FINDING 2023-039 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 $183, for 3 (20%) of 15 sampled clients who were hospitalized while receiving Home Help Program (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 135, effective through January 31, 2023, prohibits payment for HHP services on days a client is admitted to a hospital and for all subsequent days they remain in that facility. ASM Section 140, effective February 1, 2023, 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 Sections 135 and 140 allow 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 $183 from October 1, 2022 through September 30, 2023 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 that total questioned costs would exceed $25,000. • $128 - federal share of amounts paid for HHP services while sampled clients were hospitalized. • $55 - 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 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
FINDING 2023-013 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. Background In 2014, federal regulations changed the methodology for determining eligibility for certain Medicaid Cluster and CHIP beneficiaries to a methodology using federal income tax data known as MAGI. Federal regulation 26 CFR 301.6103(a) prohibits an auditor from using federal income tax data unless in connection with an audit of the state agency responsible for the administration of the state tax law. For 2014 through 2018, auditors were not expected to review MAGI eligibility determinations. Beginning in 2019, the U.S. Office of Management and Budget* (OMB) Compliance Supplement was revised requiring auditors to review MAGI eligibility determinations for both the Medicaid Cluster and CHIP. Also, because of the public health emergency, MDHHS was not required to perform redeterminations and could not end healthcare coverage unless the individual voluntarily requested termination, moved out of state, or was deceased. These continuous enrollment conditions ended March 31, 2023 with the passage of the Consolidated Appropriations Act of 2023, and states were required to initiate all redeterminations within a 12-month unwinding period. MDHHS began initiating redeterminations in June 2023. We sampled beneficiaries for each program who either had a benefit period which started during fiscal year 2023 or who had a benefit period which started prior to fiscal year 2023 and had a redetermination during the months of June through September 2023. We summarized the results of our eligibility review in the following table: See Schedule of Findings and Questioned Costs for chart/table. For an estimated 22,428 Medicaid and 8,520 CHIP beneficiaries, we were unable to determine if MDHHS complied with federal laws and regulations related to MAGI-based eligibility because federal regulations prohibited our use of federal income tax data and the beneficiaries' case record did not contain other available income information. Other income information is not required to be included in the case record when a determination of eligibility is based on MAGI. However, if such information was available, we reviewed this information for eligibility purposes to accurately report the sample items that could not be tested. The results of the testing for the remaining 59 Medicaid and 56 CHIP beneficiaries we were able to review are summarized in the finding below. Condition MDHHS did not ensure or demonstrate compliance with federal laws and regulations relating to beneficiary eligibility. Our review disclosed: a. MDHHS did not determine beneficiary eligibility in accordance with eligibility requirements for 5 (8%) of 59 Medicaid and 12 (21%) of 56 CHIP cases reviewed. b. MDHHS did not maintain case file documentation that supports the beneficiary eligibility determination for 1 (2%) of 59 Medicaid and 1 (2%) of 56 CHIP cases reviewed. c. MDHHS did not determine beneficiary eligibility within the required time frame for 2 (3%) of 59 Medicaid and 4 (7%) of 56 CHIP 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 regulation 42 CFR 435.914 requires 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 regulations 42 CFR 435.912(c) and 42 CFR 457.340(d) require 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. Cause For part a., MDHHS indicated it did not properly consider all available beneficiary information when determining beneficiary eligibility because of system issues and staff actions. For part b., MDHHS indicated the missing documentation resulted from staff oversight. For part c., MDHHS indicated limited staff resources and a significantly higher number of renewals due to the Public Health Emergency affected its ability to determine beneficiary eligibility within the required time frame. 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 10% Medicaid and 29% CHIP unduplicated 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. • $2,211 - federal share. • $762 - 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 finding.
FINDING 2023-014 Medicaid Cluster, ALN 93.775, 93.777, and 93.778 and Children's Health Insurance Program, ALN 93.767 - Expenditure Processing for Medical Payments See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure Bridges and CHAMPS contained the correct Medicaid Cluster and CHIP eligibility information to record expenditures to the appropriate program at the time of payment and to ensure the related federal draw was accurate and timely. On a quarterly basis, MDHHS transferred expenditure amounts from the Medicaid Cluster to CHIP by completing a summary-level adjustment determined by analyzing CHAMPS payment data and Bridges eligibility data. As a result, MDHHS identified that it incorrectly recorded $33.4 million of CHIP medical payments to the Medicaid Cluster throughout fiscal year 2023. However, we selected a sample of 3 beneficiaries that were transferred to CHIP and noted that 1 of 3 beneficiaries was not eligible for CHIP but was in fact Medicaid eligible and, therefore, should not have been transferred. Criteria Federal regulation 45 CFR 75.303 requires the auditee to establish and maintain effective internal control over federal programs that provides reasonable assurance the auditee is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of federal awards. Federal regulation 31 CFR 205 requires state recipients to enter into agreements with the U.S. Department of the Treasury that prescribe specific methods of drawing down federal funds for selected large programs. Cause MDHHS implemented a system change to correct eligibility classifications in Bridges in April 2021. All new cases are being correctly routed. MDHHS expects all existing cases will be updated during the 14-month period following the May 11, 2023 end of the public health emergency, as allowed by the Centers for Medicare and Medicaid Services (CMS). The Medicaid Cluster to CHIP transfer was completed correctly; however, because of an incorrect eligibility determination reflected in Bridges, one case was transferred in error. Effect MDHHS inappropriately transferred $133 Medicaid Cluster expenditures to CHIP. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Also, of the $33.4 million in quarterly transfers, MDHHS may have improperly received either federal Medicaid Cluster funds or federal CHIP funds depending on the accuracy of the transferred amount. After MDHHS recorded the quarterly summary-level adjustments in the accounting system, it returned the Medicaid Cluster funds to the federal government and appropriately received reimbursement from CHIP. The quarterly CHIP draws were not compliant with the State's Cash Management Improvement Act (CMIA) agreement, which required weekly actual costs draws. For the CHIP cash management compliance requirement noted, we consider this to be a material weakness and material noncompliance because the $33.4 million CHIP expenditures identified by MDHHS as inappropriately charged to and reimbursed by the Medicaid Cluster represented 11% of total CHIP expenditures. 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. • $89 - federal share of CHIP payments made to providers for ineligible CHIP beneficiaries, of which $89 is questioned in Finding 2023-013. • $45 - State share of costs MDHHS inappropriately used as matching. Recommendation We recommend MDHHS ensure Bridges and CHAMPS contain the correct Medicaid Cluster and CHIP eligibility information to allow MDHHS to record expenditures to the appropriate program at the time of payment and to ensure the related federal draw is accurate and timely. Management Views MDHHS agrees with the finding.
FINDING 2023-038 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 $1,058 for 8 (27%) of 30 payments sampled from a $1,620,411 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 and interface issues in both Bridges and CHAMPS, eligibility information was not always properly updated in 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 that total questioned costs exceed $25,000. • $945 - federal share of payments made to providers on behalf of ineligible beneficiaries. • $113 - 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 2023-039 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 $183, for 3 (20%) of 15 sampled clients who were hospitalized while receiving Home Help Program (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 135, effective through January 31, 2023, prohibits payment for HHP services on days a client is admitted to a hospital and for all subsequent days they remain in that facility. ASM Section 140, effective February 1, 2023, 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 Sections 135 and 140 allow 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 $183 from October 1, 2022 through September 30, 2023 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 that total questioned costs would exceed $25,000. • $128 - federal share of amounts paid for HHP services while sampled clients were hospitalized. • $55 - 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 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
FINDING 2023-013 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. Background In 2014, federal regulations changed the methodology for determining eligibility for certain Medicaid Cluster and CHIP beneficiaries to a methodology using federal income tax data known as MAGI. Federal regulation 26 CFR 301.6103(a) prohibits an auditor from using federal income tax data unless in connection with an audit of the state agency responsible for the administration of the state tax law. For 2014 through 2018, auditors were not expected to review MAGI eligibility determinations. Beginning in 2019, the U.S. Office of Management and Budget* (OMB) Compliance Supplement was revised requiring auditors to review MAGI eligibility determinations for both the Medicaid Cluster and CHIP. Also, because of the public health emergency, MDHHS was not required to perform redeterminations and could not end healthcare coverage unless the individual voluntarily requested termination, moved out of state, or was deceased. These continuous enrollment conditions ended March 31, 2023 with the passage of the Consolidated Appropriations Act of 2023, and states were required to initiate all redeterminations within a 12-month unwinding period. MDHHS began initiating redeterminations in June 2023. We sampled beneficiaries for each program who either had a benefit period which started during fiscal year 2023 or who had a benefit period which started prior to fiscal year 2023 and had a redetermination during the months of June through September 2023. We summarized the results of our eligibility review in the following table: See Schedule of Findings and Questioned Costs for chart/table. For an estimated 22,428 Medicaid and 8,520 CHIP beneficiaries, we were unable to determine if MDHHS complied with federal laws and regulations related to MAGI-based eligibility because federal regulations prohibited our use of federal income tax data and the beneficiaries' case record did not contain other available income information. Other income information is not required to be included in the case record when a determination of eligibility is based on MAGI. However, if such information was available, we reviewed this information for eligibility purposes to accurately report the sample items that could not be tested. The results of the testing for the remaining 59 Medicaid and 56 CHIP beneficiaries we were able to review are summarized in the finding below. Condition MDHHS did not ensure or demonstrate compliance with federal laws and regulations relating to beneficiary eligibility. Our review disclosed: a. MDHHS did not determine beneficiary eligibility in accordance with eligibility requirements for 5 (8%) of 59 Medicaid and 12 (21%) of 56 CHIP cases reviewed. b. MDHHS did not maintain case file documentation that supports the beneficiary eligibility determination for 1 (2%) of 59 Medicaid and 1 (2%) of 56 CHIP cases reviewed. c. MDHHS did not determine beneficiary eligibility within the required time frame for 2 (3%) of 59 Medicaid and 4 (7%) of 56 CHIP 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 regulation 42 CFR 435.914 requires 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 regulations 42 CFR 435.912(c) and 42 CFR 457.340(d) require 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. Cause For part a., MDHHS indicated it did not properly consider all available beneficiary information when determining beneficiary eligibility because of system issues and staff actions. For part b., MDHHS indicated the missing documentation resulted from staff oversight. For part c., MDHHS indicated limited staff resources and a significantly higher number of renewals due to the Public Health Emergency affected its ability to determine beneficiary eligibility within the required time frame. 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 10% Medicaid and 29% CHIP unduplicated 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. • $2,211 - federal share. • $762 - 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 finding.
FINDING 2023-014 Medicaid Cluster, ALN 93.775, 93.777, and 93.778 and Children's Health Insurance Program, ALN 93.767 - Expenditure Processing for Medical Payments See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure Bridges and CHAMPS contained the correct Medicaid Cluster and CHIP eligibility information to record expenditures to the appropriate program at the time of payment and to ensure the related federal draw was accurate and timely. On a quarterly basis, MDHHS transferred expenditure amounts from the Medicaid Cluster to CHIP by completing a summary-level adjustment determined by analyzing CHAMPS payment data and Bridges eligibility data. As a result, MDHHS identified that it incorrectly recorded $33.4 million of CHIP medical payments to the Medicaid Cluster throughout fiscal year 2023. However, we selected a sample of 3 beneficiaries that were transferred to CHIP and noted that 1 of 3 beneficiaries was not eligible for CHIP but was in fact Medicaid eligible and, therefore, should not have been transferred. Criteria Federal regulation 45 CFR 75.303 requires the auditee to establish and maintain effective internal control over federal programs that provides reasonable assurance the auditee is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of federal awards. Federal regulation 31 CFR 205 requires state recipients to enter into agreements with the U.S. Department of the Treasury that prescribe specific methods of drawing down federal funds for selected large programs. Cause MDHHS implemented a system change to correct eligibility classifications in Bridges in April 2021. All new cases are being correctly routed. MDHHS expects all existing cases will be updated during the 14-month period following the May 11, 2023 end of the public health emergency, as allowed by the Centers for Medicare and Medicaid Services (CMS). The Medicaid Cluster to CHIP transfer was completed correctly; however, because of an incorrect eligibility determination reflected in Bridges, one case was transferred in error. Effect MDHHS inappropriately transferred $133 Medicaid Cluster expenditures to CHIP. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Also, of the $33.4 million in quarterly transfers, MDHHS may have improperly received either federal Medicaid Cluster funds or federal CHIP funds depending on the accuracy of the transferred amount. After MDHHS recorded the quarterly summary-level adjustments in the accounting system, it returned the Medicaid Cluster funds to the federal government and appropriately received reimbursement from CHIP. The quarterly CHIP draws were not compliant with the State's Cash Management Improvement Act (CMIA) agreement, which required weekly actual costs draws. For the CHIP cash management compliance requirement noted, we consider this to be a material weakness and material noncompliance because the $33.4 million CHIP expenditures identified by MDHHS as inappropriately charged to and reimbursed by the Medicaid Cluster represented 11% of total CHIP expenditures. 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. • $89 - federal share of CHIP payments made to providers for ineligible CHIP beneficiaries, of which $89 is questioned in Finding 2023-013. • $45 - State share of costs MDHHS inappropriately used as matching. Recommendation We recommend MDHHS ensure Bridges and CHAMPS contain the correct Medicaid Cluster and CHIP eligibility information to allow MDHHS to record expenditures to the appropriate program at the time of payment and to ensure the related federal draw is accurate and timely. Management Views MDHHS agrees with the finding.
FINDING 2023-038 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 $1,058 for 8 (27%) of 30 payments sampled from a $1,620,411 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 and interface issues in both Bridges and CHAMPS, eligibility information was not always properly updated in 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 that total questioned costs exceed $25,000. • $945 - federal share of payments made to providers on behalf of ineligible beneficiaries. • $113 - 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 2023-039 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 $183, for 3 (20%) of 15 sampled clients who were hospitalized while receiving Home Help Program (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 135, effective through January 31, 2023, prohibits payment for HHP services on days a client is admitted to a hospital and for all subsequent days they remain in that facility. ASM Section 140, effective February 1, 2023, 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 Sections 135 and 140 allow 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 $183 from October 1, 2022 through September 30, 2023 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 that total questioned costs would exceed $25,000. • $128 - federal share of amounts paid for HHP services while sampled clients were hospitalized. • $55 - 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 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
FINDING 2023-047 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 3 (14%) of 21 sampled TANF-funded assistance payments. MDHHS did not obtain or maintain documentation such as support for timely completion of the Family Automated Screening Tool, Family Self-Sufficiency Plan, and records to support children older than 6 were attending school full time in order to demonstrate the 3 families were 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 TANF State Plan requires MDHHS and the client complete the Family Self-Sufficiency Plan prior to the end of the first three months of 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 that apply to both the federal award and other activities of the state. Cause MDHHS informed us its controls were not sufficient to ensure that 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. • $97 - federal share. 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.
FINDING 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
FINDING 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
FINDING 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
FINDING 2023-056 Low-Income Home Energy Assistance, ALN 93.568, Eligibility - Client Benefits in Excess of Fiscal Year Cap See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure the total client benefits were limited to the fiscal year cap for 1 (3%) of 39 sampled clients. Criteria Federal law 42 USC 8624 requires the State expend funds in accordance with the LIHEAP State Plan. The LIHEAP State Plan indicates that when a payment was necessary to resolve an energy related emergency, the payment would be the minimum amount necessary to prevent shutoff or restore activities for natural gas and electric services and the payment for any other fuel types and deliverable fuels may be made up to the fiscal year cap. Also, MDHHS policy establishes payment limits for these emergency energy fiscal year caps. Cause MDHHS informed us the miscalculation of the total client benefits paid during the fiscal year was caused by a manual data entry error. Effect MDHHS made an energy payment in excess of the client's fiscal year cap. 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 that total questioned costs would exceed $25,000. • $190 - federal share. Recommendation We recommend MDHHS ensure the total client benefits do not exceed the fiscal year cap. Management Views MDHHS agrees with the finding.
FINDING 2023-057 Low-Income Home Energy Assistance, ALN 93.568, Eligibility - Eligibility Determinations See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not maintain sufficient documentation of its efforts to evaluate client eligibility; examples of documentation include support for the verification of the client's income, household size, and proof of energy crisis for 9 (23%) of 39 sampled LIHEAP-funded State Emergency Relief (SER) energy payments. Criteria Federal law 42 USC 8624 requires the State to expend funds in accordance with the LIHEAP State Plan and allows MDHHS to use LIHEAP funds to intervene in energy-related crisis situations and assist eligible households to meet the costs of home energy. MDHHS policy requires county/district office caseworkers to verify and include certain income of SER group members during intake in order to determine eligibility for SER energy services. Also, policy states the payment amount must match the amount on the past due or shut-off notice. In addition, policy indicates the income limitation to be eligible is based on family size or SER group size. Cause MDHHS's internal control and monitoring activities were not sufficient to ensure that county/district office caseworkers adhered to established policies and procedures. Effect We consider this to be a material weakness and material noncompliance because MDHHS may have made payments on behalf of ineligible recipients and because of the high error rate. 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 that total questioned costs would exceed $25,000. • $6,469 - federal share. Recommendation We recommend MDHHS maintain sufficient documentation to support client eligibility for LIHEAP-funded SER energy payments. Management Views MDHHS agrees with the finding.
FINDING 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
FINDING 2023-056 Low-Income Home Energy Assistance, ALN 93.568, Eligibility - Client Benefits in Excess of Fiscal Year Cap See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure the total client benefits were limited to the fiscal year cap for 1 (3%) of 39 sampled clients. Criteria Federal law 42 USC 8624 requires the State expend funds in accordance with the LIHEAP State Plan. The LIHEAP State Plan indicates that when a payment was necessary to resolve an energy related emergency, the payment would be the minimum amount necessary to prevent shutoff or restore activities for natural gas and electric services and the payment for any other fuel types and deliverable fuels may be made up to the fiscal year cap. Also, MDHHS policy establishes payment limits for these emergency energy fiscal year caps. Cause MDHHS informed us the miscalculation of the total client benefits paid during the fiscal year was caused by a manual data entry error. Effect MDHHS made an energy payment in excess of the client's fiscal year cap. 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 that total questioned costs would exceed $25,000. • $190 - federal share. Recommendation We recommend MDHHS ensure the total client benefits do not exceed the fiscal year cap. Management Views MDHHS agrees with the finding.
FINDING 2023-057 Low-Income Home Energy Assistance, ALN 93.568, Eligibility - Eligibility Determinations See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not maintain sufficient documentation of its efforts to evaluate client eligibility; examples of documentation include support for the verification of the client's income, household size, and proof of energy crisis for 9 (23%) of 39 sampled LIHEAP-funded State Emergency Relief (SER) energy payments. Criteria Federal law 42 USC 8624 requires the State to expend funds in accordance with the LIHEAP State Plan and allows MDHHS to use LIHEAP funds to intervene in energy-related crisis situations and assist eligible households to meet the costs of home energy. MDHHS policy requires county/district office caseworkers to verify and include certain income of SER group members during intake in order to determine eligibility for SER energy services. Also, policy states the payment amount must match the amount on the past due or shut-off notice. In addition, policy indicates the income limitation to be eligible is based on family size or SER group size. Cause MDHHS's internal control and monitoring activities were not sufficient to ensure that county/district office caseworkers adhered to established policies and procedures. Effect We consider this to be a material weakness and material noncompliance because MDHHS may have made payments on behalf of ineligible recipients and because of the high error rate. 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 that total questioned costs would exceed $25,000. • $6,469 - federal share. Recommendation We recommend MDHHS maintain sufficient documentation to support client eligibility for LIHEAP-funded SER energy payments. Management Views MDHHS agrees with the finding.
FINDING 2023-013 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. Background In 2014, federal regulations changed the methodology for determining eligibility for certain Medicaid Cluster and CHIP beneficiaries to a methodology using federal income tax data known as MAGI. Federal regulation 26 CFR 301.6103(a) prohibits an auditor from using federal income tax data unless in connection with an audit of the state agency responsible for the administration of the state tax law. For 2014 through 2018, auditors were not expected to review MAGI eligibility determinations. Beginning in 2019, the U.S. Office of Management and Budget* (OMB) Compliance Supplement was revised requiring auditors to review MAGI eligibility determinations for both the Medicaid Cluster and CHIP. Also, because of the public health emergency, MDHHS was not required to perform redeterminations and could not end healthcare coverage unless the individual voluntarily requested termination, moved out of state, or was deceased. These continuous enrollment conditions ended March 31, 2023 with the passage of the Consolidated Appropriations Act of 2023, and states were required to initiate all redeterminations within a 12-month unwinding period. MDHHS began initiating redeterminations in June 2023. We sampled beneficiaries for each program who either had a benefit period which started during fiscal year 2023 or who had a benefit period which started prior to fiscal year 2023 and had a redetermination during the months of June through September 2023. We summarized the results of our eligibility review in the following table: See Schedule of Findings and Questioned Costs for chart/table. For an estimated 22,428 Medicaid and 8,520 CHIP beneficiaries, we were unable to determine if MDHHS complied with federal laws and regulations related to MAGI-based eligibility because federal regulations prohibited our use of federal income tax data and the beneficiaries' case record did not contain other available income information. Other income information is not required to be included in the case record when a determination of eligibility is based on MAGI. However, if such information was available, we reviewed this information for eligibility purposes to accurately report the sample items that could not be tested. The results of the testing for the remaining 59 Medicaid and 56 CHIP beneficiaries we were able to review are summarized in the finding below. Condition MDHHS did not ensure or demonstrate compliance with federal laws and regulations relating to beneficiary eligibility. Our review disclosed: a. MDHHS did not determine beneficiary eligibility in accordance with eligibility requirements for 5 (8%) of 59 Medicaid and 12 (21%) of 56 CHIP cases reviewed. b. MDHHS did not maintain case file documentation that supports the beneficiary eligibility determination for 1 (2%) of 59 Medicaid and 1 (2%) of 56 CHIP cases reviewed. c. MDHHS did not determine beneficiary eligibility within the required time frame for 2 (3%) of 59 Medicaid and 4 (7%) of 56 CHIP 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 regulation 42 CFR 435.914 requires 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 regulations 42 CFR 435.912(c) and 42 CFR 457.340(d) require 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. Cause For part a., MDHHS indicated it did not properly consider all available beneficiary information when determining beneficiary eligibility because of system issues and staff actions. For part b., MDHHS indicated the missing documentation resulted from staff oversight. For part c., MDHHS indicated limited staff resources and a significantly higher number of renewals due to the Public Health Emergency affected its ability to determine beneficiary eligibility within the required time frame. 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 10% Medicaid and 29% CHIP unduplicated 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. • $2,211 - federal share. • $762 - 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 finding.
FINDING 2023-014 Medicaid Cluster, ALN 93.775, 93.777, and 93.778 and Children's Health Insurance Program, ALN 93.767 - Expenditure Processing for Medical Payments See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure Bridges and CHAMPS contained the correct Medicaid Cluster and CHIP eligibility information to record expenditures to the appropriate program at the time of payment and to ensure the related federal draw was accurate and timely. On a quarterly basis, MDHHS transferred expenditure amounts from the Medicaid Cluster to CHIP by completing a summary-level adjustment determined by analyzing CHAMPS payment data and Bridges eligibility data. As a result, MDHHS identified that it incorrectly recorded $33.4 million of CHIP medical payments to the Medicaid Cluster throughout fiscal year 2023. However, we selected a sample of 3 beneficiaries that were transferred to CHIP and noted that 1 of 3 beneficiaries was not eligible for CHIP but was in fact Medicaid eligible and, therefore, should not have been transferred. Criteria Federal regulation 45 CFR 75.303 requires the auditee to establish and maintain effective internal control over federal programs that provides reasonable assurance the auditee is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of federal awards. Federal regulation 31 CFR 205 requires state recipients to enter into agreements with the U.S. Department of the Treasury that prescribe specific methods of drawing down federal funds for selected large programs. Cause MDHHS implemented a system change to correct eligibility classifications in Bridges in April 2021. All new cases are being correctly routed. MDHHS expects all existing cases will be updated during the 14-month period following the May 11, 2023 end of the public health emergency, as allowed by the Centers for Medicare and Medicaid Services (CMS). The Medicaid Cluster to CHIP transfer was completed correctly; however, because of an incorrect eligibility determination reflected in Bridges, one case was transferred in error. Effect MDHHS inappropriately transferred $133 Medicaid Cluster expenditures to CHIP. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Also, of the $33.4 million in quarterly transfers, MDHHS may have improperly received either federal Medicaid Cluster funds or federal CHIP funds depending on the accuracy of the transferred amount. After MDHHS recorded the quarterly summary-level adjustments in the accounting system, it returned the Medicaid Cluster funds to the federal government and appropriately received reimbursement from CHIP. The quarterly CHIP draws were not compliant with the State's Cash Management Improvement Act (CMIA) agreement, which required weekly actual costs draws. For the CHIP cash management compliance requirement noted, we consider this to be a material weakness and material noncompliance because the $33.4 million CHIP expenditures identified by MDHHS as inappropriately charged to and reimbursed by the Medicaid Cluster represented 11% of total CHIP expenditures. 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. • $89 - federal share of CHIP payments made to providers for ineligible CHIP beneficiaries, of which $89 is questioned in Finding 2023-013. • $45 - State share of costs MDHHS inappropriately used as matching. Recommendation We recommend MDHHS ensure Bridges and CHAMPS contain the correct Medicaid Cluster and CHIP eligibility information to allow MDHHS to record expenditures to the appropriate program at the time of payment and to ensure the related federal draw is accurate and timely. Management Views MDHHS agrees with the finding.
FINDING 2023-013 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. Background In 2014, federal regulations changed the methodology for determining eligibility for certain Medicaid Cluster and CHIP beneficiaries to a methodology using federal income tax data known as MAGI. Federal regulation 26 CFR 301.6103(a) prohibits an auditor from using federal income tax data unless in connection with an audit of the state agency responsible for the administration of the state tax law. For 2014 through 2018, auditors were not expected to review MAGI eligibility determinations. Beginning in 2019, the U.S. Office of Management and Budget* (OMB) Compliance Supplement was revised requiring auditors to review MAGI eligibility determinations for both the Medicaid Cluster and CHIP. Also, because of the public health emergency, MDHHS was not required to perform redeterminations and could not end healthcare coverage unless the individual voluntarily requested termination, moved out of state, or was deceased. These continuous enrollment conditions ended March 31, 2023 with the passage of the Consolidated Appropriations Act of 2023, and states were required to initiate all redeterminations within a 12-month unwinding period. MDHHS began initiating redeterminations in June 2023. We sampled beneficiaries for each program who either had a benefit period which started during fiscal year 2023 or who had a benefit period which started prior to fiscal year 2023 and had a redetermination during the months of June through September 2023. We summarized the results of our eligibility review in the following table: See Schedule of Findings and Questioned Costs for chart/table. For an estimated 22,428 Medicaid and 8,520 CHIP beneficiaries, we were unable to determine if MDHHS complied with federal laws and regulations related to MAGI-based eligibility because federal regulations prohibited our use of federal income tax data and the beneficiaries' case record did not contain other available income information. Other income information is not required to be included in the case record when a determination of eligibility is based on MAGI. However, if such information was available, we reviewed this information for eligibility purposes to accurately report the sample items that could not be tested. The results of the testing for the remaining 59 Medicaid and 56 CHIP beneficiaries we were able to review are summarized in the finding below. Condition MDHHS did not ensure or demonstrate compliance with federal laws and regulations relating to beneficiary eligibility. Our review disclosed: a. MDHHS did not determine beneficiary eligibility in accordance with eligibility requirements for 5 (8%) of 59 Medicaid and 12 (21%) of 56 CHIP cases reviewed. b. MDHHS did not maintain case file documentation that supports the beneficiary eligibility determination for 1 (2%) of 59 Medicaid and 1 (2%) of 56 CHIP cases reviewed. c. MDHHS did not determine beneficiary eligibility within the required time frame for 2 (3%) of 59 Medicaid and 4 (7%) of 56 CHIP 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 regulation 42 CFR 435.914 requires 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 regulations 42 CFR 435.912(c) and 42 CFR 457.340(d) require 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. Cause For part a., MDHHS indicated it did not properly consider all available beneficiary information when determining beneficiary eligibility because of system issues and staff actions. For part b., MDHHS indicated the missing documentation resulted from staff oversight. For part c., MDHHS indicated limited staff resources and a significantly higher number of renewals due to the Public Health Emergency affected its ability to determine beneficiary eligibility within the required time frame. 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 10% Medicaid and 29% CHIP unduplicated 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. • $2,211 - federal share. • $762 - 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 finding.
FINDING 2023-014 Medicaid Cluster, ALN 93.775, 93.777, and 93.778 and Children's Health Insurance Program, ALN 93.767 - Expenditure Processing for Medical Payments See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure Bridges and CHAMPS contained the correct Medicaid Cluster and CHIP eligibility information to record expenditures to the appropriate program at the time of payment and to ensure the related federal draw was accurate and timely. On a quarterly basis, MDHHS transferred expenditure amounts from the Medicaid Cluster to CHIP by completing a summary-level adjustment determined by analyzing CHAMPS payment data and Bridges eligibility data. As a result, MDHHS identified that it incorrectly recorded $33.4 million of CHIP medical payments to the Medicaid Cluster throughout fiscal year 2023. However, we selected a sample of 3 beneficiaries that were transferred to CHIP and noted that 1 of 3 beneficiaries was not eligible for CHIP but was in fact Medicaid eligible and, therefore, should not have been transferred. Criteria Federal regulation 45 CFR 75.303 requires the auditee to establish and maintain effective internal control over federal programs that provides reasonable assurance the auditee is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of federal awards. Federal regulation 31 CFR 205 requires state recipients to enter into agreements with the U.S. Department of the Treasury that prescribe specific methods of drawing down federal funds for selected large programs. Cause MDHHS implemented a system change to correct eligibility classifications in Bridges in April 2021. All new cases are being correctly routed. MDHHS expects all existing cases will be updated during the 14-month period following the May 11, 2023 end of the public health emergency, as allowed by the Centers for Medicare and Medicaid Services (CMS). The Medicaid Cluster to CHIP transfer was completed correctly; however, because of an incorrect eligibility determination reflected in Bridges, one case was transferred in error. Effect MDHHS inappropriately transferred $133 Medicaid Cluster expenditures to CHIP. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Also, of the $33.4 million in quarterly transfers, MDHHS may have improperly received either federal Medicaid Cluster funds or federal CHIP funds depending on the accuracy of the transferred amount. After MDHHS recorded the quarterly summary-level adjustments in the accounting system, it returned the Medicaid Cluster funds to the federal government and appropriately received reimbursement from CHIP. The quarterly CHIP draws were not compliant with the State's Cash Management Improvement Act (CMIA) agreement, which required weekly actual costs draws. For the CHIP cash management compliance requirement noted, we consider this to be a material weakness and material noncompliance because the $33.4 million CHIP expenditures identified by MDHHS as inappropriately charged to and reimbursed by the Medicaid Cluster represented 11% of total CHIP expenditures. 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. • $89 - federal share of CHIP payments made to providers for ineligible CHIP beneficiaries, of which $89 is questioned in Finding 2023-013. • $45 - State share of costs MDHHS inappropriately used as matching. Recommendation We recommend MDHHS ensure Bridges and CHAMPS contain the correct Medicaid Cluster and CHIP eligibility information to allow MDHHS to record expenditures to the appropriate program at the time of payment and to ensure the related federal draw is accurate and timely. Management Views MDHHS agrees with the finding.
2023-004 Sufficiency of Documentation to Support Compliance to Allowable Cost Requirements (Repeat Finding 2022-003) Program Name: State Opioid Response Federal Assistance Listing No.: 93.788 Federal Agency: Department of Health and Human Services Federal Award Identification: Unknown Pass-Through Entity Number: Unknown Applicable Pass-Through Entity: Ohio Department of Mental Health and Addiction Services and Cuyahoga County, Ohio Type of Finding: Material Weakness Compliance Requirement: Allowable Costs/Cost Principles Criteria: Under Section 200.303 of the Uniform Guidance, a non-federal entity must establish effective internal controls to ensure compliance with Federal statutes, regulations, and award terms. Point of Freedom, receiving Federal Awards, must adhere to 2 CFR Part 200 Subpart E, which outlines cost principles. Adequate documentation is essential to ensure that costs are allowable, ensuring compliance, transparency, and accountability in fund utilization. Condition: We identified five (5) disbursements that lacked supporting documentation to verify the accuracy and allowability of the costs incurred. Additionally, three (3) of these transactions involved contractors for whom no partnership agreements were in place. Cause of Condition: The absence of formal monitoring for contractor charges and established documentation policies (i.e contractor invoices) indicates a control deficiency in compliance. Effect: Incomplete documentation hinders timely verification of accuracy, increasing the risk of improper disbursement of federal funds. Questioned Cost: $19,179 Context: Of the 714 disbursements, we examined 91 of which five (5) were identified with incomplete documentation and three (3) of these transactions involved contractors for whom no partnership agreements. In accordance with 2 CFR 200.516(a)(3), auditors are required to report known questioned costs when likely questioned costs are greater than $25,000. Although the sample uncovered five (5) transactions with incomplete documentation, resulting in $19,179 in questioned costs, extending the tests to the entire population projects questioned costs approximately $24,736 which is close to $25,000. Recommendation: We recommend that management should establish a document retention policy. This policy should define clear procedures for maintaining and organizing transaction documentation, which will support accurate verification and enhance overall internal controls. Views of Responsible Officials: As indicated in the 2022 POFCAP response to Finding 2022-003, and as reiterated herein, POF began to implement additional internal control procedures and practices effective July 1, 2024, to ensure that underlying cost documentation is adequate, reasonable, and complete in accordance with 2 CFR Part 200 Subpart E and other regulatory requirements. More specifically, vendor invoices as of that date and related supporting documents such as weekly meeting reports and sign-in sheets are being scanned and retained electronically. As in 2022, the contact information from the 2023 weekly reports was transmitted to either Wright State University or The Ohio State University for data mining purposes. On July 22, 20224, the POF Board of Directors unanimously adopted the POF Record Retention Policy, as recommended by the auditors. The Board also unanimously adopted a Code of Conduct along with Conflict of Interest, and Whistleblower policies as further evidence of their commitment to instituting policies and procedures designed to strengthen internal controls and comply with federal regulations. Questioned Cost Totaling $19,179 Effective July l, 2024, POF's new internal control policies, and procedures will eliminate or drastically reduce future discrepancies of this nature.
Finding 2023-009 - Procurement Information on Federal Programs: All programs Criteria or Specific Requirements: According to 2 CFR §200.303, the non-Federal entity must: establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in Standards for Internal Control in the Federal Government, issued by the Comptroller General of the United States, or the Internal Control Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Additionally, according to 2 CFR §200.320, Procurement standards, the non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §200.318, and §200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: a) Informal procurement methods, b) Formal procurement methods, c) Noncompetitive procurement. Condition: During the review of the procurement compliance requirement related to major program, it was determined that U.S. Water Alliance did not have a document procurement policy in place until August 2023. Cause: Management did not have internal control procedures in place to ensure that procurement requirements were adequately followed, documented and retained when Federal awards were obtained. Effect: Failure to have and use documented procurement procedures could have resulted in noncompliance with the Criteria section above. Perspective: U.S. Water Alliance established a documented procurement policy that was put in place in August 2023. Within a random sample of 26 disbursements, 3 disbursements would have required compliance with the simplified acquisition method, but would have also met the exception due to the existence of an emergency causing public harm and the specialized nature of the work performed. Questioned Costs: Questioned costs were not identified. Repeat Finding: Not applicable. Recommendation: U.S. Water Alliance should adhere to its procurement policy put in place in August 2023 to ensure compliance with the Uniform Guidance going forward. Views of Responsible Officials and Planned Corrective Actions: While the Alliance did not have a standalone procurement policy in place until August 2023, it did have purchasing policies embedded in its Accounting and Finance Manual that covered purchases relative to our work at that time. No further corrective action is needed however policies are reviewed annually to ensure compliance under 2 CFR 200.516(a).
Finding 2023-009 - Procurement Information on Federal Programs: All programs Criteria or Specific Requirements: According to 2 CFR §200.303, the non-Federal entity must: establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in Standards for Internal Control in the Federal Government, issued by the Comptroller General of the United States, or the Internal Control Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Additionally, according to 2 CFR §200.320, Procurement standards, the non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §200.318, and §200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: a) Informal procurement methods, b) Formal procurement methods, c) Noncompetitive procurement. Condition: During the review of the procurement compliance requirement related to major program, it was determined that U.S. Water Alliance did not have a document procurement policy in place until August 2023. Cause: Management did not have internal control procedures in place to ensure that procurement requirements were adequately followed, documented and retained when Federal awards were obtained. Effect: Failure to have and use documented procurement procedures could have resulted in noncompliance with the Criteria section above. Perspective: U.S. Water Alliance established a documented procurement policy that was put in place in August 2023. Within a random sample of 26 disbursements, 3 disbursements would have required compliance with the simplified acquisition method, but would have also met the exception due to the existence of an emergency causing public harm and the specialized nature of the work performed. Questioned Costs: Questioned costs were not identified. Repeat Finding: Not applicable. Recommendation: U.S. Water Alliance should adhere to its procurement policy put in place in August 2023 to ensure compliance with the Uniform Guidance going forward. Views of Responsible Officials and Planned Corrective Actions: While the Alliance did not have a standalone procurement policy in place until August 2023, it did have purchasing policies embedded in its Accounting and Finance Manual that covered purchases relative to our work at that time. No further corrective action is needed however policies are reviewed annually to ensure compliance under 2 CFR 200.516(a).
Finding 2023-009 - Procurement Information on Federal Programs: All programs Criteria or Specific Requirements: According to 2 CFR §200.303, the non-Federal entity must: establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in Standards for Internal Control in the Federal Government, issued by the Comptroller General of the United States, or the Internal Control Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Additionally, according to 2 CFR §200.320, Procurement standards, the non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §200.318, and §200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: a) Informal procurement methods, b) Formal procurement methods, c) Noncompetitive procurement. Condition: During the review of the procurement compliance requirement related to major program, it was determined that U.S. Water Alliance did not have a document procurement policy in place until August 2023. Cause: Management did not have internal control procedures in place to ensure that procurement requirements were adequately followed, documented and retained when Federal awards were obtained. Effect: Failure to have and use documented procurement procedures could have resulted in noncompliance with the Criteria section above. Perspective: U.S. Water Alliance established a documented procurement policy that was put in place in August 2023. Within a random sample of 26 disbursements, 3 disbursements would have required compliance with the simplified acquisition method, but would have also met the exception due to the existence of an emergency causing public harm and the specialized nature of the work performed. Questioned Costs: Questioned costs were not identified. Repeat Finding: Not applicable. Recommendation: U.S. Water Alliance should adhere to its procurement policy put in place in August 2023 to ensure compliance with the Uniform Guidance going forward. Views of Responsible Officials and Planned Corrective Actions: While the Alliance did not have a standalone procurement policy in place until August 2023, it did have purchasing policies embedded in its Accounting and Finance Manual that covered purchases relative to our work at that time. No further corrective action is needed however policies are reviewed annually to ensure compliance under 2 CFR 200.516(a).
Finding 2023-009 - Procurement Information on Federal Programs: All programs Criteria or Specific Requirements: According to 2 CFR §200.303, the non-Federal entity must: establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in Standards for Internal Control in the Federal Government, issued by the Comptroller General of the United States, or the Internal Control Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Additionally, according to 2 CFR §200.320, Procurement standards, the non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §200.318, and §200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: a) Informal procurement methods, b) Formal procurement methods, c) Noncompetitive procurement. Condition: During the review of the procurement compliance requirement related to major program, it was determined that U.S. Water Alliance did not have a document procurement policy in place until August 2023. Cause: Management did not have internal control procedures in place to ensure that procurement requirements were adequately followed, documented and retained when Federal awards were obtained. Effect: Failure to have and use documented procurement procedures could have resulted in noncompliance with the Criteria section above. Perspective: U.S. Water Alliance established a documented procurement policy that was put in place in August 2023. Within a random sample of 26 disbursements, 3 disbursements would have required compliance with the simplified acquisition method, but would have also met the exception due to the existence of an emergency causing public harm and the specialized nature of the work performed. Questioned Costs: Questioned costs were not identified. Repeat Finding: Not applicable. Recommendation: U.S. Water Alliance should adhere to its procurement policy put in place in August 2023 to ensure compliance with the Uniform Guidance going forward. Views of Responsible Officials and Planned Corrective Actions: While the Alliance did not have a standalone procurement policy in place until August 2023, it did have purchasing policies embedded in its Accounting and Finance Manual that covered purchases relative to our work at that time. No further corrective action is needed however policies are reviewed annually to ensure compliance under 2 CFR 200.516(a).
Criteria: As a condition of receiving federal awards, the awardee organization must comply with filing the required reports timely, specifically, submission of an audit report within nine months after the end of the audit period. Condition: The entity submitted their audit report eleven months after the end of their audit period September 30, 2022. Cause: The entity has not been able to close their books in a timely manner due to the late submission of vendor invoices. At times their closing has conflicted with the auditor’s availability and therefore, the audit was unable to be completed within the nine month period. Effect: The entity was not in compliance with the deadline for the audit report under 2 CFR 200.516 (a). Questioned costs: None Reported Context/Sampling: None Reported Repeat Finding from Prior Year: No Recommendation: We recommend that management communicate with their vendors to assure that timely invoices are submitted and that a strict timeline for completion of the audit is adhered to. Views of Responsible Officials: The entity has implemented wording in their vendor contracts that they will not honor invoices that are more than 90 days out.
Criteria: As a condition of receiving federal awards, the awardee organization must comply with filing the required reports timely, specifically, submission of an audit report within nine months after the end of the audit period. Condition: The entity submitted their audit report eleven months after the end of their audit period September 30, 2022. Cause: The entity has not been able to close their books in a timely manner due to the late submission of vendor invoices. At times their closing has conflicted with the auditor’s availability and therefore, the audit was unable to be completed within the nine month period. Effect: The entity was not in compliance with the deadline for the audit report under 2 CFR 200.516 (a). Questioned costs: None Reported Context/Sampling: None Reported Repeat Finding from Prior Year: No Recommendation: We recommend that management communicate with their vendors to assure that timely invoices are submitted and that a strict timeline for completion of the audit is adhered to. Views of Responsible Officials: The entity has implemented wording in their vendor contracts that they will not honor invoices that are more than 90 days out.
Criteria: As a condition of receiving federal awards, the awardee organization must comply with filing the required reports timely, specifically, submission of an audit report within nine months after the end of the audit period. Condition: The entity submitted their audit report eleven months after the end of their audit period September 30, 2022. Cause: The entity has not been able to close their books in a timely manner due to the late submission of vendor invoices. At times their closing has conflicted with the auditor’s availability and therefore, the audit was unable to be completed within the nine month period. Effect: The entity was not in compliance with the deadline for the audit report under 2 CFR 200.516 (a). Questioned costs: None Reported Context/Sampling: None Reported Repeat Finding from Prior Year: No Recommendation: We recommend that management communicate with their vendors to assure that timely invoices are submitted and that a strict timeline for completion of the audit is adhered to. Views of Responsible Officials: The entity has implemented wording in their vendor contracts that they will not honor invoices that are more than 90 days out.
Criteria: As a condition of receiving federal awards, the awardee organization must comply with filing the required reports timely, specifically, submission of an audit report within nine months after the end of the audit period. Condition: The entity submitted their audit report eleven months after the end of their audit period September 30, 2022. Cause: The entity has not been able to close their books in a timely manner due to the late submission of vendor invoices. At times their closing has conflicted with the auditor’s availability and therefore, the audit was unable to be completed within the nine month period. Effect: The entity was not in compliance with the deadline for the audit report under 2 CFR 200.516 (a). Questioned costs: None Reported Context/Sampling: None Reported Repeat Finding from Prior Year: No Recommendation: We recommend that management communicate with their vendors to assure that timely invoices are submitted and that a strict timeline for completion of the audit is adhered to. Views of Responsible Officials: The entity has implemented wording in their vendor contracts that they will not honor invoices that are more than 90 days out.
Criteria: As a condition of receiving federal awards, the awardee organization must comply with filing the required reports timely, specifically, submission of an audit report within nine months after the end of the audit period. Condition: The entity submitted their audit report eleven months after the end of their audit period September 30, 2022. Cause: The entity has not been able to close their books in a timely manner due to the late submission of vendor invoices. At times their closing has conflicted with the auditor’s availability and therefore, the audit was unable to be completed within the nine month period. Effect: The entity was not in compliance with the deadline for the audit report under 2 CFR 200.516 (a). Questioned costs: None Reported Context/Sampling: None Reported Repeat Finding from Prior Year: No Recommendation: We recommend that management communicate with their vendors to assure that timely invoices are submitted and that a strict timeline for completion of the audit is adhered to. Views of Responsible Officials: The entity has implemented wording in their vendor contracts that they will not honor invoices that are more than 90 days out.
Criteria: As a condition of receiving federal awards, the awardee organization must comply with filing the required reports timely, specifically, submission of an audit report within nine months after the end of the audit period. Condition: The entity submitted their audit report eleven months after the end of their audit period September 30, 2022. Cause: The entity has not been able to close their books in a timely manner due to the late submission of vendor invoices. At times their closing has conflicted with the auditor’s availability and therefore, the audit was unable to be completed within the nine month period. Effect: The entity was not in compliance with the deadline for the audit report under 2 CFR 200.516 (a). Questioned costs: None Reported Context/Sampling: None Reported Repeat Finding from Prior Year: No Recommendation: We recommend that management communicate with their vendors to assure that timely invoices are submitted and that a strict timeline for completion of the audit is adhered to. Views of Responsible Officials: The entity has implemented wording in their vendor contracts that they will not honor invoices that are more than 90 days out.
Criteria: As a condition of receiving federal awards, the awardee organization must comply with filing the required reports timely, specifically, submission of an audit report within nine months after the end of the audit period. Condition: The entity submitted their audit report eleven months after the end of their audit period September 30, 2022. Cause: The entity has not been able to close their books in a timely manner due to the late submission of vendor invoices. At times their closing has conflicted with the auditor’s availability and therefore, the audit was unable to be completed within the nine month period. Effect: The entity was not in compliance with the deadline for the audit report under 2 CFR 200.516 (a). Questioned costs: None Reported Context/Sampling: None Reported Repeat Finding from Prior Year: No Recommendation: We recommend that management communicate with their vendors to assure that timely invoices are submitted and that a strict timeline for completion of the audit is adhered to. Views of Responsible Officials: The entity has implemented wording in their vendor contracts that they will not honor invoices that are more than 90 days out.
Findings and Questioned Costs Related to Federal and State Awards (continued) Finding Number: 2023‐002 Repeat Finding: Yes; 2022‐002, 2021‐002 Federal Program Name/Assistance Listing Title: Federal Transit Cluster Federal Assistance Listing Number: 20.507, 20.526 Federal Agency: U.S. Department of Transportation Federal Award Number: 5339‐R‐2022‐GCTD‐00039, 5339‐R‐2022‐GCTD‐00039 Federal Pass‐Through Agency: Texas Department of Transportation State Program Name: State Urbanized Area Formula Program, State Formula Grants For Rural Areas State Agency: Texas Department of Transportation Type of Finding: Noncompliance Material to Financial Statements and Federal/State Major Programs, Material Weakness in Internal Control Over Compliance Compliance Requirement: Procurement, Suspension and Debarment Questioned Costs: N/A; In accordance with 2 CFR 200.516(b)(7), when there are known questioned costs but the dollar amount is undetermined or not reported, the audit findings must include a description of why the dollar amount was undetermined or otherwise could not be reported. Based on our description of the finding below, the District was unable to provide evidence that the federal guidelines were followed for purchases exceeding the small purchases threshold. Due to inadequate records being maintained by the District, we were unable to determine if proper procured occurred for each purchase, and could not be located, or proper procurement never occurred. Therefore, we were unable to differentiate transactions as questioned costs from transactions in question caused solely because of deficiencies in internal control. Criteria: Non‐federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR §§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. Additionally, non‐federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. When a non‐federal entity enters into a covered transaction with an entity at a lower tier, the non‐federal entity must verify that the entity, as defined in 2 CFR §180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the System of Award Management (SAM) maintained by the General Services Administration (GSA) or (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR §180.300). Condition: The District did not meet the requirement to verify that covered transactions were only made to an entity that was not suspended or debarred or otherwise excluded. Additionally, the District did was unable to provide evidence that the federal guidelines for purchases exceeding the small purchases threshold. Cause: The District’s internal controls over procurement of goods and services were not adequate. Effect: The District was not in compliance with Federal regulations and guidelines related to suspension and debarment or procurement. Context: The sample was not intended to be, and was not, a statistically valid sample. During our review of purchasing, we noted the following: • For 7 out of 7 procurements reviewed, documentation demonstrating a vendor check for suspension and debarment was not retained. • For 3 out of 5 vendors reviewed with total expenditures below the Simplified Acquisition threshold, no documentation of quotes was maintained. • For 2 out of 2 vendors reviewed with total expenditures that exceeded the Simplified Acquisition threshold, no documentation of a sealed procurement issued in accordance with federal guidelines was maintained. Recommendation: The District should maintain documentation of procurement actions in the vendor file including sealed procurements issued, quotes and suspension and debarment checks. Review of procurement compliance should occur before the District’s funds are obligated. Views of Responsible Officials: The District agrees with the finding and has taken steps to address this issue as detailed in the Corrective Action Plan.
Findings and Questioned Costs Related to Federal and State Awards (continued) Finding Number: 2023‐002 Repeat Finding: Yes; 2022‐002, 2021‐002 Federal Program Name/Assistance Listing Title: Federal Transit Cluster Federal Assistance Listing Number: 20.507, 20.526 Federal Agency: U.S. Department of Transportation Federal Award Number: 5339‐R‐2022‐GCTD‐00039, 5339‐R‐2022‐GCTD‐00039 Federal Pass‐Through Agency: Texas Department of Transportation State Program Name: State Urbanized Area Formula Program, State Formula Grants For Rural Areas State Agency: Texas Department of Transportation Type of Finding: Noncompliance Material to Financial Statements and Federal/State Major Programs, Material Weakness in Internal Control Over Compliance Compliance Requirement: Procurement, Suspension and Debarment Questioned Costs: N/A; In accordance with 2 CFR 200.516(b)(7), when there are known questioned costs but the dollar amount is undetermined or not reported, the audit findings must include a description of why the dollar amount was undetermined or otherwise could not be reported. Based on our description of the finding below, the District was unable to provide evidence that the federal guidelines were followed for purchases exceeding the small purchases threshold. Due to inadequate records being maintained by the District, we were unable to determine if proper procured occurred for each purchase, and could not be located, or proper procurement never occurred. Therefore, we were unable to differentiate transactions as questioned costs from transactions in question caused solely because of deficiencies in internal control. Criteria: Non‐federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR §§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. Additionally, non‐federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. When a non‐federal entity enters into a covered transaction with an entity at a lower tier, the non‐federal entity must verify that the entity, as defined in 2 CFR §180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the System of Award Management (SAM) maintained by the General Services Administration (GSA) or (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR §180.300). Condition: The District did not meet the requirement to verify that covered transactions were only made to an entity that was not suspended or debarred or otherwise excluded. Additionally, the District did was unable to provide evidence that the federal guidelines for purchases exceeding the small purchases threshold. Cause: The District’s internal controls over procurement of goods and services were not adequate. Effect: The District was not in compliance with Federal regulations and guidelines related to suspension and debarment or procurement. Context: The sample was not intended to be, and was not, a statistically valid sample. During our review of purchasing, we noted the following: • For 7 out of 7 procurements reviewed, documentation demonstrating a vendor check for suspension and debarment was not retained. • For 3 out of 5 vendors reviewed with total expenditures below the Simplified Acquisition threshold, no documentation of quotes was maintained. • For 2 out of 2 vendors reviewed with total expenditures that exceeded the Simplified Acquisition threshold, no documentation of a sealed procurement issued in accordance with federal guidelines was maintained. Recommendation: The District should maintain documentation of procurement actions in the vendor file including sealed procurements issued, quotes and suspension and debarment checks. Review of procurement compliance should occur before the District’s funds are obligated. Views of Responsible Officials: The District agrees with the finding and has taken steps to address this issue as detailed in the Corrective Action Plan.
Findings and Questioned Costs Related to Federal and State Awards (continued) Finding Number: 2023‐002 Repeat Finding: Yes; 2022‐002, 2021‐002 Federal Program Name/Assistance Listing Title: Federal Transit Cluster Federal Assistance Listing Number: 20.507, 20.526 Federal Agency: U.S. Department of Transportation Federal Award Number: 5339‐R‐2022‐GCTD‐00039, 5339‐R‐2022‐GCTD‐00039 Federal Pass‐Through Agency: Texas Department of Transportation State Program Name: State Urbanized Area Formula Program, State Formula Grants For Rural Areas State Agency: Texas Department of Transportation Type of Finding: Noncompliance Material to Financial Statements and Federal/State Major Programs, Material Weakness in Internal Control Over Compliance Compliance Requirement: Procurement, Suspension and Debarment Questioned Costs: N/A; In accordance with 2 CFR 200.516(b)(7), when there are known questioned costs but the dollar amount is undetermined or not reported, the audit findings must include a description of why the dollar amount was undetermined or otherwise could not be reported. Based on our description of the finding below, the District was unable to provide evidence that the federal guidelines were followed for purchases exceeding the small purchases threshold. Due to inadequate records being maintained by the District, we were unable to determine if proper procured occurred for each purchase, and could not be located, or proper procurement never occurred. Therefore, we were unable to differentiate transactions as questioned costs from transactions in question caused solely because of deficiencies in internal control. Criteria: Non‐federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR §§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. Additionally, non‐federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. When a non‐federal entity enters into a covered transaction with an entity at a lower tier, the non‐federal entity must verify that the entity, as defined in 2 CFR §180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the System of Award Management (SAM) maintained by the General Services Administration (GSA) or (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR §180.300). Condition: The District did not meet the requirement to verify that covered transactions were only made to an entity that was not suspended or debarred or otherwise excluded. Additionally, the District did was unable to provide evidence that the federal guidelines for purchases exceeding the small purchases threshold. Cause: The District’s internal controls over procurement of goods and services were not adequate. Effect: The District was not in compliance with Federal regulations and guidelines related to suspension and debarment or procurement. Context: The sample was not intended to be, and was not, a statistically valid sample. During our review of purchasing, we noted the following: • For 7 out of 7 procurements reviewed, documentation demonstrating a vendor check for suspension and debarment was not retained. • For 3 out of 5 vendors reviewed with total expenditures below the Simplified Acquisition threshold, no documentation of quotes was maintained. • For 2 out of 2 vendors reviewed with total expenditures that exceeded the Simplified Acquisition threshold, no documentation of a sealed procurement issued in accordance with federal guidelines was maintained. Recommendation: The District should maintain documentation of procurement actions in the vendor file including sealed procurements issued, quotes and suspension and debarment checks. Review of procurement compliance should occur before the District’s funds are obligated. Views of Responsible Officials: The District agrees with the finding and has taken steps to address this issue as detailed in the Corrective Action Plan.
Findings and Questioned Costs Related to Federal and State Awards (continued) Finding Number: 2023‐002 Repeat Finding: Yes; 2022‐002, 2021‐002 Federal Program Name/Assistance Listing Title: Federal Transit Cluster Federal Assistance Listing Number: 20.507, 20.526 Federal Agency: U.S. Department of Transportation Federal Award Number: 5339‐R‐2022‐GCTD‐00039, 5339‐R‐2022‐GCTD‐00039 Federal Pass‐Through Agency: Texas Department of Transportation State Program Name: State Urbanized Area Formula Program, State Formula Grants For Rural Areas State Agency: Texas Department of Transportation Type of Finding: Noncompliance Material to Financial Statements and Federal/State Major Programs, Material Weakness in Internal Control Over Compliance Compliance Requirement: Procurement, Suspension and Debarment Questioned Costs: N/A; In accordance with 2 CFR 200.516(b)(7), when there are known questioned costs but the dollar amount is undetermined or not reported, the audit findings must include a description of why the dollar amount was undetermined or otherwise could not be reported. Based on our description of the finding below, the District was unable to provide evidence that the federal guidelines were followed for purchases exceeding the small purchases threshold. Due to inadequate records being maintained by the District, we were unable to determine if proper procured occurred for each purchase, and could not be located, or proper procurement never occurred. Therefore, we were unable to differentiate transactions as questioned costs from transactions in question caused solely because of deficiencies in internal control. Criteria: Non‐federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR §§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. Additionally, non‐federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. When a non‐federal entity enters into a covered transaction with an entity at a lower tier, the non‐federal entity must verify that the entity, as defined in 2 CFR §180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the System of Award Management (SAM) maintained by the General Services Administration (GSA) or (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR §180.300). Condition: The District did not meet the requirement to verify that covered transactions were only made to an entity that was not suspended or debarred or otherwise excluded. Additionally, the District did was unable to provide evidence that the federal guidelines for purchases exceeding the small purchases threshold. Cause: The District’s internal controls over procurement of goods and services were not adequate. Effect: The District was not in compliance with Federal regulations and guidelines related to suspension and debarment or procurement. Context: The sample was not intended to be, and was not, a statistically valid sample. During our review of purchasing, we noted the following: • For 7 out of 7 procurements reviewed, documentation demonstrating a vendor check for suspension and debarment was not retained. • For 3 out of 5 vendors reviewed with total expenditures below the Simplified Acquisition threshold, no documentation of quotes was maintained. • For 2 out of 2 vendors reviewed with total expenditures that exceeded the Simplified Acquisition threshold, no documentation of a sealed procurement issued in accordance with federal guidelines was maintained. Recommendation: The District should maintain documentation of procurement actions in the vendor file including sealed procurements issued, quotes and suspension and debarment checks. Review of procurement compliance should occur before the District’s funds are obligated. Views of Responsible Officials: The District agrees with the finding and has taken steps to address this issue as detailed in the Corrective Action Plan.
Findings and Questioned Costs Related to Federal and State Awards (continued) Finding Number: 2023‐002 Repeat Finding: Yes; 2022‐002, 2021‐002 Federal Program Name/Assistance Listing Title: Federal Transit Cluster Federal Assistance Listing Number: 20.507, 20.526 Federal Agency: U.S. Department of Transportation Federal Award Number: 5339‐R‐2022‐GCTD‐00039, 5339‐R‐2022‐GCTD‐00039 Federal Pass‐Through Agency: Texas Department of Transportation State Program Name: State Urbanized Area Formula Program, State Formula Grants For Rural Areas State Agency: Texas Department of Transportation Type of Finding: Noncompliance Material to Financial Statements and Federal/State Major Programs, Material Weakness in Internal Control Over Compliance Compliance Requirement: Procurement, Suspension and Debarment Questioned Costs: N/A; In accordance with 2 CFR 200.516(b)(7), when there are known questioned costs but the dollar amount is undetermined or not reported, the audit findings must include a description of why the dollar amount was undetermined or otherwise could not be reported. Based on our description of the finding below, the District was unable to provide evidence that the federal guidelines were followed for purchases exceeding the small purchases threshold. Due to inadequate records being maintained by the District, we were unable to determine if proper procured occurred for each purchase, and could not be located, or proper procurement never occurred. Therefore, we were unable to differentiate transactions as questioned costs from transactions in question caused solely because of deficiencies in internal control. Criteria: Non‐federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR §§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. Additionally, non‐federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. When a non‐federal entity enters into a covered transaction with an entity at a lower tier, the non‐federal entity must verify that the entity, as defined in 2 CFR §180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the System of Award Management (SAM) maintained by the General Services Administration (GSA) or (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR §180.300). Condition: The District did not meet the requirement to verify that covered transactions were only made to an entity that was not suspended or debarred or otherwise excluded. Additionally, the District did was unable to provide evidence that the federal guidelines for purchases exceeding the small purchases threshold. Cause: The District’s internal controls over procurement of goods and services were not adequate. Effect: The District was not in compliance with Federal regulations and guidelines related to suspension and debarment or procurement. Context: The sample was not intended to be, and was not, a statistically valid sample. During our review of purchasing, we noted the following: • For 7 out of 7 procurements reviewed, documentation demonstrating a vendor check for suspension and debarment was not retained. • For 3 out of 5 vendors reviewed with total expenditures below the Simplified Acquisition threshold, no documentation of quotes was maintained. • For 2 out of 2 vendors reviewed with total expenditures that exceeded the Simplified Acquisition threshold, no documentation of a sealed procurement issued in accordance with federal guidelines was maintained. Recommendation: The District should maintain documentation of procurement actions in the vendor file including sealed procurements issued, quotes and suspension and debarment checks. Review of procurement compliance should occur before the District’s funds are obligated. Views of Responsible Officials: The District agrees with the finding and has taken steps to address this issue as detailed in the Corrective Action Plan.
Findings and Questioned Costs Related to Federal and State Awards (continued) Finding Number: 2023‐002 Repeat Finding: Yes; 2022‐002, 2021‐002 Federal Program Name/Assistance Listing Title: Federal Transit Cluster Federal Assistance Listing Number: 20.507, 20.526 Federal Agency: U.S. Department of Transportation Federal Award Number: 5339‐R‐2022‐GCTD‐00039, 5339‐R‐2022‐GCTD‐00039 Federal Pass‐Through Agency: Texas Department of Transportation State Program Name: State Urbanized Area Formula Program, State Formula Grants For Rural Areas State Agency: Texas Department of Transportation Type of Finding: Noncompliance Material to Financial Statements and Federal/State Major Programs, Material Weakness in Internal Control Over Compliance Compliance Requirement: Procurement, Suspension and Debarment Questioned Costs: N/A; In accordance with 2 CFR 200.516(b)(7), when there are known questioned costs but the dollar amount is undetermined or not reported, the audit findings must include a description of why the dollar amount was undetermined or otherwise could not be reported. Based on our description of the finding below, the District was unable to provide evidence that the federal guidelines were followed for purchases exceeding the small purchases threshold. Due to inadequate records being maintained by the District, we were unable to determine if proper procured occurred for each purchase, and could not be located, or proper procurement never occurred. Therefore, we were unable to differentiate transactions as questioned costs from transactions in question caused solely because of deficiencies in internal control. Criteria: Non‐federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR §§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. Additionally, non‐federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. When a non‐federal entity enters into a covered transaction with an entity at a lower tier, the non‐federal entity must verify that the entity, as defined in 2 CFR §180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the System of Award Management (SAM) maintained by the General Services Administration (GSA) or (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR §180.300). Condition: The District did not meet the requirement to verify that covered transactions were only made to an entity that was not suspended or debarred or otherwise excluded. Additionally, the District did was unable to provide evidence that the federal guidelines for purchases exceeding the small purchases threshold. Cause: The District’s internal controls over procurement of goods and services were not adequate. Effect: The District was not in compliance with Federal regulations and guidelines related to suspension and debarment or procurement. Context: The sample was not intended to be, and was not, a statistically valid sample. During our review of purchasing, we noted the following: • For 7 out of 7 procurements reviewed, documentation demonstrating a vendor check for suspension and debarment was not retained. • For 3 out of 5 vendors reviewed with total expenditures below the Simplified Acquisition threshold, no documentation of quotes was maintained. • For 2 out of 2 vendors reviewed with total expenditures that exceeded the Simplified Acquisition threshold, no documentation of a sealed procurement issued in accordance with federal guidelines was maintained. Recommendation: The District should maintain documentation of procurement actions in the vendor file including sealed procurements issued, quotes and suspension and debarment checks. Review of procurement compliance should occur before the District’s funds are obligated. Views of Responsible Officials: The District agrees with the finding and has taken steps to address this issue as detailed in the Corrective Action Plan.
Criteria or specific requirement (including statutory, regulatory, or other citation) - During the fiscal years June 30, 2018 to June 30, 2023, the University incurred unallowed expenditures for a federal grant that were not identified by the internal controls in place over the grant program. According to 2 CFR § 200.413, Direct Costs, direct costs are those costs that can be directly assigned to a direct cost activity with a high degree of accuracy. In addition, according to 2 CFR § 200.516, Audit Findings, the auditor must report known fraud affecting a federal award as well as known questioned costs that are greater than $25,000 for a federal program which is not audited as a major program, as an audit finding. Condition- From fiscal year 2018 through 2023, the University was not able to support that expenses paid from a federal grant for salary, benefits, and travel and other expense reimbursements for an adjunct faculty member were related to allowable activities to eligible clients under the terms of the grant agreement due to false reporting by the adjunct faculty member. More specifically, the adjunct faculty member misrepresented that services were or would be provided per the terms of the grant to eligible clients. In addition, the adjunct faculty member provided false reporting of the impact of services provided to the clients and utilized fraudulent documentation as evidence for their work performed. As a result, the University was reimbursed for expenses by the grant related to services that were not provided or were unallowable. Cause - Lack of oversight and insufficient review of work performed of adjunct faculty member. Effect- The University was reimbursed federal grant monies for work that was not performed under the terms and conditions of the grant award. Questioned costs - For fiscal years 2018 to 2023, questioned costs totaled $209,101. Identification as a repeat finding - Not applicable – this matter is not a repeat finding Recommendation - We recommend the University, along with the internal audit function, continue to emphasize with staff existing job responsibilities, the critical task of secondary reviews and thoroughness of those reviews. The reviews should include ensuring compliance with grant terms and conditions, as well as adequate documentation is provided and maintained to support the federal expenditure and the secondary reviews.
Criteria or specific requirement (including statutory, regulatory, or other citation) - During the fiscal years June 30, 2018 to June 30, 2023, the University incurred unallowed expenditures for a federal grant that were not identified by the internal controls in place over the grant program. According to 2 CFR § 200.413, Direct Costs, direct costs are those costs that can be directly assigned to a direct cost activity with a high degree of accuracy. In addition, according to 2 CFR § 200.516, Audit Findings, the auditor must report known fraud affecting a federal award as well as known questioned costs that are greater than $25,000 for a federal program which is not audited as a major program, as an audit finding. Condition- From fiscal year 2018 through 2023, the University was not able to support that expenses paid from a federal grant for salary, benefits, and travel and other expense reimbursements for an adjunct faculty member were related to allowable activities to eligible clients under the terms of the grant agreement due to false reporting by the adjunct faculty member. More specifically, the adjunct faculty member misrepresented that services were or would be provided per the terms of the grant to eligible clients. In addition, the adjunct faculty member provided false reporting of the impact of services provided to the clients and utilized fraudulent documentation as evidence for their work performed. As a result, the University was reimbursed for expenses by the grant related to services that were not provided or were unallowable. Cause - Lack of oversight and insufficient review of work performed of adjunct faculty member. Effect- The University was reimbursed federal grant monies for work that was not performed under the terms and conditions of the grant award. Questioned costs - For fiscal years 2018 to 2023, questioned costs totaled $209,101. Identification as a repeat finding - Not applicable – this matter is not a repeat finding Recommendation - We recommend the University, along with the internal audit function, continue to emphasize with staff existing job responsibilities, the critical task of secondary reviews and thoroughness of those reviews. The reviews should include ensuring compliance with grant terms and conditions, as well as adequate documentation is provided and maintained to support the federal expenditure and the secondary reviews.
Criteria or specific requirement (including statutory, regulatory, or other citation) - During the fiscal years June 30, 2018 to June 30, 2023, the University incurred unallowed expenditures for a federal grant that were not identified by the internal controls in place over the grant program. According to 2 CFR § 200.413, Direct Costs, direct costs are those costs that can be directly assigned to a direct cost activity with a high degree of accuracy. In addition, according to 2 CFR § 200.516, Audit Findings, the auditor must report known fraud affecting a federal award as well as known questioned costs that are greater than $25,000 for a federal program which is not audited as a major program, as an audit finding. Condition- From fiscal year 2018 through 2023, the University was not able to support that expenses paid from a federal grant for salary, benefits, and travel and other expense reimbursements for an adjunct faculty member were related to allowable activities to eligible clients under the terms of the grant agreement due to false reporting by the adjunct faculty member. More specifically, the adjunct faculty member misrepresented that services were or would be provided per the terms of the grant to eligible clients. In addition, the adjunct faculty member provided false reporting of the impact of services provided to the clients and utilized fraudulent documentation as evidence for their work performed. As a result, the University was reimbursed for expenses by the grant related to services that were not provided or were unallowable. Cause - Lack of oversight and insufficient review of work performed of adjunct faculty member. Effect- The University was reimbursed federal grant monies for work that was not performed under the terms and conditions of the grant award. Questioned costs - For fiscal years 2018 to 2023, questioned costs totaled $209,101. Identification as a repeat finding - Not applicable – this matter is not a repeat finding Recommendation - We recommend the University, along with the internal audit function, continue to emphasize with staff existing job responsibilities, the critical task of secondary reviews and thoroughness of those reviews. The reviews should include ensuring compliance with grant terms and conditions, as well as adequate documentation is provided and maintained to support the federal expenditure and the secondary reviews.
Criteria or specific requirement (including statutory, regulatory, or other citation) - During the fiscal years June 30, 2018 to June 30, 2023, the University incurred unallowed expenditures for a federal grant that were not identified by the internal controls in place over the grant program. According to 2 CFR § 200.413, Direct Costs, direct costs are those costs that can be directly assigned to a direct cost activity with a high degree of accuracy. In addition, according to 2 CFR § 200.516, Audit Findings, the auditor must report known fraud affecting a federal award as well as known questioned costs that are greater than $25,000 for a federal program which is not audited as a major program, as an audit finding. Condition- From fiscal year 2018 through 2023, the University was not able to support that expenses paid from a federal grant for salary, benefits, and travel and other expense reimbursements for an adjunct faculty member were related to allowable activities to eligible clients under the terms of the grant agreement due to false reporting by the adjunct faculty member. More specifically, the adjunct faculty member misrepresented that services were or would be provided per the terms of the grant to eligible clients. In addition, the adjunct faculty member provided false reporting of the impact of services provided to the clients and utilized fraudulent documentation as evidence for their work performed. As a result, the University was reimbursed for expenses by the grant related to services that were not provided or were unallowable. Cause - Lack of oversight and insufficient review of work performed of adjunct faculty member. Effect- The University was reimbursed federal grant monies for work that was not performed under the terms and conditions of the grant award. Questioned costs - For fiscal years 2018 to 2023, questioned costs totaled $209,101. Identification as a repeat finding - Not applicable – this matter is not a repeat finding Recommendation - We recommend the University, along with the internal audit function, continue to emphasize with staff existing job responsibilities, the critical task of secondary reviews and thoroughness of those reviews. The reviews should include ensuring compliance with grant terms and conditions, as well as adequate documentation is provided and maintained to support the federal expenditure and the secondary reviews.
Criteria or specific requirement (including statutory, regulatory, or other citation) - During the fiscal years June 30, 2018 to June 30, 2023, the University incurred unallowed expenditures for a federal grant that were not identified by the internal controls in place over the grant program. According to 2 CFR § 200.413, Direct Costs, direct costs are those costs that can be directly assigned to a direct cost activity with a high degree of accuracy. In addition, according to 2 CFR § 200.516, Audit Findings, the auditor must report known fraud affecting a federal award as well as known questioned costs that are greater than $25,000 for a federal program which is not audited as a major program, as an audit finding. Condition- From fiscal year 2018 through 2023, the University was not able to support that expenses paid from a federal grant for salary, benefits, and travel and other expense reimbursements for an adjunct faculty member were related to allowable activities to eligible clients under the terms of the grant agreement due to false reporting by the adjunct faculty member. More specifically, the adjunct faculty member misrepresented that services were or would be provided per the terms of the grant to eligible clients. In addition, the adjunct faculty member provided false reporting of the impact of services provided to the clients and utilized fraudulent documentation as evidence for their work performed. As a result, the University was reimbursed for expenses by the grant related to services that were not provided or were unallowable. Cause - Lack of oversight and insufficient review of work performed of adjunct faculty member. Effect- The University was reimbursed federal grant monies for work that was not performed under the terms and conditions of the grant award. Questioned costs - For fiscal years 2018 to 2023, questioned costs totaled $209,101. Identification as a repeat finding - Not applicable – this matter is not a repeat finding Recommendation - We recommend the University, along with the internal audit function, continue to emphasize with staff existing job responsibilities, the critical task of secondary reviews and thoroughness of those reviews. The reviews should include ensuring compliance with grant terms and conditions, as well as adequate documentation is provided and maintained to support the federal expenditure and the secondary reviews.
Criteria or specific requirement (including statutory, regulatory, or other citation) - During the fiscal years June 30, 2018 to June 30, 2023, the University incurred unallowed expenditures for a federal grant that were not identified by the internal controls in place over the grant program. According to 2 CFR § 200.413, Direct Costs, direct costs are those costs that can be directly assigned to a direct cost activity with a high degree of accuracy. In addition, according to 2 CFR § 200.516, Audit Findings, the auditor must report known fraud affecting a federal award as well as known questioned costs that are greater than $25,000 for a federal program which is not audited as a major program, as an audit finding. Condition- From fiscal year 2018 through 2023, the University was not able to support that expenses paid from a federal grant for salary, benefits, and travel and other expense reimbursements for an adjunct faculty member were related to allowable activities to eligible clients under the terms of the grant agreement due to false reporting by the adjunct faculty member. More specifically, the adjunct faculty member misrepresented that services were or would be provided per the terms of the grant to eligible clients. In addition, the adjunct faculty member provided false reporting of the impact of services provided to the clients and utilized fraudulent documentation as evidence for their work performed. As a result, the University was reimbursed for expenses by the grant related to services that were not provided or were unallowable. Cause - Lack of oversight and insufficient review of work performed of adjunct faculty member. Effect- The University was reimbursed federal grant monies for work that was not performed under the terms and conditions of the grant award. Questioned costs - For fiscal years 2018 to 2023, questioned costs totaled $209,101. Identification as a repeat finding - Not applicable – this matter is not a repeat finding Recommendation - We recommend the University, along with the internal audit function, continue to emphasize with staff existing job responsibilities, the critical task of secondary reviews and thoroughness of those reviews. The reviews should include ensuring compliance with grant terms and conditions, as well as adequate documentation is provided and maintained to support the federal expenditure and the secondary reviews.
Criteria or specific requirement (including statutory, regulatory, or other citation) - During the fiscal years June 30, 2018 to June 30, 2023, the University incurred unallowed expenditures for a federal grant that were not identified by the internal controls in place over the grant program. According to 2 CFR § 200.413, Direct Costs, direct costs are those costs that can be directly assigned to a direct cost activity with a high degree of accuracy. In addition, according to 2 CFR § 200.516, Audit Findings, the auditor must report known fraud affecting a federal award as well as known questioned costs that are greater than $25,000 for a federal program which is not audited as a major program, as an audit finding. Condition- From fiscal year 2018 through 2023, the University was not able to support that expenses paid from a federal grant for salary, benefits, and travel and other expense reimbursements for an adjunct faculty member were related to allowable activities to eligible clients under the terms of the grant agreement due to false reporting by the adjunct faculty member. More specifically, the adjunct faculty member misrepresented that services were or would be provided per the terms of the grant to eligible clients. In addition, the adjunct faculty member provided false reporting of the impact of services provided to the clients and utilized fraudulent documentation as evidence for their work performed. As a result, the University was reimbursed for expenses by the grant related to services that were not provided or were unallowable. Cause - Lack of oversight and insufficient review of work performed of adjunct faculty member. Effect- The University was reimbursed federal grant monies for work that was not performed under the terms and conditions of the grant award. Questioned costs - For fiscal years 2018 to 2023, questioned costs totaled $209,101. Identification as a repeat finding - Not applicable – this matter is not a repeat finding Recommendation - We recommend the University, along with the internal audit function, continue to emphasize with staff existing job responsibilities, the critical task of secondary reviews and thoroughness of those reviews. The reviews should include ensuring compliance with grant terms and conditions, as well as adequate documentation is provided and maintained to support the federal expenditure and the secondary reviews.