Finding 2025-002: AL #84.063 Federal Pell Grant Program; AL #84.268 Federal Direct Student Loans Criteria: Auditors performing single audits in accordance with Subpart F of the Uniform Guidance must report known or likely fraud affecting a Federal award as an audit finding (2 C.F.R. §200.516). The disbursement of federal student financial aid funds should be made only to eligible students enrolled in eligible programs (34 CFR 668.32). Condition: During the Spring 2025 term, a third-party servicer notified the College that two students had requested that refunds be deposited into the same bank account. The students were contacted, and both responded in a timely manner to confirm their bank account information. However, upon further review by the College, it was noted that both students were enrolled in online learning programs and, although they had logged on and submitted coursework, the College found that the students' names matched those of individuals incarcerated out of state. Based on this information, the College requested the students submit Identity and Statement of Education Purpose forms to confirm the students' identities. When the students failed to provide the form, the Title IV aid and loans were prevented from being disbursed to the students. The College, of its own volition, then further extended its internal review and identified five additional students with similar circumstances in the Fall 2024 and Spring 2025 terms. As a result of the College's internal review, it was determined that these students were also ineligible for student financial aid. Cause: The College was the victim of fraud perpetrated by a third party. Effect: The College disbursed aid to five individuals enrolled in online learning programs who were not eligible for aid. Upon identification, the College reversed the aid on the students' accounts, returned aid totaling $13,200 for Fall 2024 and $16,936 for Spring 2025 to the federal government, and contacted the DOE's Office of Inspector General. Questioned Costs: $30,136 Auditors’ Recommendation: The College should continue to follow the enhanced procedures implemented by management after identification of the fraud. Views of Responsible Officials: The College has taken all appropriate action and this matter is reported pursuant to Uniform Guidance requiring auditors to report all known or likely fraud affecting a Federal award.
FINDING 2025-001: PELL GRANT AWARD Condition In three of the forty-eight student files tested for compliance with Federal Pell Grant Program requirements, we determined the Institution miscalculated the student’s Pell award in one or more payment periods. The students involved were #s 1, 11, and 36. To gain a more accurate projection of the likely questioned costs from this finding, we expanded our testing to include another twenty-five Pell recipients and identified one student who was awarded the incorrect amount. The student’s ID number is 93547. Criteria Pell Grant awards are based on a student’s Student Aid Index (SAI), the academic year structure of the student’s educational program, and the cost of attendance (COA) for a full-time student for a full academic year. For term-based programs, awards are also based on a student’s enrollment intensity (EI). If the student does not begin attendance in all classes for a payment period, resulting in a change in the student’s EI, a school must recalculate the student’s award for that payment period based on the lower EI. Cause The students were enrolled in term-based programs. They did not attend the same number of credits that they were originally scheduled to attend (and on which their Pell payments were based), and the Institution neglected to recalculate the Pell awards and make adjustments to the student accounts. The Institution was not consistently utilizing its third-party servicer’s reports that are designed to identify these discrepancies. Effect and Questioned Costs As outlined below, the students were not paid the proper amount of Pell. Subsequent to our testing, the Institution corrected the Pell awards for each of these students. Over (Under) Student # Disbursed Eligible Award Award Year 1 $1,652 $2,465 $(813) 2024/2025 11 $2,046 $2,465 $(419) 2024/2025 36 $2,465 $1,652 $813 2024/2025 93547 $2,046 $2,465 $(419) 2024/2025 Total Questioned Costs: $2,464 The Institution disbursed a total of $387,481 to the seventy-three students in our original and expanded samples for an overall error rate of 5.5%. When applying these results to the entire population of Pell Grant recipients, we determined it is likely that questioned costs would exceed the $25,000 threshold established in 2 CFR 200.516(a)(3). Recommendation The Institution should follow its established procedures more closely to ensure that, in the future, Pell Grant awards are calculated and disbursed in accordance with the federal regulations. Views of Responsible Officials The Institution concurs with this finding.
2025-001 Costs Incurred Beyond the Period of Performance Program Name/Assistance Listing Number: 93.788 Opioid STR Federal Agency: Department of Health and Human Services Type of Finding: Significant Deficiency Compliance Requirement: Period of Performance Criteria: According to 2 CFR §§200.1, 200.308, 200.309, 200.344, and 200.403(h), a non-Federal entity may only charge allowable costs incurred during the approved budget period of the Federal award’s period of performance, and any costs incurred before the Federal award was made that were authorized by the Federal awarding agency or pass-through entity. All financial obligations incurred under the Federal award must be liquidated within the required time period. Costs incurred outside the approved period of performance are unallowable and constitute questioned costs. Condition: During cash disbursement testing, it was identified that costs totaling $56,017.62 were incurred after the end of the period of performance (which ended on September 30, 2024; grant ID 2401119 SOR 3.0 – SOS). Although the expenditures were allowable in nature, they were outside the approved period and therefore did not comply with the grant terms. Cause of Condition: The expenditures were incurred after the period of performance, possibly due to timing of invoicing. There was insufficient monitoring or review to ensure that all expenses were properly charged within the approved period. Potential Effect of Condition: The following are the potential effect based on the findings noted above: a. Non-Compliance: The Organization is at risk of non-compliance with the funding agreement, which may lead to questioned costs or repayment obligations. b. Financial Oversight Risk: Continued occurrence may indicate a lack of internal controls ensuring compliance with grant period requirements. Questioned Cost: $56,017.62 Recommendation: We recommend the following: a. Implement a monitoring process to ensure that all costs are incurred within the approved period of performance. b. Document and maintain a checklist of allowable expenses by period to prevent future occurrences of similar issues. Description of the Nature and Extent of Issues Reported: All expenditures outside the period of performance were identified during testing. The total known questioned cost is $56,017.62, which exceeds the $25,000 threshold for reporting under 2 CFR §200.516(a)(3). Management Response: Management concurred with the finding. During the current fiscal year, the Organization has implemented additional controls to ensure that all grant funding is expended within the timeframe allotted
2025-002 SEFA Presentation Error – Prior Year Program Name/Assistance Listing Number: 93.788 Opioid STR Federal Agency: Department of Health and Human Services Type of Finding: Significant Deficiency Compliance Requirement: Reporting Criteria: Uniform Guidance (2 CFR §200.510(b)) requires that the Schedule of Expenditures of Federal Awards (SEFA) accurately present all federal awards, including the correct identifying numbers assigned by pass-through entities for each award. Accurate reporting is essential to ensure compliance with funding requirements and enable proper tracking and monitoring of federal awards. Condition: During the current year audit, it was noted that the prior year’s SEFA contained an underreporting of $206,206.41 related to Grant ID 2401119 – Think Act and Live 2.0. While the total expenditures under the correct Assistance Listing Number (ALN) were accurate, the amounts assigned to this specific Grant ID were misclassified or omitted. Cause of Condition: The error occurred due to insufficient review procedures over SEFA preparation, specifically related to the accuracy of pass-through identifying numbers and grant-level allocations. Potential Effect of Condition: Although the error did not impact major program determination or the prior year audit opinion, it led to an incomplete and inaccurate SEFA presentation, which could affect tracking and monitoring of specific awards. Questioned Cost: Not applicable – the expenditures were allowable but misclassified. Recommendation: We recommend that management strengthen SEFA preparation and review controls by the following: a. Performing a detailed verification of grant-specific information, including Grant IDs, pass through numbers, and related allocations. b. Implementing a formal review process to ensure accuracy and completeness of the SEFA prior to submission. Description of the Nature and Extent of Issues Reported: During the current year audit, all misclassified expenditures related to Grant ID 2401119 – Think Act and Live 2.0 in the prior year SEFA were identified. The total underreported amount is $206,206.41, which exceeds both the program-level materiality threshold of $91,000 (based on a 5% benchmark of total awards expended for the major program 93.788) and the $25,000 SEFA reporting threshold under 2 CFR §200.516(a)(3). Management Response: Management concurred with the finding. The Organization has implemented the necessary internal controls to ensure that the grant reporting accurately reflects the expenditures for each of the respective grants.
Criteria Per 7 CFR 225.15 (c)(1), “Sponsors shall maintain accurate records justifying all meals claimed and documenting that all program funds were spent only on allowable Child Nutrition Program costs. Failure to maintain such records may be grounds for denial of reimbursement for meals served and/or administrative costs claimed during the period covered by the records in question. The sponsor's records shall be available at all times for inspection and audit by representatives of the Secretary, the Comptroller General of the United States, and the State agency for a period of three years following the date of submission of the final claim for reimbursement for the fiscal year.” Per 7 CFR 226.10 (c), “Claims for Reimbursement shall report information in accordance with the financial management system established by the State agency, and in sufficient detail to justify the reimbursement claimed… In submitting a Claim for Reimbursement, each institution shall certify that the claim is correct and that records are available to support that claim.” Condition During the procedures performed over meals claimed under the School Breakfast Program in the fiscal year 2025, it was noted that monthly meal counts recorded in the District’s Cafeteria Management System (CMS) were not fully supported by underlying documentation (e.g., meal count sheets). We sampled a total 25 daily meal counts from the months of September 2024, November 2024, and February 2025. We then validated that the meal counts recorded in the CMS for Breakfast and Lunch were supported by either meal count sheets used at the school sites or by the point-of-sale (POS) system data. As a result of our testing, we noted variances in four (4) daily meal counts between the CMS count and the meal count sheets for Breakfast in Class. Breakfast counts were overclaimed by 111 based on a total sample of 3,793 meals tested from a total reported population of 12,688,107 meals. Our samples were statistically valid samples. Cause and Effect The condition is as a result of human error while manually counting the paper meal count sheets for Breakfast in Class. Inaccurate claims of meal counts could lead to questioned costs. Questioned Costs Federal regulation 2 CFR 200.516 (a)(3) requires the auditor to report questioned costs when likely questioned costs exceed $25,000. An overclaim of $315 was identified, resulting from overclaimed quantities of 111 breakfasts multiplied by the reimbursement rate of $2.84 under the School Breakfast Program – Severe Need. Recommendation We recommend the District continue to strengthen its controls over the meal claim process to ensure that meals are accurately counted, input into CMS, and claimed for reimbursement.
Criteria: According to 2 CFR part 200.516, the District is required to have internal controls in place to allow the District to properly monitor the ongoing activities relating to the receipt and expenditure of federal awards. Condition: It was noted for the 2024/2025 school year, the District had not set up monitoring controls over the handling of federal awards received and spent during the year that would be necessary to track and report multi-year grants. Cause: The District lacks controls over the reporting for federal awards and single audit requirements and is unaware of many requirements relating to coding and tracking of awards. Effect: Risk is present that non-allowable costs could end up being reported as allowable costs for grants and not be detected or reported correctly in the financial statements and schedule of expenditures of federal awards. Recommendation: We recommend that increased monitoring over federal awards funds be implemented and that federal expenses be more thoroughly tracked by those in charge of performing monitoring activities. We also recommend that the District use the project coding provided by the oversight agency to help with this tracking as expenses occur rather than recoding expenses at year end to match the agency reports. Management Response: The District has corrected the reporting error for ESSER fund expenditures and is increasing its monitoring responsibilities to meet the needs of federal programs in the future. The District will be developing controls over reporting of federal funds to ensure these funds reconcile to the general ledger going forward.
Assistance Listing Number(s): 21.027 Name of Federal Program or Cluster: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Name of Federal Agency: Department of the Treasury Name of Pass-Through Entity: Milwaukee County Department of Health and Human Services Criteria or Specific Requirement: Nonfederal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. Condition: The Agency did not document procurements consistent with the standards of 2 CFR sections 200.318, 200.319, and 200.320. Cause: The Agency did not establish written policies and procedures for procurement. Effect or Potential Effect: The cost of the procurements may be disallowed. Questioned Costs: $2,000,000 Context: The Agency contracted with multiple vendors in the course of constructing a building to be used for affordable housing. Funding from this project was derived from both federal and nonfederal sources. The questioned costs represent the amount charged to this program as the required Uniform Guidance procurement procedures were not applied. Under 2 CFR 200.516(a)(3), questioned costs are those greater than $25,000 for a type of compliance requirement for a major program. Repeat Finding: No Recommendation: The Agency should establish written policies and procedures for procurement required by 2 CFR sections 200.318 through 200.326. Views of Responsible Officials: Management has established written policies and procedures for procurement. Management confirmed policies and procedures were followed and monitored during the construction of the project with supporting documentation to meet procurement requirements, however written policies and procedures were completed after year-end.
Non‐Material Non‐Compliance Material Weakness, Eligibility Criteria: Individuals receiving assistance benefits must meet the eligibility requirements defined in the State Plan and specified in the Child Welfare Manual, Chapter XIII. Additionally, in accordance with 2 CFR 200.303, management is responsible for establishing and maintaining effective internal controls to ensure case records contain sufficient documentation to support eligibility determinations. Condition: The County Department of Social Services could not locate adequate documentation to support eligibility determinations for two adoption cases. We were not able to determine whether these recipients were eligible to receive the Title IV-E benefits. Context: We tested 50 beneficiaries, consisting of 27 adoption cases, 21 foster care cases, and 2 guardianship assistance cases. The above condition was noted in 2 of the 27 adoption cases tested, representing 4% of the overall sample. Effect: Failure to maintain complete and accurate documentation of eligibility determinations increases the risk that assistance payments may be made to individuals who are not eligible to receive benefits. This could result in questioned costs and repayment obligations. Cause: Caseworkers did not maintain complete and accurate eligibility documentation as required by the Child Welfare Manual and related State Plan guidance. Questioned Costs: Known questioned costs total $8,972, representing the combined federal and state share of benefits paid for the two cases in which eligibility could not be verified. Based on the County’s funding allocation, the estimated federal portion of the known questioned costs is approximately 81%, or $7,268. Using the results of our testing and extrapolation to the population, we estimate that likely questioned costs exceed $25,000, based on the same 81% federal share allocation. In accordance with 2 CFR 200.516(a)(3), auditors are required to report known questioned costs and likely questioned costs when they exceed $25,000. Recommendation: The County should strengthen internal controls to ensure all required eligibility documentation is complete, accurate, and consistently maintained in each case file. Supervisory review procedures should be enhanced to verify that eligibility determinations are properly supported. View of Responsible Officials and Planned Corrective Actions: Management’s response and corrective action plan are included in the Corrective Action Plan section of this report.
This section identifies the audit findings required to be reported by 2 CFR 200.516(a) (significant deficiencies, material weaknesses, material instances of noncompliance, including questioned costs and material abuse.) Finding 2025-001: Student Financial Assistance Cluster, Department of Education Programs Program Names: Federal Direct Student Loans Assistance Listing Numbers: 84.268 Criteria or Specific Requirement: 34 CFR section 685.309 states that once a change in student enrollment status has been received, the institution must update for changes in student status, report the date the enrollment status was effective, enter the new anticipated completion date, and submit the changes electronically through the batch method or the National Student Loan Data System (NSLDS) website. A student’s enrollment status determines eligibility for in-school status, deferment, and grace periods, as well as for the payment of interest subsidies to Federal Family Education Loan Program (FFEL) loan holders by the Department of Education (ED). Enrollment reporting in a timely and accurate manner is critical for effective management of the programs. Enrollment information must be reported within 30 days whenever attendance changes for students, unless a roster will be submitted within 60 days. These changes include reductions or increases in attendance levels, withdrawals, graduations, or approved leaves-of-absence. 34 CFR 668.32 requires that an organization report student status changes within 60 days of graduation, withdrawal, or other roster status changes. Condition: The College failed to report enrollment status changes to the NSLDS through the National Student Clearinghouse within the required timeframe as required under 34 CFR 668.32 for 3 of 60 students tested. Cause: The delay in the reporting of student enrollment changes was a failure in the College’s processes and controls surrounding review of exchange students’ and high school students’ reporting information. The College did not include all student enrollment changes in the clearinghouse timely. Effect or Potential Effect: A student’s enrollment status determines eligibility for in-school status, deferment and grace periods, as well as for the payment interest subsidies to FFEL Program loan holders by ED. Enrollment reporting in a timely and accurate manner is critical for effective management of the program. Changes in enrollment status were not submitted on time to the National Student Loan Data System as required under 34 CFR 668.32. This potentially caused a late conversion of student loans into repayment status. Questioned Costs: There are no questioned costs. Context: The sample selected for testing is representative of the population. Identification as a Repeat Finding, if applicable: This is not a repeat finding. Recommendation: We recommend the College implement a review over the exchange students’ and high school students’ enrollment change submission to the NSLDS. We also recommend that the College develop and document policies and procedures to ensure that all enrollment changes are reported accurately, completely and in a timely manner. Views of Responsible Officials and Planned Corrective Actions: Management concurs with this finding. See separate corrective action plan document.
Finding No. 2025-001 Federal Agency: U.S. Department of Health and Human Services and U.S. Department of Treasury Federal Program Name: Temporary Assistance for Needy Families, Substance Abuse and Mental Health Services Projects of Regional and National Significance, and COVID-19 Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 93.558, 93.243, and 21.027 Pass-Through Agency: Various. Refer to Schedule of Expenditures of Federal Awards Pass-Through Agency Identifying Numbers: Various. Refer to Schedule of Expenditures of Federal Awards Award Period: 2025 Type of Finding: • Significant Deficiency in Internal Control Over Compliance • Audit finding required to be reported in accordance with 2 CFR 200.516(a) Criteria: Proper documentation to ensure salaried employee time allocation is reviewed and approved must be obtained. Condition: The Organization’s internal control procedures around maintenance of documentation is not sufficient to ensure that costs submitted for reimbursement were properly approved. Questioned Costs: None. Context: A sample of 40 employees was selected for testing for each major program for a total of 120 selections. The Organization was unable to provide evidence of approval for 57 selections. Cause: Controls were not in place to ensure underlying support as required by the Federal Uniform Guidance was properly maintained. Effect: Without proper document retention of the approved salary employee time allocations, the Organization could submit unallowable costs for reimbursement. Repeat Finding: Finding does not represent a repeat finding. Recommendation: We recommend management enhance internal control policies and procedures to ensure underlying supporting documentation of approvals is fully retained going forward. Views of Responsible Officials: Management concurs with the finding. Management will implement a document retention policy to ensure timecard approvals are maintained.
Finding No. 2025-002 Federal Agency: U.S. Department of Treasury Federal Program Name: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Pass-Through Agency: State of Connecticut Judicial Branch Pass-Through Agency Identifying Number: 02-2202-11 Award Period: 2025 Type of Finding: • Significant Deficiency in Internal Control Over Compliance • Audit finding required to be reported in accordance with 2 CFR 200.516(a) Criteria: The Organization shall complete and submit its quarterly financial report for quarters two and four by January 10, 2025 and July 10, 2025 per the contract. Condition: The Organization was not in compliance with these reporting requirements as the reports were not submitted timely. Questioned Costs: None Context: The required quarterly financial report for quarters two and four were not submitted timely to the State of Connecticut Judicial Branch. Cause: Controls were not in place to ensure reporting was submitted by the required deadline. Effect: Without the timely submission, the Organization's reimbursements under the contract agreement can be delayed and administration of the program hindered. Repeat Finding: Finding does not represent a repeat finding. Recommendation: We recommend management enhance internal control processes related to grants to include controls for proper lines of communication with granting agencies to ensure all required reporting requirements are identified and adhered to. Views of Responsible Officials: Management concurs with the finding. Management will enhance internal control processes related to grants to include controls for proper lines of communication with granting agencies to ensure all required reporting requirements are identified and adhered to.
Finding No. 2025-003 Federal Agency: U.S. Department of Treasury Federal Program Name: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Pass-Through Agency: Department of Children and Families Pass-Through Agency Identifying Number: 24DCF0053 Award Period: 2025 Type of Finding: • Significant Deficiency in Internal Control Over Compliance • Audit finding required to be reported in accordance with 2 CFR 200.516(a) Criteria: The Organization shall complete and submit its annual report by September 30 per the contract. Condition: The Organization was not in compliance with this reporting requirement as the report was not submitted timely. Questioned Costs: None Context: The required annual report for the period July 1, 2024 to June 30, 2025 was not submitted timely to the State of Connecticut Department of Children and Families. Cause: Controls were not in place to ensure reporting was submitted by the required deadlines. Effect: Without the timely submission, the Organization's reimbursements under the contract agreement can be delayed and administration of the program hindered. Repeat Finding: Finding does not represent a repeat finding. Recommendation: We recommend management enhance internal control processes related to grants to include controls for proper lines of communication with granting agencies to ensure all required reporting requirements are identified and adhered to. Views of Responsible Officials: Management concurs with the finding. Management will enhance internal control processes related to grants to include controls for proper lines of communication with granting agencies to ensure all required reporting requirements are identified and adhered to.
2025-024: Comply with Period of Performance Requirements for Vocational Rehabilitation Grants Applicable to: Department for Aging and Rehabilitative Services Assigned Topic: Federal Grants Management Prior Finding Number: N/A Finding Type: Compliance Finding Severity: N/A Financial Statement Finding: No Federal Awards Finding: Yes ALPT - ALN: Rehabilitation Services Vocational Rehabilitation Grants to States - 84.126 Federal Award ID (Year): H126A240070 (2024) Federal Agency: U.S. Department of Education Compliance Requirement: Period of Performance - 2 CFR § 200.403(h); 34 CFR § 76.707 Known Questioned Costs: $166,000 Aging and Rehabilitative Services’ Finance Division inappropriately applied $166,000 in expenses to its federal fiscal year 2024 VR grant. Since this amount exceeded $25,000 for the period of performance compliance requirement, we are required to report the known questioned cost identified during the audit through an audit finding in accordance with 2 CFR § 200.516(a)(4). The objective of this federal grant program is to assist states in operating a VR program that is designed to assess, plan, develop, and provide services to individuals with disabilities so that they may prepare for and engage in gainful employment. During state fiscal year 2025, the Commonwealth of Virginia incurred approximately $109 million in expenses under the VR federal grant program. Aging and Rehabilitative Services received a vendor invoice in August 2024 for pre-employment transition services related to an obligation incurred in July 2023. However, the contract administrator inadvertently indicated that this expense should be applied to the federal fiscal year 2024 VR grant, which began on October 1, 2023, instead of the federal fiscal year 2023 VR grant when Aging and Rehabilitative Services incurred the obligation to the federal award. Aging and Rehabilitative Services’ Finance Division did not consider the obligation date when reviewing the vendor invoice and as a result, did not identify that the contract administrator incorrectly applied this expense to the project code for the federal fiscal year 2024 VR grant. Aging and Rehabilitative Services uses project codes in its financial system to track and record expenses for its various federal grant programs and monitor compliance with the period of performance requirements. Title 34 CFR § 76.707 states that an obligation for performance of work other than personal services occurs on the date on which the State makes a binding written commitment to obtain the services. Further, 2 CFR § 200.403(h) stipulates that costs must be incurred during the approved budget period or period of performance to be considered allowable. Finally, the United States Department of Education’s Rehabilitative Service Administration’s Frequently Asked Questions for Period of Performance for Formula Grant Awards mandates that States must track all expenditures against their obligation to ensure they are incurred during the period of performance and are properly reported to the federal government. Without tracking expenses against their obligation date and verifying use of correct project codes, Aging and Rehabilitative Services risks posting expenses to incorrect award periods and risk having to return monies to the federal government. Aging and Rehabilitative Services’ Finance Division should strengthen its review processes to ensure that it applies transactions to the correct project code applying to the award’s period of performance. Views of Responsible Officials: The views of responsible officials are included in the report related to their organization, which can be found at www.apa.virginia.gov and, in summary, do not express disagreement with the finding.
2025-020: Monitor Case Management System Records to Ensure Compliance with TANF Eligibility Requirements Applicable to: Department of Social Services Assigned Topic: Federal Grants Management Prior Finding Number: 2024-103; 2023-103 Finding Type: Compliance Finding Severity: N/A Financial Statement Finding: No Federal Awards Finding: Yes ALPT - ALN: Temporary Assistance for Needy Families (TANF) - 93.558 Federal Award ID (Year): 2501VATANF (2025) Federal Agency: U.S. Department of Health and Human Services Compliance Requirement: Eligibility - 45 CFR § 260.3; 45 CFR § 261.13; 45 CFR § 264.1; 42 USC § 604(a)(1); 42 USC § 608(a)(3) Known Questioned Costs: $10,192 Social Services did not comply with certain federal eligibility requirements for the TANF federal grant program, resulting in known questioned costs of $10,192. When projecting the known questioned costs to the population of questionable payments tested during the audit, we estimated likely questioned costs to be approximately $86,000 and had to report an audit finding in accordance with 2 CFR § 200.516(a)(4) since the likely questioned costs projection exceeded $25,000. The TANF federal grant program provided over $89 million in assistance to approximately 25,000 needy families during fiscal year 2025. During the audit, we reperformed the eligibility determinations using the information from Social Services’ case management system for all needy families that received assistance during the fiscal year and identified the following 27 instances (<1%) where the eligibility determination was not supported by facts in the recipient's case record: For 19 payments, Social Services did not properly evaluate whether individuals were already counted as eligible for TANF benefits under an existing case, which allowed these individuals to receive multiple benefit payments exceeding the Standards of Assistance and maximum program benefit amounts. Title 42 United States Code (USC) § 604(a)(1) mandates that a State may use the grant in any manner that is reasonably calculated to accomplish the purpose of TANF where Social Services’ reasonable calculation is defined by its Standard of Assistance and maximum program benefit amounts within its TANF Program Manual. For four payments, Social Services did not verify that the individual assigned the rights that they may have to child support to the state. As a result, these amounts were not excluded from the individual’s countable income and they were underpaid TANF benefits. Title 42 USC § 608(a)(3) mandates that the State shall require, as a condition of providing assistance, recipients to assign their rights to support from any other person (e.g. child support), not to exceed the amount of assistance provided by the State. For two payments, Social Services did not properly reduce or terminate assistance for individuals not complying with their individual responsibility plan for the TANF program. Title 45 CFR § 261.13 mandates that if an individual fails without good cause to comply with an individual responsibility plan that he or she has signed, the State may reduce the amount of assistance otherwise payable to the family, by whatever amount it considers appropriate. For one payment, Social Services did not properly evaluate the age criteria for an individual, resulting in an overpayment due to the individual not meeting the definition of a minor child as defined in Title 45 CFR § 260.30. For one payment, Social Services did not properly reduce or terminate TANF assistance to a head-of-household that received federal assistance for over 60 months. Title 45 CFR 264.1 mandates that states may not use any of its federal TANF funds to provide assistance to a family that includes an adult head-of-household or a spouse of the head-of-household who has received federal assistance for a total of five years, or 60 cumulative months (whether or not consecutive). Social Services relies on its case management system to properly determine eligibility, correctly calculate benefit payments, and achieve the federal requirements of the TANF federal grant program. Of the exceptions noted above, four of the 27 (15%) were the result of local Department of Social Services eligibility workers mistakenly reporting child support payments as unearned revenue beyond the acceptable timeframe instead of assigning these payments to the Commonwealth for referral to the Division of Child Support Enforcement, as required by the USC. The remaining 23 exceptions (85%) resulted from local Department of Social Services eligibility workers not including sufficient documentation to justify the rationale for their eligibility determinations. Social Services did not identify these exceptions because it did not have a mechanism to identify risky transactions in its case management system that deviate from Social Services’ policies and procedures and warrant further follow-up. Non-compliance with these provisions increases Social Services’ risk of incurring disallowed costs and having to repay grant funds to the federal government. Social Services should continue to provide additional training to local Department of Social Services eligibility workers on how to properly determine and document eligibility determinations in its case management system. Additionally, Social Services should continue to develop and implement a data-driven approach to monitor and analyze data from its case management system to identify risky transactions that deviate from Social Services’ policies and procedures. By providing additional training and developing and implementing risk-based data analytics, Social Services will be able to ensure that each decision in its case management system regarding eligibility is supported by the facts in the applicant’s or recipient’s case record and complies with federal requirements. Views of Responsible Officials: The views of responsible officials are included in the report related to their organization, which can be found at www.apa.virginia.gov and, in summary, do not express disagreement with the finding.
2025-021: Monitor Case Management System Records to Ensure Compliance with CCDF Eligibility Requirements Applicable to: Department of Social Services Assigned Topic: Federal Grants Management Prior Finding Number: N/A Finding Type: Compliance Finding Severity: N/A Financial Statement Finding: No Federal Awards Finding: Yes ALPT - ALN: Child Care and Development Block Grant - 93.575; Child Care Mandatory and Matching Funds of the Child Care and Development Fund - 93.596 Federal Award ID (Year): 2502VACCDD (2025); 2502VACCDM (2025) Federal Agency: U.S. Department of Health and Human Services Compliance Requirement: Eligibility - 45 CFR § 98.21(1) Known Questioned Costs: $218 Social Services did not comply with certain federal eligibility requirements for the CCDF Cluster, resulting in known questioned costs of $218. When projecting the known questioned costs to the population of questionable payments tested during the audit, we estimated likely questioned costs to be approximately $2.2 million and had to report an audit finding in accordance with 2 CFR § 200.516(a)(4) since the likely questioned costs projection exceeded $25,000. The CCDF Cluster served over 33,000 needy families in the Commonwealth during fiscal year 2025 and Social Services authorized and disbursed over $428 million in subsidy payments during this timeframe. During the audit, we re-performed eligibility determinations, using the information from Social Services’ case management system, for all needy families that received assistance during fiscal year 2025 and identified five instances (<1%) where Social Services did not discontinue benefits when the period of eligibility expired. Social Services relies on its case management system to properly determine eligibility and achieve the federal requirements of the CCDF Cluster. Social Services did not identify these exceptions because it did not have a mechanism to identify potentially ineligible payments where benefits continued past their redetermination review due date without eligibility workers completing an eligibility redetermination. Title 45 CFR 98.21(a)(1) mandates that a lead agency shall periodically redetermine a child's eligibility for child care services. Further, Virginia’s Child Care Subsidy Program Manual requires an eligibility redetermination at the end of the annual eligibility period and approval or denial of the application by a child care worker by the last day of the redetermination month, as long as the recipient has been given at least 10 days to provide all required verifications. Noncompliance with these provisions increases the Commonwealth’s risk of incurring ineligible costs. Social Services should provide additional training to eligibility workers to properly determine and document child care eligibility redeterminations in its case management system in accordance with Virginia’s Child Care Subsidy Program Manual. Additionally, Social Services should consider developing a mechanism, using the data in its case management system, to identify instances where benefits continue past their respective redetermination review due date without eligibility workers completing eligibility redetermination. Views of Responsible Officials: The views of responsible officials are included in the report related to their organization, which can be found at www.apa.virginia.gov and, in summary, do not express disagreement with the finding.
Finding 2025-002 Student Financial Assistance Cluster of Programs Reporting 84.268 Significant Deficiency Federal Direct Loan Program U.S. Department of Education Federal Award Identification (Required by 2 CFR 200.516(a)(1)): Federal program: Student Financial Assistance Cluster – Direct Loan Program Assistance listing (CFDA): 84.268 Federal agency: U.S. Department of Education Pass-through Entity: Not applicable - direct award Award number: P268K256742 Award year: June 30, 2025 Criteria: 34 CFR 685.301(a)(4) A school may not originate a Direct Subsidized, Direct Unsubsidized, or Direct PLUS Loan, or a combination of loans, for an amount that - (i) The school has reason to know would result in the borrower exceeding the annual or maximum loan amounts in § 685.203; or (ii) Exceeds the student's estimated cost of attendance less - (A) The student's estimated financial assistance for that period; and (B) In the case of a Direct Subsidized Loan, the borrower's expected family contribution for that period. Condition: A sample of thirty-seven students was selected for student file and account testing. Two students were packaged using a full-time cost of attendance despite enrollment in programs structured at three-quartertime courseload. Context: The deficiency was discovered during the audit testing of student files and accounts. The affected students were enrolled as part of a teach-out arrangement from another institution. Cause: These students were part of a teach-out arrangement from another institution. A breakdown in communication between the Admissions and Financial Aid departments regarding the enrollment status of this program resulted in the use of an incorrect cost of attendance for packaging purposes. The issue appears isolated to this specific teach-out program. Effect: Students received unsubsidized and Grad PLUS loans in excess of their allowable cost of attendance. Known questioned costs: Known questioned costs total $34,739 for the two students. Likely questioned costs: Likely questioned costs are $0, as the condition was isolated to 2 of 37 students tested (5.4 percent) and limited to a closed, finite teach‑out population. Because the teach-out population was finite, closed, and fully identified, and no similar conditions were noted outside this population, it was determined that projection of known questioned costs to the remaining population was not appropriate. Repeat finding status: This is a new finding for the year ended June 30, 2025. Recommendation: We recommend the University document and implement a brief communication protocol for future teach-out or non-standard admissions populations to ensure enrollment status and program structure are clearly communicated to Financial Aid prior to Title IV packaging. Views of responsible officials: Management has implemented corrective actions to address reporting errors related to cost of attendance calculations for a limited number of students admitted through a teach‑out arrangement. Management is strengthening coordination between Admissions and Financial Aid by implementing a standardized handoff process for non‑standard student populations that documents program structure, enrollment status, and term length prior to Title IV packaging. In addition, management has established a secondary review requirement for initial aid awards for new programs or cohorts and will conduct cross‑functional checkpoints during the setup of non‑standard programs to ensure accurate and compliant aid packaging. These actions are intended to prevent recurrence and to maintain strong controls over cost of attendance determinations and Title IV compliance
(1) Summary of Auditors’ Results Financial Statements a. Type of report issued on whether the financial statements were prepared in accordance with generally accepted accounting principles: Unmodified b. Internal control deficiencies over financial reporting disclosed by the audit of the financial statements: • Material weaknesses: No • Significant deficiencies: No c. Noncompliance material to the financial statements: No Federal Awards d. Internal control deficiencies over major programs disclosed by the audit: • Material weaknesses: Yes • Significant deficiencies: No e. Type of report issued on compliance for major programs: Qualified f. Audit findings that are required to be reported in accordance with 2 CFR 200.516(a): Yes g. Major programs: • Student Financial Assistance Cluster – Various ALNs h. Dollar threshold used to distinguish between Type A and Type B programs: $750,000 i. Auditee qualified as a low-risk auditee: No (2) Findings Relating to the Financial Statements Reported in Accordance with Government Auditing Standards None (3) Findings and Questioned Costs Relating to Federal Awards Finding Number: 2025-01 Program: Student Financial Assistance Cluster ALN #: 84.063 and 84.268 Federal Award #’s: P063P235372, P268K225372 Federal Award Years: July 1, 2024 to June 30, 2025 Federal Agencies: U.S. Department of Education Pass-Through Entity: N/A – Direct Award Compliance Requirement: Enrollment Reporting Finding Type: Material Weakness and Material Noncompliance Criteria: Under the Pell grant and the Direct and Federal Family Education Loan programs, institutions are required to report enrollment information via the National Student Loan Data System (NSLDS) (OMB No. 845-0035). The administration of the Title IV programs depends heavily on the accuracy and timeliness of the enrollment information reported by institutions. Institutions must review, update and verify student enrollment statuses, program information and effective dates that appear on the Enrollment Reporting Roster file or on the Enrollment Maintenance page of the NSLDS Financial Aid Professionals (NSLDSFAP) website. The data on the institution’s Enrollment Reporting Roster, or Enrollment Maintenance page, is what NSLDS has as the most recently certified enrollment information. There are two categories of enrollment information, “Campus Level” and “Program Level,” both of which need to be reported accurately and have separate record types. The NSLDS Enrollment Reporting Guide provides the requirements and guidance for reporting enrollment details using the NSLDS Enrollment Reporting Process. Institutions are responsible for timely reporting, whether they report directly or via a third-party servicer. Institutions must complete and return the Enrollment Reporting roster file placed in their Student Aid Internet Gateway (SAIG) (OMB No. 1845-0002) mailboxes sent by ED via NSLDS within 15 days. An institution determines how often it receives the Enrollment Reporting roster file with the default set at a minimum of every 60 days. Once received, the institution must update for changes in the data elements for the Campus Record and the Program Record identified above, and submit the changes electronically through the batch method, spreadsheet submittal or the NSLDS website. Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards 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 of the federal award. Condition found: During our testwork over student enrollment reporting, we noted Regent did not report all students' status changes accurately or within the required 60 days. For a sample of 60 students who were recipients of Direct Loans or Pell Grants between July 1, 2024 and June 30, 2025 and that had been identified as having withdrawn, graduated, or modified their enrollment status as defined by Regent’s Satisfactory Academic Progress Policy through a change in course load, the following was noted: For 24 students out of the 60 selected for compliance testing, Regent did not transmit the students’ status change to NSLDS within 60 days. For 9 students out of the 60 selected for compliance testing, Regent did not transmit the students’ status change to NSLDS within 60 days and failed to report the correct effective date of the status change. For 2 students out of the 60 selected for compliance testing, Regent failed to report the correct effective date of the status change. For 2 students out of the 60 selected for compliance testing, Regent failed to report the proper status to NSLDS. Additionally, while Regent has controls in place to ensure that enrollment changes are reported timely to the National Student Clearinghouse (NSC), the control does not ensure that any required correspondence with NSC to resolve data matters is happening accurately and timely. Cause: For the students noted above, management communicated that there were delays in the data transmission from the NSC and the NSLDS. While the data was provided to the NSC in a timely manner, there were issues with the data that needed to be resolved between Regent and the NSC in order to proceed with the submission to NSLDS. For the reasons noted above, we determined the related control in place at Regent, which is designed to address the accuracy and timeliness of the transmission reports, is not designed at a sufficient level to verify the accuracy and timeliness of the data transmission to the NSC. Nor does Regent have a control to ensure that any subsequent issues are resolved timely and that the data is ultimately submitted to the NSLDS timely. Proper perspective: Regent’s policy is to submit enrollment data to the NSC on a predetermined schedule that allows Regent to comply with the enrollment reporting requirements. For our sample of 60 students with status changes, we identified 37 students where either the status change was not reported within 60 days, improper status was reported, or the effective date was not accurately reported which indicates a systemic issue. Possible asserted effect: Untimely submission of student enrollment information affects the determinations that lenders and servicers of students’ loans make related to in-school status, deferments, graces periods, and repayment schedules, as well as the federal government’s payment and interest schedules. Questioned costs: None noted. Statistical sampling: The sample was not intended to be, and was not, a statistically valid sample. Repeat finding: A similar finding was reported in the prior year. The prior year finding number was 2024-001 Recommendation: We recommend Regent evaluate its processes and procedures when submitting data to the NSC to mitigate the number of errors in data transmissions in order to expedite the accuracy and timeliness of the NSLDS enrollment reporting. Views of responsible officials: Regent agrees with this finding. Regent intends to strengthen its controls and quality assurance measures over the timeliness of enrollment information to NSLDS.
UNEMPLOYMENT INSURANCE – IMPROPER PAYMENTS Finding Number: 2025-011 State Agency Number: JFS-01 Assistance Listing Number and Title: 17.225 – Unemployment Insurance Federal Award Identification Numbers / Years: UI-37243-22-55-A-39 / 2022 UI-39342-23-55-A-39 / 2023 24-A-55-UI000039 / 2024 25-A-55-UI000070 / 2025 Federal Agency: Department of Labor Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Costs Principles, Eligibility Repeat Finding from Prior Audit? No QUESTIONED COSTS 2 C.F.R. § 2900.4 gives regulatory effect to the Department of Labor (DOL) for 2 C.F.R. § 200.1 which states, in part: Improper payment means a payment that should not have been made or that was made in an incorrect amount under statutory, contractual, administrative, or other legally applicable requirements. The term improper payment includes: any payment to an ineligible recipient; any payment for an ineligible good or service; any duplicate payment; any payment for a good or service not received, except for those payments where authorized by law; any payment that is not authorized by law; and any payment that does not account for credit for applicable discounts. . . . Ohio Rev. Code (ORC) § 4141.28 states, in part: . . . (B) APPLICATION FOR DETERMINATION OF BENEFIT RIGHTS . . . An individual filing an application for determination of benefit rights shall furnish proof of identity at the time of filing in the manner prescribed by the director. . . . ORC § 4141.29 states, in part: . . . (A) No individual is entitled to a waiting period or benefits for any week unless the individual: . . . (4)(a)(i) Is able to work and available for suitable work and, except as provided in division (A)(4)(a)(ii) or (iii) of this section, is actively seeking suitable work either in a locality in which the individual has earned wages subject to this chapter during the individual's base period, or if the individual leaves that locality, then in a locality where suitable work normally is performed. . . . ORC § 4141.30 states, in part: . . . (B) With the exceptions in division (B)(4) of this section, benefits are payable to each eligible and qualified individual on account of each week of involuntary total unemployment after the specified waiting period at the weekly benefit amount determined by: (1) Computing the individual's average weekly wage as defined in division (O)(2) of section 4141.01 of the Revised Code; (2) Determining the individual's dependency class under division (E) of this section; (3) Computing the individual's weekly benefit amount to be fifty percent of the individual's average weekly wage except, that the individual's weekly benefit amount shall not exceed the maximum amount shown for the individual's dependency class... . . . The federal government established rules, regulations, and requirements related to eligibility, benefit amounts and timing, monitoring responsibilities, etc. regarding Unemployment benefits. It is management’s responsibility to implement controls, processes, and procedures to provide reasonable assurance over the reliability of financial reporting, effectiveness and efficiency of operations, and compliance with these rules, regulations, and requirements. During state fiscal year 2025, the Department disbursed approximately $950.9 million in unemployment benefits through the Ohio Job Insurance (OJI) benefit system. Eligibility for unemployment benefits was determined within OJI based upon requirements outlined in state and/or federal laws. Weekly, claimants confirmed their unemployment status and completed the required work search activities. If the claimant’s benefit payment was flagged, an adjudicator performed an additional review and requested fact-finding information for either monetary or nonmonetary issues. The claimant continued to receive weekly benefit payments until the adjudicator investigated the issue and confirmed the claimant’s status. If an issue was suspected of fraud, the issue was routed to the Department’s Benefit Payment Control section to be investigated, adjudicated and, if applicable, an overpayment flag was created in OJI. The Department’s policy, which is based on U.S. Department of Labor guidance, is to adjudicate possible fraud cases within 21 days or 90 days, depending on the circumstances of the case. Although the Department had various controls in place over regular unemployment benefit payments, the OJI system requires the Adjudicators to manually enter a significant amount of data into the system. To pay an unemployment benefit claim, the Adjudicators may have to clear multiple issues identified in the system before the claim can be paid. Furthermore, there are no alerts indicating when a pending issue prevents a claim from being paid which can result in significant delays in the payments to the claimants. Additionally, these controls did not prevent or detect the following noncompliance errors, resulting in known questioned costs totaling $3,274. The likely questioned costs would be in excess of $25,000 and therefore required to be reported under 2 C.F.R. § 200.516: • For two of 25 (8%) regular unemployment benefit claims identified in an OJI system data match as potential unemployment claims processed more than 30 days after the claimant’s benefit year end, the claimant was not eligible to receive benefits for the weeks claimed, was overpaid, or was underpaid, as follows: • One claimant did not provide the necessary documents to prove their identity. The Claims Examiner cleared the identity verification issue in OJI; however, there is no documentation showing the claimant verified their identity. As a result, the claimant was overpaid benefits of $2,988 during the audit period. • Due to an OJI system issue at the time the claim was filed, the claimant’s dependency class designated did not agree with the information provided on the application. This resulted in an underpayment of $143. • For one of 25 (4%) regular unemployment benefit claims identified in an OJI system data match as potentially exceeding the maximum allowable amount, the claimant stated in the application a qualifying dependent. However, the Department denied the dependent without mailing an Eligibility notice to allow the claimant to prove the identity of the dependent. This resulted in the claimant potentially being underpaid $124 for the week reviewed. • For one of 60 (1.77%) regular unemployment benefit claims selected for testing, the claimant was not eligible to receive benefits for the week claimed per ORC 4141.29(A)(4)(a)(i). The claimant did not provide the necessary documents evidencing clearance to work, therefore, the claimant was ineligible for unemployment benefits. This resulted in an overpayment of $286 to the claimant. Without effective internal controls for the eligibility determination and benefit payment processes, including manual data entry or the lack of alerts indicating when a pending issue prevents a claim from being paid, there is an increased risk benefit payments will be inaccurate, unallowable, or eligibility determinations not being made in a timely manner. Overpayments to ineligible claimants may subject the Department to penalties or sanctions which may jeopardize future funding and limit its ability to fulfill program requirements to provide benefits to those in need. Based on discussions with management, these errors were due to oversight and system design flaws within OJI. We recommend Department management: • Evaluate and strengthen current internal control procedures over the Unemployment Insurance program to ensure claimants are eligible, receive the correct weekly benefits and system design flaws such as limiting manual data entry and developing alerts for pending issues that impact claims being paid timely. This should include evaluating the cause of the errors identified above and updating controls as necessary. • Periodically monitor the established controls to determine if they are working effectively and as intended. • Perform periodic reviews of the claimant files to reasonably ensure the information is properly maintained and accurately entered into the related systems. • Evaluate underpayments, overpayments and/or payments to ineligible claimants and offset future benefits or seek reimbursement, where necessary.
Finding 2025-003 — Material Weakness (Internal Control Over Compliance): Grant Accounting and Close Process Affecting Major Programs Condition: The deficiencies noted in Finding 2025-001 also affect internal control over compliance for major programs. Programs Affected: 1) ALN 14.872 – Public Housing Capital Fund and 2) ALN 97.036 – Disaster Grants – Public Assistance. Repeat finding: No. Criteria: 2 CFR 200.303 and 200.516(a) require effective internal control over compliance. Cause: Lack of a structured, documented month end and year end close process and delayed reconciliations of grant related activity. Effect: Increased risk of misclassification or reporting in the wrong period for federal awards. Questioned Costs: 1) Known questioned costs were $0 and 2) likely questioned costs were $0. Perspective / Context: The control deficiencies were observed across all grant related closing cycles reviewed for FY 2025, demonstrating a systemic process issue rather than isolated instances. Recommendation: Apply the corrective actions in Finding 2025-001, including: 1) establishing a documented monthly and year end closing calendar, 2) performing timely reconciliations of grant activity, 3) strengthening supervisory review points prior to SEFA preparation and reporting. Management Response: Management concurs and will implement the recommended improvements beginning FY 2026.
Condition During our audit of the School Board’s financial statements for the year ended June 30, 2025, we encountered circumstances that imposed pervasive limitations on the scope of our audit. Specifically: • We were unable to obtain sufficient appropriate audit evidence regarding significant financial statement balances, transactions, and disclosures. • Accounting records and supporting documentation necessary to perform audit procedures were incomplete, unavailable, or unreliable. • Management representations, including written representations required under auditing standards, could not be relied upon due to concerns regarding the reliability of management representations. • These conditions, combined with the risk that management could override internal controls, further limited our ability to obtain evidence that financial reporting was complete and accurate. In addition, these same conditions prevented us from performing required audit procedures over the School Board’s federal programs, including testing of internal control over compliance and compliance with applicable federal statutes, regulations, and terms and conditions of federal awards. As a result, we were unable to obtain sufficient appropriate audit evidence to support an opinion on compliance for each major federal program. Criteria Uniform Guidance (2 CFR §200.303 and §200.514) requires non-federal entities to establish and maintain effective internal control over federal programs and to provide auditors with access to records and personnel necessary to perform a Single Audit. Uniform Guidance §200.516 requires auditors to report material weaknesses and noncompliance when identified. Cause The conditions described above resulted from inadequate recordkeeping and documentation practices, deficiencies in internal control over financial reporting, and management actions and behaviors that restricted the auditor’s ability to obtain reliable audit evidence and representations. These conditions directly impaired the auditor’s ability to perform planned audit procedures and obtain sufficient appropriate audit evidence. These conditions affected both financial reporting and compliance with federal program requirements. Effect Because of these pervasive limitations and the risk of management override, we were unable to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion. The potential effects on the financial statements are both material and pervasive, and therefore we issued a disclaimer of opinion on the School Board’s financial statements for the year ended June 30, 2025. For the same reasons, we were also unable to obtain sufficient appropriate audit evidence to support an opinion on compliance for each of the School Board’s major federal programs and on internal control over compliance. Accordingly, we disclaimed an opinion on compliance for each major federal program under the Single Audit. Context Questioned costs could not be determined due to the disclaimer of opinion. Recommendation We recommend that the School Board take immediate action to strengthen its internal control environment. Specifically, management should: • Ensure that all accounting records and supporting documentation are complete, accurate, and readily available. • Enforce oversight of financial reporting and internal control procedures. • Promote transparency, accountability, and cooperation with auditors to facilitate future audits. • Implement measures to mitigate the risk of management override, including additional supervisory review, approval requirements, and segregation of duties. • Ensure compliance documentation for federal programs is complete, accurate, and available for audit. Views of Responsible Officials and Planned Corrective Action A. OBJECTION On December 29, 2025, following LPSB’s submission of its Response to the Draft Findings of Kolder, Slaven, and Company, LLC (“KS&C”) relating to its 2024-2025 Annual Audit, LPSB received two additional findings characterized as Disclaimers of Opinion. The issuance of these post-response Disclaimers of Opinion regarding the findings highlights KS&C’s apparent lack of objectivity and its failure to adhere to generally accepted government auditing standards in conducting the 24-25 audit. A Disclaimer of Opinion “is expressed when the auditor is unable to obtain sufficient appropriate audit evidence on which to base the opinion, and the auditor concludes that the possible effects on the financial statements of undetected misstatements, if any, could be both material and pervasive.”1 According to LLA, “a local auditee that provides for an audit report with a disclaimer of opinion” is regarded as being in noncompliance with its reporting requirements to LLA under the audit law (Louisiana Revised Statute 24:513). LLA further expects the CPA to include in such a report a finding that provides a full explanation for the disclaimer of opinion.2 The two supplemental responses provided are, however, substantially lacking the “full explanation” mandated by the Legislative Auditors for the serious allegations being presented by KS&C. As with its other findings, these recent findings fail to cite any specific conditions present during the audit period that would have precluded KS&C from forming a conclusion. Therefore, as with the original findings, LPSB, on January 6, 2026, again requested that KS&C provide supporting evidence for its claim that it was unable to obtain “evidence regarding significant financial statement balances, transactions, and disclosures.” KS&C responded by stating that these new findings were based on Finding 16 - Invoices Paid Without Sufficient Supporting Detail (IC & C), Finding 26 - Management Override of Established Internal Controls (IC), Finding 31 - Unsupported Experience-Based Pay Increases (IC), and other undisclosed matters. Notably, none of these specific findings are instances where KS&C was prevented from forming a conclusion. To the contrary, the original findings identified by KS&C reflect otherwise. For instance, in Finding 16, KS&C notes it “tested 539 and identified 213 in which invoices were paid without sufficient documentation.” Despite KS&C’s assertions, LPSB has at no point failed to provide information to KS&C upon request (see Corrective Action sections below). In fact, KS&C issued 33 Findings, each purportedly substantiated by documentation. As stated in LPSB’s Response, a request was made by LPSB for KS&C to produce the referenced specific supporting documentation. However, KS&C declined to provide the documentation. Auditing standards stipulate: “Auditors should document supervisory review, before the report release date, of the evidence that supports the findings and conclusions contained in the audit report.”3 They further require: “Auditors should document any departures from the GAGAS requirements and the effect on the audit and on the auditors’ conclusions when the audit is not in compliance with applicable GAGAS requirements because of law, regulation, scope limitations, restrictions on access to records, or other issues affecting the audit.”4 Despite LPSB, in its Response and communications prior thereto pointing out erroneous references to the law and facts, KS&C refused to modify its findings. Instead, it introduced these two ambiguous Disclaimers of Opinion, alleging that LPSB failed to provide necessary information for KS&C to reach a conclusion. However, a cursory review of its original findings clearly reflect that KS&C did reach conclusions, which they assert were based upon conditions found during their investigation. Which is it? Are KS&C’s findings supported or not? KS&C’s ex post Disclaimers of Opinion not only misrepresent LPSB’s cooperation and full disclosure of information, but they are also predicated upon the unfounded assertion that LPSB’s “representations, including written representations required under auditing standards, could not be relied upon due to concerns regarding the reliability of management representations.” After 33 years of engagement with LPSB audits, KS&C has now made the unwarranted claim that LPSB’s representations are unreliable, without pointing to a specific instance of unreliability. Ironically, it is the auditor’s own representations that are demonstrated to be unreliable, as evidenced by the submission of these two vague and contradictory Disclaimers of Opinion. “[A] CPA cannot enter into the engagement with a pre-conceived notion that the local auditee is doing everything wrong. Going into an engagement with [this] attitude impairs the independence of the CPA firm.” The two findings, submitted after LPSB responded to its original findings, do not meet the standards set forth in the Louisiana Governmental Audit Guide. They contradict the original findings, misrepresent LPSB’s cooperation throughout the audit, insert slanderous statements as to the reliability of LPSB’s representations, and fail to provide a full explanation for the disclaimer of opinion. KS&C should remove these findings from its report. 1 LGAG 400-1160, Types of Auditor’s Opinions 2 LGAG 400-1160, Types of Auditor’s Opinions 3 GAO-24, Sections 6.31 (emphasis added) 4 GAO-24, Sections 6.32 B. CORRECTIVE ACTION Prior to the financial audit, Lafayette Parish School Board (LPSB) staff prepared reports and documentation for at least 185 requests that were made by the external auditors. These requests consisted of, but were not limited to, all General Ledger data and information on all Major and Non Major Funds (i.e. General Fund, Construction Funds, Debt Service Funds, and Special Revenue funds), worksheets, personnel records, copies of checks, copies of invoices, grant reimbursement requests, expenditure detail reports, capital asset data and reports, accounts payable data and reports, the type of computer equipment used (including the software and operating systems), construction related documents, copies of contracts, insurance invoices, schedules of judgments and agreements, check registers, calendars, securities pledged, accounts payable details, financial statements, schedule of construction contracts, retirement reports, listing of new hires, purchase orders, check requests, financial reconciliations, sales tax reports and documents, other insurance related documents, insurance policies, monitoring reports, AFR report, arbitrage documentation, copies of deposits receipts, copies of budgets, outstanding checks, revenue reports, expenditure reports, and balance sheet reports. Under the Department of Education agreed upon procedures audit, LPSB staff provided Class size data, PEP data and a user guide. Under the Statewide Agreed Upon procedure, LPSB staff provided proof of required trainings such as ethics, bond insurance policies, list of all bank accounts, a listing of employees, officials employed during the year, and a list of deposit and collection sites. Other requests from our external auditors may come via email throughout the audit process and responses are provided likewise. All of the items listed above, and other items that were not listed above, are routinely provided each year. For several decades this has been the standard and nothing has changed in terms of provided supporting documentation within this particular audit. Internal controls have been in place for many decades. The external auditors have been reviewing, studying and auditing our internal controls for three decades. Over the years, LPSB internal controls have been adjusted, strengthened or heighten to prevent operational deficiencies, fraud and/or non-compliance of which the auditors have contributed to its advancement. Substantially, there has been no change to internal controls as they are in place for a reason. Systematically, internal controls are planted and executed in various areas and departments for various functions and/or lawful requirements. The biggest threats to any organization are misappropriation or improper disbursement of funds. Neither have occurred, because internal controls such as the utilization of electronic requisitions and check request processes were in place to ensure goods and services were precured properly and vendor payments were substantiated. LPSB stands by its management representations that have been provided to the auditors. We acknowledge our responsibility for the design, implementation, and maintenance of internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. In addition to supporting documentation, the external auditors had complete access to our financial software to ascertain the completeness and accuracy of our financial records. Auditor’s Response The School Board’s response to this finding contains statements and characterizations that are inconsistent with the audit evidence obtained and the procedures performed. The auditor stands by the condition, criteria, cause, and effect as presented in the finding, which are based on documentation, observations, interviews, and other information available during the audit. Management’s response has not resulted in any change to the finding or the auditor’s conclusions.
Condition During our audit of the School Board’s financial statements for the year ended June 30, 2025, we encountered circumstances that imposed pervasive limitations on the scope of our audit. Specifically: • We were unable to obtain sufficient appropriate audit evidence regarding significant financial statement balances, transactions, and disclosures. • Accounting records and supporting documentation necessary to perform audit procedures were incomplete, unavailable, or unreliable. • Management representations, including written representations required under auditing standards, could not be relied upon due to concerns regarding the reliability of management representations. • These conditions, combined with the risk that management could override internal controls, further limited our ability to obtain evidence that financial reporting was complete and accurate. In addition, these same conditions prevented us from performing required audit procedures over the School Board’s federal programs, including testing of internal control over compliance and compliance with applicable federal statutes, regulations, and terms and conditions of federal awards. As a result, we were unable to obtain sufficient appropriate audit evidence to support an opinion on compliance for each major federal program. Criteria Uniform Guidance (2 CFR §200.303 and §200.514) requires non-federal entities to establish and maintain effective internal control over federal programs and to provide auditors with access to records and personnel necessary to perform a Single Audit. Uniform Guidance §200.516 requires auditors to report material weaknesses and noncompliance when identified. Cause The conditions described above resulted from inadequate recordkeeping and documentation practices, deficiencies in internal control over financial reporting, and management actions and behaviors that restricted the auditor’s ability to obtain reliable audit evidence and representations. These conditions directly impaired the auditor’s ability to perform planned audit procedures and obtain sufficient appropriate audit evidence. These conditions affected both financial reporting and compliance with federal program requirements. Effect Because of these pervasive limitations and the risk of management override, we were unable to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion. The potential effects on the financial statements are both material and pervasive, and therefore we issued a disclaimer of opinion on the School Board’s financial statements for the year ended June 30, 2025. For the same reasons, we were also unable to obtain sufficient appropriate audit evidence to support an opinion on compliance for each of the School Board’s major federal programs and on internal control over compliance. Accordingly, we disclaimed an opinion on compliance for each major federal program under the Single Audit. Context Questioned costs could not be determined due to the disclaimer of opinion. Recommendation We recommend that the School Board take immediate action to strengthen its internal control environment. Specifically, management should: • Ensure that all accounting records and supporting documentation are complete, accurate, and readily available. • Enforce oversight of financial reporting and internal control procedures. • Promote transparency, accountability, and cooperation with auditors to facilitate future audits. • Implement measures to mitigate the risk of management override, including additional supervisory review, approval requirements, and segregation of duties. • Ensure compliance documentation for federal programs is complete, accurate, and available for audit. Views of Responsible Officials and Planned Corrective Action A. OBJECTION On December 29, 2025, following LPSB’s submission of its Response to the Draft Findings of Kolder, Slaven, and Company, LLC (“KS&C”) relating to its 2024-2025 Annual Audit, LPSB received two additional findings characterized as Disclaimers of Opinion. The issuance of these post-response Disclaimers of Opinion regarding the findings highlights KS&C’s apparent lack of objectivity and its failure to adhere to generally accepted government auditing standards in conducting the 24-25 audit. A Disclaimer of Opinion “is expressed when the auditor is unable to obtain sufficient appropriate audit evidence on which to base the opinion, and the auditor concludes that the possible effects on the financial statements of undetected misstatements, if any, could be both material and pervasive.”1 According to LLA, “a local auditee that provides for an audit report with a disclaimer of opinion” is regarded as being in noncompliance with its reporting requirements to LLA under the audit law (Louisiana Revised Statute 24:513). LLA further expects the CPA to include in such a report a finding that provides a full explanation for the disclaimer of opinion.2 The two supplemental responses provided are, however, substantially lacking the “full explanation” mandated by the Legislative Auditors for the serious allegations being presented by KS&C. As with its other findings, these recent findings fail to cite any specific conditions present during the audit period that would have precluded KS&C from forming a conclusion. Therefore, as with the original findings, LPSB, on January 6, 2026, again requested that KS&C provide supporting evidence for its claim that it was unable to obtain “evidence regarding significant financial statement balances, transactions, and disclosures.” KS&C responded by stating that these new findings were based on Finding 16 - Invoices Paid Without Sufficient Supporting Detail (IC & C), Finding 26 - Management Override of Established Internal Controls (IC), Finding 31 - Unsupported Experience-Based Pay Increases (IC), and other undisclosed matters. Notably, none of these specific findings are instances where KS&C was prevented from forming a conclusion. To the contrary, the original findings identified by KS&C reflect otherwise. For instance, in Finding 16, KS&C notes it “tested 539 and identified 213 in which invoices were paid without sufficient documentation.” Despite KS&C’s assertions, LPSB has at no point failed to provide information to KS&C upon request (see Corrective Action sections below). In fact, KS&C issued 33 Findings, each purportedly substantiated by documentation. As stated in LPSB’s Response, a request was made by LPSB for KS&C to produce the referenced specific supporting documentation. However, KS&C declined to provide the documentation. Auditing standards stipulate: “Auditors should document supervisory review, before the report release date, of the evidence that supports the findings and conclusions contained in the audit report.”3 They further require: “Auditors should document any departures from the GAGAS requirements and the effect on the audit and on the auditors’ conclusions when the audit is not in compliance with applicable GAGAS requirements because of law, regulation, scope limitations, restrictions on access to records, or other issues affecting the audit.”4 Despite LPSB, in its Response and communications prior thereto pointing out erroneous references to the law and facts, KS&C refused to modify its findings. Instead, it introduced these two ambiguous Disclaimers of Opinion, alleging that LPSB failed to provide necessary information for KS&C to reach a conclusion. However, a cursory review of its original findings clearly reflect that KS&C did reach conclusions, which they assert were based upon conditions found during their investigation. Which is it? Are KS&C’s findings supported or not? KS&C’s ex post Disclaimers of Opinion not only misrepresent LPSB’s cooperation and full disclosure of information, but they are also predicated upon the unfounded assertion that LPSB’s “representations, including written representations required under auditing standards, could not be relied upon due to concerns regarding the reliability of management representations.” After 33 years of engagement with LPSB audits, KS&C has now made the unwarranted claim that LPSB’s representations are unreliable, without pointing to a specific instance of unreliability. Ironically, it is the auditor’s own representations that are demonstrated to be unreliable, as evidenced by the submission of these two vague and contradictory Disclaimers of Opinion. “[A] CPA cannot enter into the engagement with a pre-conceived notion that the local auditee is doing everything wrong. Going into an engagement with [this] attitude impairs the independence of the CPA firm.” The two findings, submitted after LPSB responded to its original findings, do not meet the standards set forth in the Louisiana Governmental Audit Guide. They contradict the original findings, misrepresent LPSB’s cooperation throughout the audit, insert slanderous statements as to the reliability of LPSB’s representations, and fail to provide a full explanation for the disclaimer of opinion. KS&C should remove these findings from its report. 1 LGAG 400-1160, Types of Auditor’s Opinions 2 LGAG 400-1160, Types of Auditor’s Opinions 3 GAO-24, Sections 6.31 (emphasis added) 4 GAO-24, Sections 6.32 B. CORRECTIVE ACTION Prior to the financial audit, Lafayette Parish School Board (LPSB) staff prepared reports and documentation for at least 185 requests that were made by the external auditors. These requests consisted of, but were not limited to, all General Ledger data and information on all Major and Non Major Funds (i.e. General Fund, Construction Funds, Debt Service Funds, and Special Revenue funds), worksheets, personnel records, copies of checks, copies of invoices, grant reimbursement requests, expenditure detail reports, capital asset data and reports, accounts payable data and reports, the type of computer equipment used (including the software and operating systems), construction related documents, copies of contracts, insurance invoices, schedules of judgments and agreements, check registers, calendars, securities pledged, accounts payable details, financial statements, schedule of construction contracts, retirement reports, listing of new hires, purchase orders, check requests, financial reconciliations, sales tax reports and documents, other insurance related documents, insurance policies, monitoring reports, AFR report, arbitrage documentation, copies of deposits receipts, copies of budgets, outstanding checks, revenue reports, expenditure reports, and balance sheet reports. Under the Department of Education agreed upon procedures audit, LPSB staff provided Class size data, PEP data and a user guide. Under the Statewide Agreed Upon procedure, LPSB staff provided proof of required trainings such as ethics, bond insurance policies, list of all bank accounts, a listing of employees, officials employed during the year, and a list of deposit and collection sites. Other requests from our external auditors may come via email throughout the audit process and responses are provided likewise. All of the items listed above, and other items that were not listed above, are routinely provided each year. For several decades this has been the standard and nothing has changed in terms of provided supporting documentation within this particular audit. Internal controls have been in place for many decades. The external auditors have been reviewing, studying and auditing our internal controls for three decades. Over the years, LPSB internal controls have been adjusted, strengthened or heighten to prevent operational deficiencies, fraud and/or non-compliance of which the auditors have contributed to its advancement. Substantially, there has been no change to internal controls as they are in place for a reason. Systematically, internal controls are planted and executed in various areas and departments for various functions and/or lawful requirements. The biggest threats to any organization are misappropriation or improper disbursement of funds. Neither have occurred, because internal controls such as the utilization of electronic requisitions and check request processes were in place to ensure goods and services were precured properly and vendor payments were substantiated. LPSB stands by its management representations that have been provided to the auditors. We acknowledge our responsibility for the design, implementation, and maintenance of internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. In addition to supporting documentation, the external auditors had complete access to our financial software to ascertain the completeness and accuracy of our financial records. Auditor’s Response The School Board’s response to this finding contains statements and characterizations that are inconsistent with the audit evidence obtained and the procedures performed. The auditor stands by the condition, criteria, cause, and effect as presented in the finding, which are based on documentation, observations, interviews, and other information available during the audit. Management’s response has not resulted in any change to the finding or the auditor’s conclusions.
Federal Program Title: Medical Assistance Assistance Listing Number: 93.778 Federal Award Identification and Year: 2405MN5ADM, 2405MN5MAP Compliance Requirement Affected: Allowable Cost and Activity Award Period: Year Ended December 31, 2024 Type of Finding: Material Weakness in Internal Control over Compliance and Other Matters Criteria or Specific Requirement: In accordance with Uniform Guidance 2 CFR 200.516(a), management is responsible for establishing and maintaining internal controls, including proper review of disbursements prior to payment being made with federal funding. Condition: As part of the audit, key controls over significant audit areas are reviewed to ensure they are properly performed. We were not presented with documentation for one of the forty disbursements tested to show that the disbursement was reviewed by a supervisor prior to payment. Questioned Costs: None. Context: During Allowable Cost testing it was noted that one of the forty transactions tested was not reviewed and approved by a supervisor. Cause: The County has a limited number of personnel and there was significant turnover at the County. Effect: The County controls are not operating as designed. Repeat Finding: No. Recommendation: We recommend the County implement procedures to ensure that all disbursements are reviewed and approved prior to payment. Views of responsible officials: There is no disagreement with the audit finding.
Federal Program Title: Medical Assistance Assistance Listing Number: 93.778 Federal Award Identification and Year: 2405MN5ADM, 2405MN5MAP Compliance Requirement Affected: Allowable Cost and Activity Award Period: Year Ended December 31, 2024 Type of Finding: Material Weakness in Internal Control over Compliance and Other Matters Criteria or Specific Requirement: In accordance with Uniform Guidance 2 CFR 200.516(a), management is responsible for establishing and maintaining internal controls, including proper review of disbursements prior to payment being made with federal funding. Condition: As part of the audit, key controls over significant audit areas are reviewed to ensure they are properly performed. We were not presented with documentation for one of the forty disbursements tested to show that the disbursement was reviewed by a supervisor prior to payment. Questioned Costs: None. Context: During Allowable Cost testing it was noted that one of the forty transactions tested was not reviewed and approved by a supervisor. Cause: The County has a limited number of personnel and there was significant turnover at the County. Effect: The County controls are not operating as designed. Repeat Finding: No. Recommendation: We recommend the County implement procedures to ensure that all disbursements are reviewed and approved prior to payment. Views of responsible officials: There is no disagreement with the audit finding.
Criteria 2 CFR 200 establishes that the auditee must establish and maintain effective internal controls over the federal awards that provide assurance that the entity is managing the federal awards in compliance with federal statutes, regulations, and the conditions of the federal award. 2 CFR section 200.516(a) require the auditee to collect financial information and monitor its activities under federal awards to assure compliance with applicable federal requirements and performance expectations are being achieved and report these items in accordance with the program requirements. Condition Final financial report were not completed and submitted for 5NU61TS000295-05 award by the due date. Cause CARD failed to file the final financial report on a timely basis. Context/Sampling The final financial report was filed late. Effect Lack of compliance with designed internal controls over reporting could result in CARD reporting incorrect or incomplete information. The required final financial report was not filed by the due date. Questioned Costs None reported. Recommendation We recommend that CARD submit all reports in timely manner. This will ensure CARD is in compliance with the award and CARS’s policies. Organization Response The Organization has added all report due dates to their calendars to ensure that reports are filed in a timely manner.
CONDITION: During the calendar year 2024, the City did not record the necessary adjustments to the various ‘Fund’ general ledgers of the City to properly reconcile the balance sheet accounts, such as cash, receivables, payables, and payroll-related liabilities to the underlying supporting documentation available at the City (which includes reconciliations of cash prepared independently by City personnel but do not agree to amounts reported in the various general ledgers). This included ‘Funds” containing significant federal funding such as the City’s Community Development Block Grant (CDBG) Program and American Rescue Plan Act (ARPA) funding known as the Coronavirus State and Local Fiscal Recovery Fund. As a result, the financial position and results of operations as shown throughout the calendar year were inaccurately stated. However, it should be noted that the Community Development Department of the City and other City personnel maintain separate financial reporting for these federal funds, independent of the aforementioned ‘Fund’ general ledgers sufficient to ascertain the revenues and expenditures of the federal programs. This is a repeat finding (2023-001) from the prior year. CRITERIA: Prudent internal control procedures in the areas of general ledger management and financial reporting include the reconciliation of all general ledger account balances to underlying supporting documentation monthly with independent oversight and approval as part of the process. In specific as it relates to federal programs, Section 2 CFR 200.403(g) of the Uniform Guidance requires that federal costs must be adequately documented which would include the applicable general ledgers of the City. EFFECT: The lack of procedures in place for reconciling balance sheet accounts throughout the calendar year, with independent oversight, 1) reduces the City’s internal control over the financial reporting processes, 2) exposes the City to inaccurate financial reporting to management for decision-making purposes, and 3) increases the potential for irregularities that may result (unintentional or otherwise) that are not detected in a timely manner. Had these reconciliations been performed, issues such as non-postings, and inaccurate postings to the City’s various general ledgers could have been detected and corrected in a timely manner to enhance internal controls and financial reporting in this important area of financial management. As a result, the City is not incompliance with Section 2 CFR 200.403(g) of the Uniform Guidance which requires federal costs to be adequately documented in the applicable general ledgers of the City.Findings and questioned costs related to Federal Awards which are required to be reported in accordance with the Uniform Guidance 2 CFR 200.516(a):CAUSE: City business office personnel perform a variety of duties such as accounting for deposits, invoice processing, reconciliation of cash (but not to the various general ledger accounts of the City), preparation of payroll, and posting of financial transactions to the City’s general ledgers. However, no one individual is responsible for managing and reconciling all of the aforementioned procedures to the various ‘Fund’ general ledgers at the City. RECOMMENDATION: I am recommending that the management of the City establish written procedures for all accounting functions, but most notably for recording the necessary adjustments to the City’s general ledgers throughout the calendar year (monthly) to ensure that all balance sheet account balances are supported by the underlying documentation available at the City. It is anticipated that additional training will be required for in-house personnel to perform this function, or the City may want to consider contracting these services to a third-party professional with the expertise to perform these functions for the City on a monthly or quarterly basis throughout the year. These procedures should significantly enhance the internal control over the financial accounting and reporting process relative to the City’s general ledgers for each Fund. VIEWS OF RESPONSIBLE OFFICIALS: The City concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
Finding 2024-003: Inaccurate Reporting of SLFRF Expenditures and Fiscal Year End Federal Program: Coronavirus State and Local Fiscal Recovery Funds (SLFRF) Assistance Listing Number (ALN): 21.027 Federal Agency: U.S. Department of the Treasury Type of Finding: Compliance and significant deficiency in internal control over compliance Criteria: Per Uniform Guidance (2 CFR 200.510(b) and 2 CFR 200.516), recipients must accurately report expenditures and obligations in required annual compliance reports. Reports must also reflect the correct fiscal year end date as required by federal and state reporting standards. Context: Morgan County is a recipient of SLFRF funding and is required to submit accurate annual compliance reports reflecting actual expenditures and the correct fiscal year end. For the reporting period ending March 31, 2025, the County elected the $10 million standard allowance for revenue loss and was required to report all SLFRF expenditures incurred during the year ended December 31, 2024. Condition: The County’s SLFRF compliance report for the year ended December 31, 2024 included several clerical errors including incorrectly reporting there were $0 in current period expenditures rather than the $1,660,202 included on the Schedule of Expenditures of Federal awards as well as incorrectly listing the fiscal year end date as December 31, 2023. Cause: The errors appear to be due to insufficient oversight in preparing the annual compliance report due to staffing issues within the County. Effect: The inaccurate reporting resulted in noncompliance with federal and state reporting requirements. This may impact the transparency and accountability of SLFRF fund usage. Questioned Costs: None Recommendation: Morgan County should implement procedures to ensure accurate reporting of expenditures and correct fiscal year end dates in all future SLFRF compliance reports. The County should ensure that all future reports are reconciled to actual activity and comply with SLFRF and Uniform Guidance requirements. Views of Responsible Officials: Management concurs with the finding and will address the issue as outlined in the corrective action plan included in this report
Section III - Federal Award Findings and Questioned Costs (2 CFR 200.516(a)) Finding 2024-001: Cash Management (Material Weakness) Federal Programs: ALN 19.019 Criteria: According to 2 CFR 200.305, recipients must draw Federal funds only in amounts necessary to meet immediate cash needs for program expenditures. Funds should be disbursed as soon as possible, generally within three business days of receipt. Condition: During our testing of cash management compliance, we noted that ICMEC drew down a total of $233,494 on Federal funds in advance of need. The remaining funds were used for other ICMEC programmatic work. Cause: ICMEC did not have adequate procedures to align Federal drawdown requests with immediate program disbursement requirements. Drawdowns were based on budgeted monthly cash needs rather than actual expenditures. Effect or Potential Effect: Drawing funds in advance of need results in excess Federal cash being held by ICMEC, which is not permitted under Federal regulations. This increases the risk of misuse of Federal funds and may result in ICMEC owing interest to the Federal Government. Questioned Costs: $233,494 Context: Our audit procedures consisted of testwork completed on individual cash receipts and draw downs requests and evaluating the refundable advance analysis prepared by ICMEC as of December 31, 2024. Identification as a Repeat Finding, if Applicable: Not a repeat finding. Recommendation: We recommend ICMEC establish and implement procedures to ensure drawdown requests are limited to actual, immediate cash needs, with monitoring to confirm that Federal funds are disbursed within three business days of receipt.
Section III - Federal Award Findings and Questioned Costs (2 CFR 200.516(a)) (Continued) Finding 2024-002: Late Submission of Audit Report to the Federal Audit Clearinghouse (Significant Deficiency) Federal Programs: All Federal programs Criteria: The Uniform Guidance, specifically 2 CFR 200.512(a), establishes the filing requirements for the submission of single audits to the Federal audit clearing house and indicates that the single audit reporting package must be submitted 30 days after the date of the auditor's report(s) or 9 months after the end of the fiscal year, whichever comes first. Condition: The single audit reporting package for ICMEC December 31, 2023 year-end audit was due to the Federal audit clearinghouse by September 30, 2024. However, the data collection form was submitted on February 24, 2025. Cause: During the 2023 audit process, fieldwork timelines had to be extended to accommodate the time ICMEC needed to ensure that all schedules were properly reconciled and supported, which caused delays in the audit completion. As a result, the 2023 auditor's report(s) were dated January 30, 2025. Effect or Potential Effect: Not timely filing the single audit reporting package is indicative of timeliness issues with the audit process. Questioned Costs: None noted. Context: As a result of delays in the completion of the 2023 audit, the single audit reporting package for the year ended December 31, 2023, was not submitted timely. Identification as a Repeat Finding, if Applicable: Not a repeat finding. Recommendation: We recommend that management implement procedures and control processes to ensure that future audits are completed timely so that the single audit reporting package is submitted by the appropriate deadline of either 30 days after the date of the auditor's report(s) or 9 months after the end of the fiscal year, whichever comes first.
Finding 2024-001: Known questioned costs related to eligibility Major Program: Housing Choice Voucher Program Federal Agency: U.S. Department of Housing and Urban Development Assistant Listing Number: 14.871 Criteria: The OMB Compliance Supplement for the Housing Choice Voucher Program (HCVP) states that the HCVP regulations are found in 24 CFR parts 5, 982, 983, and 985. 24 CFR 982.306(d) states that “The PHA must not approve a unit if the owner is the parent, child, grandparent, grandchild, sister, or brother of any member of the family, unless the PHA determines that approving the unit would provide reasonable accommodation for a family member who is a person with disabilities. This restriction against PHA approval of a unit only applies at the time a family initially receives tenant-based assistance for occupancy of a particular unit but does not apply to PHA approval of a new tenancy with continued tenant-based assistance in the same unit.” 2 CFR 200.516(a)(3) requires an audit finding to be reported for known questioned costs that are greater than $25,000 for a type of compliance requirement for a major program. Condition: As a result of our audit of the HCVP eligibility compliance requirement, it was noted that one (1) out of forty (40) participants reviewed did not meet the eligibility requirement because the tenant was a relative of the owner of the unit. Homeowner’s may apply for a reasonable accommodation for a family member who is a person with disabilities, however the owner did not request a reasonable accommodation. The owner and tenant were approved in May 2018, and payments began in June 2018. Cause: The City approved a housing choice voucher to a tenant that was ineligible due to being a relative of the owner because the City was unaware of the relationship between the owner and tenant upon approval of the housing choice voucher. The was unaware of the unallowed relationship because the owner and tenant certified that they were not related by signing the HUD-52517 form Request for Tenancy Approval that includes an owner’s certification that the owner is not the parent, child, grandparent, grandchild, sister or brother of any member of the family, unless the PHA has determined (and has notified the owner and the family of such determination) that approving leasing of the unit, notwithstanding such relationship, would provide reasonable accommodation for a family member who is a person with disabilities. Effect or Potential Effect: The City issued payments for a housing choice voucher to an ineligible owner and tenant since June 2018. Known Questioned Costs: $69,019 from June 2018 through September 2024. Current fiscal year known questioned costs were $11,712. The questioned costs are all payments made to the owner on behalf of the tenant mentioned above. Context: The auditor believes that the audit finding is an isolated instance and not a systemic problem. The City has appropriate internal controls, including inquiry of applicants as to whether they are related and obtains signed certifications that the owner and tenant are not related. In addition, the relationship was discovered through procedures that are not required by the Department of Housing and Urban Development. The finding was due to misrepresentations provided by the owner and tenant, and through other audit procedures there were no indications that this was a systematic issue. The sample selected was a valid sample and the City is still in overall compliance with the eligibility requirement for the HCVP major program. Repeat finding: No Recommendation: We recommend the City continue to clearly communicate to housing owners that they cannot rent to relatives, and to implement additional procedures over eligibility compliance on a sample basis going forward with regards to potential ineligible relationships between the owner and tenant. Examples of potential additional procedures include internet searches of the owner and tenant. View of Responsible Officials: See corrective action plan on page 9
Finding 2024-001: Significant Deficiency and known questioned costs related to activities allowed or unallowed and allowable costs/cost principles Major Program: HOME Investment Partnership Program Federal Agency: U.S. Department of Housing and Urban Development Assistant Listing Number: 14.239 Criteria: The City is responsible for ensuring compliance with all applicable provisions of the HOME Investment Partnerships Program (HOME) as prescribed by the U.S. Department of Housing and Urban Development. According to requirements included in the OMB Compliance Supplement, all HOME Funds may be used by participating jurisdictions to provide for: (a) incentives to develop and support affordable rental housing and homeownership affordability through the acquisition, new construction, reconstruction, or rehabilitation of non-luxury housing with suitable amenities, including real property acquisition, site improvements, conversion, demolition, and other expenses, including financing costs, relocation expenses of any displaced persons, families, businesses, or organizations; (b) tenant-based rental assistance, including security deposits; (c) the payment of reasonable administrative and planning costs; and (d) the payment of operating expenses of Community Housing Development Organizations (CHDOs). The housing must be permanent or transitional. The acquisition of vacant land or demolition can only be undertaken with respect to a particular housing project intended to provide affordable housing, and when construction is expected to begin within 12 months. Conversion of an existing structure to affordable housing is rehabilitation unless certain circumstances exist. Manufactured housing may be purchased or rehabilitated and the land upon which it is built may be purchased with HOME funds. HOME funds may be used to pay for development construction hard costs, refinancing costs, acquisition costs, related soft costs, CHDO costs, relocation costs, and costs related to the repayment of loans (24 CFR sections 92.205(a) and 92.206).” 2 CFR 200.516(a)(3) requires an audit finding to be reported for known questioned costs that are greater than $25,000 for a type of compliance requirement for a major program. Condition and Context: During testing of HOME activities allowed or unallowed and allowable costs/cost principles (AB) compliance requirements, it was noted that one (1) out of thirty-nine (39) disbursement transactions reviewed did not meet the AB compliance requirements. 2 CFR 200.305(b)(8) states that “a payment must not be made to a recipient or subrecipient for amounts that the recipient or subrecipient withholds from contractors to assure satisfactory completion of work. Payment must be made when the recipient or subrecipient disburses the withheld funds to the contractors or to escrow accounts established to ensure satisfactory completion of work.” The City requested reimbursement for retainage amounts that were not released as of September 30, 2024. Cause: The City had turnover in the project manager department related to HOME construction projects. The project manager turnover caused a miscommunication between the project managers and grant accounting employees which resulted in the request for reimbursement of retainage that had not yet been paid by the City. Effect or Potential Effect: The City received grant reimbursements related to expenditures that were not paid as of September 30, 2025. Known Questioned Costs: $112,539 from October 1st, 2023 through September 30th, 2024. These are for all projects that retainage was requested for reimbursement but the retainage was not released as of September 30, 2024. Repeat Finding: No Recommendation: We recommend the City continue to train its employees to on allowable activities and costs related to the HOME grant. View of Responsible Officials: See Corrective Action Plan on page 10
FINDING 2024-033 CCDF Cluster, ALN 93.575 and 93.596, Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Eligibility; and Matching, Level of Effort, and Earmarking - Client Eligibility See Schedule of Findings and Questioned Costs for chart/table. Condition MiLEAP and MDHHS did not ensure compliance with federal laws and regulations relating to client eligibility for CCDF Cluster child care payments for 5 (8%) of the 60 cases we reviewed. Our review disclosed: a. MDHHS case record documentation was inconsistent with client eligibility information entered in Bridges for 5 (8%) of 60 cases reviewed. For these cases, the authorized hours of care in Bridges exceeded the client's documented need for hours of child care services. b. MDHHS did not appropriately categorize the client's eligibility based on the supporting documentation in the case record for 1 (2%) of 60 cases reviewed, which is also reported in part a. We determined this did not affect the client's eligibility for child care services or level of benefits. Criteria Federal regulation 45 CFR 98.20 provides eligibility requirements for child care services and permits MiLEAP to establish eligibility requirements in addition to those outlined in the section as long as the additional requirements are not in violation of the regulation. Federal regulation 45 CFR 98.16(i)(5) requires MiLEAP identify additional eligibility requirements in its CCDF State Plan. MiLEAP's CCDF State Plan for Federal Fiscal Years 2022-2024 provides specific requirements for client, child, and provider eligibility. Also, CCDF program policy deems clients are either income eligible or categorically eligible if they participate in certain other programs such as Foster Care - Title IV. The client's income or categorical eligibility determines the client's level of benefits, and the child must be assigned to an eligible provider. Federal regulation 45 CFR 98.55 allows states to claim expenditures to be matched at the FMAP rate for allowable activities, as described in the approved state plan. In order to receive federal matching funds for a fiscal year, states must also expend an amount of nonfederal funds for child care activities in the state at least equal to the state's share of expenditures for the fiscal years 1994 or 1995 (whichever is greater) under Sections 402(g) and 402(i) of the federal Social Security Act as these sections were in effect before October 1, 1995, and the expenditures must be for allowable services or activities, as described in the approved state plan. Cause MDHHS informed us its internal control and monitoring activities were not sufficient to ensure MDHHS maintained or appropriately considered all required verification documentation in the client's case record to support eligibility. Effect MiLEAP may have made payments on behalf of ineligible clients. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs would exceed $25,000. • $586 - federal share. • $257 - State share of costs MiLEAP inappropriately used as matching. Recommendation We recommend MiLEAP and MDHHS maintain sufficient documentation and ensure Bridges appropriately reflects documentation to support client eligibility was determined in accordance with eligibility requirements. Management Views MiLEAP and MDHHS agree with the finding.
FINDING 2024-033 CCDF Cluster, ALN 93.575 and 93.596, Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Eligibility; and Matching, Level of Effort, and Earmarking - Client Eligibility See Schedule of Findings and Questioned Costs for chart/table. Condition MiLEAP and MDHHS did not ensure compliance with federal laws and regulations relating to client eligibility for CCDF Cluster child care payments for 5 (8%) of the 60 cases we reviewed. Our review disclosed: a. MDHHS case record documentation was inconsistent with client eligibility information entered in Bridges for 5 (8%) of 60 cases reviewed. For these cases, the authorized hours of care in Bridges exceeded the client's documented need for hours of child care services. b. MDHHS did not appropriately categorize the client's eligibility based on the supporting documentation in the case record for 1 (2%) of 60 cases reviewed, which is also reported in part a. We determined this did not affect the client's eligibility for child care services or level of benefits. Criteria Federal regulation 45 CFR 98.20 provides eligibility requirements for child care services and permits MiLEAP to establish eligibility requirements in addition to those outlined in the section as long as the additional requirements are not in violation of the regulation. Federal regulation 45 CFR 98.16(i)(5) requires MiLEAP identify additional eligibility requirements in its CCDF State Plan. MiLEAP's CCDF State Plan for Federal Fiscal Years 2022-2024 provides specific requirements for client, child, and provider eligibility. Also, CCDF program policy deems clients are either income eligible or categorically eligible if they participate in certain other programs such as Foster Care - Title IV. The client's income or categorical eligibility determines the client's level of benefits, and the child must be assigned to an eligible provider. Federal regulation 45 CFR 98.55 allows states to claim expenditures to be matched at the FMAP rate for allowable activities, as described in the approved state plan. In order to receive federal matching funds for a fiscal year, states must also expend an amount of nonfederal funds for child care activities in the state at least equal to the state's share of expenditures for the fiscal years 1994 or 1995 (whichever is greater) under Sections 402(g) and 402(i) of the federal Social Security Act as these sections were in effect before October 1, 1995, and the expenditures must be for allowable services or activities, as described in the approved state plan. Cause MDHHS informed us its internal control and monitoring activities were not sufficient to ensure MDHHS maintained or appropriately considered all required verification documentation in the client's case record to support eligibility. Effect MiLEAP may have made payments on behalf of ineligible clients. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs would exceed $25,000. • $586 - federal share. • $257 - State share of costs MiLEAP inappropriately used as matching. Recommendation We recommend MiLEAP and MDHHS maintain sufficient documentation and ensure Bridges appropriately reflects documentation to support client eligibility was determined in accordance with eligibility requirements. Management Views MiLEAP and MDHHS agree with the finding.
FINDING 2024-033 CCDF Cluster, ALN 93.575 and 93.596, Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Eligibility; and Matching, Level of Effort, and Earmarking - Client Eligibility See Schedule of Findings and Questioned Costs for chart/table. Condition MiLEAP and MDHHS did not ensure compliance with federal laws and regulations relating to client eligibility for CCDF Cluster child care payments for 5 (8%) of the 60 cases we reviewed. Our review disclosed: a. MDHHS case record documentation was inconsistent with client eligibility information entered in Bridges for 5 (8%) of 60 cases reviewed. For these cases, the authorized hours of care in Bridges exceeded the client's documented need for hours of child care services. b. MDHHS did not appropriately categorize the client's eligibility based on the supporting documentation in the case record for 1 (2%) of 60 cases reviewed, which is also reported in part a. We determined this did not affect the client's eligibility for child care services or level of benefits. Criteria Federal regulation 45 CFR 98.20 provides eligibility requirements for child care services and permits MiLEAP to establish eligibility requirements in addition to those outlined in the section as long as the additional requirements are not in violation of the regulation. Federal regulation 45 CFR 98.16(i)(5) requires MiLEAP identify additional eligibility requirements in its CCDF State Plan. MiLEAP's CCDF State Plan for Federal Fiscal Years 2022-2024 provides specific requirements for client, child, and provider eligibility. Also, CCDF program policy deems clients are either income eligible or categorically eligible if they participate in certain other programs such as Foster Care - Title IV. The client's income or categorical eligibility determines the client's level of benefits, and the child must be assigned to an eligible provider. Federal regulation 45 CFR 98.55 allows states to claim expenditures to be matched at the FMAP rate for allowable activities, as described in the approved state plan. In order to receive federal matching funds for a fiscal year, states must also expend an amount of nonfederal funds for child care activities in the state at least equal to the state's share of expenditures for the fiscal years 1994 or 1995 (whichever is greater) under Sections 402(g) and 402(i) of the federal Social Security Act as these sections were in effect before October 1, 1995, and the expenditures must be for allowable services or activities, as described in the approved state plan. Cause MDHHS informed us its internal control and monitoring activities were not sufficient to ensure MDHHS maintained or appropriately considered all required verification documentation in the client's case record to support eligibility. Effect MiLEAP may have made payments on behalf of ineligible clients. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs would exceed $25,000. • $586 - federal share. • $257 - State share of costs MiLEAP inappropriately used as matching. Recommendation We recommend MiLEAP and MDHHS maintain sufficient documentation and ensure Bridges appropriately reflects documentation to support client eligibility was determined in accordance with eligibility requirements. Management Views MiLEAP and MDHHS agree with the finding.
FINDING 2024-012 Medicaid Cluster, ALN 93.775, 93.777, and 93.778 and Children's Health Insurance Program, ALN 93.767 - Beneficiary Eligibility See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure or demonstrate compliance with federal laws and regulations relating to beneficiary eligibility for 7 (12%) of 60 Medicaid and 33 (55%) of 60 CHIP cases. Our review disclosed: a. MDHHS did not determine beneficiary eligibility in accordance with eligibility requirements for 2 (3%) of 60 Medicaid and 10 (17%) of 60 CHIP cases reviewed. b. MDHHS did not maintain case file documentation supporting the beneficiary eligibility determination; examples of documentation include MAGI-based income verification results, other income support, and signed applications for 4 (7%) of 60 Medicaid and 23 (38%) of 60 CHIP cases reviewed. c. MDHHS did not determine beneficiary eligibility within the required time frame for 1 (2%) of 60 Medicaid cases reviewed. Criteria Federal regulations 42 CFR 435.1002(b) and 42 CFR 457.622(d) indicate federal funding is available only for services provided to eligible beneficiaries. Federal regulations 42 CFR 435.914 and 42 CFR 457.965 require case record documentation be maintained to support the eligibility decision. Federal regulations 42 CFR 435.10, 42 CFR 457.50, and 42 CFR 457.70 require MDHHS to specify in its State Plan the groups to whom Medicaid and CHIP are provided and the conditions of eligibility for individuals in those groups. Federal regulation 42 CFR 435.912(c) requires MDHHS to determine eligibility and provide notice of the decision within 90 days for applicants who apply for Medicaid on the basis of disability and 45 days for all other applicants. MDHHS Bridges Administrative Manual 300, The Case Record, indicates a case record includes documents and information related to a given case arranged in a series of packets and contained in a folder identified by a case name, grantee ID, or case number. A case record consists of both paper case records and electronic case files (ECF). The paper case record and ECF contain all forms, documents, and other evidence relevant to the group's current and past eligibility. Unless captured in Bridges the case record must document the facts essential to the eligibility determination and actions taken by the local office regarding the case. Cause MDHHS's internal control and monitoring activities were not sufficient to ensure MDHHS maintained or appropriately considered the required documentation in beneficiaries' case records to support eligibility determinations. Also, MDHHS's internal control did not ensure county/district office caseworkers timely reviewed beneficiaries' case records. Effect We consider this to be a material weakness and material noncompliance because MDHHS may have made payments on behalf of ineligible beneficiaries and because of the 12% Medicaid and 55% CHIP error rates. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs would exceed $25,000. • $6,697 - federal share. • $2,299 - State share of costs MDHHS inappropriately used as matching. Recommendations We recommend MDHHS properly consider Medicaid and CHIP eligibility documentation in accordance with eligibility requirements. We also recommend MDHHS maintain documentation to support beneficiary eligibility was determined in accordance with eligibility requirements. We further recommend MDHHS ensure eligibility determinations are made timely. Management Views MDHHS agrees with the identified exceptions for parts a. and c. of the finding. However, MDHHS disagrees that 3 Medicaid cases and 20 Children's Health Insurance Program (CHIP) cases with MAGI determinations cited in part b. did not have case file documentation supporting the beneficiary eligibility determination. The Centers for Medicare and Medicaid Services (CMS) has determined that a reasonable compatibility indicator can be used for CMS audit purposes to determine if the attested income information was electronically verified for MAGI cases and MDHHS disagrees that documentation was not maintained to support the eligibility determination. The SOM MiIntegrate system communicates with various State and federal electronic trusted data sources and sends the information from these sources, along with the beneficiaries' attested income, to the SOM MAGI Rules Engine where the MAGI eligibility determination is made. As part of the MAGI eligibility determination, a reasonable compatibility test is completed to determine if beneficiary/applicant attested income is within a specified percentage of the electronic trusted data sources or if the attested and verified income are below the threshold for the applicable program. The results of the MAGI eligibility determination are sent back to MiIntegrate using an Account Transfer (AT) packet that contains the results. MiIntegrate then communicates the results to the SOM MAGI Viewer and Bridges using an AT packet and Bridges stores the AT packet number only that can be used to view the details of the AT packet within the SOM MAGI Viewer. The version of the AT packet within the MAGI Viewer also contains a reasonable compatibility indicator that documents the outcome of the reasonable compatibility test and supports the SOM MAGI Rules Engine eligibility decision. MDHHS stores the AT packet information, including facts essential to the eligibility determination, within MiIntegrate and the MAGI Viewer instead of Bridges to help protect and secure the federal income tax data and unemployment data used for the determination. The AT packet for each individual determination can be retrieved from the MAGI Viewer using the AT packet number stored in each beneficiary's case file within Bridges. MDHHS is not aware of any federal regulations that preclude MDHHS from storing this information in a separate system to help secure the data and restrict access as required by federal and state law. Auditor's Comments to Management Views Regarding the MAGI beneficiary eligibility documentation cited in part b., the CMS's Payment Error Rate Measurement (PERM) Manual indicates if states use electronic verification to verify eligibility elements there should be an indicator in the eligibility system, i.e., Bridges, showing the State verified the element, including the result of the verification. Also, federal regulations 42 CFR 935.914 and 42 CFR 457.965 require MDHHS to maintain facts in the case file to support the eligibility determination. The AT packet number does not include the reasonable compatibility indicator. Therefore, it does not provide sufficient detail within the case file, defined by MDHHS as records captured in Bridges, to demonstrate MDHHS verified the income or the caseworker confirmed the result of the verification. Therefore, the finding stands as written.
FINDING 2024-040 Medicaid Cluster, ALN 93.775, 93.777, and 93.778, Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Eligibility; and Matching, Level of Effort, and Earmarking - Payments on Behalf of Ineligible Beneficiaries See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure beneficiary eligibility was updated in CHAMPS. As a result, MDHHS issued $3,373 for 11 (37%) of 30 payments sampled from a $2,001,375 population of beneficiary payments with no corresponding Medicaid coverage. Criteria Federal regulation 42 CFR 435.1002(b) indicates federal funding is available only for services provided to eligible beneficiaries. Cause MDHHS informed us that because of system issues in Bridges, inaccurate eligibility information from Bridges was interfaced into CHAMPS, resulting in beneficiaries appearing eligible in CHAMPS in error and payments being processed based on that eligibility. Effect MDHHS made payments on behalf of ineligible beneficiaries. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs exceed $25,000. • $2,256 - federal share of payments made to providers on behalf of ineligible beneficiaries. • $1,117 - State share of payments made to providers on behalf of ineligible beneficiaries. Recommendation We recommend MDHHS ensure beneficiary eligibility is updated in CHAMPS. Management Views MDHHS agrees with the finding.
FINDING 2024-041 Medicaid Cluster, ALN 93.775, 93.777, and 93.778, Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Eligibility; and Matching, Level of Effort, and Earmarking - Ineligible HHP Payments See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not prevent or timely recover payments, totaling $342, for 3 (20%) of 15 sampled clients who were hospitalized while receiving HHP services and no longer met eligibility requirements. Criteria Federal regulation 42 CFR 435.10 requires MDHHS to specify in its State Plan the groups to whom Medicaid is provided and the conditions of eligibility for individuals in those groups. MDHHS's Medicaid State Plan states it will provide personal care services under HHP. MDHHS has developed the Adult Services Manual (ASM) to further define specific policies and procedures for delivery of Medicaid HHP services. ASM Section 140 prohibits payment for HHP services on days a client is unavailable due to hospitalization, except the caregiver may receive payment of HHP services on the day a client is admitted to a hospital if HHP services were completed before the time the client was admitted to the hospital. Also, ASM Section 140 allows payment for HHP services on the day a client is discharged from the hospital. Cause MDHHS informed us the post-payment review process is complicated by the lag time (up to one year) associated with MDHHS receiving and processing hospital claims and delays in changes to clients' level of care. Also, MDHHS indicated staff oversight impacted the timeliness and accuracy of recoupments. Effect MDHHS paid a total of $342 from October 1, 2023 through September 30, 2024 for sampled clients who did not qualify for HHP services because they were hospitalized. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs would exceed $25,000. • $223 - federal share of amounts paid for HHP services while sampled clients were hospitalized. • $119 - State share of costs MDHHS inappropriately used as matching. Recommendation We recommend MDHHS prevent or timely recover payments for HHP services when clients no longer meet eligibility requirements. Management Views MDHHS agrees with the finding.
FINDING 2024-042 Medicaid Cluster, ALN 93.775, 93.777, and 93.778, Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Eligibility; and Matching, Level of Effort, and Earmarking - Ineligible Home Help Assistance See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not obtain an updated medical needs form to ensure the HHP beneficiary met eligibility requirements for 1 of 3 HHP payments sampled. The specified time frame for needed services, as indicated on the beneficiary's initial medical needs form, elapsed before the date of the HHP payment and an updated medical needs form was not completed as of the date of our review. Criteria Federal regulation 42 CFR 435.10 requires MDHHS to specify in its State Plan the groups to whom Medicaid is provided and the conditions of eligibility for individuals in those groups. MDHHS's Medicaid State Plan states it will provide personal care services under the HHP. MDHHS has developed the ASM to further define specific policies and procedures for delivery of Medicaid HHP services. ASM Section 115 requires most HHP clients to obtain certification from a Medicaid-enrolled medical professional of the clients' medical need for services only at the initial opening of a case before qualifying for services unless special circumstances exist, such as the medical needs form has a specified time frame for needed services and the time frame has elapsed. Cause MDHHS informed us it did not consistently track and document when medical needs forms with a specified time frame were expected to expire. Effect MDHHS may have made payments on behalf of an ineligible HHP beneficiary. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs would exceed $25,000. • $910 - federal share made to a provider on behalf of an ineligible beneficiary. • $492 - State share of costs MDHHS inappropriately used as matching. Recommendation We recommend MDHHS obtain an updated medical needs form to support beneficiary eligibility for HHP payments. Management Views MDHHS agrees with the finding.
FINDING 2024-012 Medicaid Cluster, ALN 93.775, 93.777, and 93.778 and Children's Health Insurance Program, ALN 93.767 - Beneficiary Eligibility See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure or demonstrate compliance with federal laws and regulations relating to beneficiary eligibility for 7 (12%) of 60 Medicaid and 33 (55%) of 60 CHIP cases. Our review disclosed: a. MDHHS did not determine beneficiary eligibility in accordance with eligibility requirements for 2 (3%) of 60 Medicaid and 10 (17%) of 60 CHIP cases reviewed. b. MDHHS did not maintain case file documentation supporting the beneficiary eligibility determination; examples of documentation include MAGI-based income verification results, other income support, and signed applications for 4 (7%) of 60 Medicaid and 23 (38%) of 60 CHIP cases reviewed. c. MDHHS did not determine beneficiary eligibility within the required time frame for 1 (2%) of 60 Medicaid cases reviewed. Criteria Federal regulations 42 CFR 435.1002(b) and 42 CFR 457.622(d) indicate federal funding is available only for services provided to eligible beneficiaries. Federal regulations 42 CFR 435.914 and 42 CFR 457.965 require case record documentation be maintained to support the eligibility decision. Federal regulations 42 CFR 435.10, 42 CFR 457.50, and 42 CFR 457.70 require MDHHS to specify in its State Plan the groups to whom Medicaid and CHIP are provided and the conditions of eligibility for individuals in those groups. Federal regulation 42 CFR 435.912(c) requires MDHHS to determine eligibility and provide notice of the decision within 90 days for applicants who apply for Medicaid on the basis of disability and 45 days for all other applicants. MDHHS Bridges Administrative Manual 300, The Case Record, indicates a case record includes documents and information related to a given case arranged in a series of packets and contained in a folder identified by a case name, grantee ID, or case number. A case record consists of both paper case records and electronic case files (ECF). The paper case record and ECF contain all forms, documents, and other evidence relevant to the group's current and past eligibility. Unless captured in Bridges the case record must document the facts essential to the eligibility determination and actions taken by the local office regarding the case. Cause MDHHS's internal control and monitoring activities were not sufficient to ensure MDHHS maintained or appropriately considered the required documentation in beneficiaries' case records to support eligibility determinations. Also, MDHHS's internal control did not ensure county/district office caseworkers timely reviewed beneficiaries' case records. Effect We consider this to be a material weakness and material noncompliance because MDHHS may have made payments on behalf of ineligible beneficiaries and because of the 12% Medicaid and 55% CHIP error rates. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs would exceed $25,000. • $6,697 - federal share. • $2,299 - State share of costs MDHHS inappropriately used as matching. Recommendations We recommend MDHHS properly consider Medicaid and CHIP eligibility documentation in accordance with eligibility requirements. We also recommend MDHHS maintain documentation to support beneficiary eligibility was determined in accordance with eligibility requirements. We further recommend MDHHS ensure eligibility determinations are made timely. Management Views MDHHS agrees with the identified exceptions for parts a. and c. of the finding. However, MDHHS disagrees that 3 Medicaid cases and 20 Children's Health Insurance Program (CHIP) cases with MAGI determinations cited in part b. did not have case file documentation supporting the beneficiary eligibility determination. The Centers for Medicare and Medicaid Services (CMS) has determined that a reasonable compatibility indicator can be used for CMS audit purposes to determine if the attested income information was electronically verified for MAGI cases and MDHHS disagrees that documentation was not maintained to support the eligibility determination. The SOM MiIntegrate system communicates with various State and federal electronic trusted data sources and sends the information from these sources, along with the beneficiaries' attested income, to the SOM MAGI Rules Engine where the MAGI eligibility determination is made. As part of the MAGI eligibility determination, a reasonable compatibility test is completed to determine if beneficiary/applicant attested income is within a specified percentage of the electronic trusted data sources or if the attested and verified income are below the threshold for the applicable program. The results of the MAGI eligibility determination are sent back to MiIntegrate using an Account Transfer (AT) packet that contains the results. MiIntegrate then communicates the results to the SOM MAGI Viewer and Bridges using an AT packet and Bridges stores the AT packet number only that can be used to view the details of the AT packet within the SOM MAGI Viewer. The version of the AT packet within the MAGI Viewer also contains a reasonable compatibility indicator that documents the outcome of the reasonable compatibility test and supports the SOM MAGI Rules Engine eligibility decision. MDHHS stores the AT packet information, including facts essential to the eligibility determination, within MiIntegrate and the MAGI Viewer instead of Bridges to help protect and secure the federal income tax data and unemployment data used for the determination. The AT packet for each individual determination can be retrieved from the MAGI Viewer using the AT packet number stored in each beneficiary's case file within Bridges. MDHHS is not aware of any federal regulations that preclude MDHHS from storing this information in a separate system to help secure the data and restrict access as required by federal and state law. Auditor's Comments to Management Views Regarding the MAGI beneficiary eligibility documentation cited in part b., the CMS's Payment Error Rate Measurement (PERM) Manual indicates if states use electronic verification to verify eligibility elements there should be an indicator in the eligibility system, i.e., Bridges, showing the State verified the element, including the result of the verification. Also, federal regulations 42 CFR 935.914 and 42 CFR 457.965 require MDHHS to maintain facts in the case file to support the eligibility determination. The AT packet number does not include the reasonable compatibility indicator. Therefore, it does not provide sufficient detail within the case file, defined by MDHHS as records captured in Bridges, to demonstrate MDHHS verified the income or the caseworker confirmed the result of the verification. Therefore, the finding stands as written.
FINDING 2024-040 Medicaid Cluster, ALN 93.775, 93.777, and 93.778, Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Eligibility; and Matching, Level of Effort, and Earmarking - Payments on Behalf of Ineligible Beneficiaries See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure beneficiary eligibility was updated in CHAMPS. As a result, MDHHS issued $3,373 for 11 (37%) of 30 payments sampled from a $2,001,375 population of beneficiary payments with no corresponding Medicaid coverage. Criteria Federal regulation 42 CFR 435.1002(b) indicates federal funding is available only for services provided to eligible beneficiaries. Cause MDHHS informed us that because of system issues in Bridges, inaccurate eligibility information from Bridges was interfaced into CHAMPS, resulting in beneficiaries appearing eligible in CHAMPS in error and payments being processed based on that eligibility. Effect MDHHS made payments on behalf of ineligible beneficiaries. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs exceed $25,000. • $2,256 - federal share of payments made to providers on behalf of ineligible beneficiaries. • $1,117 - State share of payments made to providers on behalf of ineligible beneficiaries. Recommendation We recommend MDHHS ensure beneficiary eligibility is updated in CHAMPS. Management Views MDHHS agrees with the finding.
FINDING 2024-041 Medicaid Cluster, ALN 93.775, 93.777, and 93.778, Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Eligibility; and Matching, Level of Effort, and Earmarking - Ineligible HHP Payments See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not prevent or timely recover payments, totaling $342, for 3 (20%) of 15 sampled clients who were hospitalized while receiving HHP services and no longer met eligibility requirements. Criteria Federal regulation 42 CFR 435.10 requires MDHHS to specify in its State Plan the groups to whom Medicaid is provided and the conditions of eligibility for individuals in those groups. MDHHS's Medicaid State Plan states it will provide personal care services under HHP. MDHHS has developed the Adult Services Manual (ASM) to further define specific policies and procedures for delivery of Medicaid HHP services. ASM Section 140 prohibits payment for HHP services on days a client is unavailable due to hospitalization, except the caregiver may receive payment of HHP services on the day a client is admitted to a hospital if HHP services were completed before the time the client was admitted to the hospital. Also, ASM Section 140 allows payment for HHP services on the day a client is discharged from the hospital. Cause MDHHS informed us the post-payment review process is complicated by the lag time (up to one year) associated with MDHHS receiving and processing hospital claims and delays in changes to clients' level of care. Also, MDHHS indicated staff oversight impacted the timeliness and accuracy of recoupments. Effect MDHHS paid a total of $342 from October 1, 2023 through September 30, 2024 for sampled clients who did not qualify for HHP services because they were hospitalized. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs would exceed $25,000. • $223 - federal share of amounts paid for HHP services while sampled clients were hospitalized. • $119 - State share of costs MDHHS inappropriately used as matching. Recommendation We recommend MDHHS prevent or timely recover payments for HHP services when clients no longer meet eligibility requirements. Management Views MDHHS agrees with the finding.
FINDING 2024-042 Medicaid Cluster, ALN 93.775, 93.777, and 93.778, Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Eligibility; and Matching, Level of Effort, and Earmarking - Ineligible Home Help Assistance See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not obtain an updated medical needs form to ensure the HHP beneficiary met eligibility requirements for 1 of 3 HHP payments sampled. The specified time frame for needed services, as indicated on the beneficiary's initial medical needs form, elapsed before the date of the HHP payment and an updated medical needs form was not completed as of the date of our review. Criteria Federal regulation 42 CFR 435.10 requires MDHHS to specify in its State Plan the groups to whom Medicaid is provided and the conditions of eligibility for individuals in those groups. MDHHS's Medicaid State Plan states it will provide personal care services under the HHP. MDHHS has developed the ASM to further define specific policies and procedures for delivery of Medicaid HHP services. ASM Section 115 requires most HHP clients to obtain certification from a Medicaid-enrolled medical professional of the clients' medical need for services only at the initial opening of a case before qualifying for services unless special circumstances exist, such as the medical needs form has a specified time frame for needed services and the time frame has elapsed. Cause MDHHS informed us it did not consistently track and document when medical needs forms with a specified time frame were expected to expire. Effect MDHHS may have made payments on behalf of an ineligible HHP beneficiary. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs would exceed $25,000. • $910 - federal share made to a provider on behalf of an ineligible beneficiary. • $492 - State share of costs MDHHS inappropriately used as matching. Recommendation We recommend MDHHS obtain an updated medical needs form to support beneficiary eligibility for HHP payments. Management Views MDHHS agrees with the finding.
FINDING 2024-012 Medicaid Cluster, ALN 93.775, 93.777, and 93.778 and Children's Health Insurance Program, ALN 93.767 - Beneficiary Eligibility See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure or demonstrate compliance with federal laws and regulations relating to beneficiary eligibility for 7 (12%) of 60 Medicaid and 33 (55%) of 60 CHIP cases. Our review disclosed: a. MDHHS did not determine beneficiary eligibility in accordance with eligibility requirements for 2 (3%) of 60 Medicaid and 10 (17%) of 60 CHIP cases reviewed. b. MDHHS did not maintain case file documentation supporting the beneficiary eligibility determination; examples of documentation include MAGI-based income verification results, other income support, and signed applications for 4 (7%) of 60 Medicaid and 23 (38%) of 60 CHIP cases reviewed. c. MDHHS did not determine beneficiary eligibility within the required time frame for 1 (2%) of 60 Medicaid cases reviewed. Criteria Federal regulations 42 CFR 435.1002(b) and 42 CFR 457.622(d) indicate federal funding is available only for services provided to eligible beneficiaries. Federal regulations 42 CFR 435.914 and 42 CFR 457.965 require case record documentation be maintained to support the eligibility decision. Federal regulations 42 CFR 435.10, 42 CFR 457.50, and 42 CFR 457.70 require MDHHS to specify in its State Plan the groups to whom Medicaid and CHIP are provided and the conditions of eligibility for individuals in those groups. Federal regulation 42 CFR 435.912(c) requires MDHHS to determine eligibility and provide notice of the decision within 90 days for applicants who apply for Medicaid on the basis of disability and 45 days for all other applicants. MDHHS Bridges Administrative Manual 300, The Case Record, indicates a case record includes documents and information related to a given case arranged in a series of packets and contained in a folder identified by a case name, grantee ID, or case number. A case record consists of both paper case records and electronic case files (ECF). The paper case record and ECF contain all forms, documents, and other evidence relevant to the group's current and past eligibility. Unless captured in Bridges the case record must document the facts essential to the eligibility determination and actions taken by the local office regarding the case. Cause MDHHS's internal control and monitoring activities were not sufficient to ensure MDHHS maintained or appropriately considered the required documentation in beneficiaries' case records to support eligibility determinations. Also, MDHHS's internal control did not ensure county/district office caseworkers timely reviewed beneficiaries' case records. Effect We consider this to be a material weakness and material noncompliance because MDHHS may have made payments on behalf of ineligible beneficiaries and because of the 12% Medicaid and 55% CHIP error rates. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs would exceed $25,000. • $6,697 - federal share. • $2,299 - State share of costs MDHHS inappropriately used as matching. Recommendations We recommend MDHHS properly consider Medicaid and CHIP eligibility documentation in accordance with eligibility requirements. We also recommend MDHHS maintain documentation to support beneficiary eligibility was determined in accordance with eligibility requirements. We further recommend MDHHS ensure eligibility determinations are made timely. Management Views MDHHS agrees with the identified exceptions for parts a. and c. of the finding. However, MDHHS disagrees that 3 Medicaid cases and 20 Children's Health Insurance Program (CHIP) cases with MAGI determinations cited in part b. did not have case file documentation supporting the beneficiary eligibility determination. The Centers for Medicare and Medicaid Services (CMS) has determined that a reasonable compatibility indicator can be used for CMS audit purposes to determine if the attested income information was electronically verified for MAGI cases and MDHHS disagrees that documentation was not maintained to support the eligibility determination. The SOM MiIntegrate system communicates with various State and federal electronic trusted data sources and sends the information from these sources, along with the beneficiaries' attested income, to the SOM MAGI Rules Engine where the MAGI eligibility determination is made. As part of the MAGI eligibility determination, a reasonable compatibility test is completed to determine if beneficiary/applicant attested income is within a specified percentage of the electronic trusted data sources or if the attested and verified income are below the threshold for the applicable program. The results of the MAGI eligibility determination are sent back to MiIntegrate using an Account Transfer (AT) packet that contains the results. MiIntegrate then communicates the results to the SOM MAGI Viewer and Bridges using an AT packet and Bridges stores the AT packet number only that can be used to view the details of the AT packet within the SOM MAGI Viewer. The version of the AT packet within the MAGI Viewer also contains a reasonable compatibility indicator that documents the outcome of the reasonable compatibility test and supports the SOM MAGI Rules Engine eligibility decision. MDHHS stores the AT packet information, including facts essential to the eligibility determination, within MiIntegrate and the MAGI Viewer instead of Bridges to help protect and secure the federal income tax data and unemployment data used for the determination. The AT packet for each individual determination can be retrieved from the MAGI Viewer using the AT packet number stored in each beneficiary's case file within Bridges. MDHHS is not aware of any federal regulations that preclude MDHHS from storing this information in a separate system to help secure the data and restrict access as required by federal and state law. Auditor's Comments to Management Views Regarding the MAGI beneficiary eligibility documentation cited in part b., the CMS's Payment Error Rate Measurement (PERM) Manual indicates if states use electronic verification to verify eligibility elements there should be an indicator in the eligibility system, i.e., Bridges, showing the State verified the element, including the result of the verification. Also, federal regulations 42 CFR 935.914 and 42 CFR 457.965 require MDHHS to maintain facts in the case file to support the eligibility determination. The AT packet number does not include the reasonable compatibility indicator. Therefore, it does not provide sufficient detail within the case file, defined by MDHHS as records captured in Bridges, to demonstrate MDHHS verified the income or the caseworker confirmed the result of the verification. Therefore, the finding stands as written.
FINDING 2024-040 Medicaid Cluster, ALN 93.775, 93.777, and 93.778, Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Eligibility; and Matching, Level of Effort, and Earmarking - Payments on Behalf of Ineligible Beneficiaries See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure beneficiary eligibility was updated in CHAMPS. As a result, MDHHS issued $3,373 for 11 (37%) of 30 payments sampled from a $2,001,375 population of beneficiary payments with no corresponding Medicaid coverage. Criteria Federal regulation 42 CFR 435.1002(b) indicates federal funding is available only for services provided to eligible beneficiaries. Cause MDHHS informed us that because of system issues in Bridges, inaccurate eligibility information from Bridges was interfaced into CHAMPS, resulting in beneficiaries appearing eligible in CHAMPS in error and payments being processed based on that eligibility. Effect MDHHS made payments on behalf of ineligible beneficiaries. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs exceed $25,000. • $2,256 - federal share of payments made to providers on behalf of ineligible beneficiaries. • $1,117 - State share of payments made to providers on behalf of ineligible beneficiaries. Recommendation We recommend MDHHS ensure beneficiary eligibility is updated in CHAMPS. Management Views MDHHS agrees with the finding.
FINDING 2024-041 Medicaid Cluster, ALN 93.775, 93.777, and 93.778, Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Eligibility; and Matching, Level of Effort, and Earmarking - Ineligible HHP Payments See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not prevent or timely recover payments, totaling $342, for 3 (20%) of 15 sampled clients who were hospitalized while receiving HHP services and no longer met eligibility requirements. Criteria Federal regulation 42 CFR 435.10 requires MDHHS to specify in its State Plan the groups to whom Medicaid is provided and the conditions of eligibility for individuals in those groups. MDHHS's Medicaid State Plan states it will provide personal care services under HHP. MDHHS has developed the Adult Services Manual (ASM) to further define specific policies and procedures for delivery of Medicaid HHP services. ASM Section 140 prohibits payment for HHP services on days a client is unavailable due to hospitalization, except the caregiver may receive payment of HHP services on the day a client is admitted to a hospital if HHP services were completed before the time the client was admitted to the hospital. Also, ASM Section 140 allows payment for HHP services on the day a client is discharged from the hospital. Cause MDHHS informed us the post-payment review process is complicated by the lag time (up to one year) associated with MDHHS receiving and processing hospital claims and delays in changes to clients' level of care. Also, MDHHS indicated staff oversight impacted the timeliness and accuracy of recoupments. Effect MDHHS paid a total of $342 from October 1, 2023 through September 30, 2024 for sampled clients who did not qualify for HHP services because they were hospitalized. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs would exceed $25,000. • $223 - federal share of amounts paid for HHP services while sampled clients were hospitalized. • $119 - State share of costs MDHHS inappropriately used as matching. Recommendation We recommend MDHHS prevent or timely recover payments for HHP services when clients no longer meet eligibility requirements. Management Views MDHHS agrees with the finding.
FINDING 2024-042 Medicaid Cluster, ALN 93.775, 93.777, and 93.778, Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Eligibility; and Matching, Level of Effort, and Earmarking - Ineligible Home Help Assistance See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not obtain an updated medical needs form to ensure the HHP beneficiary met eligibility requirements for 1 of 3 HHP payments sampled. The specified time frame for needed services, as indicated on the beneficiary's initial medical needs form, elapsed before the date of the HHP payment and an updated medical needs form was not completed as of the date of our review. Criteria Federal regulation 42 CFR 435.10 requires MDHHS to specify in its State Plan the groups to whom Medicaid is provided and the conditions of eligibility for individuals in those groups. MDHHS's Medicaid State Plan states it will provide personal care services under the HHP. MDHHS has developed the ASM to further define specific policies and procedures for delivery of Medicaid HHP services. ASM Section 115 requires most HHP clients to obtain certification from a Medicaid-enrolled medical professional of the clients' medical need for services only at the initial opening of a case before qualifying for services unless special circumstances exist, such as the medical needs form has a specified time frame for needed services and the time frame has elapsed. Cause MDHHS informed us it did not consistently track and document when medical needs forms with a specified time frame were expected to expire. Effect MDHHS may have made payments on behalf of an ineligible HHP beneficiary. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs would exceed $25,000. • $910 - federal share made to a provider on behalf of an ineligible beneficiary. • $492 - State share of costs MDHHS inappropriately used as matching. Recommendation We recommend MDHHS obtain an updated medical needs form to support beneficiary eligibility for HHP payments. Management Views MDHHS agrees with the finding.
FINDING 2024-012 Medicaid Cluster, ALN 93.775, 93.777, and 93.778 and Children's Health Insurance Program, ALN 93.767 - Beneficiary Eligibility See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure or demonstrate compliance with federal laws and regulations relating to beneficiary eligibility for 7 (12%) of 60 Medicaid and 33 (55%) of 60 CHIP cases. Our review disclosed: a. MDHHS did not determine beneficiary eligibility in accordance with eligibility requirements for 2 (3%) of 60 Medicaid and 10 (17%) of 60 CHIP cases reviewed. b. MDHHS did not maintain case file documentation supporting the beneficiary eligibility determination; examples of documentation include MAGI-based income verification results, other income support, and signed applications for 4 (7%) of 60 Medicaid and 23 (38%) of 60 CHIP cases reviewed. c. MDHHS did not determine beneficiary eligibility within the required time frame for 1 (2%) of 60 Medicaid cases reviewed. Criteria Federal regulations 42 CFR 435.1002(b) and 42 CFR 457.622(d) indicate federal funding is available only for services provided to eligible beneficiaries. Federal regulations 42 CFR 435.914 and 42 CFR 457.965 require case record documentation be maintained to support the eligibility decision. Federal regulations 42 CFR 435.10, 42 CFR 457.50, and 42 CFR 457.70 require MDHHS to specify in its State Plan the groups to whom Medicaid and CHIP are provided and the conditions of eligibility for individuals in those groups. Federal regulation 42 CFR 435.912(c) requires MDHHS to determine eligibility and provide notice of the decision within 90 days for applicants who apply for Medicaid on the basis of disability and 45 days for all other applicants. MDHHS Bridges Administrative Manual 300, The Case Record, indicates a case record includes documents and information related to a given case arranged in a series of packets and contained in a folder identified by a case name, grantee ID, or case number. A case record consists of both paper case records and electronic case files (ECF). The paper case record and ECF contain all forms, documents, and other evidence relevant to the group's current and past eligibility. Unless captured in Bridges the case record must document the facts essential to the eligibility determination and actions taken by the local office regarding the case. Cause MDHHS's internal control and monitoring activities were not sufficient to ensure MDHHS maintained or appropriately considered the required documentation in beneficiaries' case records to support eligibility determinations. Also, MDHHS's internal control did not ensure county/district office caseworkers timely reviewed beneficiaries' case records. Effect We consider this to be a material weakness and material noncompliance because MDHHS may have made payments on behalf of ineligible beneficiaries and because of the 12% Medicaid and 55% CHIP error rates. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs would exceed $25,000. • $6,697 - federal share. • $2,299 - State share of costs MDHHS inappropriately used as matching. Recommendations We recommend MDHHS properly consider Medicaid and CHIP eligibility documentation in accordance with eligibility requirements. We also recommend MDHHS maintain documentation to support beneficiary eligibility was determined in accordance with eligibility requirements. We further recommend MDHHS ensure eligibility determinations are made timely. Management Views MDHHS agrees with the identified exceptions for parts a. and c. of the finding. However, MDHHS disagrees that 3 Medicaid cases and 20 Children's Health Insurance Program (CHIP) cases with MAGI determinations cited in part b. did not have case file documentation supporting the beneficiary eligibility determination. The Centers for Medicare and Medicaid Services (CMS) has determined that a reasonable compatibility indicator can be used for CMS audit purposes to determine if the attested income information was electronically verified for MAGI cases and MDHHS disagrees that documentation was not maintained to support the eligibility determination. The SOM MiIntegrate system communicates with various State and federal electronic trusted data sources and sends the information from these sources, along with the beneficiaries' attested income, to the SOM MAGI Rules Engine where the MAGI eligibility determination is made. As part of the MAGI eligibility determination, a reasonable compatibility test is completed to determine if beneficiary/applicant attested income is within a specified percentage of the electronic trusted data sources or if the attested and verified income are below the threshold for the applicable program. The results of the MAGI eligibility determination are sent back to MiIntegrate using an Account Transfer (AT) packet that contains the results. MiIntegrate then communicates the results to the SOM MAGI Viewer and Bridges using an AT packet and Bridges stores the AT packet number only that can be used to view the details of the AT packet within the SOM MAGI Viewer. The version of the AT packet within the MAGI Viewer also contains a reasonable compatibility indicator that documents the outcome of the reasonable compatibility test and supports the SOM MAGI Rules Engine eligibility decision. MDHHS stores the AT packet information, including facts essential to the eligibility determination, within MiIntegrate and the MAGI Viewer instead of Bridges to help protect and secure the federal income tax data and unemployment data used for the determination. The AT packet for each individual determination can be retrieved from the MAGI Viewer using the AT packet number stored in each beneficiary's case file within Bridges. MDHHS is not aware of any federal regulations that preclude MDHHS from storing this information in a separate system to help secure the data and restrict access as required by federal and state law. Auditor's Comments to Management Views Regarding the MAGI beneficiary eligibility documentation cited in part b., the CMS's Payment Error Rate Measurement (PERM) Manual indicates if states use electronic verification to verify eligibility elements there should be an indicator in the eligibility system, i.e., Bridges, showing the State verified the element, including the result of the verification. Also, federal regulations 42 CFR 935.914 and 42 CFR 457.965 require MDHHS to maintain facts in the case file to support the eligibility determination. The AT packet number does not include the reasonable compatibility indicator. Therefore, it does not provide sufficient detail within the case file, defined by MDHHS as records captured in Bridges, to demonstrate MDHHS verified the income or the caseworker confirmed the result of the verification. Therefore, the finding stands as written.
FINDING 2024-040 Medicaid Cluster, ALN 93.775, 93.777, and 93.778, Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Eligibility; and Matching, Level of Effort, and Earmarking - Payments on Behalf of Ineligible Beneficiaries See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure beneficiary eligibility was updated in CHAMPS. As a result, MDHHS issued $3,373 for 11 (37%) of 30 payments sampled from a $2,001,375 population of beneficiary payments with no corresponding Medicaid coverage. Criteria Federal regulation 42 CFR 435.1002(b) indicates federal funding is available only for services provided to eligible beneficiaries. Cause MDHHS informed us that because of system issues in Bridges, inaccurate eligibility information from Bridges was interfaced into CHAMPS, resulting in beneficiaries appearing eligible in CHAMPS in error and payments being processed based on that eligibility. Effect MDHHS made payments on behalf of ineligible beneficiaries. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs exceed $25,000. • $2,256 - federal share of payments made to providers on behalf of ineligible beneficiaries. • $1,117 - State share of payments made to providers on behalf of ineligible beneficiaries. Recommendation We recommend MDHHS ensure beneficiary eligibility is updated in CHAMPS. Management Views MDHHS agrees with the finding.
FINDING 2024-041 Medicaid Cluster, ALN 93.775, 93.777, and 93.778, Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Eligibility; and Matching, Level of Effort, and Earmarking - Ineligible HHP Payments See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not prevent or timely recover payments, totaling $342, for 3 (20%) of 15 sampled clients who were hospitalized while receiving HHP services and no longer met eligibility requirements. Criteria Federal regulation 42 CFR 435.10 requires MDHHS to specify in its State Plan the groups to whom Medicaid is provided and the conditions of eligibility for individuals in those groups. MDHHS's Medicaid State Plan states it will provide personal care services under HHP. MDHHS has developed the Adult Services Manual (ASM) to further define specific policies and procedures for delivery of Medicaid HHP services. ASM Section 140 prohibits payment for HHP services on days a client is unavailable due to hospitalization, except the caregiver may receive payment of HHP services on the day a client is admitted to a hospital if HHP services were completed before the time the client was admitted to the hospital. Also, ASM Section 140 allows payment for HHP services on the day a client is discharged from the hospital. Cause MDHHS informed us the post-payment review process is complicated by the lag time (up to one year) associated with MDHHS receiving and processing hospital claims and delays in changes to clients' level of care. Also, MDHHS indicated staff oversight impacted the timeliness and accuracy of recoupments. Effect MDHHS paid a total of $342 from October 1, 2023 through September 30, 2024 for sampled clients who did not qualify for HHP services because they were hospitalized. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs would exceed $25,000. • $223 - federal share of amounts paid for HHP services while sampled clients were hospitalized. • $119 - State share of costs MDHHS inappropriately used as matching. Recommendation We recommend MDHHS prevent or timely recover payments for HHP services when clients no longer meet eligibility requirements. Management Views MDHHS agrees with the finding.
FINDING 2024-042 Medicaid Cluster, ALN 93.775, 93.777, and 93.778, Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Eligibility; and Matching, Level of Effort, and Earmarking - Ineligible Home Help Assistance See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not obtain an updated medical needs form to ensure the HHP beneficiary met eligibility requirements for 1 of 3 HHP payments sampled. The specified time frame for needed services, as indicated on the beneficiary's initial medical needs form, elapsed before the date of the HHP payment and an updated medical needs form was not completed as of the date of our review. Criteria Federal regulation 42 CFR 435.10 requires MDHHS to specify in its State Plan the groups to whom Medicaid is provided and the conditions of eligibility for individuals in those groups. MDHHS's Medicaid State Plan states it will provide personal care services under the HHP. MDHHS has developed the ASM to further define specific policies and procedures for delivery of Medicaid HHP services. ASM Section 115 requires most HHP clients to obtain certification from a Medicaid-enrolled medical professional of the clients' medical need for services only at the initial opening of a case before qualifying for services unless special circumstances exist, such as the medical needs form has a specified time frame for needed services and the time frame has elapsed. Cause MDHHS informed us it did not consistently track and document when medical needs forms with a specified time frame were expected to expire. Effect MDHHS may have made payments on behalf of an ineligible HHP beneficiary. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs would exceed $25,000. • $910 - federal share made to a provider on behalf of an ineligible beneficiary. • $492 - State share of costs MDHHS inappropriately used as matching. Recommendation We recommend MDHHS obtain an updated medical needs form to support beneficiary eligibility for HHP payments. Management Views MDHHS agrees with the finding.
FINDING 2024-045 Temporary Assistance for Needy Families, ALN 93.558, Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Eligibility - Non-Financial Eligibility Documentation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not obtain or maintain sufficient non-financial case record documentation to support client eligibility for 1 (5%) of 22 sampled TANF-funded assistance payments. In this 1 instance, we noted MDHHS did not ensure the family's case record contained documentation to indicate household individuals were not in violation of their probation or parole requirements related to any offense in order to demonstrate the family was in need of TANF assistance. Criteria Federal regulation 45 CFR 260.20 requires a family be needy in order to be eligible for TANF assistance and job preparation services. Federal regulation 45 CFR 205.60(a) requires MDHHS to maintain records to support eligibility, including facts to support the client's need for assistance. MDHHS's policies and procedures require documentation used to verify eligibility be maintained in the case file. In addition, Subpart E of federal regulation 45 CFR 75 requires costs charged to federal programs be adequately documented, be necessary and reasonable for the administration of the federal award, be in accordance with the relative benefits received by the program, and be consistent with policies and procedures applying to both the federal award and other activities of the state. Cause MDHHS informed us its controls were not sufficient to ensure all of the required verification documentation was appropriately maintained in the client's case record. Effect MDHHS may have made TANF-funded assistance payments to ineligible clients. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs would exceed $25,000. • $13 - federally funded. Recommendation We recommend MDHHS obtain and maintain sufficient non-financial case record documentation to support client eligibility for TANF-funded assistance payments. Management Views MDHHS agrees with the finding.