pinpoint the root causes of the reporting errors on the Schedule of Expenditures of Federal Awards (SEFA) identified during the recent audit. As noted by the auditors, the errors were due to significant turnover-related knowledge gaps, staff being tasked with unfamiliar processes, lack of written desk manuals and other documentation, and issues with maintaining the internal reporting tool. This identification was completed by Rob Sepich, Chief Financial Officer, and Jeri Ann Fogg, Accounting Supervisor, in tandem with the audit. • Implement Training and Guidance: DEQ will provide comprehensive training sessions for staff involved in preparing and reviewing SEFA reports, considering the high turnover rate experienced in the department. We are in the process of developing detailed guidelines and documentation outlining SEFA reporting requirements, including specific instructions on categorizing federal awards, allowable expenditures, and reporting formats, to address any knowledge gaps resulting from turnover. As part of the statewide ERP move to LUMA from STARS, staff will utilize new reporting platforms and tools in LUMA to streamline SEFA reporting processes and mitigate potential errors associated with manual data entry or outdated systems. One significant improvement over our legacy reporting will be the use of front-end splits (FES) in LUMA that will automatically split out the state match from the federal component of our expenditures at the time in which they are spent, which was not as clearly defined under STARS. The new accounting system will be clearer to auditors and staff. Rob Sepich, Chief Financial Officer will create reconciliation reports for the SEFA by June 2024, with SEFA reporting compiled and completed in July 2024. • Enhance Internal Controls: Moving forward we will significantly strengthen internal controls and review processes to detect and prevent reporting errors in the future, particularly considering the turnover challenges. We anticipate requiring multiple additional review checkpoints and validation procedures within the new reporting platforms to verify the accuracy and completeness of SEFA data that will be reconciled before submission. We will also assign clear responsibilities and designate individuals responsible for overseeing SEFA reporting activities, ensuring continuity and consistency despite turnover and reduce the amount of unfamiliar work given to staff. This will include a review by Doug McRoberts, Grants Manager, Heather Hodges, Principal Budget Analyst, Rob Sepich, Chief Financial Officer, and Jeri Ann Fogg, Accounting Manager. Lastly, we are in the process of developing improved documentation on the new LUMA processes for our day-to-day operations so that we have up to date and accurate desk manuals should we experience additional turnover. These desk manuals are expected to be completed in June 2024. • Conduct Comprehensive Review: As part of the audit, we conducted a comprehensive review of the FY 2023 SEFA reports to identify any additional errors or discrepancies that may have been overlooked, considering the turnover-related knowledge gaps. The department was able to resubmit our SEFA closing package, including the list of sub recipients to the State Controller’s Office and LSO Auditors on March 9th, 2024 due to the efforts of Jeri Ann Fogg, Accounting Manager and Rob Sepich, Chief Financial Officer. • Continuous Monitoring and Improvement: We will establish a process for ongoing monitoring and periodic review of SEFA reporting activities, leveraging the capabilities of the new reporting platforms in LUMA to streamline processes and enhance accuracy. This will bring us closer to the work processes that other agencies do through the statewide reporting systems and reduce our dependency on reporting tools developed in-house that are unfamiliar to other state agencies. This should reduce the risk of losing key institutional knowledge during turnover and will make it easier for an employee with experience from another agency to be able to quickly pick up our reporting needs. To foster a culture of continuous improvement and knowledge sharing within the department, we will have additional meetings to encourage collaboration and communication to address SEFA reporting and ensure that we are not missing key input from staff. Auditor’s Concluding Remarks: We thank the Department for its cooperation and assistance throughout the audit.
FINDING 2023-205 The Department understated total federal expenditures on the Schedule of Expenditures of Federal Awards (SEFA) closing package by $24,824,862 and understated amounts passed through to subrecipients by $39,901,202. Type of Finding: Significant Deficiency, SEFA Misstatement Assistance Listing Title: Coronavirus State and Local Fiscal Recovery Funds; Clean Water State Revolving Fund; Drinking Water State Revolving Fund; Water Pollution Control State, Interstate, and Tribal Program Support; State Public Water System Supervision; Nonpoint Source Implementation Grants; Pollution Prevention Grants; Deisel Emissions Reduction Act State Grants; Environmental Monitoring/Cleanup, Cultural and Resource Management, Emergency Response Research, Outreach, Technical Analysis Assistance Listing Number: 21.027; 66.458; 66.468; 66.419; 66.432; 66.460; 66.708; 66.040; 81.214 Federal Award Number: Various Program Year: Various Federal Agency: Various Compliance Requirement: U.S. Code of Federal Regulations (CFR) 200.510(b) Questioned Costs: None Criteria: The U.S. Code of Federal Regulations (CFR) 2 CFR 200.510(b) requires the State to prepare a Schedule of Expenditures of Federal Awards (SEFA) for the fiscal year that must include the total federal awards expended and the total amount provided to subrecipients from each federal program. State agencies are required to report this information to the Office of the State Controller (Office) through the SEFA closing package. The Office provides instructions on the completion of the closing package. The Uniform Guidance included in 2 CFR 200.303 requires that a nonfederal entity receiving federal awards establish and maintain internal controls that provide reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulation, and the terms and conditions in the federal award. The Internal Control Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) identifies internal control activities that help ensure management directives are carried out and risks are mitigated. These activities include approvals, authorizations, verifications, reconciliations, and segregation of duties. Condition: The Department completed a SEFA closing package to report various federal grant expenditures. We identified the following errors in the SEFA reporting that resulted in an understatement of $24,824,862 for total federal grant expenditures and an understatement of $39,901,202 in the amount reported as passed through to subrecipients: Cause: The Department has experienced significant turnover in fiscal personnel completing the closing packages. There were limited written instructions available to the new personnel to compile the correct information from the Department’s internal grant management system. Effect: The Statewide SEFA expenditures were understated by $24,824,862, and the amounts reported as disbursed to subrecipients were understated by $39,901,202. Recommendation: We recommend that the Department design and implement procedures to ensure the federal expenditures and amounts passed through to subrecipients are reported accurately for all federal programs. Management’s View: The department agrees with the audit findings that we under reported the total federal expenditures on the SEFA and the amounts passed through to subrecipients. Corrective Action: • Identify Root Causes: With the aid of LSO, we identified errors and are acting on a thorough analysis to pinpoint the root causes of the reporting errors on the Schedule of Expenditures of Federal Awards (SEFA) identified during the recent audit. As noted by the auditors, the errors were due to significant turnover-related knowledge gaps, staff being tasked with unfamiliar processes, lack of written desk manuals and other documentation, and issues with maintaining the internal reporting tool. This identification was completed by Rob Sepich, Chief Financial Officer, and Jeri Ann Fogg, Accounting Supervisor, in tandem with the audit. • Implement Training and Guidance: DEQ will provide comprehensive training sessions for staff involved in preparing and reviewing SEFA reports, considering the high turnover rate experienced in the department. We are in the process of developing detailed guidelines and documentation outlining SEFA reporting requirements, including specific instructions on categorizing federal awards, allowable expenditures, and reporting formats, to address any knowledge gaps resulting from turnover. As part of the statewide ERP move to LUMA from STARS, staff will utilize new reporting platforms and tools in LUMA to streamline SEFA reporting processes and mitigate potential errors associated with manual data entry or outdated systems. One significant improvement over our legacy reporting will be the use of front-end splits (FES) in LUMA that will automatically split out the state match from the federal component of our expenditures at the time in which they are spent, which was not as clearly defined under STARS. The new accounting system will be clearer to auditors and staff. Rob Sepich, Chief Financial Officer will create reconciliation reports for the SEFA by June 2024, with SEFA reporting compiled and completed in July 2024. • Enhance Internal Controls: Moving forward we will significantly strengthen internal controls and review processes to detect and prevent reporting errors in the future, particularly considering the turnover challenges. We anticipate requiring multiple additional review checkpoints and validation procedures within the new reporting platforms to verify the accuracy and completeness of SEFA data that will be reconciled before submission. We will also assign clear responsibilities and designate individuals responsible for overseeing SEFA reporting activities, ensuring continuity and consistency despite turnover and reduce the amount of unfamiliar work given to staff. This will include a review by Doug McRoberts, Grants Manager, Heather Hodges, Principal Budget Analyst, Rob Sepich, Chief Financial Officer, and Jeri Ann Fogg, Accounting Manager. Lastly, we are in the process of developing improved documentation on the new LUMA processes for our day-to-day operations so that we have up to date and accurate desk manuals should we experience additional turnover. These desk manuals are expected to be completed in June 2024. • Conduct Comprehensive Review: As part of the audit, we conducted a comprehensive review of the FY 2023 SEFA reports to identify any additional errors or discrepancies that may have been overlooked, considering the turnover-related knowledge gaps. The department was able to resubmit our SEFA closing package, including the list of sub recipients to the State Controller’s Office and LSO Auditors on March 9th, 2024 due to the efforts of Jeri Ann Fogg, Accounting Manager and Rob Sepich, Chief Financial Officer. • Continuous Monitoring and Improvement: We will establish a process for ongoing monitoring and periodic review of SEFA reporting activities, leveraging the capabilities of the new reporting platforms in LUMA to streamline processes and enhance accuracy. This will bring us closer to the work processes that other agencies do through the statewide reporting systems and reduce our dependency on reporting tools developed in-house that are unfamiliar to other state agencies. This should reduce the risk of losing key institutional knowledge during turnover and will make it easier for an employee with experience from another agency to be able to quickly pick up our reporting needs. To foster a culture of continuous improvement and knowledge sharing within the department, we will have additional meetings to encourage collaboration and communication to address SEFA reporting and ensure that we are not missing key input from staff. Auditor’s Concluding Remarks: We thank the Department for its cooperation and assistance throughout the audit.
FINDING 2023-205 The Department understated total federal expenditures on the Schedule of Expenditures of Federal Awards (SEFA) closing package by $24,824,862 and understated amounts passed through to subrecipients by $39,901,202. Type of Finding: Significant Deficiency, SEFA Misstatement Assistance Listing Title: Coronavirus State and Local Fiscal Recovery Funds; Clean Water State Revolving Fund; Drinking Water State Revolving Fund; Water Pollution Control State, Interstate, and Tribal Program Support; State Public Water System Supervision; Nonpoint Source Implementation Grants; Pollution Prevention Grants; Deisel Emissions Reduction Act State Grants; Environmental Monitoring/Cleanup, Cultural and Resource Management, Emergency Response Research, Outreach, Technical Analysis Assistance Listing Number: 21.027; 66.458; 66.468; 66.419; 66.432; 66.460; 66.708; 66.040; 81.214 Federal Award Number: Various Program Year: Various Federal Agency: Various Compliance Requirement: U.S. Code of Federal Regulations (CFR) 200.510(b) Questioned Costs: None Criteria: The U.S. Code of Federal Regulations (CFR) 2 CFR 200.510(b) requires the State to prepare a Schedule of Expenditures of Federal Awards (SEFA) for the fiscal year that must include the total federal awards expended and the total amount provided to subrecipients from each federal program. State agencies are required to report this information to the Office of the State Controller (Office) through the SEFA closing package. The Office provides instructions on the completion of the closing package. The Uniform Guidance included in 2 CFR 200.303 requires that a nonfederal entity receiving federal awards establish and maintain internal controls that provide reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulation, and the terms and conditions in the federal award. The Internal Control Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) identifies internal control activities that help ensure management directives are carried out and risks are mitigated. These activities include approvals, authorizations, verifications, reconciliations, and segregation of duties. Condition: The Department completed a SEFA closing package to report various federal grant expenditures. We identified the following errors in the SEFA reporting that resulted in an understatement of $24,824,862 for total federal grant expenditures and an understatement of $39,901,202 in the amount reported as passed through to subrecipients: Cause: The Department has experienced significant turnover in fiscal personnel completing the closing packages. There were limited written instructions available to the new personnel to compile the correct information from the Department’s internal grant management system. Effect: The Statewide SEFA expenditures were understated by $24,824,862, and the amounts reported as disbursed to subrecipients were understated by $39,901,202. Recommendation: We recommend that the Department design and implement procedures to ensure the federal expenditures and amounts passed through to subrecipients are reported accurately for all federal programs. Management’s View: The department agrees with the audit findings that we under reported the total federal expenditures on the SEFA and the amounts passed through to subrecipients. Corrective Action: • Identify Root Causes: With the aid of LSO, we identified errors and are acting on a thorough analysis to pinpoint the root causes of the reporting errors on the Schedule of Expenditures of Federal Awards (SEFA) identified during the recent audit. As noted by the auditors, the errors were due to significant turnover-related knowledge gaps, staff being tasked with unfamiliar processes, lack of written desk manuals and other documentation, and issues with maintaining the internal reporting tool. This identification was completed by Rob Sepich, Chief Financial Officer, and Jeri Ann Fogg, Accounting Supervisor, in tandem with the audit. • Implement Training and Guidance: DEQ will provide comprehensive training sessions for staff involved in preparing and reviewing SEFA reports, considering the high turnover rate experienced in the department. We are in the process of developing detailed guidelines and documentation outlining SEFA reporting requirements, including specific instructions on categorizing federal awards, allowable expenditures, and reporting formats, to address any knowledge gaps resulting from turnover. As part of the statewide ERP move to LUMA from STARS, staff will utilize new reporting platforms and tools in LUMA to streamline SEFA reporting processes and mitigate potential errors associated with manual data entry or outdated systems. One significant improvement over our legacy reporting will be the use of front-end splits (FES) in LUMA that will automatically split out the state match from the federal component of our expenditures at the time in which they are spent, which was not as clearly defined under STARS. The new accounting system will be clearer to auditors and staff. Rob Sepich, Chief Financial Officer will create reconciliation reports for the SEFA by June 2024, with SEFA reporting compiled and completed in July 2024. • Enhance Internal Controls: Moving forward we will significantly strengthen internal controls and review processes to detect and prevent reporting errors in the future, particularly considering the turnover challenges. We anticipate requiring multiple additional review checkpoints and validation procedures within the new reporting platforms to verify the accuracy and completeness of SEFA data that will be reconciled before submission. We will also assign clear responsibilities and designate individuals responsible for overseeing SEFA reporting activities, ensuring continuity and consistency despite turnover and reduce the amount of unfamiliar work given to staff. This will include a review by Doug McRoberts, Grants Manager, Heather Hodges, Principal Budget Analyst, Rob Sepich, Chief Financial Officer, and Jeri Ann Fogg, Accounting Manager. Lastly, we are in the process of developing improved documentation on the new LUMA processes for our day-to-day operations so that we have up to date and accurate desk manuals should we experience additional turnover. These desk manuals are expected to be completed in June 2024. • Conduct Comprehensive Review: As part of the audit, we conducted a comprehensive review of the FY 2023 SEFA reports to identify any additional errors or discrepancies that may have been overlooked, considering the turnover-related knowledge gaps. The department was able to resubmit our SEFA closing package, including the list of sub recipients to the State Controller’s Office and LSO Auditors on March 9th, 2024 due to the efforts of Jeri Ann Fogg, Accounting Manager and Rob Sepich, Chief Financial Officer. • Continuous Monitoring and Improvement: We will establish a process for ongoing monitoring and periodic review of SEFA reporting activities, leveraging the capabilities of the new reporting platforms in LUMA to streamline processes and enhance accuracy. This will bring us closer to the work processes that other agencies do through the statewide reporting systems and reduce our dependency on reporting tools developed in-house that are unfamiliar to other state agencies. This should reduce the risk of losing key institutional knowledge during turnover and will make it easier for an employee with experience from another agency to be able to quickly pick up our reporting needs. To foster a culture of continuous improvement and knowledge sharing within the department, we will have additional meetings to encourage collaboration and communication to address SEFA reporting and ensure that we are not missing key input from staff. Auditor’s Concluding Remarks: We thank the Department for its cooperation and assistance throughout the audit.
FINDING 2023-205 The Department understated total federal expenditures on the Schedule of Expenditures of Federal Awards (SEFA) closing package by $24,824,862 and understated amounts passed through to subrecipients by $39,901,202. Type of Finding: Significant Deficiency, SEFA Misstatement Assistance Listing Title: Coronavirus State and Local Fiscal Recovery Funds; Clean Water State Revolving Fund; Drinking Water State Revolving Fund; Water Pollution Control State, Interstate, and Tribal Program Support; State Public Water System Supervision; Nonpoint Source Implementation Grants; Pollution Prevention Grants; Deisel Emissions Reduction Act State Grants; Environmental Monitoring/Cleanup, Cultural and Resource Management, Emergency Response Research, Outreach, Technical Analysis Assistance Listing Number: 21.027; 66.458; 66.468; 66.419; 66.432; 66.460; 66.708; 66.040; 81.214 Federal Award Number: Various Program Year: Various Federal Agency: Various Compliance Requirement: U.S. Code of Federal Regulations (CFR) 200.510(b) Questioned Costs: None Criteria: The U.S. Code of Federal Regulations (CFR) 2 CFR 200.510(b) requires the State to prepare a Schedule of Expenditures of Federal Awards (SEFA) for the fiscal year that must include the total federal awards expended and the total amount provided to subrecipients from each federal program. State agencies are required to report this information to the Office of the State Controller (Office) through the SEFA closing package. The Office provides instructions on the completion of the closing package. The Uniform Guidance included in 2 CFR 200.303 requires that a nonfederal entity receiving federal awards establish and maintain internal controls that provide reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulation, and the terms and conditions in the federal award. The Internal Control Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) identifies internal control activities that help ensure management directives are carried out and risks are mitigated. These activities include approvals, authorizations, verifications, reconciliations, and segregation of duties. Condition: The Department completed a SEFA closing package to report various federal grant expenditures. We identified the following errors in the SEFA reporting that resulted in an understatement of $24,824,862 for total federal grant expenditures and an understatement of $39,901,202 in the amount reported as passed through to subrecipients: Cause: The Department has experienced significant turnover in fiscal personnel completing the closing packages. There were limited written instructions available to the new personnel to compile the correct information from the Department’s internal grant management system. Effect: The Statewide SEFA expenditures were understated by $24,824,862, and the amounts reported as disbursed to subrecipients were understated by $39,901,202. Recommendation: We recommend that the Department design and implement procedures to ensure the federal expenditures and amounts passed through to subrecipients are reported accurately for all federal programs. Management’s View: The department agrees with the audit findings that we under reported the total federal expenditures on the SEFA and the amounts passed through to subrecipients. Corrective Action: • Identify Root Causes: With the aid of LSO, we identified errors and are acting on a thorough analysis to pinpoint the root causes of the reporting errors on the Schedule of Expenditures of Federal Awards (SEFA) identified during the recent audit. As noted by the auditors, the errors were due to significant turnover-related knowledge gaps, staff being tasked with unfamiliar processes, lack of written desk manuals and other documentation, and issues with maintaining the internal reporting tool. This identification was completed by Rob Sepich, Chief Financial Officer, and Jeri Ann Fogg, Accounting Supervisor, in tandem with the audit. • Implement Training and Guidance: DEQ will provide comprehensive training sessions for staff involved in preparing and reviewing SEFA reports, considering the high turnover rate experienced in the department. We are in the process of developing detailed guidelines and documentation outlining SEFA reporting requirements, including specific instructions on categorizing federal awards, allowable expenditures, and reporting formats, to address any knowledge gaps resulting from turnover. As part of the statewide ERP move to LUMA from STARS, staff will utilize new reporting platforms and tools in LUMA to streamline SEFA reporting processes and mitigate potential errors associated with manual data entry or outdated systems. One significant improvement over our legacy reporting will be the use of front-end splits (FES) in LUMA that will automatically split out the state match from the federal component of our expenditures at the time in which they are spent, which was not as clearly defined under STARS. The new accounting system will be clearer to auditors and staff. Rob Sepich, Chief Financial Officer will create reconciliation reports for the SEFA by June 2024, with SEFA reporting compiled and completed in July 2024. • Enhance Internal Controls: Moving forward we will significantly strengthen internal controls and review processes to detect and prevent reporting errors in the future, particularly considering the turnover challenges. We anticipate requiring multiple additional review checkpoints and validation procedures within the new reporting platforms to verify the accuracy and completeness of SEFA data that will be reconciled before submission. We will also assign clear responsibilities and designate individuals responsible for overseeing SEFA reporting activities, ensuring continuity and consistency despite turnover and reduce the amount of unfamiliar work given to staff. This will include a review by Doug McRoberts, Grants Manager, Heather Hodges, Principal Budget Analyst, Rob Sepich, Chief Financial Officer, and Jeri Ann Fogg, Accounting Manager. Lastly, we are in the process of developing improved documentation on the new LUMA processes for our day-to-day operations so that we have up to date and accurate desk manuals should we experience additional turnover. These desk manuals are expected to be completed in June 2024. • Conduct Comprehensive Review: As part of the audit, we conducted a comprehensive review of the FY 2023 SEFA reports to identify any additional errors or discrepancies that may have been overlooked, considering the turnover-related knowledge gaps. The department was able to resubmit our SEFA closing package, including the list of sub recipients to the State Controller’s Office and LSO Auditors on March 9th, 2024 due to the efforts of Jeri Ann Fogg, Accounting Manager and Rob Sepich, Chief Financial Officer. • Continuous Monitoring and Improvement: We will establish a process for ongoing monitoring and periodic review of SEFA reporting activities, leveraging the capabilities of the new reporting platforms in LUMA to streamline processes and enhance accuracy. This will bring us closer to the work processes that other agencies do through the statewide reporting systems and reduce our dependency on reporting tools developed in-house that are unfamiliar to other state agencies. This should reduce the risk of losing key institutional knowledge during turnover and will make it easier for an employee with experience from another agency to be able to quickly pick up our reporting needs. To foster a culture of continuous improvement and knowledge sharing within the department, we will have additional meetings to encourage collaboration and communication to address SEFA reporting and ensure that we are not missing key input from staff. Auditor’s Concluding Remarks: We thank the Department for its cooperation and assistance throughout the audit.
FINDING 2023-205 The Department understated total federal expenditures on the Schedule of Expenditures of Federal Awards (SEFA) closing package by $24,824,862 and understated amounts passed through to subrecipients by $39,901,202. Type of Finding: Significant Deficiency, SEFA Misstatement Assistance Listing Title: Coronavirus State and Local Fiscal Recovery Funds; Clean Water State Revolving Fund; Drinking Water State Revolving Fund; Water Pollution Control State, Interstate, and Tribal Program Support; State Public Water System Supervision; Nonpoint Source Implementation Grants; Pollution Prevention Grants; Deisel Emissions Reduction Act State Grants; Environmental Monitoring/Cleanup, Cultural and Resource Management, Emergency Response Research, Outreach, Technical Analysis Assistance Listing Number: 21.027; 66.458; 66.468; 66.419; 66.432; 66.460; 66.708; 66.040; 81.214 Federal Award Number: Various Program Year: Various Federal Agency: Various Compliance Requirement: U.S. Code of Federal Regulations (CFR) 200.510(b) Questioned Costs: None Criteria: The U.S. Code of Federal Regulations (CFR) 2 CFR 200.510(b) requires the State to prepare a Schedule of Expenditures of Federal Awards (SEFA) for the fiscal year that must include the total federal awards expended and the total amount provided to subrecipients from each federal program. State agencies are required to report this information to the Office of the State Controller (Office) through the SEFA closing package. The Office provides instructions on the completion of the closing package. The Uniform Guidance included in 2 CFR 200.303 requires that a nonfederal entity receiving federal awards establish and maintain internal controls that provide reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulation, and the terms and conditions in the federal award. The Internal Control Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) identifies internal control activities that help ensure management directives are carried out and risks are mitigated. These activities include approvals, authorizations, verifications, reconciliations, and segregation of duties. Condition: The Department completed a SEFA closing package to report various federal grant expenditures. We identified the following errors in the SEFA reporting that resulted in an understatement of $24,824,862 for total federal grant expenditures and an understatement of $39,901,202 in the amount reported as passed through to subrecipients: Cause: The Department has experienced significant turnover in fiscal personnel completing the closing packages. There were limited written instructions available to the new personnel to compile the correct information from the Department’s internal grant management system. Effect: The Statewide SEFA expenditures were understated by $24,824,862, and the amounts reported as disbursed to subrecipients were understated by $39,901,202. Recommendation: We recommend that the Department design and implement procedures to ensure the federal expenditures and amounts passed through to subrecipients are reported accurately for all federal programs. Management’s View: The department agrees with the audit findings that we under reported the total federal expenditures on the SEFA and the amounts passed through to subrecipients. Corrective Action: • Identify Root Causes: With the aid of LSO, we identified errors and are acting on a thorough analysis to pinpoint the root causes of the reporting errors on the Schedule of Expenditures of Federal Awards (SEFA) identified during the recent audit. As noted by the auditors, the errors were due to significant turnover-related knowledge gaps, staff being tasked with unfamiliar processes, lack of written desk manuals and other documentation, and issues with maintaining the internal reporting tool. This identification was completed by Rob Sepich, Chief Financial Officer, and Jeri Ann Fogg, Accounting Supervisor, in tandem with the audit. • Implement Training and Guidance: DEQ will provide comprehensive training sessions for staff involved in preparing and reviewing SEFA reports, considering the high turnover rate experienced in the department. We are in the process of developing detailed guidelines and documentation outlining SEFA reporting requirements, including specific instructions on categorizing federal awards, allowable expenditures, and reporting formats, to address any knowledge gaps resulting from turnover. As part of the statewide ERP move to LUMA from STARS, staff will utilize new reporting platforms and tools in LUMA to streamline SEFA reporting processes and mitigate potential errors associated with manual data entry or outdated systems. One significant improvement over our legacy reporting will be the use of front-end splits (FES) in LUMA that will automatically split out the state match from the federal component of our expenditures at the time in which they are spent, which was not as clearly defined under STARS. The new accounting system will be clearer to auditors and staff. Rob Sepich, Chief Financial Officer will create reconciliation reports for the SEFA by June 2024, with SEFA reporting compiled and completed in July 2024. • Enhance Internal Controls: Moving forward we will significantly strengthen internal controls and review processes to detect and prevent reporting errors in the future, particularly considering the turnover challenges. We anticipate requiring multiple additional review checkpoints and validation procedures within the new reporting platforms to verify the accuracy and completeness of SEFA data that will be reconciled before submission. We will also assign clear responsibilities and designate individuals responsible for overseeing SEFA reporting activities, ensuring continuity and consistency despite turnover and reduce the amount of unfamiliar work given to staff. This will include a review by Doug McRoberts, Grants Manager, Heather Hodges, Principal Budget Analyst, Rob Sepich, Chief Financial Officer, and Jeri Ann Fogg, Accounting Manager. Lastly, we are in the process of developing improved documentation on the new LUMA processes for our day-to-day operations so that we have up to date and accurate desk manuals should we experience additional turnover. These desk manuals are expected to be completed in June 2024. • Conduct Comprehensive Review: As part of the audit, we conducted a comprehensive review of the FY 2023 SEFA reports to identify any additional errors or discrepancies that may have been overlooked, considering the turnover-related knowledge gaps. The department was able to resubmit our SEFA closing package, including the list of sub recipients to the State Controller’s Office and LSO Auditors on March 9th, 2024 due to the efforts of Jeri Ann Fogg, Accounting Manager and Rob Sepich, Chief Financial Officer. • Continuous Monitoring and Improvement: We will establish a process for ongoing monitoring and periodic review of SEFA reporting activities, leveraging the capabilities of the new reporting platforms in LUMA to streamline processes and enhance accuracy. This will bring us closer to the work processes that other agencies do through the statewide reporting systems and reduce our dependency on reporting tools developed in-house that are unfamiliar to other state agencies. This should reduce the risk of losing key institutional knowledge during turnover and will make it easier for an employee with experience from another agency to be able to quickly pick up our reporting needs. To foster a culture of continuous improvement and knowledge sharing within the department, we will have additional meetings to encourage collaboration and communication to address SEFA reporting and ensure that we are not missing key input from staff. Auditor’s Concluding Remarks: We thank the Department for its cooperation and assistance throughout the audit.
FINDING 2023-205 The Department understated total federal expenditures on the Schedule of Expenditures of Federal Awards (SEFA) closing package by $24,824,862 and understated amounts passed through to subrecipients by $39,901,202. Type of Finding: Significant Deficiency, SEFA Misstatement Assistance Listing Title: Coronavirus State and Local Fiscal Recovery Funds; Clean Water State Revolving Fund; Drinking Water State Revolving Fund; Water Pollution Control State, Interstate, and Tribal Program Support; State Public Water System Supervision; Nonpoint Source Implementation Grants; Pollution Prevention Grants; Deisel Emissions Reduction Act State Grants; Environmental Monitoring/Cleanup, Cultural and Resource Management, Emergency Response Research, Outreach, Technical Analysis Assistance Listing Number: 21.027; 66.458; 66.468; 66.419; 66.432; 66.460; 66.708; 66.040; 81.214 Federal Award Number: Various Program Year: Various Federal Agency: Various Compliance Requirement: U.S. Code of Federal Regulations (CFR) 200.510(b) Questioned Costs: None Criteria: The U.S. Code of Federal Regulations (CFR) 2 CFR 200.510(b) requires the State to prepare a Schedule of Expenditures of Federal Awards (SEFA) for the fiscal year that must include the total federal awards expended and the total amount provided to subrecipients from each federal program. State agencies are required to report this information to the Office of the State Controller (Office) through the SEFA closing package. The Office provides instructions on the completion of the closing package. The Uniform Guidance included in 2 CFR 200.303 requires that a nonfederal entity receiving federal awards establish and maintain internal controls that provide reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulation, and the terms and conditions in the federal award. The Internal Control Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) identifies internal control activities that help ensure management directives are carried out and risks are mitigated. These activities include approvals, authorizations, verifications, reconciliations, and segregation of duties. Condition: The Department completed a SEFA closing package to report various federal grant expenditures. We identified the following errors in the SEFA reporting that resulted in an understatement of $24,824,862 for total federal grant expenditures and an understatement of $39,901,202 in the amount reported as passed through to subrecipients: Cause: The Department has experienced significant turnover in fiscal personnel completing the closing packages. There were limited written instructions available to the new personnel to compile the correct information from the Department’s internal grant management system. Effect: The Statewide SEFA expenditures were understated by $24,824,862, and the amounts reported as disbursed to subrecipients were understated by $39,901,202. Recommendation: We recommend that the Department design and implement procedures to ensure the federal expenditures and amounts passed through to subrecipients are reported accurately for all federal programs. Management’s View: The department agrees with the audit findings that we under reported the total federal expenditures on the SEFA and the amounts passed through to subrecipients. Corrective Action: • Identify Root Causes: With the aid of LSO, we identified errors and are acting on a thorough analysis to pinpoint the root causes of the reporting errors on the Schedule of Expenditures of Federal Awards (SEFA) identified during the recent audit. As noted by the auditors, the errors were due to significant turnover-related knowledge gaps, staff being tasked with unfamiliar processes, lack of written desk manuals and other documentation, and issues with maintaining the internal reporting tool. This identification was completed by Rob Sepich, Chief Financial Officer, and Jeri Ann Fogg, Accounting Supervisor, in tandem with the audit. • Implement Training and Guidance: DEQ will provide comprehensive training sessions for staff involved in preparing and reviewing SEFA reports, considering the high turnover rate experienced in the department. We are in the process of developing detailed guidelines and documentation outlining SEFA reporting requirements, including specific instructions on categorizing federal awards, allowable expenditures, and reporting formats, to address any knowledge gaps resulting from turnover. As part of the statewide ERP move to LUMA from STARS, staff will utilize new reporting platforms and tools in LUMA to streamline SEFA reporting processes and mitigate potential errors associated with manual data entry or outdated systems. One significant improvement over our legacy reporting will be the use of front-end splits (FES) in LUMA that will automatically split out the state match from the federal component of our expenditures at the time in which they are spent, which was not as clearly defined under STARS. The new accounting system will be clearer to auditors and staff. Rob Sepich, Chief Financial Officer will create reconciliation reports for the SEFA by June 2024, with SEFA reporting compiled and completed in July 2024. • Enhance Internal Controls: Moving forward we will significantly strengthen internal controls and review processes to detect and prevent reporting errors in the future, particularly considering the turnover challenges. We anticipate requiring multiple additional review checkpoints and validation procedures within the new reporting platforms to verify the accuracy and completeness of SEFA data that will be reconciled before submission. We will also assign clear responsibilities and designate individuals responsible for overseeing SEFA reporting activities, ensuring continuity and consistency despite turnover and reduce the amount of unfamiliar work given to staff. This will include a review by Doug McRoberts, Grants Manager, Heather Hodges, Principal Budget Analyst, Rob Sepich, Chief Financial Officer, and Jeri Ann Fogg, Accounting Manager. Lastly, we are in the process of developing improved documentation on the new LUMA processes for our day-to-day operations so that we have up to date and accurate desk manuals should we experience additional turnover. These desk manuals are expected to be completed in June 2024. • Conduct Comprehensive Review: As part of the audit, we conducted a comprehensive review of the FY 2023 SEFA reports to identify any additional errors or discrepancies that may have been overlooked, considering the turnover-related knowledge gaps. The department was able to resubmit our SEFA closing package, including the list of sub recipients to the State Controller’s Office and LSO Auditors on March 9th, 2024 due to the efforts of Jeri Ann Fogg, Accounting Manager and Rob Sepich, Chief Financial Officer. • Continuous Monitoring and Improvement: We will establish a process for ongoing monitoring and periodic review of SEFA reporting activities, leveraging the capabilities of the new reporting platforms in LUMA to streamline processes and enhance accuracy. This will bring us closer to the work processes that other agencies do through the statewide reporting systems and reduce our dependency on reporting tools developed in-house that are unfamiliar to other state agencies. This should reduce the risk of losing key institutional knowledge during turnover and will make it easier for an employee with experience from another agency to be able to quickly pick up our reporting needs. To foster a culture of continuous improvement and knowledge sharing within the department, we will have additional meetings to encourage collaboration and communication to address SEFA reporting and ensure that we are not missing key input from staff. Auditor’s Concluding Remarks: We thank the Department for its cooperation and assistance throughout the audit.
FINDING 2023-205 The Department understated total federal expenditures on the Schedule of Expenditures of Federal Awards (SEFA) closing package by $24,824,862 and understated amounts passed through to subrecipients by $39,901,202. Type of Finding: Significant Deficiency, SEFA Misstatement Assistance Listing Title: Coronavirus State and Local Fiscal Recovery Funds; Clean Water State Revolving Fund; Drinking Water State Revolving Fund; Water Pollution Control State, Interstate, and Tribal Program Support; State Public Water System Supervision; Nonpoint Source Implementation Grants; Pollution Prevention Grants; Deisel Emissions Reduction Act State Grants; Environmental Monitoring/Cleanup, Cultural and Resource Management, Emergency Response Research, Outreach, Technical Analysis Assistance Listing Number: 21.027; 66.458; 66.468; 66.419; 66.432; 66.460; 66.708; 66.040; 81.214 Federal Award Number: Various Program Year: Various Federal Agency: Various Compliance Requirement: U.S. Code of Federal Regulations (CFR) 200.510(b) Questioned Costs: None Criteria: The U.S. Code of Federal Regulations (CFR) 2 CFR 200.510(b) requires the State to prepare a Schedule of Expenditures of Federal Awards (SEFA) for the fiscal year that must include the total federal awards expended and the total amount provided to subrecipients from each federal program. State agencies are required to report this information to the Office of the State Controller (Office) through the SEFA closing package. The Office provides instructions on the completion of the closing package. The Uniform Guidance included in 2 CFR 200.303 requires that a nonfederal entity receiving federal awards establish and maintain internal controls that provide reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulation, and the terms and conditions in the federal award. The Internal Control Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) identifies internal control activities that help ensure management directives are carried out and risks are mitigated. These activities include approvals, authorizations, verifications, reconciliations, and segregation of duties. Condition: The Department completed a SEFA closing package to report various federal grant expenditures. We identified the following errors in the SEFA reporting that resulted in an understatement of $24,824,862 for total federal grant expenditures and an understatement of $39,901,202 in the amount reported as passed through to subrecipients: Cause: The Department has experienced significant turnover in fiscal personnel completing the closing packages. There were limited written instructions available to the new personnel to compile the correct information from the Department’s internal grant management system. Effect: The Statewide SEFA expenditures were understated by $24,824,862, and the amounts reported as disbursed to subrecipients were understated by $39,901,202. Recommendation: We recommend that the Department design and implement procedures to ensure the federal expenditures and amounts passed through to subrecipients are reported accurately for all federal programs. Management’s View: The department agrees with the audit findings that we under reported the total federal expenditures on the SEFA and the amounts passed through to subrecipients. Corrective Action: • Identify Root Causes: With the aid of LSO, we identified errors and are acting on a thorough analysis to pinpoint the root causes of the reporting errors on the Schedule of Expenditures of Federal Awards (SEFA) identified during the recent audit. As noted by the auditors, the errors were due to significant turnover-related knowledge gaps, staff being tasked with unfamiliar processes, lack of written desk manuals and other documentation, and issues with maintaining the internal reporting tool. This identification was completed by Rob Sepich, Chief Financial Officer, and Jeri Ann Fogg, Accounting Supervisor, in tandem with the audit. • Implement Training and Guidance: DEQ will provide comprehensive training sessions for staff involved in preparing and reviewing SEFA reports, considering the high turnover rate experienced in the department. We are in the process of developing detailed guidelines and documentation outlining SEFA reporting requirements, including specific instructions on categorizing federal awards, allowable expenditures, and reporting formats, to address any knowledge gaps resulting from turnover. As part of the statewide ERP move to LUMA from STARS, staff will utilize new reporting platforms and tools in LUMA to streamline SEFA reporting processes and mitigate potential errors associated with manual data entry or outdated systems. One significant improvement over our legacy reporting will be the use of front-end splits (FES) in LUMA that will automatically split out the state match from the federal component of our expenditures at the time in which they are spent, which was not as clearly defined under STARS. The new accounting system will be clearer to auditors and staff. Rob Sepich, Chief Financial Officer will create reconciliation reports for the SEFA by June 2024, with SEFA reporting compiled and completed in July 2024. • Enhance Internal Controls: Moving forward we will significantly strengthen internal controls and review processes to detect and prevent reporting errors in the future, particularly considering the turnover challenges. We anticipate requiring multiple additional review checkpoints and validation procedures within the new reporting platforms to verify the accuracy and completeness of SEFA data that will be reconciled before submission. We will also assign clear responsibilities and designate individuals responsible for overseeing SEFA reporting activities, ensuring continuity and consistency despite turnover and reduce the amount of unfamiliar work given to staff. This will include a review by Doug McRoberts, Grants Manager, Heather Hodges, Principal Budget Analyst, Rob Sepich, Chief Financial Officer, and Jeri Ann Fogg, Accounting Manager. Lastly, we are in the process of developing improved documentation on the new LUMA processes for our day-to-day operations so that we have up to date and accurate desk manuals should we experience additional turnover. These desk manuals are expected to be completed in June 2024. • Conduct Comprehensive Review: As part of the audit, we conducted a comprehensive review of the FY 2023 SEFA reports to identify any additional errors or discrepancies that may have been overlooked, considering the turnover-related knowledge gaps. The department was able to resubmit our SEFA closing package, including the list of sub recipients to the State Controller’s Office and LSO Auditors on March 9th, 2024 due to the efforts of Jeri Ann Fogg, Accounting Manager and Rob Sepich, Chief Financial Officer. • Continuous Monitoring and Improvement: We will establish a process for ongoing monitoring and periodic review of SEFA reporting activities, leveraging the capabilities of the new reporting platforms in LUMA to streamline processes and enhance accuracy. This will bring us closer to the work processes that other agencies do through the statewide reporting systems and reduce our dependency on reporting tools developed in-house that are unfamiliar to other state agencies. This should reduce the risk of losing key institutional knowledge during turnover and will make it easier for an employee with experience from another agency to be able to quickly pick up our reporting needs. To foster a culture of continuous improvement and knowledge sharing within the department, we will have additional meetings to encourage collaboration and communication to address SEFA reporting and ensure that we are not missing key input from staff. Auditor’s Concluding Remarks: We thank the Department for its cooperation and assistance throughout the audit.
FINDING 2023-207 The Division overstated federal expenditures by incorrectly including $6.6 million expended under the State Small Business Credit Initiative (SSBCI) on the Schedule of Expenditures of Federal Awards (SEFA) closing package. Type of Finding: Significant Deficiency, SEFA Misstatement Assistance Listing Title: State Small Business Credit Initiative Assistance Listing Number: 21.031 Federal Award Number: Not Applicable Program Year: Not Applicable Federal Agency: Department of Treasury Compliance Requirement: U.S. Code of Federal Regulations (CFR) 2 CFR 200.510(b) Questioned Costs: None Criteria: The U.S. Code of Federal Regulations (CFR) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, 2 CFR 200.510, requires the State to prepare a SEFA, which must include the total federal awards expended for each individual federal award program. The Office of the State Controller requires agencies to complete the SEFA closing package and uses this information to compile the statewide SEFA. The SSBCI statute, 12 U.S.C. § 5702(c)(5), specifically states that capital funds transferred to jurisdictions are not considered federal financial assistance for the purposes of 31 U.S.C. subtitle V. As such, capital funds are not subject to the single audit requirements of the Single Audit Act or 2 CFR 200, Subpart F. Condition: The Division reported $6.6 million in federal expenditures incurred under the SSBCI program on the SEFA closing package. These SSBCI funds includes two programs: the Capital Program and the Technical Assistance (TA) Grant Program. Under the Capital Program, participating jurisdictions implement credit and equity/venture capital programs to provide capital to small businesses. The Division received funding under the Capital Program, these funds are not subject to the Single Audit requirements of 2 CFR Subpart F. Cause: The Division was unaware that the Capital Program funds should not have been included on the SEFA. Effect: In the absence of the audit work completed and the resulting revised submission by the Division, the statewide SEFA would have included an overstatement of $6.6 million for the SSBCI program. Recommendation: We recommend that the Division improve training and the review process for the SEFA closing package to ensure appropriate reporting of federal expenditures on the SEFA. Management’s View: The Division of Financial Management concurs with the finding. Corrective Action: The agency will implement improved training and review for the SEFA closing package prior to submission to ensure appropriate reporting of federal expenditures on the SEFA. The SSBCI funds were included in an abundance of caution to ensure reporting of all federal funds received, as it is rare that federal monies are to be excluded from the SEFA. Moving forward, preparation of the SEFA will include an analysis of all new federal awards to be included to confirm if the amounts are to be included, and a side-by-side comparison of the prospective list to the prior year report to note any differences and investigation of any that exist. Auditor’s Concluding Remarks: We thank the Division for its cooperation and assistance throughout the audit.
FINDING 2023-208 The Schedule of Expenditures of Federal Awards (SEFA) closing package originally submitted to the Office of the State Controller (Office) included multiple errors. Related to Prior Finding: 2022-211; 2021-206 Type of Finding: Significant Deficiency, SEFA Misstatement Assistance Listing Title: Supplemental Nutrition Assistance Program; Coronavirus State and Local Fiscal Recovery Funds; Guardianship Assistance; Temporary Assistance for Needy Families; Child Support Enforcement; Child Care and Development Block Grant; Foster Care Title IV-E; Adoption Assistance; Child Care and Development Block Grant (CCDF); Social Services Block Grant; Children's Health Insurance Program; Medical Assistance Program; Money Follows the Person Rebalancing Demonstration; Block Grants for Community Mental Health Services Assistance Listing Number: 10.561; 21.027; 93.090; 93.558; 93.563; 93.575; 93.658; 93.659; 93.667; 93.767; 93.778; 93.791; 93.958 Federal Award Number: Various Program Year: Various Federal Agency: Various Compliance Requirement: U.S. Code of Federal Regulations Questioned Costs: None Criteria: The Internal Control Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) provides a basis for organizations to design internal control procedures to ensure reliable financial reporting, effective and efficient operations, and compliance with applicable laws and regulations. Components of this framework include risk assessment, control activities, and information and communication. Risk assessment is the identification and analysis of various risks entities face because of changing economic, industry, regulatory, and operating conditions, and provides a basis to develop appropriate responses to manage those risks. Control activities are policies and procedures that help ensure management directives are carried out and risks are mitigated. Verifications, approvals, reconciliations, authorizations, and segregation of duties are all control activities that support this objective. Information and communication relate to obtaining quality information and effective internal and external communication of that information to achieve management objectives. Management objectives should include the preparation and fair presentation of the SEFA in relation to the basic financial statements as a whole and in compliance with requirements contained in the U.S. Code of Federal Regulations (CFR), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) (2 CFR §200.510(b)), which states it must include: • Total federal awards expended as determined in accordance with 2 CFR §200.502, and • Total amount provided to subrecipients from each federal program in accordance with 2 CFR 200.510(b)(4) The requirements included in 2 CFR 200.303 require that a nonfederal entity receiving federal awards establish and maintain internal controls that provide reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions in the federal award. The Office requires agencies to complete the SEFA closing package and uses this information to compile the statewide SEFA. Condition: The Department submitted multiple revisions of the fiscal year 2023 SEFA closing package to correct errors identified by the auditors and communicated to management during the audit process. The original submission included misstatements for the following programs: • Overstatement of $144,460 for the Supplemental Nutrition Assistance Program (Assistance Listing (AL) number 10.561) • Overstatement of $933 for the Guardianship Assistance program (AL 93.090) • Understatement of $1,300,232 for the Temporary Assistance for Needy Families program (AL 93.558) • Understatement of $230,034 for the Child Support Enforcement program (AL 93.563) • Understatement of $42,349 for the Foster Care Title IV-E program (AL 93.658) • Overstatement of $16,112 for the Adoption Assistance program (AL 93.659) • Overstatement of $1,036,549 for the Social Services Block Grant program (AL 93.667) • Overstatement of $3,469,677 for the Children's Health Insurance Program (AL 93.767) • Understatement of $25,108,923 for the Medical Assistance program (AL 93.778) • Understatement of $48,071 for the Money Follows the Person Rebalancing Demonstration program (AL 93.791) • Understatement of $676,806 for the Block Grants for Community Mental Health Services program (AL 93.958) • Understatement of $21,358,086 for the Coronavirus State and Local Fiscal Recovery Funds program (AL 21.027) In addition, expenditures to subrecipients were misstated for the following programs: • Overstatement of $86,608,290 for the Child Care and Development Block Grant program (AL 93.575) • Understatement of $18,959,072 for the Coronavirus State and Local Fiscal Recovery Funds program (AL 21.027) Cause: The Department has a review process in place for closing packages that is intended to detect and correct errors. However, the review of the fiscal year 2023 SEFA closing package was not completed at a level of detail sufficient to properly identify and correct errors. This issue was also reported as finding 2022-211 in the Single Audit Report for fiscal year 2022. Other factors impacting the Department’s accurate completion of the fiscal year 2023 SEFA, such as working with the implementation of a new statewide accounting system, Luma, that resulted in issues reconciling grant reports and SEFA reports. The Department also used SEFA reports that had been run before the budget team had completed all necessary grant uploads, which resulted in excluded information from the SEFA. The reports used to prepare the SEFA closing package were pre-built to pull the data from only the cooperative welfare fund (0220). Historically, this approach was successful because all the Department’s federal funds were coded to the cooperative welfare fund. The Department did not consider the spending for the Coronavirus State and Local Fiscal Recovery Funds (AL 21.027) through the American Rescue Plan Act fund (0344) when preparing the SEFA closing package. This resulted in those expenditures being omitted from the original SEFA submitted. The spending for the Coronavirus State and Local Fiscal Recovery Funds (AL 21.027) was originally understated on the SEFA by $21,358,086. The SEFA was adjusted after inquiry during the audit process to include the American Rescue Plan Act fund (0344). The original amount reported was $2,856,346. The final amount reported was $24,214,432. In addition, $86,608,290 originally reported as expenditures to subrecipients for the Child Care and Development Block Grant program (AL 93.575) were payments to providers rather than subrecipients. The coding in the accounting system by the Department’s program staff lead to the erroneous inclusion of the funds in the subrecipient reporting on the SEFA. Effect: In the absence of the audit work completed and the resulting revised submission by the Department to the Office, the statewide SEFA would have included multiple misstatements. Recommendation: We recommend that the Department improve the process for gathering information to prepare the SEFA closing package, and to review it for accuracy, to include training and specific procedures at a level of detail sufficient to detect and correct errors in the SEFA closing package. Management’s View: The Department agrees with the finding. Corrective Action: Since the implementation of LUMA, the department has been cognizant of the systematic challenges and risks and is acutely attentive to monitoring and review efforts. For example, due to LUMA, finance now has a new chart of accounts structure, meaning previously used reports for compilation of the SEFA are no longer a concern. The department held a required training on March 12-13, 2024, for all employees involved with grant administration where the determination of contractor vs. subrecipient, as well as proper account coding, were reiterated. Finance has efforts underway to strengthen compliance through report building and monthly monitoring of proper coding. The department will be moving forward with the implementation of Grant Management Software in SFY25, which finance believes will provide further assurances of data accuracy. Finance will confirm all expenditures and adjustments are completed before running reports when preparing the SFY24 and future SEFA’s. This confirmation will be documented via an email to the Financial Manager of the Budget section. The email response will be retained with the SEFA preparation file for audit purposes. Auditor’s Concluding Remarks: We thank the Department for its cooperation and assistance throughout the audit.
FINDING 2023-208 The Schedule of Expenditures of Federal Awards (SEFA) closing package originally submitted to the Office of the State Controller (Office) included multiple errors. Related to Prior Finding: 2022-211; 2021-206 Type of Finding: Significant Deficiency, SEFA Misstatement Assistance Listing Title: Supplemental Nutrition Assistance Program; Coronavirus State and Local Fiscal Recovery Funds; Guardianship Assistance; Temporary Assistance for Needy Families; Child Support Enforcement; Child Care and Development Block Grant; Foster Care Title IV-E; Adoption Assistance; Child Care and Development Block Grant (CCDF); Social Services Block Grant; Children's Health Insurance Program; Medical Assistance Program; Money Follows the Person Rebalancing Demonstration; Block Grants for Community Mental Health Services Assistance Listing Number: 10.561; 21.027; 93.090; 93.558; 93.563; 93.575; 93.658; 93.659; 93.667; 93.767; 93.778; 93.791; 93.958 Federal Award Number: Various Program Year: Various Federal Agency: Various Compliance Requirement: U.S. Code of Federal Regulations Questioned Costs: None Criteria: The Internal Control Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) provides a basis for organizations to design internal control procedures to ensure reliable financial reporting, effective and efficient operations, and compliance with applicable laws and regulations. Components of this framework include risk assessment, control activities, and information and communication. Risk assessment is the identification and analysis of various risks entities face because of changing economic, industry, regulatory, and operating conditions, and provides a basis to develop appropriate responses to manage those risks. Control activities are policies and procedures that help ensure management directives are carried out and risks are mitigated. Verifications, approvals, reconciliations, authorizations, and segregation of duties are all control activities that support this objective. Information and communication relate to obtaining quality information and effective internal and external communication of that information to achieve management objectives. Management objectives should include the preparation and fair presentation of the SEFA in relation to the basic financial statements as a whole and in compliance with requirements contained in the U.S. Code of Federal Regulations (CFR), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) (2 CFR §200.510(b)), which states it must include: • Total federal awards expended as determined in accordance with 2 CFR §200.502, and • Total amount provided to subrecipients from each federal program in accordance with 2 CFR 200.510(b)(4) The requirements included in 2 CFR 200.303 require that a nonfederal entity receiving federal awards establish and maintain internal controls that provide reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions in the federal award. The Office requires agencies to complete the SEFA closing package and uses this information to compile the statewide SEFA. Condition: The Department submitted multiple revisions of the fiscal year 2023 SEFA closing package to correct errors identified by the auditors and communicated to management during the audit process. The original submission included misstatements for the following programs: • Overstatement of $144,460 for the Supplemental Nutrition Assistance Program (Assistance Listing (AL) number 10.561) • Overstatement of $933 for the Guardianship Assistance program (AL 93.090) • Understatement of $1,300,232 for the Temporary Assistance for Needy Families program (AL 93.558) • Understatement of $230,034 for the Child Support Enforcement program (AL 93.563) • Understatement of $42,349 for the Foster Care Title IV-E program (AL 93.658) • Overstatement of $16,112 for the Adoption Assistance program (AL 93.659) • Overstatement of $1,036,549 for the Social Services Block Grant program (AL 93.667) • Overstatement of $3,469,677 for the Children's Health Insurance Program (AL 93.767) • Understatement of $25,108,923 for the Medical Assistance program (AL 93.778) • Understatement of $48,071 for the Money Follows the Person Rebalancing Demonstration program (AL 93.791) • Understatement of $676,806 for the Block Grants for Community Mental Health Services program (AL 93.958) • Understatement of $21,358,086 for the Coronavirus State and Local Fiscal Recovery Funds program (AL 21.027) In addition, expenditures to subrecipients were misstated for the following programs: • Overstatement of $86,608,290 for the Child Care and Development Block Grant program (AL 93.575) • Understatement of $18,959,072 for the Coronavirus State and Local Fiscal Recovery Funds program (AL 21.027) Cause: The Department has a review process in place for closing packages that is intended to detect and correct errors. However, the review of the fiscal year 2023 SEFA closing package was not completed at a level of detail sufficient to properly identify and correct errors. This issue was also reported as finding 2022-211 in the Single Audit Report for fiscal year 2022. Other factors impacting the Department’s accurate completion of the fiscal year 2023 SEFA, such as working with the implementation of a new statewide accounting system, Luma, that resulted in issues reconciling grant reports and SEFA reports. The Department also used SEFA reports that had been run before the budget team had completed all necessary grant uploads, which resulted in excluded information from the SEFA. The reports used to prepare the SEFA closing package were pre-built to pull the data from only the cooperative welfare fund (0220). Historically, this approach was successful because all the Department’s federal funds were coded to the cooperative welfare fund. The Department did not consider the spending for the Coronavirus State and Local Fiscal Recovery Funds (AL 21.027) through the American Rescue Plan Act fund (0344) when preparing the SEFA closing package. This resulted in those expenditures being omitted from the original SEFA submitted. The spending for the Coronavirus State and Local Fiscal Recovery Funds (AL 21.027) was originally understated on the SEFA by $21,358,086. The SEFA was adjusted after inquiry during the audit process to include the American Rescue Plan Act fund (0344). The original amount reported was $2,856,346. The final amount reported was $24,214,432. In addition, $86,608,290 originally reported as expenditures to subrecipients for the Child Care and Development Block Grant program (AL 93.575) were payments to providers rather than subrecipients. The coding in the accounting system by the Department’s program staff lead to the erroneous inclusion of the funds in the subrecipient reporting on the SEFA. Effect: In the absence of the audit work completed and the resulting revised submission by the Department to the Office, the statewide SEFA would have included multiple misstatements. Recommendation: We recommend that the Department improve the process for gathering information to prepare the SEFA closing package, and to review it for accuracy, to include training and specific procedures at a level of detail sufficient to detect and correct errors in the SEFA closing package. Management’s View: The Department agrees with the finding. Corrective Action: Since the implementation of LUMA, the department has been cognizant of the systematic challenges and risks and is acutely attentive to monitoring and review efforts. For example, due to LUMA, finance now has a new chart of accounts structure, meaning previously used reports for compilation of the SEFA are no longer a concern. The department held a required training on March 12-13, 2024, for all employees involved with grant administration where the determination of contractor vs. subrecipient, as well as proper account coding, were reiterated. Finance has efforts underway to strengthen compliance through report building and monthly monitoring of proper coding. The department will be moving forward with the implementation of Grant Management Software in SFY25, which finance believes will provide further assurances of data accuracy. Finance will confirm all expenditures and adjustments are completed before running reports when preparing the SFY24 and future SEFA’s. This confirmation will be documented via an email to the Financial Manager of the Budget section. The email response will be retained with the SEFA preparation file for audit purposes. Auditor’s Concluding Remarks: We thank the Department for its cooperation and assistance throughout the audit.
FINDING 2023-208 The Schedule of Expenditures of Federal Awards (SEFA) closing package originally submitted to the Office of the State Controller (Office) included multiple errors. Related to Prior Finding: 2022-211; 2021-206 Type of Finding: Significant Deficiency, SEFA Misstatement Assistance Listing Title: Supplemental Nutrition Assistance Program; Coronavirus State and Local Fiscal Recovery Funds; Guardianship Assistance; Temporary Assistance for Needy Families; Child Support Enforcement; Child Care and Development Block Grant; Foster Care Title IV-E; Adoption Assistance; Child Care and Development Block Grant (CCDF); Social Services Block Grant; Children's Health Insurance Program; Medical Assistance Program; Money Follows the Person Rebalancing Demonstration; Block Grants for Community Mental Health Services Assistance Listing Number: 10.561; 21.027; 93.090; 93.558; 93.563; 93.575; 93.658; 93.659; 93.667; 93.767; 93.778; 93.791; 93.958 Federal Award Number: Various Program Year: Various Federal Agency: Various Compliance Requirement: U.S. Code of Federal Regulations Questioned Costs: None Criteria: The Internal Control Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) provides a basis for organizations to design internal control procedures to ensure reliable financial reporting, effective and efficient operations, and compliance with applicable laws and regulations. Components of this framework include risk assessment, control activities, and information and communication. Risk assessment is the identification and analysis of various risks entities face because of changing economic, industry, regulatory, and operating conditions, and provides a basis to develop appropriate responses to manage those risks. Control activities are policies and procedures that help ensure management directives are carried out and risks are mitigated. Verifications, approvals, reconciliations, authorizations, and segregation of duties are all control activities that support this objective. Information and communication relate to obtaining quality information and effective internal and external communication of that information to achieve management objectives. Management objectives should include the preparation and fair presentation of the SEFA in relation to the basic financial statements as a whole and in compliance with requirements contained in the U.S. Code of Federal Regulations (CFR), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) (2 CFR §200.510(b)), which states it must include: • Total federal awards expended as determined in accordance with 2 CFR §200.502, and • Total amount provided to subrecipients from each federal program in accordance with 2 CFR 200.510(b)(4) The requirements included in 2 CFR 200.303 require that a nonfederal entity receiving federal awards establish and maintain internal controls that provide reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions in the federal award. The Office requires agencies to complete the SEFA closing package and uses this information to compile the statewide SEFA. Condition: The Department submitted multiple revisions of the fiscal year 2023 SEFA closing package to correct errors identified by the auditors and communicated to management during the audit process. The original submission included misstatements for the following programs: • Overstatement of $144,460 for the Supplemental Nutrition Assistance Program (Assistance Listing (AL) number 10.561) • Overstatement of $933 for the Guardianship Assistance program (AL 93.090) • Understatement of $1,300,232 for the Temporary Assistance for Needy Families program (AL 93.558) • Understatement of $230,034 for the Child Support Enforcement program (AL 93.563) • Understatement of $42,349 for the Foster Care Title IV-E program (AL 93.658) • Overstatement of $16,112 for the Adoption Assistance program (AL 93.659) • Overstatement of $1,036,549 for the Social Services Block Grant program (AL 93.667) • Overstatement of $3,469,677 for the Children's Health Insurance Program (AL 93.767) • Understatement of $25,108,923 for the Medical Assistance program (AL 93.778) • Understatement of $48,071 for the Money Follows the Person Rebalancing Demonstration program (AL 93.791) • Understatement of $676,806 for the Block Grants for Community Mental Health Services program (AL 93.958) • Understatement of $21,358,086 for the Coronavirus State and Local Fiscal Recovery Funds program (AL 21.027) In addition, expenditures to subrecipients were misstated for the following programs: • Overstatement of $86,608,290 for the Child Care and Development Block Grant program (AL 93.575) • Understatement of $18,959,072 for the Coronavirus State and Local Fiscal Recovery Funds program (AL 21.027) Cause: The Department has a review process in place for closing packages that is intended to detect and correct errors. However, the review of the fiscal year 2023 SEFA closing package was not completed at a level of detail sufficient to properly identify and correct errors. This issue was also reported as finding 2022-211 in the Single Audit Report for fiscal year 2022. Other factors impacting the Department’s accurate completion of the fiscal year 2023 SEFA, such as working with the implementation of a new statewide accounting system, Luma, that resulted in issues reconciling grant reports and SEFA reports. The Department also used SEFA reports that had been run before the budget team had completed all necessary grant uploads, which resulted in excluded information from the SEFA. The reports used to prepare the SEFA closing package were pre-built to pull the data from only the cooperative welfare fund (0220). Historically, this approach was successful because all the Department’s federal funds were coded to the cooperative welfare fund. The Department did not consider the spending for the Coronavirus State and Local Fiscal Recovery Funds (AL 21.027) through the American Rescue Plan Act fund (0344) when preparing the SEFA closing package. This resulted in those expenditures being omitted from the original SEFA submitted. The spending for the Coronavirus State and Local Fiscal Recovery Funds (AL 21.027) was originally understated on the SEFA by $21,358,086. The SEFA was adjusted after inquiry during the audit process to include the American Rescue Plan Act fund (0344). The original amount reported was $2,856,346. The final amount reported was $24,214,432. In addition, $86,608,290 originally reported as expenditures to subrecipients for the Child Care and Development Block Grant program (AL 93.575) were payments to providers rather than subrecipients. The coding in the accounting system by the Department’s program staff lead to the erroneous inclusion of the funds in the subrecipient reporting on the SEFA. Effect: In the absence of the audit work completed and the resulting revised submission by the Department to the Office, the statewide SEFA would have included multiple misstatements. Recommendation: We recommend that the Department improve the process for gathering information to prepare the SEFA closing package, and to review it for accuracy, to include training and specific procedures at a level of detail sufficient to detect and correct errors in the SEFA closing package. Management’s View: The Department agrees with the finding. Corrective Action: Since the implementation of LUMA, the department has been cognizant of the systematic challenges and risks and is acutely attentive to monitoring and review efforts. For example, due to LUMA, finance now has a new chart of accounts structure, meaning previously used reports for compilation of the SEFA are no longer a concern. The department held a required training on March 12-13, 2024, for all employees involved with grant administration where the determination of contractor vs. subrecipient, as well as proper account coding, were reiterated. Finance has efforts underway to strengthen compliance through report building and monthly monitoring of proper coding. The department will be moving forward with the implementation of Grant Management Software in SFY25, which finance believes will provide further assurances of data accuracy. Finance will confirm all expenditures and adjustments are completed before running reports when preparing the SFY24 and future SEFA’s. This confirmation will be documented via an email to the Financial Manager of the Budget section. The email response will be retained with the SEFA preparation file for audit purposes. Auditor’s Concluding Remarks: We thank the Department for its cooperation and assistance throughout the audit.
FINDING 2023-208 The Schedule of Expenditures of Federal Awards (SEFA) closing package originally submitted to the Office of the State Controller (Office) included multiple errors. Related to Prior Finding: 2022-211; 2021-206 Type of Finding: Significant Deficiency, SEFA Misstatement Assistance Listing Title: Supplemental Nutrition Assistance Program; Coronavirus State and Local Fiscal Recovery Funds; Guardianship Assistance; Temporary Assistance for Needy Families; Child Support Enforcement; Child Care and Development Block Grant; Foster Care Title IV-E; Adoption Assistance; Child Care and Development Block Grant (CCDF); Social Services Block Grant; Children's Health Insurance Program; Medical Assistance Program; Money Follows the Person Rebalancing Demonstration; Block Grants for Community Mental Health Services Assistance Listing Number: 10.561; 21.027; 93.090; 93.558; 93.563; 93.575; 93.658; 93.659; 93.667; 93.767; 93.778; 93.791; 93.958 Federal Award Number: Various Program Year: Various Federal Agency: Various Compliance Requirement: U.S. Code of Federal Regulations Questioned Costs: None Criteria: The Internal Control Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) provides a basis for organizations to design internal control procedures to ensure reliable financial reporting, effective and efficient operations, and compliance with applicable laws and regulations. Components of this framework include risk assessment, control activities, and information and communication. Risk assessment is the identification and analysis of various risks entities face because of changing economic, industry, regulatory, and operating conditions, and provides a basis to develop appropriate responses to manage those risks. Control activities are policies and procedures that help ensure management directives are carried out and risks are mitigated. Verifications, approvals, reconciliations, authorizations, and segregation of duties are all control activities that support this objective. Information and communication relate to obtaining quality information and effective internal and external communication of that information to achieve management objectives. Management objectives should include the preparation and fair presentation of the SEFA in relation to the basic financial statements as a whole and in compliance with requirements contained in the U.S. Code of Federal Regulations (CFR), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) (2 CFR §200.510(b)), which states it must include: • Total federal awards expended as determined in accordance with 2 CFR §200.502, and • Total amount provided to subrecipients from each federal program in accordance with 2 CFR 200.510(b)(4) The requirements included in 2 CFR 200.303 require that a nonfederal entity receiving federal awards establish and maintain internal controls that provide reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions in the federal award. The Office requires agencies to complete the SEFA closing package and uses this information to compile the statewide SEFA. Condition: The Department submitted multiple revisions of the fiscal year 2023 SEFA closing package to correct errors identified by the auditors and communicated to management during the audit process. The original submission included misstatements for the following programs: • Overstatement of $144,460 for the Supplemental Nutrition Assistance Program (Assistance Listing (AL) number 10.561) • Overstatement of $933 for the Guardianship Assistance program (AL 93.090) • Understatement of $1,300,232 for the Temporary Assistance for Needy Families program (AL 93.558) • Understatement of $230,034 for the Child Support Enforcement program (AL 93.563) • Understatement of $42,349 for the Foster Care Title IV-E program (AL 93.658) • Overstatement of $16,112 for the Adoption Assistance program (AL 93.659) • Overstatement of $1,036,549 for the Social Services Block Grant program (AL 93.667) • Overstatement of $3,469,677 for the Children's Health Insurance Program (AL 93.767) • Understatement of $25,108,923 for the Medical Assistance program (AL 93.778) • Understatement of $48,071 for the Money Follows the Person Rebalancing Demonstration program (AL 93.791) • Understatement of $676,806 for the Block Grants for Community Mental Health Services program (AL 93.958) • Understatement of $21,358,086 for the Coronavirus State and Local Fiscal Recovery Funds program (AL 21.027) In addition, expenditures to subrecipients were misstated for the following programs: • Overstatement of $86,608,290 for the Child Care and Development Block Grant program (AL 93.575) • Understatement of $18,959,072 for the Coronavirus State and Local Fiscal Recovery Funds program (AL 21.027) Cause: The Department has a review process in place for closing packages that is intended to detect and correct errors. However, the review of the fiscal year 2023 SEFA closing package was not completed at a level of detail sufficient to properly identify and correct errors. This issue was also reported as finding 2022-211 in the Single Audit Report for fiscal year 2022. Other factors impacting the Department’s accurate completion of the fiscal year 2023 SEFA, such as working with the implementation of a new statewide accounting system, Luma, that resulted in issues reconciling grant reports and SEFA reports. The Department also used SEFA reports that had been run before the budget team had completed all necessary grant uploads, which resulted in excluded information from the SEFA. The reports used to prepare the SEFA closing package were pre-built to pull the data from only the cooperative welfare fund (0220). Historically, this approach was successful because all the Department’s federal funds were coded to the cooperative welfare fund. The Department did not consider the spending for the Coronavirus State and Local Fiscal Recovery Funds (AL 21.027) through the American Rescue Plan Act fund (0344) when preparing the SEFA closing package. This resulted in those expenditures being omitted from the original SEFA submitted. The spending for the Coronavirus State and Local Fiscal Recovery Funds (AL 21.027) was originally understated on the SEFA by $21,358,086. The SEFA was adjusted after inquiry during the audit process to include the American Rescue Plan Act fund (0344). The original amount reported was $2,856,346. The final amount reported was $24,214,432. In addition, $86,608,290 originally reported as expenditures to subrecipients for the Child Care and Development Block Grant program (AL 93.575) were payments to providers rather than subrecipients. The coding in the accounting system by the Department’s program staff lead to the erroneous inclusion of the funds in the subrecipient reporting on the SEFA. Effect: In the absence of the audit work completed and the resulting revised submission by the Department to the Office, the statewide SEFA would have included multiple misstatements. Recommendation: We recommend that the Department improve the process for gathering information to prepare the SEFA closing package, and to review it for accuracy, to include training and specific procedures at a level of detail sufficient to detect and correct errors in the SEFA closing package. Management’s View: The Department agrees with the finding. Corrective Action: Since the implementation of LUMA, the department has been cognizant of the systematic challenges and risks and is acutely attentive to monitoring and review efforts. For example, due to LUMA, finance now has a new chart of accounts structure, meaning previously used reports for compilation of the SEFA are no longer a concern. The department held a required training on March 12-13, 2024, for all employees involved with grant administration where the determination of contractor vs. subrecipient, as well as proper account coding, were reiterated. Finance has efforts underway to strengthen compliance through report building and monthly monitoring of proper coding. The department will be moving forward with the implementation of Grant Management Software in SFY25, which finance believes will provide further assurances of data accuracy. Finance will confirm all expenditures and adjustments are completed before running reports when preparing the SFY24 and future SEFA’s. This confirmation will be documented via an email to the Financial Manager of the Budget section. The email response will be retained with the SEFA preparation file for audit purposes. Auditor’s Concluding Remarks: We thank the Department for its cooperation and assistance throughout the audit.
FINDING 2023-208 The Schedule of Expenditures of Federal Awards (SEFA) closing package originally submitted to the Office of the State Controller (Office) included multiple errors. Related to Prior Finding: 2022-211; 2021-206 Type of Finding: Significant Deficiency, SEFA Misstatement Assistance Listing Title: Supplemental Nutrition Assistance Program; Coronavirus State and Local Fiscal Recovery Funds; Guardianship Assistance; Temporary Assistance for Needy Families; Child Support Enforcement; Child Care and Development Block Grant; Foster Care Title IV-E; Adoption Assistance; Child Care and Development Block Grant (CCDF); Social Services Block Grant; Children's Health Insurance Program; Medical Assistance Program; Money Follows the Person Rebalancing Demonstration; Block Grants for Community Mental Health Services Assistance Listing Number: 10.561; 21.027; 93.090; 93.558; 93.563; 93.575; 93.658; 93.659; 93.667; 93.767; 93.778; 93.791; 93.958 Federal Award Number: Various Program Year: Various Federal Agency: Various Compliance Requirement: U.S. Code of Federal Regulations Questioned Costs: None Criteria: The Internal Control Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) provides a basis for organizations to design internal control procedures to ensure reliable financial reporting, effective and efficient operations, and compliance with applicable laws and regulations. Components of this framework include risk assessment, control activities, and information and communication. Risk assessment is the identification and analysis of various risks entities face because of changing economic, industry, regulatory, and operating conditions, and provides a basis to develop appropriate responses to manage those risks. Control activities are policies and procedures that help ensure management directives are carried out and risks are mitigated. Verifications, approvals, reconciliations, authorizations, and segregation of duties are all control activities that support this objective. Information and communication relate to obtaining quality information and effective internal and external communication of that information to achieve management objectives. Management objectives should include the preparation and fair presentation of the SEFA in relation to the basic financial statements as a whole and in compliance with requirements contained in the U.S. Code of Federal Regulations (CFR), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) (2 CFR §200.510(b)), which states it must include: • Total federal awards expended as determined in accordance with 2 CFR §200.502, and • Total amount provided to subrecipients from each federal program in accordance with 2 CFR 200.510(b)(4) The requirements included in 2 CFR 200.303 require that a nonfederal entity receiving federal awards establish and maintain internal controls that provide reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions in the federal award. The Office requires agencies to complete the SEFA closing package and uses this information to compile the statewide SEFA. Condition: The Department submitted multiple revisions of the fiscal year 2023 SEFA closing package to correct errors identified by the auditors and communicated to management during the audit process. The original submission included misstatements for the following programs: • Overstatement of $144,460 for the Supplemental Nutrition Assistance Program (Assistance Listing (AL) number 10.561) • Overstatement of $933 for the Guardianship Assistance program (AL 93.090) • Understatement of $1,300,232 for the Temporary Assistance for Needy Families program (AL 93.558) • Understatement of $230,034 for the Child Support Enforcement program (AL 93.563) • Understatement of $42,349 for the Foster Care Title IV-E program (AL 93.658) • Overstatement of $16,112 for the Adoption Assistance program (AL 93.659) • Overstatement of $1,036,549 for the Social Services Block Grant program (AL 93.667) • Overstatement of $3,469,677 for the Children's Health Insurance Program (AL 93.767) • Understatement of $25,108,923 for the Medical Assistance program (AL 93.778) • Understatement of $48,071 for the Money Follows the Person Rebalancing Demonstration program (AL 93.791) • Understatement of $676,806 for the Block Grants for Community Mental Health Services program (AL 93.958) • Understatement of $21,358,086 for the Coronavirus State and Local Fiscal Recovery Funds program (AL 21.027) In addition, expenditures to subrecipients were misstated for the following programs: • Overstatement of $86,608,290 for the Child Care and Development Block Grant program (AL 93.575) • Understatement of $18,959,072 for the Coronavirus State and Local Fiscal Recovery Funds program (AL 21.027) Cause: The Department has a review process in place for closing packages that is intended to detect and correct errors. However, the review of the fiscal year 2023 SEFA closing package was not completed at a level of detail sufficient to properly identify and correct errors. This issue was also reported as finding 2022-211 in the Single Audit Report for fiscal year 2022. Other factors impacting the Department’s accurate completion of the fiscal year 2023 SEFA, such as working with the implementation of a new statewide accounting system, Luma, that resulted in issues reconciling grant reports and SEFA reports. The Department also used SEFA reports that had been run before the budget team had completed all necessary grant uploads, which resulted in excluded information from the SEFA. The reports used to prepare the SEFA closing package were pre-built to pull the data from only the cooperative welfare fund (0220). Historically, this approach was successful because all the Department’s federal funds were coded to the cooperative welfare fund. The Department did not consider the spending for the Coronavirus State and Local Fiscal Recovery Funds (AL 21.027) through the American Rescue Plan Act fund (0344) when preparing the SEFA closing package. This resulted in those expenditures being omitted from the original SEFA submitted. The spending for the Coronavirus State and Local Fiscal Recovery Funds (AL 21.027) was originally understated on the SEFA by $21,358,086. The SEFA was adjusted after inquiry during the audit process to include the American Rescue Plan Act fund (0344). The original amount reported was $2,856,346. The final amount reported was $24,214,432. In addition, $86,608,290 originally reported as expenditures to subrecipients for the Child Care and Development Block Grant program (AL 93.575) were payments to providers rather than subrecipients. The coding in the accounting system by the Department’s program staff lead to the erroneous inclusion of the funds in the subrecipient reporting on the SEFA. Effect: In the absence of the audit work completed and the resulting revised submission by the Department to the Office, the statewide SEFA would have included multiple misstatements. Recommendation: We recommend that the Department improve the process for gathering information to prepare the SEFA closing package, and to review it for accuracy, to include training and specific procedures at a level of detail sufficient to detect and correct errors in the SEFA closing package. Management’s View: The Department agrees with the finding. Corrective Action: Since the implementation of LUMA, the department has been cognizant of the systematic challenges and risks and is acutely attentive to monitoring and review efforts. For example, due to LUMA, finance now has a new chart of accounts structure, meaning previously used reports for compilation of the SEFA are no longer a concern. The department held a required training on March 12-13, 2024, for all employees involved with grant administration where the determination of contractor vs. subrecipient, as well as proper account coding, were reiterated. Finance has efforts underway to strengthen compliance through report building and monthly monitoring of proper coding. The department will be moving forward with the implementation of Grant Management Software in SFY25, which finance believes will provide further assurances of data accuracy. Finance will confirm all expenditures and adjustments are completed before running reports when preparing the SFY24 and future SEFA’s. This confirmation will be documented via an email to the Financial Manager of the Budget section. The email response will be retained with the SEFA preparation file for audit purposes. Auditor’s Concluding Remarks: We thank the Department for its cooperation and assistance throughout the audit.
FINDING 2023-208 The Schedule of Expenditures of Federal Awards (SEFA) closing package originally submitted to the Office of the State Controller (Office) included multiple errors. Related to Prior Finding: 2022-211; 2021-206 Type of Finding: Significant Deficiency, SEFA Misstatement Assistance Listing Title: Supplemental Nutrition Assistance Program; Coronavirus State and Local Fiscal Recovery Funds; Guardianship Assistance; Temporary Assistance for Needy Families; Child Support Enforcement; Child Care and Development Block Grant; Foster Care Title IV-E; Adoption Assistance; Child Care and Development Block Grant (CCDF); Social Services Block Grant; Children's Health Insurance Program; Medical Assistance Program; Money Follows the Person Rebalancing Demonstration; Block Grants for Community Mental Health Services Assistance Listing Number: 10.561; 21.027; 93.090; 93.558; 93.563; 93.575; 93.658; 93.659; 93.667; 93.767; 93.778; 93.791; 93.958 Federal Award Number: Various Program Year: Various Federal Agency: Various Compliance Requirement: U.S. Code of Federal Regulations Questioned Costs: None Criteria: The Internal Control Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) provides a basis for organizations to design internal control procedures to ensure reliable financial reporting, effective and efficient operations, and compliance with applicable laws and regulations. Components of this framework include risk assessment, control activities, and information and communication. Risk assessment is the identification and analysis of various risks entities face because of changing economic, industry, regulatory, and operating conditions, and provides a basis to develop appropriate responses to manage those risks. Control activities are policies and procedures that help ensure management directives are carried out and risks are mitigated. Verifications, approvals, reconciliations, authorizations, and segregation of duties are all control activities that support this objective. Information and communication relate to obtaining quality information and effective internal and external communication of that information to achieve management objectives. Management objectives should include the preparation and fair presentation of the SEFA in relation to the basic financial statements as a whole and in compliance with requirements contained in the U.S. Code of Federal Regulations (CFR), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) (2 CFR §200.510(b)), which states it must include: • Total federal awards expended as determined in accordance with 2 CFR §200.502, and • Total amount provided to subrecipients from each federal program in accordance with 2 CFR 200.510(b)(4) The requirements included in 2 CFR 200.303 require that a nonfederal entity receiving federal awards establish and maintain internal controls that provide reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions in the federal award. The Office requires agencies to complete the SEFA closing package and uses this information to compile the statewide SEFA. Condition: The Department submitted multiple revisions of the fiscal year 2023 SEFA closing package to correct errors identified by the auditors and communicated to management during the audit process. The original submission included misstatements for the following programs: • Overstatement of $144,460 for the Supplemental Nutrition Assistance Program (Assistance Listing (AL) number 10.561) • Overstatement of $933 for the Guardianship Assistance program (AL 93.090) • Understatement of $1,300,232 for the Temporary Assistance for Needy Families program (AL 93.558) • Understatement of $230,034 for the Child Support Enforcement program (AL 93.563) • Understatement of $42,349 for the Foster Care Title IV-E program (AL 93.658) • Overstatement of $16,112 for the Adoption Assistance program (AL 93.659) • Overstatement of $1,036,549 for the Social Services Block Grant program (AL 93.667) • Overstatement of $3,469,677 for the Children's Health Insurance Program (AL 93.767) • Understatement of $25,108,923 for the Medical Assistance program (AL 93.778) • Understatement of $48,071 for the Money Follows the Person Rebalancing Demonstration program (AL 93.791) • Understatement of $676,806 for the Block Grants for Community Mental Health Services program (AL 93.958) • Understatement of $21,358,086 for the Coronavirus State and Local Fiscal Recovery Funds program (AL 21.027) In addition, expenditures to subrecipients were misstated for the following programs: • Overstatement of $86,608,290 for the Child Care and Development Block Grant program (AL 93.575) • Understatement of $18,959,072 for the Coronavirus State and Local Fiscal Recovery Funds program (AL 21.027) Cause: The Department has a review process in place for closing packages that is intended to detect and correct errors. However, the review of the fiscal year 2023 SEFA closing package was not completed at a level of detail sufficient to properly identify and correct errors. This issue was also reported as finding 2022-211 in the Single Audit Report for fiscal year 2022. Other factors impacting the Department’s accurate completion of the fiscal year 2023 SEFA, such as working with the implementation of a new statewide accounting system, Luma, that resulted in issues reconciling grant reports and SEFA reports. The Department also used SEFA reports that had been run before the budget team had completed all necessary grant uploads, which resulted in excluded information from the SEFA. The reports used to prepare the SEFA closing package were pre-built to pull the data from only the cooperative welfare fund (0220). Historically, this approach was successful because all the Department’s federal funds were coded to the cooperative welfare fund. The Department did not consider the spending for the Coronavirus State and Local Fiscal Recovery Funds (AL 21.027) through the American Rescue Plan Act fund (0344) when preparing the SEFA closing package. This resulted in those expenditures being omitted from the original SEFA submitted. The spending for the Coronavirus State and Local Fiscal Recovery Funds (AL 21.027) was originally understated on the SEFA by $21,358,086. The SEFA was adjusted after inquiry during the audit process to include the American Rescue Plan Act fund (0344). The original amount reported was $2,856,346. The final amount reported was $24,214,432. In addition, $86,608,290 originally reported as expenditures to subrecipients for the Child Care and Development Block Grant program (AL 93.575) were payments to providers rather than subrecipients. The coding in the accounting system by the Department’s program staff lead to the erroneous inclusion of the funds in the subrecipient reporting on the SEFA. Effect: In the absence of the audit work completed and the resulting revised submission by the Department to the Office, the statewide SEFA would have included multiple misstatements. Recommendation: We recommend that the Department improve the process for gathering information to prepare the SEFA closing package, and to review it for accuracy, to include training and specific procedures at a level of detail sufficient to detect and correct errors in the SEFA closing package. Management’s View: The Department agrees with the finding. Corrective Action: Since the implementation of LUMA, the department has been cognizant of the systematic challenges and risks and is acutely attentive to monitoring and review efforts. For example, due to LUMA, finance now has a new chart of accounts structure, meaning previously used reports for compilation of the SEFA are no longer a concern. The department held a required training on March 12-13, 2024, for all employees involved with grant administration where the determination of contractor vs. subrecipient, as well as proper account coding, were reiterated. Finance has efforts underway to strengthen compliance through report building and monthly monitoring of proper coding. The department will be moving forward with the implementation of Grant Management Software in SFY25, which finance believes will provide further assurances of data accuracy. Finance will confirm all expenditures and adjustments are completed before running reports when preparing the SFY24 and future SEFA’s. This confirmation will be documented via an email to the Financial Manager of the Budget section. The email response will be retained with the SEFA preparation file for audit purposes. Auditor’s Concluding Remarks: We thank the Department for its cooperation and assistance throughout the audit.
FINDING 2023-208 The Schedule of Expenditures of Federal Awards (SEFA) closing package originally submitted to the Office of the State Controller (Office) included multiple errors. Related to Prior Finding: 2022-211; 2021-206 Type of Finding: Significant Deficiency, SEFA Misstatement Assistance Listing Title: Supplemental Nutrition Assistance Program; Coronavirus State and Local Fiscal Recovery Funds; Guardianship Assistance; Temporary Assistance for Needy Families; Child Support Enforcement; Child Care and Development Block Grant; Foster Care Title IV-E; Adoption Assistance; Child Care and Development Block Grant (CCDF); Social Services Block Grant; Children's Health Insurance Program; Medical Assistance Program; Money Follows the Person Rebalancing Demonstration; Block Grants for Community Mental Health Services Assistance Listing Number: 10.561; 21.027; 93.090; 93.558; 93.563; 93.575; 93.658; 93.659; 93.667; 93.767; 93.778; 93.791; 93.958 Federal Award Number: Various Program Year: Various Federal Agency: Various Compliance Requirement: U.S. Code of Federal Regulations Questioned Costs: None Criteria: The Internal Control Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) provides a basis for organizations to design internal control procedures to ensure reliable financial reporting, effective and efficient operations, and compliance with applicable laws and regulations. Components of this framework include risk assessment, control activities, and information and communication. Risk assessment is the identification and analysis of various risks entities face because of changing economic, industry, regulatory, and operating conditions, and provides a basis to develop appropriate responses to manage those risks. Control activities are policies and procedures that help ensure management directives are carried out and risks are mitigated. Verifications, approvals, reconciliations, authorizations, and segregation of duties are all control activities that support this objective. Information and communication relate to obtaining quality information and effective internal and external communication of that information to achieve management objectives. Management objectives should include the preparation and fair presentation of the SEFA in relation to the basic financial statements as a whole and in compliance with requirements contained in the U.S. Code of Federal Regulations (CFR), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) (2 CFR §200.510(b)), which states it must include: • Total federal awards expended as determined in accordance with 2 CFR §200.502, and • Total amount provided to subrecipients from each federal program in accordance with 2 CFR 200.510(b)(4) The requirements included in 2 CFR 200.303 require that a nonfederal entity receiving federal awards establish and maintain internal controls that provide reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions in the federal award. The Office requires agencies to complete the SEFA closing package and uses this information to compile the statewide SEFA. Condition: The Department submitted multiple revisions of the fiscal year 2023 SEFA closing package to correct errors identified by the auditors and communicated to management during the audit process. The original submission included misstatements for the following programs: • Overstatement of $144,460 for the Supplemental Nutrition Assistance Program (Assistance Listing (AL) number 10.561) • Overstatement of $933 for the Guardianship Assistance program (AL 93.090) • Understatement of $1,300,232 for the Temporary Assistance for Needy Families program (AL 93.558) • Understatement of $230,034 for the Child Support Enforcement program (AL 93.563) • Understatement of $42,349 for the Foster Care Title IV-E program (AL 93.658) • Overstatement of $16,112 for the Adoption Assistance program (AL 93.659) • Overstatement of $1,036,549 for the Social Services Block Grant program (AL 93.667) • Overstatement of $3,469,677 for the Children's Health Insurance Program (AL 93.767) • Understatement of $25,108,923 for the Medical Assistance program (AL 93.778) • Understatement of $48,071 for the Money Follows the Person Rebalancing Demonstration program (AL 93.791) • Understatement of $676,806 for the Block Grants for Community Mental Health Services program (AL 93.958) • Understatement of $21,358,086 for the Coronavirus State and Local Fiscal Recovery Funds program (AL 21.027) In addition, expenditures to subrecipients were misstated for the following programs: • Overstatement of $86,608,290 for the Child Care and Development Block Grant program (AL 93.575) • Understatement of $18,959,072 for the Coronavirus State and Local Fiscal Recovery Funds program (AL 21.027) Cause: The Department has a review process in place for closing packages that is intended to detect and correct errors. However, the review of the fiscal year 2023 SEFA closing package was not completed at a level of detail sufficient to properly identify and correct errors. This issue was also reported as finding 2022-211 in the Single Audit Report for fiscal year 2022. Other factors impacting the Department’s accurate completion of the fiscal year 2023 SEFA, such as working with the implementation of a new statewide accounting system, Luma, that resulted in issues reconciling grant reports and SEFA reports. The Department also used SEFA reports that had been run before the budget team had completed all necessary grant uploads, which resulted in excluded information from the SEFA. The reports used to prepare the SEFA closing package were pre-built to pull the data from only the cooperative welfare fund (0220). Historically, this approach was successful because all the Department’s federal funds were coded to the cooperative welfare fund. The Department did not consider the spending for the Coronavirus State and Local Fiscal Recovery Funds (AL 21.027) through the American Rescue Plan Act fund (0344) when preparing the SEFA closing package. This resulted in those expenditures being omitted from the original SEFA submitted. The spending for the Coronavirus State and Local Fiscal Recovery Funds (AL 21.027) was originally understated on the SEFA by $21,358,086. The SEFA was adjusted after inquiry during the audit process to include the American Rescue Plan Act fund (0344). The original amount reported was $2,856,346. The final amount reported was $24,214,432. In addition, $86,608,290 originally reported as expenditures to subrecipients for the Child Care and Development Block Grant program (AL 93.575) were payments to providers rather than subrecipients. The coding in the accounting system by the Department’s program staff lead to the erroneous inclusion of the funds in the subrecipient reporting on the SEFA. Effect: In the absence of the audit work completed and the resulting revised submission by the Department to the Office, the statewide SEFA would have included multiple misstatements. Recommendation: We recommend that the Department improve the process for gathering information to prepare the SEFA closing package, and to review it for accuracy, to include training and specific procedures at a level of detail sufficient to detect and correct errors in the SEFA closing package. Management’s View: The Department agrees with the finding. Corrective Action: Since the implementation of LUMA, the department has been cognizant of the systematic challenges and risks and is acutely attentive to monitoring and review efforts. For example, due to LUMA, finance now has a new chart of accounts structure, meaning previously used reports for compilation of the SEFA are no longer a concern. The department held a required training on March 12-13, 2024, for all employees involved with grant administration where the determination of contractor vs. subrecipient, as well as proper account coding, were reiterated. Finance has efforts underway to strengthen compliance through report building and monthly monitoring of proper coding. The department will be moving forward with the implementation of Grant Management Software in SFY25, which finance believes will provide further assurances of data accuracy. Finance will confirm all expenditures and adjustments are completed before running reports when preparing the SFY24 and future SEFA’s. This confirmation will be documented via an email to the Financial Manager of the Budget section. The email response will be retained with the SEFA preparation file for audit purposes. Auditor’s Concluding Remarks: We thank the Department for its cooperation and assistance throughout the audit.
FINDING 2023-208 The Schedule of Expenditures of Federal Awards (SEFA) closing package originally submitted to the Office of the State Controller (Office) included multiple errors. Related to Prior Finding: 2022-211; 2021-206 Type of Finding: Significant Deficiency, SEFA Misstatement Assistance Listing Title: Supplemental Nutrition Assistance Program; Coronavirus State and Local Fiscal Recovery Funds; Guardianship Assistance; Temporary Assistance for Needy Families; Child Support Enforcement; Child Care and Development Block Grant; Foster Care Title IV-E; Adoption Assistance; Child Care and Development Block Grant (CCDF); Social Services Block Grant; Children's Health Insurance Program; Medical Assistance Program; Money Follows the Person Rebalancing Demonstration; Block Grants for Community Mental Health Services Assistance Listing Number: 10.561; 21.027; 93.090; 93.558; 93.563; 93.575; 93.658; 93.659; 93.667; 93.767; 93.778; 93.791; 93.958 Federal Award Number: Various Program Year: Various Federal Agency: Various Compliance Requirement: U.S. Code of Federal Regulations Questioned Costs: None Criteria: The Internal Control Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) provides a basis for organizations to design internal control procedures to ensure reliable financial reporting, effective and efficient operations, and compliance with applicable laws and regulations. Components of this framework include risk assessment, control activities, and information and communication. Risk assessment is the identification and analysis of various risks entities face because of changing economic, industry, regulatory, and operating conditions, and provides a basis to develop appropriate responses to manage those risks. Control activities are policies and procedures that help ensure management directives are carried out and risks are mitigated. Verifications, approvals, reconciliations, authorizations, and segregation of duties are all control activities that support this objective. Information and communication relate to obtaining quality information and effective internal and external communication of that information to achieve management objectives. Management objectives should include the preparation and fair presentation of the SEFA in relation to the basic financial statements as a whole and in compliance with requirements contained in the U.S. Code of Federal Regulations (CFR), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) (2 CFR §200.510(b)), which states it must include: • Total federal awards expended as determined in accordance with 2 CFR §200.502, and • Total amount provided to subrecipients from each federal program in accordance with 2 CFR 200.510(b)(4) The requirements included in 2 CFR 200.303 require that a nonfederal entity receiving federal awards establish and maintain internal controls that provide reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions in the federal award. The Office requires agencies to complete the SEFA closing package and uses this information to compile the statewide SEFA. Condition: The Department submitted multiple revisions of the fiscal year 2023 SEFA closing package to correct errors identified by the auditors and communicated to management during the audit process. The original submission included misstatements for the following programs: • Overstatement of $144,460 for the Supplemental Nutrition Assistance Program (Assistance Listing (AL) number 10.561) • Overstatement of $933 for the Guardianship Assistance program (AL 93.090) • Understatement of $1,300,232 for the Temporary Assistance for Needy Families program (AL 93.558) • Understatement of $230,034 for the Child Support Enforcement program (AL 93.563) • Understatement of $42,349 for the Foster Care Title IV-E program (AL 93.658) • Overstatement of $16,112 for the Adoption Assistance program (AL 93.659) • Overstatement of $1,036,549 for the Social Services Block Grant program (AL 93.667) • Overstatement of $3,469,677 for the Children's Health Insurance Program (AL 93.767) • Understatement of $25,108,923 for the Medical Assistance program (AL 93.778) • Understatement of $48,071 for the Money Follows the Person Rebalancing Demonstration program (AL 93.791) • Understatement of $676,806 for the Block Grants for Community Mental Health Services program (AL 93.958) • Understatement of $21,358,086 for the Coronavirus State and Local Fiscal Recovery Funds program (AL 21.027) In addition, expenditures to subrecipients were misstated for the following programs: • Overstatement of $86,608,290 for the Child Care and Development Block Grant program (AL 93.575) • Understatement of $18,959,072 for the Coronavirus State and Local Fiscal Recovery Funds program (AL 21.027) Cause: The Department has a review process in place for closing packages that is intended to detect and correct errors. However, the review of the fiscal year 2023 SEFA closing package was not completed at a level of detail sufficient to properly identify and correct errors. This issue was also reported as finding 2022-211 in the Single Audit Report for fiscal year 2022. Other factors impacting the Department’s accurate completion of the fiscal year 2023 SEFA, such as working with the implementation of a new statewide accounting system, Luma, that resulted in issues reconciling grant reports and SEFA reports. The Department also used SEFA reports that had been run before the budget team had completed all necessary grant uploads, which resulted in excluded information from the SEFA. The reports used to prepare the SEFA closing package were pre-built to pull the data from only the cooperative welfare fund (0220). Historically, this approach was successful because all the Department’s federal funds were coded to the cooperative welfare fund. The Department did not consider the spending for the Coronavirus State and Local Fiscal Recovery Funds (AL 21.027) through the American Rescue Plan Act fund (0344) when preparing the SEFA closing package. This resulted in those expenditures being omitted from the original SEFA submitted. The spending for the Coronavirus State and Local Fiscal Recovery Funds (AL 21.027) was originally understated on the SEFA by $21,358,086. The SEFA was adjusted after inquiry during the audit process to include the American Rescue Plan Act fund (0344). The original amount reported was $2,856,346. The final amount reported was $24,214,432. In addition, $86,608,290 originally reported as expenditures to subrecipients for the Child Care and Development Block Grant program (AL 93.575) were payments to providers rather than subrecipients. The coding in the accounting system by the Department’s program staff lead to the erroneous inclusion of the funds in the subrecipient reporting on the SEFA. Effect: In the absence of the audit work completed and the resulting revised submission by the Department to the Office, the statewide SEFA would have included multiple misstatements. Recommendation: We recommend that the Department improve the process for gathering information to prepare the SEFA closing package, and to review it for accuracy, to include training and specific procedures at a level of detail sufficient to detect and correct errors in the SEFA closing package. Management’s View: The Department agrees with the finding. Corrective Action: Since the implementation of LUMA, the department has been cognizant of the systematic challenges and risks and is acutely attentive to monitoring and review efforts. For example, due to LUMA, finance now has a new chart of accounts structure, meaning previously used reports for compilation of the SEFA are no longer a concern. The department held a required training on March 12-13, 2024, for all employees involved with grant administration where the determination of contractor vs. subrecipient, as well as proper account coding, were reiterated. Finance has efforts underway to strengthen compliance through report building and monthly monitoring of proper coding. The department will be moving forward with the implementation of Grant Management Software in SFY25, which finance believes will provide further assurances of data accuracy. Finance will confirm all expenditures and adjustments are completed before running reports when preparing the SFY24 and future SEFA’s. This confirmation will be documented via an email to the Financial Manager of the Budget section. The email response will be retained with the SEFA preparation file for audit purposes. Auditor’s Concluding Remarks: We thank the Department for its cooperation and assistance throughout the audit.
FINDING 2023-208 The Schedule of Expenditures of Federal Awards (SEFA) closing package originally submitted to the Office of the State Controller (Office) included multiple errors. Related to Prior Finding: 2022-211; 2021-206 Type of Finding: Significant Deficiency, SEFA Misstatement Assistance Listing Title: Supplemental Nutrition Assistance Program; Coronavirus State and Local Fiscal Recovery Funds; Guardianship Assistance; Temporary Assistance for Needy Families; Child Support Enforcement; Child Care and Development Block Grant; Foster Care Title IV-E; Adoption Assistance; Child Care and Development Block Grant (CCDF); Social Services Block Grant; Children's Health Insurance Program; Medical Assistance Program; Money Follows the Person Rebalancing Demonstration; Block Grants for Community Mental Health Services Assistance Listing Number: 10.561; 21.027; 93.090; 93.558; 93.563; 93.575; 93.658; 93.659; 93.667; 93.767; 93.778; 93.791; 93.958 Federal Award Number: Various Program Year: Various Federal Agency: Various Compliance Requirement: U.S. Code of Federal Regulations Questioned Costs: None Criteria: The Internal Control Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) provides a basis for organizations to design internal control procedures to ensure reliable financial reporting, effective and efficient operations, and compliance with applicable laws and regulations. Components of this framework include risk assessment, control activities, and information and communication. Risk assessment is the identification and analysis of various risks entities face because of changing economic, industry, regulatory, and operating conditions, and provides a basis to develop appropriate responses to manage those risks. Control activities are policies and procedures that help ensure management directives are carried out and risks are mitigated. Verifications, approvals, reconciliations, authorizations, and segregation of duties are all control activities that support this objective. Information and communication relate to obtaining quality information and effective internal and external communication of that information to achieve management objectives. Management objectives should include the preparation and fair presentation of the SEFA in relation to the basic financial statements as a whole and in compliance with requirements contained in the U.S. Code of Federal Regulations (CFR), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) (2 CFR §200.510(b)), which states it must include: • Total federal awards expended as determined in accordance with 2 CFR §200.502, and • Total amount provided to subrecipients from each federal program in accordance with 2 CFR 200.510(b)(4) The requirements included in 2 CFR 200.303 require that a nonfederal entity receiving federal awards establish and maintain internal controls that provide reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions in the federal award. The Office requires agencies to complete the SEFA closing package and uses this information to compile the statewide SEFA. Condition: The Department submitted multiple revisions of the fiscal year 2023 SEFA closing package to correct errors identified by the auditors and communicated to management during the audit process. The original submission included misstatements for the following programs: • Overstatement of $144,460 for the Supplemental Nutrition Assistance Program (Assistance Listing (AL) number 10.561) • Overstatement of $933 for the Guardianship Assistance program (AL 93.090) • Understatement of $1,300,232 for the Temporary Assistance for Needy Families program (AL 93.558) • Understatement of $230,034 for the Child Support Enforcement program (AL 93.563) • Understatement of $42,349 for the Foster Care Title IV-E program (AL 93.658) • Overstatement of $16,112 for the Adoption Assistance program (AL 93.659) • Overstatement of $1,036,549 for the Social Services Block Grant program (AL 93.667) • Overstatement of $3,469,677 for the Children's Health Insurance Program (AL 93.767) • Understatement of $25,108,923 for the Medical Assistance program (AL 93.778) • Understatement of $48,071 for the Money Follows the Person Rebalancing Demonstration program (AL 93.791) • Understatement of $676,806 for the Block Grants for Community Mental Health Services program (AL 93.958) • Understatement of $21,358,086 for the Coronavirus State and Local Fiscal Recovery Funds program (AL 21.027) In addition, expenditures to subrecipients were misstated for the following programs: • Overstatement of $86,608,290 for the Child Care and Development Block Grant program (AL 93.575) • Understatement of $18,959,072 for the Coronavirus State and Local Fiscal Recovery Funds program (AL 21.027) Cause: The Department has a review process in place for closing packages that is intended to detect and correct errors. However, the review of the fiscal year 2023 SEFA closing package was not completed at a level of detail sufficient to properly identify and correct errors. This issue was also reported as finding 2022-211 in the Single Audit Report for fiscal year 2022. Other factors impacting the Department’s accurate completion of the fiscal year 2023 SEFA, such as working with the implementation of a new statewide accounting system, Luma, that resulted in issues reconciling grant reports and SEFA reports. The Department also used SEFA reports that had been run before the budget team had completed all necessary grant uploads, which resulted in excluded information from the SEFA. The reports used to prepare the SEFA closing package were pre-built to pull the data from only the cooperative welfare fund (0220). Historically, this approach was successful because all the Department’s federal funds were coded to the cooperative welfare fund. The Department did not consider the spending for the Coronavirus State and Local Fiscal Recovery Funds (AL 21.027) through the American Rescue Plan Act fund (0344) when preparing the SEFA closing package. This resulted in those expenditures being omitted from the original SEFA submitted. The spending for the Coronavirus State and Local Fiscal Recovery Funds (AL 21.027) was originally understated on the SEFA by $21,358,086. The SEFA was adjusted after inquiry during the audit process to include the American Rescue Plan Act fund (0344). The original amount reported was $2,856,346. The final amount reported was $24,214,432. In addition, $86,608,290 originally reported as expenditures to subrecipients for the Child Care and Development Block Grant program (AL 93.575) were payments to providers rather than subrecipients. The coding in the accounting system by the Department’s program staff lead to the erroneous inclusion of the funds in the subrecipient reporting on the SEFA. Effect: In the absence of the audit work completed and the resulting revised submission by the Department to the Office, the statewide SEFA would have included multiple misstatements. Recommendation: We recommend that the Department improve the process for gathering information to prepare the SEFA closing package, and to review it for accuracy, to include training and specific procedures at a level of detail sufficient to detect and correct errors in the SEFA closing package. Management’s View: The Department agrees with the finding. Corrective Action: Since the implementation of LUMA, the department has been cognizant of the systematic challenges and risks and is acutely attentive to monitoring and review efforts. For example, due to LUMA, finance now has a new chart of accounts structure, meaning previously used reports for compilation of the SEFA are no longer a concern. The department held a required training on March 12-13, 2024, for all employees involved with grant administration where the determination of contractor vs. subrecipient, as well as proper account coding, were reiterated. Finance has efforts underway to strengthen compliance through report building and monthly monitoring of proper coding. The department will be moving forward with the implementation of Grant Management Software in SFY25, which finance believes will provide further assurances of data accuracy. Finance will confirm all expenditures and adjustments are completed before running reports when preparing the SFY24 and future SEFA’s. This confirmation will be documented via an email to the Financial Manager of the Budget section. The email response will be retained with the SEFA preparation file for audit purposes. Auditor’s Concluding Remarks: We thank the Department for its cooperation and assistance throughout the audit.
FINDING 2023-208 The Schedule of Expenditures of Federal Awards (SEFA) closing package originally submitted to the Office of the State Controller (Office) included multiple errors. Related to Prior Finding: 2022-211; 2021-206 Type of Finding: Significant Deficiency, SEFA Misstatement Assistance Listing Title: Supplemental Nutrition Assistance Program; Coronavirus State and Local Fiscal Recovery Funds; Guardianship Assistance; Temporary Assistance for Needy Families; Child Support Enforcement; Child Care and Development Block Grant; Foster Care Title IV-E; Adoption Assistance; Child Care and Development Block Grant (CCDF); Social Services Block Grant; Children's Health Insurance Program; Medical Assistance Program; Money Follows the Person Rebalancing Demonstration; Block Grants for Community Mental Health Services Assistance Listing Number: 10.561; 21.027; 93.090; 93.558; 93.563; 93.575; 93.658; 93.659; 93.667; 93.767; 93.778; 93.791; 93.958 Federal Award Number: Various Program Year: Various Federal Agency: Various Compliance Requirement: U.S. Code of Federal Regulations Questioned Costs: None Criteria: The Internal Control Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) provides a basis for organizations to design internal control procedures to ensure reliable financial reporting, effective and efficient operations, and compliance with applicable laws and regulations. Components of this framework include risk assessment, control activities, and information and communication. Risk assessment is the identification and analysis of various risks entities face because of changing economic, industry, regulatory, and operating conditions, and provides a basis to develop appropriate responses to manage those risks. Control activities are policies and procedures that help ensure management directives are carried out and risks are mitigated. Verifications, approvals, reconciliations, authorizations, and segregation of duties are all control activities that support this objective. Information and communication relate to obtaining quality information and effective internal and external communication of that information to achieve management objectives. Management objectives should include the preparation and fair presentation of the SEFA in relation to the basic financial statements as a whole and in compliance with requirements contained in the U.S. Code of Federal Regulations (CFR), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) (2 CFR §200.510(b)), which states it must include: • Total federal awards expended as determined in accordance with 2 CFR §200.502, and • Total amount provided to subrecipients from each federal program in accordance with 2 CFR 200.510(b)(4) The requirements included in 2 CFR 200.303 require that a nonfederal entity receiving federal awards establish and maintain internal controls that provide reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions in the federal award. The Office requires agencies to complete the SEFA closing package and uses this information to compile the statewide SEFA. Condition: The Department submitted multiple revisions of the fiscal year 2023 SEFA closing package to correct errors identified by the auditors and communicated to management during the audit process. The original submission included misstatements for the following programs: • Overstatement of $144,460 for the Supplemental Nutrition Assistance Program (Assistance Listing (AL) number 10.561) • Overstatement of $933 for the Guardianship Assistance program (AL 93.090) • Understatement of $1,300,232 for the Temporary Assistance for Needy Families program (AL 93.558) • Understatement of $230,034 for the Child Support Enforcement program (AL 93.563) • Understatement of $42,349 for the Foster Care Title IV-E program (AL 93.658) • Overstatement of $16,112 for the Adoption Assistance program (AL 93.659) • Overstatement of $1,036,549 for the Social Services Block Grant program (AL 93.667) • Overstatement of $3,469,677 for the Children's Health Insurance Program (AL 93.767) • Understatement of $25,108,923 for the Medical Assistance program (AL 93.778) • Understatement of $48,071 for the Money Follows the Person Rebalancing Demonstration program (AL 93.791) • Understatement of $676,806 for the Block Grants for Community Mental Health Services program (AL 93.958) • Understatement of $21,358,086 for the Coronavirus State and Local Fiscal Recovery Funds program (AL 21.027) In addition, expenditures to subrecipients were misstated for the following programs: • Overstatement of $86,608,290 for the Child Care and Development Block Grant program (AL 93.575) • Understatement of $18,959,072 for the Coronavirus State and Local Fiscal Recovery Funds program (AL 21.027) Cause: The Department has a review process in place for closing packages that is intended to detect and correct errors. However, the review of the fiscal year 2023 SEFA closing package was not completed at a level of detail sufficient to properly identify and correct errors. This issue was also reported as finding 2022-211 in the Single Audit Report for fiscal year 2022. Other factors impacting the Department’s accurate completion of the fiscal year 2023 SEFA, such as working with the implementation of a new statewide accounting system, Luma, that resulted in issues reconciling grant reports and SEFA reports. The Department also used SEFA reports that had been run before the budget team had completed all necessary grant uploads, which resulted in excluded information from the SEFA. The reports used to prepare the SEFA closing package were pre-built to pull the data from only the cooperative welfare fund (0220). Historically, this approach was successful because all the Department’s federal funds were coded to the cooperative welfare fund. The Department did not consider the spending for the Coronavirus State and Local Fiscal Recovery Funds (AL 21.027) through the American Rescue Plan Act fund (0344) when preparing the SEFA closing package. This resulted in those expenditures being omitted from the original SEFA submitted. The spending for the Coronavirus State and Local Fiscal Recovery Funds (AL 21.027) was originally understated on the SEFA by $21,358,086. The SEFA was adjusted after inquiry during the audit process to include the American Rescue Plan Act fund (0344). The original amount reported was $2,856,346. The final amount reported was $24,214,432. In addition, $86,608,290 originally reported as expenditures to subrecipients for the Child Care and Development Block Grant program (AL 93.575) were payments to providers rather than subrecipients. The coding in the accounting system by the Department’s program staff lead to the erroneous inclusion of the funds in the subrecipient reporting on the SEFA. Effect: In the absence of the audit work completed and the resulting revised submission by the Department to the Office, the statewide SEFA would have included multiple misstatements. Recommendation: We recommend that the Department improve the process for gathering information to prepare the SEFA closing package, and to review it for accuracy, to include training and specific procedures at a level of detail sufficient to detect and correct errors in the SEFA closing package. Management’s View: The Department agrees with the finding. Corrective Action: Since the implementation of LUMA, the department has been cognizant of the systematic challenges and risks and is acutely attentive to monitoring and review efforts. For example, due to LUMA, finance now has a new chart of accounts structure, meaning previously used reports for compilation of the SEFA are no longer a concern. The department held a required training on March 12-13, 2024, for all employees involved with grant administration where the determination of contractor vs. subrecipient, as well as proper account coding, were reiterated. Finance has efforts underway to strengthen compliance through report building and monthly monitoring of proper coding. The department will be moving forward with the implementation of Grant Management Software in SFY25, which finance believes will provide further assurances of data accuracy. Finance will confirm all expenditures and adjustments are completed before running reports when preparing the SFY24 and future SEFA’s. This confirmation will be documented via an email to the Financial Manager of the Budget section. The email response will be retained with the SEFA preparation file for audit purposes. Auditor’s Concluding Remarks: We thank the Department for its cooperation and assistance throughout the audit.
FINDING 2023-208 The Schedule of Expenditures of Federal Awards (SEFA) closing package originally submitted to the Office of the State Controller (Office) included multiple errors. Related to Prior Finding: 2022-211; 2021-206 Type of Finding: Significant Deficiency, SEFA Misstatement Assistance Listing Title: Supplemental Nutrition Assistance Program; Coronavirus State and Local Fiscal Recovery Funds; Guardianship Assistance; Temporary Assistance for Needy Families; Child Support Enforcement; Child Care and Development Block Grant; Foster Care Title IV-E; Adoption Assistance; Child Care and Development Block Grant (CCDF); Social Services Block Grant; Children's Health Insurance Program; Medical Assistance Program; Money Follows the Person Rebalancing Demonstration; Block Grants for Community Mental Health Services Assistance Listing Number: 10.561; 21.027; 93.090; 93.558; 93.563; 93.575; 93.658; 93.659; 93.667; 93.767; 93.778; 93.791; 93.958 Federal Award Number: Various Program Year: Various Federal Agency: Various Compliance Requirement: U.S. Code of Federal Regulations Questioned Costs: None Criteria: The Internal Control Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) provides a basis for organizations to design internal control procedures to ensure reliable financial reporting, effective and efficient operations, and compliance with applicable laws and regulations. Components of this framework include risk assessment, control activities, and information and communication. Risk assessment is the identification and analysis of various risks entities face because of changing economic, industry, regulatory, and operating conditions, and provides a basis to develop appropriate responses to manage those risks. Control activities are policies and procedures that help ensure management directives are carried out and risks are mitigated. Verifications, approvals, reconciliations, authorizations, and segregation of duties are all control activities that support this objective. Information and communication relate to obtaining quality information and effective internal and external communication of that information to achieve management objectives. Management objectives should include the preparation and fair presentation of the SEFA in relation to the basic financial statements as a whole and in compliance with requirements contained in the U.S. Code of Federal Regulations (CFR), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) (2 CFR §200.510(b)), which states it must include: • Total federal awards expended as determined in accordance with 2 CFR §200.502, and • Total amount provided to subrecipients from each federal program in accordance with 2 CFR 200.510(b)(4) The requirements included in 2 CFR 200.303 require that a nonfederal entity receiving federal awards establish and maintain internal controls that provide reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions in the federal award. The Office requires agencies to complete the SEFA closing package and uses this information to compile the statewide SEFA. Condition: The Department submitted multiple revisions of the fiscal year 2023 SEFA closing package to correct errors identified by the auditors and communicated to management during the audit process. The original submission included misstatements for the following programs: • Overstatement of $144,460 for the Supplemental Nutrition Assistance Program (Assistance Listing (AL) number 10.561) • Overstatement of $933 for the Guardianship Assistance program (AL 93.090) • Understatement of $1,300,232 for the Temporary Assistance for Needy Families program (AL 93.558) • Understatement of $230,034 for the Child Support Enforcement program (AL 93.563) • Understatement of $42,349 for the Foster Care Title IV-E program (AL 93.658) • Overstatement of $16,112 for the Adoption Assistance program (AL 93.659) • Overstatement of $1,036,549 for the Social Services Block Grant program (AL 93.667) • Overstatement of $3,469,677 for the Children's Health Insurance Program (AL 93.767) • Understatement of $25,108,923 for the Medical Assistance program (AL 93.778) • Understatement of $48,071 for the Money Follows the Person Rebalancing Demonstration program (AL 93.791) • Understatement of $676,806 for the Block Grants for Community Mental Health Services program (AL 93.958) • Understatement of $21,358,086 for the Coronavirus State and Local Fiscal Recovery Funds program (AL 21.027) In addition, expenditures to subrecipients were misstated for the following programs: • Overstatement of $86,608,290 for the Child Care and Development Block Grant program (AL 93.575) • Understatement of $18,959,072 for the Coronavirus State and Local Fiscal Recovery Funds program (AL 21.027) Cause: The Department has a review process in place for closing packages that is intended to detect and correct errors. However, the review of the fiscal year 2023 SEFA closing package was not completed at a level of detail sufficient to properly identify and correct errors. This issue was also reported as finding 2022-211 in the Single Audit Report for fiscal year 2022. Other factors impacting the Department’s accurate completion of the fiscal year 2023 SEFA, such as working with the implementation of a new statewide accounting system, Luma, that resulted in issues reconciling grant reports and SEFA reports. The Department also used SEFA reports that had been run before the budget team had completed all necessary grant uploads, which resulted in excluded information from the SEFA. The reports used to prepare the SEFA closing package were pre-built to pull the data from only the cooperative welfare fund (0220). Historically, this approach was successful because all the Department’s federal funds were coded to the cooperative welfare fund. The Department did not consider the spending for the Coronavirus State and Local Fiscal Recovery Funds (AL 21.027) through the American Rescue Plan Act fund (0344) when preparing the SEFA closing package. This resulted in those expenditures being omitted from the original SEFA submitted. The spending for the Coronavirus State and Local Fiscal Recovery Funds (AL 21.027) was originally understated on the SEFA by $21,358,086. The SEFA was adjusted after inquiry during the audit process to include the American Rescue Plan Act fund (0344). The original amount reported was $2,856,346. The final amount reported was $24,214,432. In addition, $86,608,290 originally reported as expenditures to subrecipients for the Child Care and Development Block Grant program (AL 93.575) were payments to providers rather than subrecipients. The coding in the accounting system by the Department’s program staff lead to the erroneous inclusion of the funds in the subrecipient reporting on the SEFA. Effect: In the absence of the audit work completed and the resulting revised submission by the Department to the Office, the statewide SEFA would have included multiple misstatements. Recommendation: We recommend that the Department improve the process for gathering information to prepare the SEFA closing package, and to review it for accuracy, to include training and specific procedures at a level of detail sufficient to detect and correct errors in the SEFA closing package. Management’s View: The Department agrees with the finding. Corrective Action: Since the implementation of LUMA, the department has been cognizant of the systematic challenges and risks and is acutely attentive to monitoring and review efforts. For example, due to LUMA, finance now has a new chart of accounts structure, meaning previously used reports for compilation of the SEFA are no longer a concern. The department held a required training on March 12-13, 2024, for all employees involved with grant administration where the determination of contractor vs. subrecipient, as well as proper account coding, were reiterated. Finance has efforts underway to strengthen compliance through report building and monthly monitoring of proper coding. The department will be moving forward with the implementation of Grant Management Software in SFY25, which finance believes will provide further assurances of data accuracy. Finance will confirm all expenditures and adjustments are completed before running reports when preparing the SFY24 and future SEFA’s. This confirmation will be documented via an email to the Financial Manager of the Budget section. The email response will be retained with the SEFA preparation file for audit purposes. Auditor’s Concluding Remarks: We thank the Department for its cooperation and assistance throughout the audit.
FINDING 2023-208 The Schedule of Expenditures of Federal Awards (SEFA) closing package originally submitted to the Office of the State Controller (Office) included multiple errors. Related to Prior Finding: 2022-211; 2021-206 Type of Finding: Significant Deficiency, SEFA Misstatement Assistance Listing Title: Supplemental Nutrition Assistance Program; Coronavirus State and Local Fiscal Recovery Funds; Guardianship Assistance; Temporary Assistance for Needy Families; Child Support Enforcement; Child Care and Development Block Grant; Foster Care Title IV-E; Adoption Assistance; Child Care and Development Block Grant (CCDF); Social Services Block Grant; Children's Health Insurance Program; Medical Assistance Program; Money Follows the Person Rebalancing Demonstration; Block Grants for Community Mental Health Services Assistance Listing Number: 10.561; 21.027; 93.090; 93.558; 93.563; 93.575; 93.658; 93.659; 93.667; 93.767; 93.778; 93.791; 93.958 Federal Award Number: Various Program Year: Various Federal Agency: Various Compliance Requirement: U.S. Code of Federal Regulations Questioned Costs: None Criteria: The Internal Control Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) provides a basis for organizations to design internal control procedures to ensure reliable financial reporting, effective and efficient operations, and compliance with applicable laws and regulations. Components of this framework include risk assessment, control activities, and information and communication. Risk assessment is the identification and analysis of various risks entities face because of changing economic, industry, regulatory, and operating conditions, and provides a basis to develop appropriate responses to manage those risks. Control activities are policies and procedures that help ensure management directives are carried out and risks are mitigated. Verifications, approvals, reconciliations, authorizations, and segregation of duties are all control activities that support this objective. Information and communication relate to obtaining quality information and effective internal and external communication of that information to achieve management objectives. Management objectives should include the preparation and fair presentation of the SEFA in relation to the basic financial statements as a whole and in compliance with requirements contained in the U.S. Code of Federal Regulations (CFR), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) (2 CFR §200.510(b)), which states it must include: • Total federal awards expended as determined in accordance with 2 CFR §200.502, and • Total amount provided to subrecipients from each federal program in accordance with 2 CFR 200.510(b)(4) The requirements included in 2 CFR 200.303 require that a nonfederal entity receiving federal awards establish and maintain internal controls that provide reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions in the federal award. The Office requires agencies to complete the SEFA closing package and uses this information to compile the statewide SEFA. Condition: The Department submitted multiple revisions of the fiscal year 2023 SEFA closing package to correct errors identified by the auditors and communicated to management during the audit process. The original submission included misstatements for the following programs: • Overstatement of $144,460 for the Supplemental Nutrition Assistance Program (Assistance Listing (AL) number 10.561) • Overstatement of $933 for the Guardianship Assistance program (AL 93.090) • Understatement of $1,300,232 for the Temporary Assistance for Needy Families program (AL 93.558) • Understatement of $230,034 for the Child Support Enforcement program (AL 93.563) • Understatement of $42,349 for the Foster Care Title IV-E program (AL 93.658) • Overstatement of $16,112 for the Adoption Assistance program (AL 93.659) • Overstatement of $1,036,549 for the Social Services Block Grant program (AL 93.667) • Overstatement of $3,469,677 for the Children's Health Insurance Program (AL 93.767) • Understatement of $25,108,923 for the Medical Assistance program (AL 93.778) • Understatement of $48,071 for the Money Follows the Person Rebalancing Demonstration program (AL 93.791) • Understatement of $676,806 for the Block Grants for Community Mental Health Services program (AL 93.958) • Understatement of $21,358,086 for the Coronavirus State and Local Fiscal Recovery Funds program (AL 21.027) In addition, expenditures to subrecipients were misstated for the following programs: • Overstatement of $86,608,290 for the Child Care and Development Block Grant program (AL 93.575) • Understatement of $18,959,072 for the Coronavirus State and Local Fiscal Recovery Funds program (AL 21.027) Cause: The Department has a review process in place for closing packages that is intended to detect and correct errors. However, the review of the fiscal year 2023 SEFA closing package was not completed at a level of detail sufficient to properly identify and correct errors. This issue was also reported as finding 2022-211 in the Single Audit Report for fiscal year 2022. Other factors impacting the Department’s accurate completion of the fiscal year 2023 SEFA, such as working with the implementation of a new statewide accounting system, Luma, that resulted in issues reconciling grant reports and SEFA reports. The Department also used SEFA reports that had been run before the budget team had completed all necessary grant uploads, which resulted in excluded information from the SEFA. The reports used to prepare the SEFA closing package were pre-built to pull the data from only the cooperative welfare fund (0220). Historically, this approach was successful because all the Department’s federal funds were coded to the cooperative welfare fund. The Department did not consider the spending for the Coronavirus State and Local Fiscal Recovery Funds (AL 21.027) through the American Rescue Plan Act fund (0344) when preparing the SEFA closing package. This resulted in those expenditures being omitted from the original SEFA submitted. The spending for the Coronavirus State and Local Fiscal Recovery Funds (AL 21.027) was originally understated on the SEFA by $21,358,086. The SEFA was adjusted after inquiry during the audit process to include the American Rescue Plan Act fund (0344). The original amount reported was $2,856,346. The final amount reported was $24,214,432. In addition, $86,608,290 originally reported as expenditures to subrecipients for the Child Care and Development Block Grant program (AL 93.575) were payments to providers rather than subrecipients. The coding in the accounting system by the Department’s program staff lead to the erroneous inclusion of the funds in the subrecipient reporting on the SEFA. Effect: In the absence of the audit work completed and the resulting revised submission by the Department to the Office, the statewide SEFA would have included multiple misstatements. Recommendation: We recommend that the Department improve the process for gathering information to prepare the SEFA closing package, and to review it for accuracy, to include training and specific procedures at a level of detail sufficient to detect and correct errors in the SEFA closing package. Management’s View: The Department agrees with the finding. Corrective Action: Since the implementation of LUMA, the department has been cognizant of the systematic challenges and risks and is acutely attentive to monitoring and review efforts. For example, due to LUMA, finance now has a new chart of accounts structure, meaning previously used reports for compilation of the SEFA are no longer a concern. The department held a required training on March 12-13, 2024, for all employees involved with grant administration where the determination of contractor vs. subrecipient, as well as proper account coding, were reiterated. Finance has efforts underway to strengthen compliance through report building and monthly monitoring of proper coding. The department will be moving forward with the implementation of Grant Management Software in SFY25, which finance believes will provide further assurances of data accuracy. Finance will confirm all expenditures and adjustments are completed before running reports when preparing the SFY24 and future SEFA’s. This confirmation will be documented via an email to the Financial Manager of the Budget section. The email response will be retained with the SEFA preparation file for audit purposes. Auditor’s Concluding Remarks: We thank the Department for its cooperation and assistance throughout the audit.
FINDING 2023-208 The Schedule of Expenditures of Federal Awards (SEFA) closing package originally submitted to the Office of the State Controller (Office) included multiple errors. Related to Prior Finding: 2022-211; 2021-206 Type of Finding: Significant Deficiency, SEFA Misstatement Assistance Listing Title: Supplemental Nutrition Assistance Program; Coronavirus State and Local Fiscal Recovery Funds; Guardianship Assistance; Temporary Assistance for Needy Families; Child Support Enforcement; Child Care and Development Block Grant; Foster Care Title IV-E; Adoption Assistance; Child Care and Development Block Grant (CCDF); Social Services Block Grant; Children's Health Insurance Program; Medical Assistance Program; Money Follows the Person Rebalancing Demonstration; Block Grants for Community Mental Health Services Assistance Listing Number: 10.561; 21.027; 93.090; 93.558; 93.563; 93.575; 93.658; 93.659; 93.667; 93.767; 93.778; 93.791; 93.958 Federal Award Number: Various Program Year: Various Federal Agency: Various Compliance Requirement: U.S. Code of Federal Regulations Questioned Costs: None Criteria: The Internal Control Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) provides a basis for organizations to design internal control procedures to ensure reliable financial reporting, effective and efficient operations, and compliance with applicable laws and regulations. Components of this framework include risk assessment, control activities, and information and communication. Risk assessment is the identification and analysis of various risks entities face because of changing economic, industry, regulatory, and operating conditions, and provides a basis to develop appropriate responses to manage those risks. Control activities are policies and procedures that help ensure management directives are carried out and risks are mitigated. Verifications, approvals, reconciliations, authorizations, and segregation of duties are all control activities that support this objective. Information and communication relate to obtaining quality information and effective internal and external communication of that information to achieve management objectives. Management objectives should include the preparation and fair presentation of the SEFA in relation to the basic financial statements as a whole and in compliance with requirements contained in the U.S. Code of Federal Regulations (CFR), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) (2 CFR §200.510(b)), which states it must include: • Total federal awards expended as determined in accordance with 2 CFR §200.502, and • Total amount provided to subrecipients from each federal program in accordance with 2 CFR 200.510(b)(4) The requirements included in 2 CFR 200.303 require that a nonfederal entity receiving federal awards establish and maintain internal controls that provide reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions in the federal award. The Office requires agencies to complete the SEFA closing package and uses this information to compile the statewide SEFA. Condition: The Department submitted multiple revisions of the fiscal year 2023 SEFA closing package to correct errors identified by the auditors and communicated to management during the audit process. The original submission included misstatements for the following programs: • Overstatement of $144,460 for the Supplemental Nutrition Assistance Program (Assistance Listing (AL) number 10.561) • Overstatement of $933 for the Guardianship Assistance program (AL 93.090) • Understatement of $1,300,232 for the Temporary Assistance for Needy Families program (AL 93.558) • Understatement of $230,034 for the Child Support Enforcement program (AL 93.563) • Understatement of $42,349 for the Foster Care Title IV-E program (AL 93.658) • Overstatement of $16,112 for the Adoption Assistance program (AL 93.659) • Overstatement of $1,036,549 for the Social Services Block Grant program (AL 93.667) • Overstatement of $3,469,677 for the Children's Health Insurance Program (AL 93.767) • Understatement of $25,108,923 for the Medical Assistance program (AL 93.778) • Understatement of $48,071 for the Money Follows the Person Rebalancing Demonstration program (AL 93.791) • Understatement of $676,806 for the Block Grants for Community Mental Health Services program (AL 93.958) • Understatement of $21,358,086 for the Coronavirus State and Local Fiscal Recovery Funds program (AL 21.027) In addition, expenditures to subrecipients were misstated for the following programs: • Overstatement of $86,608,290 for the Child Care and Development Block Grant program (AL 93.575) • Understatement of $18,959,072 for the Coronavirus State and Local Fiscal Recovery Funds program (AL 21.027) Cause: The Department has a review process in place for closing packages that is intended to detect and correct errors. However, the review of the fiscal year 2023 SEFA closing package was not completed at a level of detail sufficient to properly identify and correct errors. This issue was also reported as finding 2022-211 in the Single Audit Report for fiscal year 2022. Other factors impacting the Department’s accurate completion of the fiscal year 2023 SEFA, such as working with the implementation of a new statewide accounting system, Luma, that resulted in issues reconciling grant reports and SEFA reports. The Department also used SEFA reports that had been run before the budget team had completed all necessary grant uploads, which resulted in excluded information from the SEFA. The reports used to prepare the SEFA closing package were pre-built to pull the data from only the cooperative welfare fund (0220). Historically, this approach was successful because all the Department’s federal funds were coded to the cooperative welfare fund. The Department did not consider the spending for the Coronavirus State and Local Fiscal Recovery Funds (AL 21.027) through the American Rescue Plan Act fund (0344) when preparing the SEFA closing package. This resulted in those expenditures being omitted from the original SEFA submitted. The spending for the Coronavirus State and Local Fiscal Recovery Funds (AL 21.027) was originally understated on the SEFA by $21,358,086. The SEFA was adjusted after inquiry during the audit process to include the American Rescue Plan Act fund (0344). The original amount reported was $2,856,346. The final amount reported was $24,214,432. In addition, $86,608,290 originally reported as expenditures to subrecipients for the Child Care and Development Block Grant program (AL 93.575) were payments to providers rather than subrecipients. The coding in the accounting system by the Department’s program staff lead to the erroneous inclusion of the funds in the subrecipient reporting on the SEFA. Effect: In the absence of the audit work completed and the resulting revised submission by the Department to the Office, the statewide SEFA would have included multiple misstatements. Recommendation: We recommend that the Department improve the process for gathering information to prepare the SEFA closing package, and to review it for accuracy, to include training and specific procedures at a level of detail sufficient to detect and correct errors in the SEFA closing package. Management’s View: The Department agrees with the finding. Corrective Action: Since the implementation of LUMA, the department has been cognizant of the systematic challenges and risks and is acutely attentive to monitoring and review efforts. For example, due to LUMA, finance now has a new chart of accounts structure, meaning previously used reports for compilation of the SEFA are no longer a concern. The department held a required training on March 12-13, 2024, for all employees involved with grant administration where the determination of contractor vs. subrecipient, as well as proper account coding, were reiterated. Finance has efforts underway to strengthen compliance through report building and monthly monitoring of proper coding. The department will be moving forward with the implementation of Grant Management Software in SFY25, which finance believes will provide further assurances of data accuracy. Finance will confirm all expenditures and adjustments are completed before running reports when preparing the SFY24 and future SEFA’s. This confirmation will be documented via an email to the Financial Manager of the Budget section. The email response will be retained with the SEFA preparation file for audit purposes. Auditor’s Concluding Remarks: We thank the Department for its cooperation and assistance throughout the audit.
--Type of Finding: Material weakness in internal control over compliance --Federal Program: All federal programs --Questioned Costs: None --Criteria: Title 2, CFR Part 200, Subpart F, § 200.510(b) requires the auditee to prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the auditee's financial statements, which must include the total federal awards expended as determined in accordance with § 200.502. --Condition: While performing audit procedures on the schedule of expenditures of federal awards (SEFA), we identified federal awards that the organization did not identify for inclusion in the SEFA. The SEFA was materially misstated due to the exclusion of two federal awards with expenditures totaling $169,960 during the year, and discrepancies in relevant information expenditure amounts listed for certain other federal awards totaling $92,083. --Cause: There is a deficiency in the design and implementation of internal controls in place to identify federal awards and expenditures for inclusion on the SEFA, and to properly review the SEFA. --Effect: Failure to accurately identify federal awards could cause the SEFA to be materially misstated and the performance of an insufficient major federal award programs audit. --Recommendation: To ensure an accurate and complete presentation of the SEFA, we recommend management develop a system whereby all federal assistance is identified at both the program level and in the accounting department. We recommend identifying whether grants or other forms of assistance include federal funding at the time grants are signed or received. We further recommend that one individual be made responsible for tracking this information and that the information be provided to and reviewed by an individual in the accounting department on an ongoing basis. --Views of Responsible Officials: Management agrees with auditor’s finding. See attached corrective action plan.
--Type of Finding: Material weakness in internal control over compliance --Federal Program: All federal programs --Questioned Costs: None --Criteria: Title 2, CFR Part 200, Subpart F, § 200.510(b) requires the auditee to prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the auditee's financial statements, which must include the total federal awards expended as determined in accordance with § 200.502. --Condition: While performing audit procedures on the schedule of expenditures of federal awards (SEFA), we identified federal awards that the organization did not identify for inclusion in the SEFA. The SEFA was materially misstated due to the exclusion of two federal awards with expenditures totaling $169,960 during the year, and discrepancies in relevant information expenditure amounts listed for certain other federal awards totaling $92,083. --Cause: There is a deficiency in the design and implementation of internal controls in place to identify federal awards and expenditures for inclusion on the SEFA, and to properly review the SEFA. --Effect: Failure to accurately identify federal awards could cause the SEFA to be materially misstated and the performance of an insufficient major federal award programs audit. --Recommendation: To ensure an accurate and complete presentation of the SEFA, we recommend management develop a system whereby all federal assistance is identified at both the program level and in the accounting department. We recommend identifying whether grants or other forms of assistance include federal funding at the time grants are signed or received. We further recommend that one individual be made responsible for tracking this information and that the information be provided to and reviewed by an individual in the accounting department on an ongoing basis. --Views of Responsible Officials: Management agrees with auditor’s finding. See attached corrective action plan.
--Type of Finding: Material weakness in internal control over compliance --Federal Program: All federal programs --Questioned Costs: None --Criteria: Title 2, CFR Part 200, Subpart F, § 200.510(b) requires the auditee to prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the auditee's financial statements, which must include the total federal awards expended as determined in accordance with § 200.502. --Condition: While performing audit procedures on the schedule of expenditures of federal awards (SEFA), we identified federal awards that the organization did not identify for inclusion in the SEFA. The SEFA was materially misstated due to the exclusion of two federal awards with expenditures totaling $169,960 during the year, and discrepancies in relevant information expenditure amounts listed for certain other federal awards totaling $92,083. --Cause: There is a deficiency in the design and implementation of internal controls in place to identify federal awards and expenditures for inclusion on the SEFA, and to properly review the SEFA. --Effect: Failure to accurately identify federal awards could cause the SEFA to be materially misstated and the performance of an insufficient major federal award programs audit. --Recommendation: To ensure an accurate and complete presentation of the SEFA, we recommend management develop a system whereby all federal assistance is identified at both the program level and in the accounting department. We recommend identifying whether grants or other forms of assistance include federal funding at the time grants are signed or received. We further recommend that one individual be made responsible for tracking this information and that the information be provided to and reviewed by an individual in the accounting department on an ongoing basis. --Views of Responsible Officials: Management agrees with auditor’s finding. See attached corrective action plan.
--Type of Finding: Material weakness in internal control over compliance --Federal Program: All federal programs --Questioned Costs: None --Criteria: Title 2, CFR Part 200, Subpart F, § 200.510(b) requires the auditee to prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the auditee's financial statements, which must include the total federal awards expended as determined in accordance with § 200.502. --Condition: While performing audit procedures on the schedule of expenditures of federal awards (SEFA), we identified federal awards that the organization did not identify for inclusion in the SEFA. The SEFA was materially misstated due to the exclusion of two federal awards with expenditures totaling $169,960 during the year, and discrepancies in relevant information expenditure amounts listed for certain other federal awards totaling $92,083. --Cause: There is a deficiency in the design and implementation of internal controls in place to identify federal awards and expenditures for inclusion on the SEFA, and to properly review the SEFA. --Effect: Failure to accurately identify federal awards could cause the SEFA to be materially misstated and the performance of an insufficient major federal award programs audit. --Recommendation: To ensure an accurate and complete presentation of the SEFA, we recommend management develop a system whereby all federal assistance is identified at both the program level and in the accounting department. We recommend identifying whether grants or other forms of assistance include federal funding at the time grants are signed or received. We further recommend that one individual be made responsible for tracking this information and that the information be provided to and reviewed by an individual in the accounting department on an ongoing basis. --Views of Responsible Officials: Management agrees with auditor’s finding. See attached corrective action plan.
--Type of Finding: Material weakness in internal control over compliance --Federal Program: All federal programs --Questioned Costs: None --Criteria: Title 2, CFR Part 200, Subpart F, § 200.510(b) requires the auditee to prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the auditee's financial statements, which must include the total federal awards expended as determined in accordance with § 200.502. --Condition: While performing audit procedures on the schedule of expenditures of federal awards (SEFA), we identified federal awards that the organization did not identify for inclusion in the SEFA. The SEFA was materially misstated due to the exclusion of two federal awards with expenditures totaling $169,960 during the year, and discrepancies in relevant information expenditure amounts listed for certain other federal awards totaling $92,083. --Cause: There is a deficiency in the design and implementation of internal controls in place to identify federal awards and expenditures for inclusion on the SEFA, and to properly review the SEFA. --Effect: Failure to accurately identify federal awards could cause the SEFA to be materially misstated and the performance of an insufficient major federal award programs audit. --Recommendation: To ensure an accurate and complete presentation of the SEFA, we recommend management develop a system whereby all federal assistance is identified at both the program level and in the accounting department. We recommend identifying whether grants or other forms of assistance include federal funding at the time grants are signed or received. We further recommend that one individual be made responsible for tracking this information and that the information be provided to and reviewed by an individual in the accounting department on an ongoing basis. --Views of Responsible Officials: Management agrees with auditor’s finding. See attached corrective action plan.
--Type of Finding: Material weakness in internal control over compliance --Federal Program: All federal programs --Questioned Costs: None --Criteria: Title 2, CFR Part 200, Subpart F, § 200.510(b) requires the auditee to prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the auditee's financial statements, which must include the total federal awards expended as determined in accordance with § 200.502. --Condition: While performing audit procedures on the schedule of expenditures of federal awards (SEFA), we identified federal awards that the organization did not identify for inclusion in the SEFA. The SEFA was materially misstated due to the exclusion of two federal awards with expenditures totaling $169,960 during the year, and discrepancies in relevant information expenditure amounts listed for certain other federal awards totaling $92,083. --Cause: There is a deficiency in the design and implementation of internal controls in place to identify federal awards and expenditures for inclusion on the SEFA, and to properly review the SEFA. --Effect: Failure to accurately identify federal awards could cause the SEFA to be materially misstated and the performance of an insufficient major federal award programs audit. --Recommendation: To ensure an accurate and complete presentation of the SEFA, we recommend management develop a system whereby all federal assistance is identified at both the program level and in the accounting department. We recommend identifying whether grants or other forms of assistance include federal funding at the time grants are signed or received. We further recommend that one individual be made responsible for tracking this information and that the information be provided to and reviewed by an individual in the accounting department on an ongoing basis. --Views of Responsible Officials: Management agrees with auditor’s finding. See attached corrective action plan.
--Type of Finding: Material weakness in internal control over compliance --Federal Program: All federal programs --Questioned Costs: None --Criteria: Title 2, CFR Part 200, Subpart F, § 200.510(b) requires the auditee to prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the auditee's financial statements, which must include the total federal awards expended as determined in accordance with § 200.502. --Condition: While performing audit procedures on the schedule of expenditures of federal awards (SEFA), we identified federal awards that the organization did not identify for inclusion in the SEFA. The SEFA was materially misstated due to the exclusion of two federal awards with expenditures totaling $169,960 during the year, and discrepancies in relevant information expenditure amounts listed for certain other federal awards totaling $92,083. --Cause: There is a deficiency in the design and implementation of internal controls in place to identify federal awards and expenditures for inclusion on the SEFA, and to properly review the SEFA. --Effect: Failure to accurately identify federal awards could cause the SEFA to be materially misstated and the performance of an insufficient major federal award programs audit. --Recommendation: To ensure an accurate and complete presentation of the SEFA, we recommend management develop a system whereby all federal assistance is identified at both the program level and in the accounting department. We recommend identifying whether grants or other forms of assistance include federal funding at the time grants are signed or received. We further recommend that one individual be made responsible for tracking this information and that the information be provided to and reviewed by an individual in the accounting department on an ongoing basis. --Views of Responsible Officials: Management agrees with auditor’s finding. See attached corrective action plan.
--Type of Finding: Material weakness in internal control over compliance --Federal Program: All federal programs --Questioned Costs: None --Criteria: Title 2, CFR Part 200, Subpart F, § 200.510(b) requires the auditee to prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the auditee's financial statements, which must include the total federal awards expended as determined in accordance with § 200.502. --Condition: While performing audit procedures on the schedule of expenditures of federal awards (SEFA), we identified federal awards that the organization did not identify for inclusion in the SEFA. The SEFA was materially misstated due to the exclusion of two federal awards with expenditures totaling $169,960 during the year, and discrepancies in relevant information expenditure amounts listed for certain other federal awards totaling $92,083. --Cause: There is a deficiency in the design and implementation of internal controls in place to identify federal awards and expenditures for inclusion on the SEFA, and to properly review the SEFA. --Effect: Failure to accurately identify federal awards could cause the SEFA to be materially misstated and the performance of an insufficient major federal award programs audit. --Recommendation: To ensure an accurate and complete presentation of the SEFA, we recommend management develop a system whereby all federal assistance is identified at both the program level and in the accounting department. We recommend identifying whether grants or other forms of assistance include federal funding at the time grants are signed or received. We further recommend that one individual be made responsible for tracking this information and that the information be provided to and reviewed by an individual in the accounting department on an ongoing basis. --Views of Responsible Officials: Management agrees with auditor’s finding. See attached corrective action plan.
--Type of Finding: Material weakness in internal control over compliance --Federal Program: All federal programs --Questioned Costs: None --Criteria: Title 2, CFR Part 200, Subpart F, § 200.510(b) requires the auditee to prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the auditee's financial statements, which must include the total federal awards expended as determined in accordance with § 200.502. --Condition: While performing audit procedures on the schedule of expenditures of federal awards (SEFA), we identified federal awards that the organization did not identify for inclusion in the SEFA. The SEFA was materially misstated due to the exclusion of two federal awards with expenditures totaling $169,960 during the year, and discrepancies in relevant information expenditure amounts listed for certain other federal awards totaling $92,083. --Cause: There is a deficiency in the design and implementation of internal controls in place to identify federal awards and expenditures for inclusion on the SEFA, and to properly review the SEFA. --Effect: Failure to accurately identify federal awards could cause the SEFA to be materially misstated and the performance of an insufficient major federal award programs audit. --Recommendation: To ensure an accurate and complete presentation of the SEFA, we recommend management develop a system whereby all federal assistance is identified at both the program level and in the accounting department. We recommend identifying whether grants or other forms of assistance include federal funding at the time grants are signed or received. We further recommend that one individual be made responsible for tracking this information and that the information be provided to and reviewed by an individual in the accounting department on an ongoing basis. --Views of Responsible Officials: Management agrees with auditor’s finding. See attached corrective action plan.
--Type of Finding: Material weakness in internal control over compliance --Federal Program: All federal programs --Questioned Costs: None --Criteria: Title 2, CFR Part 200, Subpart F, § 200.510(b) requires the auditee to prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the auditee's financial statements, which must include the total federal awards expended as determined in accordance with § 200.502. --Condition: While performing audit procedures on the schedule of expenditures of federal awards (SEFA), we identified federal awards that the organization did not identify for inclusion in the SEFA. The SEFA was materially misstated due to the exclusion of two federal awards with expenditures totaling $169,960 during the year, and discrepancies in relevant information expenditure amounts listed for certain other federal awards totaling $92,083. --Cause: There is a deficiency in the design and implementation of internal controls in place to identify federal awards and expenditures for inclusion on the SEFA, and to properly review the SEFA. --Effect: Failure to accurately identify federal awards could cause the SEFA to be materially misstated and the performance of an insufficient major federal award programs audit. --Recommendation: To ensure an accurate and complete presentation of the SEFA, we recommend management develop a system whereby all federal assistance is identified at both the program level and in the accounting department. We recommend identifying whether grants or other forms of assistance include federal funding at the time grants are signed or received. We further recommend that one individual be made responsible for tracking this information and that the information be provided to and reviewed by an individual in the accounting department on an ongoing basis. --Views of Responsible Officials: Management agrees with auditor’s finding. See attached corrective action plan.
--Type of Finding: Material weakness in internal control over compliance --Federal Program: All federal programs --Questioned Costs: None --Criteria: Title 2, CFR Part 200, Subpart F, § 200.510(b) requires the auditee to prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the auditee's financial statements, which must include the total federal awards expended as determined in accordance with § 200.502. --Condition: While performing audit procedures on the schedule of expenditures of federal awards (SEFA), we identified federal awards that the organization did not identify for inclusion in the SEFA. The SEFA was materially misstated due to the exclusion of two federal awards with expenditures totaling $169,960 during the year, and discrepancies in relevant information expenditure amounts listed for certain other federal awards totaling $92,083. --Cause: There is a deficiency in the design and implementation of internal controls in place to identify federal awards and expenditures for inclusion on the SEFA, and to properly review the SEFA. --Effect: Failure to accurately identify federal awards could cause the SEFA to be materially misstated and the performance of an insufficient major federal award programs audit. --Recommendation: To ensure an accurate and complete presentation of the SEFA, we recommend management develop a system whereby all federal assistance is identified at both the program level and in the accounting department. We recommend identifying whether grants or other forms of assistance include federal funding at the time grants are signed or received. We further recommend that one individual be made responsible for tracking this information and that the information be provided to and reviewed by an individual in the accounting department on an ongoing basis. --Views of Responsible Officials: Management agrees with auditor’s finding. See attached corrective action plan.
--Type of Finding: Material weakness in internal control over compliance --Federal Program: All federal programs --Questioned Costs: None --Criteria: Title 2, CFR Part 200, Subpart F, § 200.510(b) requires the auditee to prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the auditee's financial statements, which must include the total federal awards expended as determined in accordance with § 200.502. --Condition: While performing audit procedures on the schedule of expenditures of federal awards (SEFA), we identified federal awards that the organization did not identify for inclusion in the SEFA. The SEFA was materially misstated due to the exclusion of two federal awards with expenditures totaling $169,960 during the year, and discrepancies in relevant information expenditure amounts listed for certain other federal awards totaling $92,083. --Cause: There is a deficiency in the design and implementation of internal controls in place to identify federal awards and expenditures for inclusion on the SEFA, and to properly review the SEFA. --Effect: Failure to accurately identify federal awards could cause the SEFA to be materially misstated and the performance of an insufficient major federal award programs audit. --Recommendation: To ensure an accurate and complete presentation of the SEFA, we recommend management develop a system whereby all federal assistance is identified at both the program level and in the accounting department. We recommend identifying whether grants or other forms of assistance include federal funding at the time grants are signed or received. We further recommend that one individual be made responsible for tracking this information and that the information be provided to and reviewed by an individual in the accounting department on an ongoing basis. --Views of Responsible Officials: Management agrees with auditor’s finding. See attached corrective action plan.
--Type of Finding: Material weakness in internal control over compliance --Federal Program: All federal programs --Questioned Costs: None --Criteria: Title 2, CFR Part 200, Subpart F, § 200.510(b) requires the auditee to prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the auditee's financial statements, which must include the total federal awards expended as determined in accordance with § 200.502. --Condition: While performing audit procedures on the schedule of expenditures of federal awards (SEFA), we identified federal awards that the organization did not identify for inclusion in the SEFA. The SEFA was materially misstated due to the exclusion of two federal awards with expenditures totaling $169,960 during the year, and discrepancies in relevant information expenditure amounts listed for certain other federal awards totaling $92,083. --Cause: There is a deficiency in the design and implementation of internal controls in place to identify federal awards and expenditures for inclusion on the SEFA, and to properly review the SEFA. --Effect: Failure to accurately identify federal awards could cause the SEFA to be materially misstated and the performance of an insufficient major federal award programs audit. --Recommendation: To ensure an accurate and complete presentation of the SEFA, we recommend management develop a system whereby all federal assistance is identified at both the program level and in the accounting department. We recommend identifying whether grants or other forms of assistance include federal funding at the time grants are signed or received. We further recommend that one individual be made responsible for tracking this information and that the information be provided to and reviewed by an individual in the accounting department on an ongoing basis. --Views of Responsible Officials: Management agrees with auditor’s finding. See attached corrective action plan.
--Type of Finding: Material weakness in internal control over compliance --Federal Program: All federal programs --Questioned Costs: None --Criteria: Title 2, CFR Part 200, Subpart F, § 200.510(b) requires the auditee to prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the auditee's financial statements, which must include the total federal awards expended as determined in accordance with § 200.502. --Condition: While performing audit procedures on the schedule of expenditures of federal awards (SEFA), we identified federal awards that the organization did not identify for inclusion in the SEFA. The SEFA was materially misstated due to the exclusion of two federal awards with expenditures totaling $169,960 during the year, and discrepancies in relevant information expenditure amounts listed for certain other federal awards totaling $92,083. --Cause: There is a deficiency in the design and implementation of internal controls in place to identify federal awards and expenditures for inclusion on the SEFA, and to properly review the SEFA. --Effect: Failure to accurately identify federal awards could cause the SEFA to be materially misstated and the performance of an insufficient major federal award programs audit. --Recommendation: To ensure an accurate and complete presentation of the SEFA, we recommend management develop a system whereby all federal assistance is identified at both the program level and in the accounting department. We recommend identifying whether grants or other forms of assistance include federal funding at the time grants are signed or received. We further recommend that one individual be made responsible for tracking this information and that the information be provided to and reviewed by an individual in the accounting department on an ongoing basis. --Views of Responsible Officials: Management agrees with auditor’s finding. See attached corrective action plan.
--Type of Finding: Material weakness in internal control over compliance --Federal Program: All federal programs --Questioned Costs: None --Criteria: Title 2, CFR Part 200, Subpart F, § 200.510(b) requires the auditee to prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the auditee's financial statements, which must include the total federal awards expended as determined in accordance with § 200.502. --Condition: While performing audit procedures on the schedule of expenditures of federal awards (SEFA), we identified federal awards that the organization did not identify for inclusion in the SEFA. The SEFA was materially misstated due to the exclusion of two federal awards with expenditures totaling $169,960 during the year, and discrepancies in relevant information expenditure amounts listed for certain other federal awards totaling $92,083. --Cause: There is a deficiency in the design and implementation of internal controls in place to identify federal awards and expenditures for inclusion on the SEFA, and to properly review the SEFA. --Effect: Failure to accurately identify federal awards could cause the SEFA to be materially misstated and the performance of an insufficient major federal award programs audit. --Recommendation: To ensure an accurate and complete presentation of the SEFA, we recommend management develop a system whereby all federal assistance is identified at both the program level and in the accounting department. We recommend identifying whether grants or other forms of assistance include federal funding at the time grants are signed or received. We further recommend that one individual be made responsible for tracking this information and that the information be provided to and reviewed by an individual in the accounting department on an ongoing basis. --Views of Responsible Officials: Management agrees with auditor’s finding. See attached corrective action plan.
--Type of Finding: Material weakness in internal control over compliance --Federal Program: All federal programs --Questioned Costs: None --Criteria: Title 2, CFR Part 200, Subpart F, § 200.510(b) requires the auditee to prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the auditee's financial statements, which must include the total federal awards expended as determined in accordance with § 200.502. --Condition: While performing audit procedures on the schedule of expenditures of federal awards (SEFA), we identified federal awards that the organization did not identify for inclusion in the SEFA. The SEFA was materially misstated due to the exclusion of two federal awards with expenditures totaling $169,960 during the year, and discrepancies in relevant information expenditure amounts listed for certain other federal awards totaling $92,083. --Cause: There is a deficiency in the design and implementation of internal controls in place to identify federal awards and expenditures for inclusion on the SEFA, and to properly review the SEFA. --Effect: Failure to accurately identify federal awards could cause the SEFA to be materially misstated and the performance of an insufficient major federal award programs audit. --Recommendation: To ensure an accurate and complete presentation of the SEFA, we recommend management develop a system whereby all federal assistance is identified at both the program level and in the accounting department. We recommend identifying whether grants or other forms of assistance include federal funding at the time grants are signed or received. We further recommend that one individual be made responsible for tracking this information and that the information be provided to and reviewed by an individual in the accounting department on an ongoing basis. --Views of Responsible Officials: Management agrees with auditor’s finding. See attached corrective action plan.
--Type of Finding: Material weakness in internal control over compliance --Federal Program: All federal programs --Questioned Costs: None --Criteria: Title 2, CFR Part 200, Subpart F, § 200.510(b) requires the auditee to prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the auditee's financial statements, which must include the total federal awards expended as determined in accordance with § 200.502. --Condition: While performing audit procedures on the schedule of expenditures of federal awards (SEFA), we identified federal awards that the organization did not identify for inclusion in the SEFA. The SEFA was materially misstated due to the exclusion of two federal awards with expenditures totaling $169,960 during the year, and discrepancies in relevant information expenditure amounts listed for certain other federal awards totaling $92,083. --Cause: There is a deficiency in the design and implementation of internal controls in place to identify federal awards and expenditures for inclusion on the SEFA, and to properly review the SEFA. --Effect: Failure to accurately identify federal awards could cause the SEFA to be materially misstated and the performance of an insufficient major federal award programs audit. --Recommendation: To ensure an accurate and complete presentation of the SEFA, we recommend management develop a system whereby all federal assistance is identified at both the program level and in the accounting department. We recommend identifying whether grants or other forms of assistance include federal funding at the time grants are signed or received. We further recommend that one individual be made responsible for tracking this information and that the information be provided to and reviewed by an individual in the accounting department on an ongoing basis. --Views of Responsible Officials: Management agrees with auditor’s finding. See attached corrective action plan.
--Type of Finding: Material weakness in internal control over compliance --Federal Program: All federal programs --Questioned Costs: None --Criteria: Title 2, CFR Part 200, Subpart F, § 200.510(b) requires the auditee to prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the auditee's financial statements, which must include the total federal awards expended as determined in accordance with § 200.502. --Condition: While performing audit procedures on the schedule of expenditures of federal awards (SEFA), we identified federal awards that the organization did not identify for inclusion in the SEFA. The SEFA was materially misstated due to the exclusion of two federal awards with expenditures totaling $169,960 during the year, and discrepancies in relevant information expenditure amounts listed for certain other federal awards totaling $92,083. --Cause: There is a deficiency in the design and implementation of internal controls in place to identify federal awards and expenditures for inclusion on the SEFA, and to properly review the SEFA. --Effect: Failure to accurately identify federal awards could cause the SEFA to be materially misstated and the performance of an insufficient major federal award programs audit. --Recommendation: To ensure an accurate and complete presentation of the SEFA, we recommend management develop a system whereby all federal assistance is identified at both the program level and in the accounting department. We recommend identifying whether grants or other forms of assistance include federal funding at the time grants are signed or received. We further recommend that one individual be made responsible for tracking this information and that the information be provided to and reviewed by an individual in the accounting department on an ongoing basis. --Views of Responsible Officials: Management agrees with auditor’s finding. See attached corrective action plan.