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.
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.
U.S. Department of Health and Human Services Passed through the N.C. Dept. of Health and Human Services Program Name: Foster Care, Adoption, and Guardianship Assistance Cluster AL# 93.658, 93.659 Grant Number: 2201NCFOST / 2301NCFOST; 2201NCADPT / 2301NCADPT Material Weakness Material Non-Compliance Finding 2023-001 Criteria: In order for costs to be allowable for purposes of reimbursement they must be allowable in accordance with 45 CFR section 1356.60 and the NC Division of Social Services Manual. All County Department of Social Services employees which provide direct services must maintain daysheets in accordance with the NC Department of Social Services Information System Policy. Condition: The County Department of Social Services failed to retain proper documentation regarding daysheet entries. Context: Of the 892 payroll charges valued at $1,287,503, we examined 55 daysheets ($44,716 value) and determined that nine daysheets (16% valued at $14,964 did not have documentation to substantiate time charged to the Foster Care, Adoption, and Guardianship Assistance Cluster program. Questioned Costs: 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. Even though the sample results only identified $14,964 (federal share of $13,844 and state share $1,120) in questioned costs, if tests were extended to the entire population, questioned costs could exceed $25,000. Effect: Caseworker time entry could be charged to the wrong program/grant causing administrative costs to be misallocated. Cause: Caseworker failed to retain documentation of time charged to program. Identification of a Repeat Finding: This is a modified, repeat finding from the immediate previous audit, 2022-002. Recommendation: Require the County Program Directors to implement procedures to ensure that daysheets are properly supported by documentation of time charged to each program. Name of Contact Person: Angela Karchmer, Social Services Director Views of Responsible Officials and Planned Corrective Actions: Management concurs with this finding and will adhere to the Corrective Action Plan in this audit report.
U.S. Department of Health and Human Services Passed through the N.C. Dept. of Health and Human Services Program Name: Foster Care, Adoption, and Guardianship Assistance Cluster AL# 93.658, 93.659 Grant Number: 2201NCFOST / 2301NCFOST; 2201NCADPT / 2301NCADPT Material Weakness Material Non-Compliance Finding 2023-001 Criteria: In order for costs to be allowable for purposes of reimbursement they must be allowable in accordance with 45 CFR section 1356.60 and the NC Division of Social Services Manual. All County Department of Social Services employees which provide direct services must maintain daysheets in accordance with the NC Department of Social Services Information System Policy. Condition: The County Department of Social Services failed to retain proper documentation regarding daysheet entries. Context: Of the 892 payroll charges valued at $1,287,503, we examined 55 daysheets ($44,716 value) and determined that nine daysheets (16% valued at $14,964 did not have documentation to substantiate time charged to the Foster Care, Adoption, and Guardianship Assistance Cluster program. Questioned Costs: 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. Even though the sample results only identified $14,964 (federal share of $13,844 and state share $1,120) in questioned costs, if tests were extended to the entire population, questioned costs could exceed $25,000. Effect: Caseworker time entry could be charged to the wrong program/grant causing administrative costs to be misallocated. Cause: Caseworker failed to retain documentation of time charged to program. Identification of a Repeat Finding: This is a modified, repeat finding from the immediate previous audit, 2022-002. Recommendation: Require the County Program Directors to implement procedures to ensure that daysheets are properly supported by documentation of time charged to each program. Name of Contact Person: Angela Karchmer, Social Services Director Views of Responsible Officials and Planned Corrective Actions: Management concurs with this finding and will adhere to the Corrective Action Plan in this audit report.
U.S. Department of Health and Human Services Passed through the N.C. Dept. of Health and Human Services Program Name: Foster Care, Adoption, and Guardianship Assistance Cluster AL# 93.658, 93.659 Grant Number: 2201NCFOST / 2301NCFOST; 2201NCADPT / 2301NCADPT Material Weakness Material Non-Compliance Finding 2023-001 Criteria: In order for costs to be allowable for purposes of reimbursement they must be allowable in accordance with 45 CFR section 1356.60 and the NC Division of Social Services Manual. All County Department of Social Services employees which provide direct services must maintain daysheets in accordance with the NC Department of Social Services Information System Policy. Condition: The County Department of Social Services failed to retain proper documentation regarding daysheet entries. Context: Of the 892 payroll charges valued at $1,287,503, we examined 55 daysheets ($44,716 value) and determined that nine daysheets (16% valued at $14,964 did not have documentation to substantiate time charged to the Foster Care, Adoption, and Guardianship Assistance Cluster program. Questioned Costs: 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. Even though the sample results only identified $14,964 (federal share of $13,844 and state share $1,120) in questioned costs, if tests were extended to the entire population, questioned costs could exceed $25,000. Effect: Caseworker time entry could be charged to the wrong program/grant causing administrative costs to be misallocated. Cause: Caseworker failed to retain documentation of time charged to program. Identification of a Repeat Finding: This is a modified, repeat finding from the immediate previous audit, 2022-002. Recommendation: Require the County Program Directors to implement procedures to ensure that daysheets are properly supported by documentation of time charged to each program. Name of Contact Person: Angela Karchmer, Social Services Director Views of Responsible Officials and Planned Corrective Actions: Management concurs with this finding and will adhere to the Corrective Action Plan in this audit report.
U.S. Department of Health and Human Services Passed through the N.C. Dept. of Health and Human Services Grant Number: 2201NCADPT / 2301NCADPT Program Name: Child Support Enforcement AL# 93.563 Grant Number: 2201NCCES / 2301NCCES Significant Deficiency Non-Material Non-Compliance Finding 2023-004 Criteria: In accordance with 45 CFR 304 and the Division of Social Services Fiscal Manual, management should have an adequate system of internal control procedures in place to ensure that salaries are being paid at the approved rate in accordance with the county pay plan. Condition: The County Department of Social Services failed to pay one employee at the correct pay rate. Context: Of the 289 payroll charges valued at $1,294,572, we examined 40 payroll charges ($184,290 value) and determined that one employee (2.5% valued at $415) was not paid at the approved pay rate. Questioned Costs: 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. Costs are under the amount to be reported. Effect: Caseworker time could be charged at the incorrect pay rate causing administrative costs to be inaccurately reported to the state for reimbursement. Cause: The County failed to pay one employee at the correct pay rate. Recommendation: Require the Human Resources Department and County Program Directors to implement procedures to ensure that pay rates are properly entered into the payroll processing system at the time the pay rate is established. Name of Contact Person: Amia Massey, Director, Human Resources Views of Responsible Officials and Planned Corrective Actions: Management concurs with this finding and will adhere to the Corrective Action Plan in this audit report.
2023-006 Federal Awarding Agency: Department of the Treasury Program title and ALN: Coronavirus State and Local Fiscal Recovery Funds #21.027 126 GRANT COUNTY, OREGON SCHEDULE OF FINDINGS AND QUESTIONED COSTS June 30, 2023 Compliance requirements applicable to finding: Activities Allowed or Unallowed Findings: Other findings disclosed in accordance with 2 CFR 200.516(a) Questioned Costs: $90,122 in known questioned costs related to the non-major federal program Criteria: The county spent $90,122 in Coronavirus State and Local Fiscal Recovery Funds on the remodel of a county building planned to materially be used for the new offices of the county’s emergency management department. Coronavirus State and Local Fiscal Recovery Funds under ALN #21.027 are required to be spent on projects that directly respond to the public health and negative economic impacts of the COVID-19 pandemic. Under 602(c)(1)(A) or 603(c)(1)(A), a general infrastructure project typically would not be considered a response to the public health emergency and its negative economic impacts unless the project responds to a specific pandemic-related public health need (e.g., investments in facilities for the delivery of vaccines) or a specific negative economic impact of the pandemic (e.g., affordable housing in a Qualified Census Tract). The emergency management department does not fit these criteria, which means this remodel project is an unallowed cost. Condition and Context: As a result of following up on prior year findings reported on the Schedule of Findings and Questioned Costs for the year ended June 30, 2022, significant transactions were identified that directly relate to noncompliance over the federal program that occurred during the June 30, 2023, fiscal year. These transactions were not tested as a major program during the 2023 fiscal year and were not subject to current year auditing procedures; however, noncompliance and known questioned costs were identified that met requirements for disclosure. Furthermore, recommendations made by auditors and plans of corrective action identified by management in prior years were insufficiently addressed. Cause: Unfamiliarity with program requirements from those accumulating and tracking costs charged to the program and lack of knowledgeable oversight over the program was a significant cause for these findings. The county lacked internal controls to ensure expenditures reimbursed through the program met compliance requirements. Effect: Known questioned costs related to the compliance of federal programs in the amount of $90,122 related to expenditures in the 2023 fiscal year were identified. Recommendation: We recommend the county adopt formal policies to address transactional compliance over grant awards. Given the volume of grant activity, identifying a grant compliance officer with the requisite experience in program compliance monitoring should be an included control. The current general ledger system has historically been sufficient to address the appropriate segregation and tracking of individual awards but has been used inappropriately to be implemented as a control. Monitoring of controls over expenditures and grant award compliance should be implemented, and deviations from controls in place should be addressed timely. Views of responsible officials and planned corrective actions: The County does not have available funding to hire a grant compliance officer, however, the County plans to seek training resources for current staff responsible for grant administration.
Agency: Department of Treasury Program & ALN: COVID-19 Coronavirus State and Local Fiscal Recovery Funds (21.027) ComplianceRequirement: Reporting Finding Type: Finding reported in accordance with 2 CFR section 200.516(a) Criteria: Per grant requirements, recipients are required to submit annual Project and Expenditure Reports detailing cumulative and current period expenditures andobligations. Condition: The Town filed reports with expenditures based on estimates that did not have underlying supporting documentation. Cause: The Town did not have a proper reporting and review process of federal grants. Effect: The expenditures reported by the Town on the report for the year ended March 31, 2023 were overstated. Context: The Town reported expenditures totaling $4,988,468 for the two years ended March 31, 2023 but only had supporting expenditures totaling $4,208,385. Recommendation: Management should establish a reconciliation process and reports should be reviewed by someone other than the preparer prior to submission to ensure accuracy of reporting. Views of Responsible Officials and Planned Corrective Action: The Town concurs with the finding; however, it will be corrected as the Town willhave fully spent the funds by the next filing due March 31, 2024.
C. FINDINGS AND QUESTIONED COSTS - FOR MAJOR FEDERAL AWARD PROGRAMS AS DEFINED BY THE UNIFORM GUIDANCE (2 CFR 200.516(a)) DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT FINDING NO. 2023-002: Late REAC Submission - See the details of this finding in 2023-001 above.
SECTION II - FINANCIAL STATEMENT FINDINGS This section identifies the significant deficiencies, material weaknesses, fraud, noncompliance with provisions of laws, regulations, contracts, grant agreements and abuse related to the financial statements for which Government Auditing Standards require reporting. There were no such findings in the current year that are required to be reported in accordance with Government Auditing Standards. SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS This section identifies the audit findings required to be reported by 2 CFR 200.516(a) (significant deficiencies, material weaknesses, material instances of noncompliance, including questioned costs and material abuse). Finding 2023-001: Student Financial Assistance Cluster, Department of Education Programs Program Names: Federal Direct Student Loans AL Numbers: 84.268 Criteria or Specific Requirement: 34 CFR 685.309 and 34 CFR 690.83(b)(2) require the institution to update its Enrollment Reporting roster file at a minimum of every 60 days. Once a change in enrollment status has been received, the institution must update its roster file for changes in student status, report the date the enrollment status was effective, enter the new anticipated completion date, and submit the changes electronically through the batch method or the National Student Loan Data System (NSLDS) website. Condition: The University did not report enrollment status updates for graduate students to the NSLDS through the National Student Clearinghouse as required under 34 CFR 682.610 for 16 of 40 students tested, within the 60-day required time frame. Cause: The exceptions noted were a result of a failure in the University’s processes and controls surrounding the validation of support uploaded to the National Student Clearinghouse. A manual trigger to an automated process was not initiated, resulting in a report not capturing enrollment changes in a timely manner for students who graduated from the University after the end of the Spring 2023 semester. Effect or Potential Effect: A student’s enrollment status determines eligibility for in-school status, deferment, and grace periods. Enrollment reporting in a timely and accurate manner is critical for effective management of the program. Changes in enrollment status were not submitted to the NSLDS within the time frame required under 34 CFR 682.610. Questioned Costs: None noted Context: The sample selected for testing is representative of the population. However, it was determined upon further review of the entire population by the University that there were 354 instances of noncompliance that were not included within the sample. Identification as a Repeat Finding, if applicable: This is not a repeat finding. Recommendation: We recommend that the University implement an additional step in its enrollment status change process to ensure that graduate status changes are reported in a timely manner and that the population of enrollment changes is complete. We also recommend that the University continue to develop and document additional policies and procedures to ensure that all enrollment changes are reported accurately, completely, and in a timely manner. Views of responsible officials: Management concurs with this finding. See separate corrective action plan document.
This section identifies the audit findings required to be reported by 2 CFR 200.516(a), including significant deficiencies, material weaknesses and material instances of noncompliance, including questioned costs and material abuse involving federal awards that are material to a major federal program. Finding No. 2023-01: Name of Federal Agency: Department of Health and Human Services Name of Pass Through Entity: Westmoreland County Children, Youth and Family Program Name: Temporary Assistance for Needy Families Assistance Listing No: 93.558 Condition During 2023, the Organization was notified upon completion of a Fiscal and Program File Review performed by an awarding agency, related to one of their Family Support Services programs, that errors were identified and supporting documentation was not readily available. As a result, the awarding agency determined these to be errors in billing and represented an overpayment. Criteria The Organization did not comply with the contractual arrangements and was non-compliant with a number of provisions of the Fiscal Year 2022-2023 Agreement with an awarding agency concerning financial responsibility and maintaining complete and accurate records related to one of their Family Support Services programs. Cause Upon initial review, there was insufficient understanding and training on the awarding agency’s documentation requirements. Effect The Organization is believed to have received an overpayment in the amount of approximately $586,594 due to lack of sufficient support for amounts billed and paid when compared to the awarding agency verified amount. Questioned Costs Approximately $586,594 of costs to be reimbursed to the awarding agency. Recommendation Management should improve processes surrounding submission of monthly invoices to include all required documentation to sufficiently support all items included within the invoice. Additional training should occur to ensure all individuals involved are aware of the requirement specified by the awarding agency. Reporting Views of Responsible Officials Management concurs with this finding and recommendation. See separate corrective action plan document.
This section identifies the audit findings required to be reported by 2 CFR 200.516(a), including significant deficiencies, material weaknesses and material instances of noncompliance, including questioned costs and material abuse involving federal awards that are material to a major federal program. Finding No. 2023-01: Name of Federal Agency: Department of Health and Human Services Name of Pass Through Entity: Westmoreland County Children, Youth and Family Program Name: Temporary Assistance for Needy Families Assistance Listing No: 93.558 Condition During 2023, the Organization was notified upon completion of a Fiscal and Program File Review performed by an awarding agency, related to one of their Family Support Services programs, that errors were identified and supporting documentation was not readily available. As a result, the awarding agency determined these to be errors in billing and represented an overpayment. Criteria The Organization did not comply with the contractual arrangements and was non-compliant with a number of provisions of the Fiscal Year 2022-2023 Agreement with an awarding agency concerning financial responsibility and maintaining complete and accurate records related to one of their Family Support Services programs. Cause Upon initial review, there was insufficient understanding and training on the awarding agency’s documentation requirements. Effect The Organization is believed to have received an overpayment in the amount of approximately $586,594 due to lack of sufficient support for amounts billed and paid when compared to the awarding agency verified amount. Questioned Costs Approximately $586,594 of costs to be reimbursed to the awarding agency. Recommendation Management should improve processes surrounding submission of monthly invoices to include all required documentation to sufficiently support all items included within the invoice. Additional training should occur to ensure all individuals involved are aware of the requirement specified by the awarding agency. Reporting Views of Responsible Officials Management concurs with this finding and recommendation. See separate corrective action plan document.
This section identifies the audit findings required to be reported by 2 CFR 200.516(a), including significant deficiencies, material weaknesses and material instances of noncompliance, including questioned costs and material abuse involving federal awards that are material to a major federal program. Finding No. 2023-01: Name of Federal Agency: Department of Health and Human Services Name of Pass Through Entity: Westmoreland County Children, Youth and Family Program Name: Temporary Assistance for Needy Families Assistance Listing No: 93.558 Condition During 2023, the Organization was notified upon completion of a Fiscal and Program File Review performed by an awarding agency, related to one of their Family Support Services programs, that errors were identified and supporting documentation was not readily available. As a result, the awarding agency determined these to be errors in billing and represented an overpayment. Criteria The Organization did not comply with the contractual arrangements and was non-compliant with a number of provisions of the Fiscal Year 2022-2023 Agreement with an awarding agency concerning financial responsibility and maintaining complete and accurate records related to one of their Family Support Services programs. Cause Upon initial review, there was insufficient understanding and training on the awarding agency’s documentation requirements. Effect The Organization is believed to have received an overpayment in the amount of approximately $586,594 due to lack of sufficient support for amounts billed and paid when compared to the awarding agency verified amount. Questioned Costs Approximately $586,594 of costs to be reimbursed to the awarding agency. Recommendation Management should improve processes surrounding submission of monthly invoices to include all required documentation to sufficiently support all items included within the invoice. Additional training should occur to ensure all individuals involved are aware of the requirement specified by the awarding agency. Reporting Views of Responsible Officials Management concurs with this finding and recommendation. See separate corrective action plan document.
This section identifies the audit findings required to be reported by 2 CFR 200.516(a), including significant deficiencies, material weaknesses and material instances of noncompliance, including questioned costs and material abuse involving federal awards that are material to a major federal program. Finding No. 2023-01: Name of Federal Agency: Department of Health and Human Services Name of Pass Through Entity: Westmoreland County Children, Youth and Family Program Name: Temporary Assistance for Needy Families Assistance Listing No: 93.558 Condition During 2023, the Organization was notified upon completion of a Fiscal and Program File Review performed by an awarding agency, related to one of their Family Support Services programs, that errors were identified and supporting documentation was not readily available. As a result, the awarding agency determined these to be errors in billing and represented an overpayment. Criteria The Organization did not comply with the contractual arrangements and was non-compliant with a number of provisions of the Fiscal Year 2022-2023 Agreement with an awarding agency concerning financial responsibility and maintaining complete and accurate records related to one of their Family Support Services programs. Cause Upon initial review, there was insufficient understanding and training on the awarding agency’s documentation requirements. Effect The Organization is believed to have received an overpayment in the amount of approximately $586,594 due to lack of sufficient support for amounts billed and paid when compared to the awarding agency verified amount. Questioned Costs Approximately $586,594 of costs to be reimbursed to the awarding agency. Recommendation Management should improve processes surrounding submission of monthly invoices to include all required documentation to sufficiently support all items included within the invoice. Additional training should occur to ensure all individuals involved are aware of the requirement specified by the awarding agency. Reporting Views of Responsible Officials Management concurs with this finding and recommendation. See separate corrective action plan document.
Finding Number: 2023-005 State/Educational Agency(s): Arkansas Department of Commerce – Division of Workforce Services Pass-Through Entity: Not Applicable ALN Number(s) and Program Title(s): 17.225 – Unemployment Insurance Federal Awarding Agency: U.S. Department of Labor Federal Award Number(s): Not Applicable Federal Award Year(s): Not Applicable Compliance Requirement(s) Affected: Activities Allowed or Unallowed; Eligibility Type of Finding: Noncompliance and Significant Deficiency Repeat Finding: A similar issue was reported in prior-year finding 2022-001. Criteria: In accordance with 2 CFR § 200.303, a 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 award. In addition, 2 CFR § 200.516 (a)(6) requires the auditor to report as an audit finding any known or likely fraud affecting a federal award. Condition and Context: In state fiscal year 2023, the Division of Workforce Services (DWS) identified 1,077 claims paid for Unemployment Insurance programs, totaling $2,295,059, as likely fraud. (This is in addition to the claims identified in the previous years.) The $2,295,059 is comprised of $1,563,505 in federal funds and $731,554 in state funds. Statistically Valid Sample: Not a statistically valid sample Questioned Costs: $1,563,505 (federal) $ 731,554 (state) Cause: In response to the increase in demand for services/benefits, the State relaxed controls over identify verification and income verification for the program during fiscal year 2021. DWS continued to identify claims in fiscal year 2023 that were paid during fiscal year 2021. Effect: Lack of appropriate internal controls resulted in overpayments of state and federal funds. Recommendation: ALA staff recommend the Agency continue to strengthen controls over benefit payments to ensure that payments are made in the correct amount and to eligible claimants. Additionally, ALA staff recommend the Agency continue to seek recoupment of the identified overpayments, returning them to their appropriate source. Views of Responsible Officials and Planned Corrective Action: Due to the health concerns of the pandemic as well as unprecedented claims volume, claimants were not required to come into a local office for identity verification, the waiting week was waived for 2020, and the requirements for work search were adjusted in order to protect employees and claimants. Before the pandemic, all claimants were required to come to the local office to verify their identity. Removing these process controls resulted in several consequences as itemized below: • By waiving the waiting week, the claimant was able to receive payment the following week. For example, a fraudster could file a claim on Friday, then receive payment on Sunday, removing the typical week that an employer would respond to validate the separation from employment. • The information mailed to the employer and claimant were not received before payments were made due to the lack of waiting week. • Businesses were closed at that time and did not respond to the unemployment paperwork timely to report fraudulent claims. • Identity theft fraudsters often changed the address of the individuals for which they had filed claims in order to prevent the victims from being notified and reporting the fraud. In 2020, the work search requirement was reinstated. In 2021, all claimants had to verify their identity in-person at the local office before the claim was opened for a regular unemployment claim. The UIdentify program was utilized for identity verification for the PUA claims filed after January 1, 2021. The waiting week was reinstated in January 2021, which lengthened the time period for employers to respond before payment was issued. In addition, Internal Audit created the Fraud Investigation Unit and hired additional staff to focus on investigating the identity theft fraud claims. When the perpetrator is identified, a determination is issued and an overpayment is established in the perpetrator’s name/SSN for collection. The NASWA Integrity Data Hub (IDH) crossmatch was implemented in July 2020 as well in an effort to identify additional fraudulent claims for investigation. ADWS was the first UI program to implement 2 projects with the Department of Labor for identity verification. One is using Login.gov and the other involves the United States Postal Service where they verify the identity of claimants for using multifactor authentication and in person presentation of ID. The Login.gov pilot started in 2022 and the USPS pilot project started in 2023. 1. The Login.gov project uses the current system that Federal agencies use to verify identity and went into service in Arkansas as of March 2022. A link is given to the claimant, when they select verify ID through login.gov and go through the steps to verify their identity through the federal government system. If they are approved, we are sent an IA2 verification to the UI processing system to allow staff to match back to the claim to prove ID verification. 2. The United States Postal Service project, implements in Arkansas March 2023, offers the claimant the same link as Login.gov, but grants the additional option to verify their identity at any US Post Office in the country. A barcode is created and must be taken with a valid government-issued ID (they are given examples) along with proof of current address to the post office in person. If they are approved, we are sent an IA2 verification to the UI processing system to allow staff to match back to the claim to prove ID verification. Anticipated Completion Date: Corrective action was taken for the controls the ALA staff recommended. Contact Person: Sheri Rooney Program Administrator Arkansas Division of Workforce Services #2 Capitol Mall Little Rock, AR 72201 501-682-3382 Sheri.Rooney@arkansas.gov
Finding Number: 2023-032 State/Educational Agency(s): Arkansas Department of Commerce – Division of Workforce Services Pass-Through Entity: Not Applicable ALN Number(s) and Program Title(s): 97.050 – COVID 19: Presidential Declared Disaster Assistance to Individuals and Households – Other Needs (Supplemental Payments for Lost Wages) Federal Awarding Agency: Federal Emergency Management Agency Federal Award Number(s): 4518DRARSPLW Federal Award Year(s): Not Applicable Compliance Requirement(s) Affected: Activities Allowed or Unallowed; Eligibility Type of Finding: Noncompliance and Significant Deficiency Repeat Finding: Not applicable Criteria: In accordance with 2 CFR § 200.303, a 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 award. In addition, 2 CFR § 200.516(a)(6) requires the auditor to report known or likely fraud affecting a federal award. Condition and Context: In state fiscal year 2023, the Division of Workforce Services (DWS) identified 64 claims paid for Lost Wages Assistance (LWA) totaling $67,500 as likely fraud. This is in addition to the claims identified in the previous fiscal years. Statistically Valid Sample: Not a statistically valid sample Questioned Costs: $67,500 Cause: In response to the increase in demand for services/benefits, the State relaxed controls over identify verification and income verification for the program during fiscal year 2021. DWS continued to identify claims in fiscal year 2023 that were paid during fiscal year 2021. Effect: Lack of appropriate internal controls resulted in overpayments of federal funds. Recommendation: ALA staff recommend the Agency continue to strengthen controls over benefit payments to ensure that payments are made in the correct amounts and to eligible claimants. Additionally, ALA staff recommend the Agency continue to seek recoupment of the identified overpayments, returning them to the appropriate source. Views of Responsible Officials and Planned Corrective Action: Due to the health concerns of the pandemic as well as unprecedented claims volume, claimants were not required to come into a local office for identity verification, the waiting week was waived for 2020, and the requirements for work search were adjusted in order to protect employees and claimants. Before the pandemic, all claimants were required to come to the local office to verify their identity. Removing these process controls resulted in several consequences as itemized below: • By waiving the waiting week, the claimant was able to receive payment the following week. For example, a fraudster could file a claim on Friday, then receive payment on Sunday, removing the typical week that an employer would respond to validate the separation from employment. • The information mailed to the employer and claimant were not received before payments were made due to the lack of waiting week. • Businesses were closed at that time and did not respond to the unemployment paperwork timely to report fraudulent claims. • Identity theft fraudsters often changed the address of the individuals for which they had filed claims in order to prevent the victims from being notified and reporting the fraud. In 2020, the work search requirement was reinstated. In 2021, all claimants had to verify their identity in-person at the local office before the claim was opened for a regular unemployment claim. The UIdentify program was utilized for identity verification for the PUA claims filed after January 1, 2021. The waiting week was reinstated in January 2021, which lengthened the time period for employers to respond before payment was issued. In addition, Internal Audit created the Fraud Investigation Unit and hired additional staff to focus on investigating the identity theft fraud claims. When the perpetrator is identified, a determination is issued and an overpayment is established in the perpetrator’s name/SSN for collection. The NASWA Integrity Data Hub (IDH) crossmatch was implemented in July 2020 as well in an effort to identify additional fraudulent claims for investigation. ADWS was the first UI program to implement 2 projects with the Department of Labor for identity verification. One is using Login.gov and the other involves the United States Postal Service where they verify the identity of claimants for using multifactor authentication and in person presentation of ID. The Login.gov pilot started in 2022 and the USPS pilot project started in 2023. 1. The Login.gov project uses the current system that Federal agencies use to verify identity and went into service in Arkansas as of March 2022. A link is given to the claimant, when they select verify ID through login.gov and go through the steps to verify their identity through the federal government system. If they are approved, we are sent an IA2 verification to the UI processing system to allow staff to match back to the claim to prove ID verification. 2. The United States Postal Service project, implements in Arkansas March 2023, offers the claimant the same link as Login.gov, but grants the additional option to verify their identity at any US Post Office in the country. A barcode is created and must be taken with a valid government-issued ID (they are given examples) along with proof of current address to the post office in person. If they are approved, we are sent an IA2 verification to the UI processing system to allow staff to match back to the claim to prove ID verification. Anticipated Completion Date: Corrective action was taken for the ALA staff recommendations Contact Person: Sheri Rooney Program Administrator Arkansas Division of Workforce Services #2 Capitol Mall Little Rock, AR 72201 501-682-3382 Sheri.Rooney@arkansas.gov
Finding 2023-003 – Material Weakness AL No: 20.507 Federal Grantor: U.S. Department of Transportation, Federal Transit Administration, Federal Transit Formula Grants - Direct Award Compliance Requirements: Activities Allowed or Unallowed and Allowable Costs/Cost Principles. Condition: The District’s internal controls over compliance requirements did not identify ineligible costs applied to four separate Federal Transit Administration (FTA) grants as follows. Section 5307 Grant Award CA-2020-173-01: The District overclaimed Route 42 and Woodland fixed route operating expenses that should have been reimbursed by a local match as required by other FTA grants applied to the same routes, resulting in ineligible costs of $1,073,260 being charged to the program. Questioned Costs: $1,073,260. Section 5307 Grant Award CA-2022-140-01: The District overclaimed Route 42 expansion fixed route operating expenses that should have been reimbursed by a local match as the wrong federal percentage was applied in the claims, resulting in ineligible costs of $33,129 being charged to the program. Questioned Costs: $33,129. Section 5307 Grant Award CA-2022-147-04: The District overclaimed communication expenses for Woodland paratransit operating routes, resulting in ineligible costs of $12,513 being charged to the program. Questioned Costs: Ineligible costs were below the $25,000 floor for questioned costs under 2 CFR Part 200, Subpart F (Uniform Guidance), Section 200.516. Section 5307 Grant Awards CA-2022-204-01 and CA-2021-162-03: The District claimed engine overhaul expenses that did not qualify as preventative maintenance costs allowed by the terms and conditions of the grant, resulting in ineligible costs of $17,902 being charged to the program. Questioned Costs: Ineligible costs were below the $25,000 floor for questioned costs under 2 CFR Part 200, Subpart F (Uniform Guidance), Section 200.516. Criteria: 2 CFR Part 200, Subpart E (Uniform Guidance) Section 200.303 states that “The nonfederal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” Cause: Several federal grants applied to these routes had local match requirements that were not captured by the District’s review procedures due to recent staff turnover and lack of documented procedures to track expenses charged to all funding sources combined. Not all paratransit operating expenses were reported and tracked separately in the allocation spreadsheet leading to expenses being double claimed under different grants for different purposes. This is due to the allocation spreadsheet not having a summary page totaling all expenses charged to programs to make sure the total expenses allocated agree to the total population of expenses allocated. Effect: Expenses were charged to more than one grant when filing claims and ineligible costs were applied, resulting in the overclaimed amounts cited above. Context: The ineligible costs were discovered through reconciliation of the operating expenses and capital costs from the claims to the general ledger. It was noted that the District did not have any FTA awards for capital maintenance during the year. The overclaimed amounts of $1,073,260, $33,129, and $12,513 have been removed from revenue as the FTA has currently approved the District claiming the expenses under different grants. There were potentially additional operating expenses under Paratransit services that could have offset some of these overclaimed amounts. The ineligible costs of $17,902 have been submitted to the FTA through a budget revision to allow for capital funding under the two related awards and is currently pending FTA approval. Recommendation: We recommend the District develop written procedures for allocating expenses to routes and purposes used to claim expenses under federal grants and to track the different funding sources applied. A summary tab should be added to the allocation spreadsheet to sum amounts for each route computed on separate tabs on the spreadsheet to make it easier to reconcile total operating expenses, preventive maintenance, insurance, communications and other expenses allocated to the population of expenses in the general ledger. View of Responsible Officials and Planned Corrective Action: Management’s response and planned corrective action is included at the Corrective Action Plan end of this report.
Finding 2023-003 – Material Weakness AL No: 20.507 Federal Grantor: U.S. Department of Transportation, Federal Transit Administration, Federal Transit Formula Grants - Direct Award Compliance Requirements: Activities Allowed or Unallowed and Allowable Costs/Cost Principles. Condition: The District’s internal controls over compliance requirements did not identify ineligible costs applied to four separate Federal Transit Administration (FTA) grants as follows. Section 5307 Grant Award CA-2020-173-01: The District overclaimed Route 42 and Woodland fixed route operating expenses that should have been reimbursed by a local match as required by other FTA grants applied to the same routes, resulting in ineligible costs of $1,073,260 being charged to the program. Questioned Costs: $1,073,260. Section 5307 Grant Award CA-2022-140-01: The District overclaimed Route 42 expansion fixed route operating expenses that should have been reimbursed by a local match as the wrong federal percentage was applied in the claims, resulting in ineligible costs of $33,129 being charged to the program. Questioned Costs: $33,129. Section 5307 Grant Award CA-2022-147-04: The District overclaimed communication expenses for Woodland paratransit operating routes, resulting in ineligible costs of $12,513 being charged to the program. Questioned Costs: Ineligible costs were below the $25,000 floor for questioned costs under 2 CFR Part 200, Subpart F (Uniform Guidance), Section 200.516. Section 5307 Grant Awards CA-2022-204-01 and CA-2021-162-03: The District claimed engine overhaul expenses that did not qualify as preventative maintenance costs allowed by the terms and conditions of the grant, resulting in ineligible costs of $17,902 being charged to the program. Questioned Costs: Ineligible costs were below the $25,000 floor for questioned costs under 2 CFR Part 200, Subpart F (Uniform Guidance), Section 200.516. Criteria: 2 CFR Part 200, Subpart E (Uniform Guidance) Section 200.303 states that “The nonfederal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” Cause: Several federal grants applied to these routes had local match requirements that were not captured by the District’s review procedures due to recent staff turnover and lack of documented procedures to track expenses charged to all funding sources combined. Not all paratransit operating expenses were reported and tracked separately in the allocation spreadsheet leading to expenses being double claimed under different grants for different purposes. This is due to the allocation spreadsheet not having a summary page totaling all expenses charged to programs to make sure the total expenses allocated agree to the total population of expenses allocated. Effect: Expenses were charged to more than one grant when filing claims and ineligible costs were applied, resulting in the overclaimed amounts cited above. Context: The ineligible costs were discovered through reconciliation of the operating expenses and capital costs from the claims to the general ledger. It was noted that the District did not have any FTA awards for capital maintenance during the year. The overclaimed amounts of $1,073,260, $33,129, and $12,513 have been removed from revenue as the FTA has currently approved the District claiming the expenses under different grants. There were potentially additional operating expenses under Paratransit services that could have offset some of these overclaimed amounts. The ineligible costs of $17,902 have been submitted to the FTA through a budget revision to allow for capital funding under the two related awards and is currently pending FTA approval. Recommendation: We recommend the District develop written procedures for allocating expenses to routes and purposes used to claim expenses under federal grants and to track the different funding sources applied. A summary tab should be added to the allocation spreadsheet to sum amounts for each route computed on separate tabs on the spreadsheet to make it easier to reconcile total operating expenses, preventive maintenance, insurance, communications and other expenses allocated to the population of expenses in the general ledger. View of Responsible Officials and Planned Corrective Action: Management’s response and planned corrective action is included at the Corrective Action Plan end of this report.
Finding 2023-003 – Material Weakness AL No: 20.507 Federal Grantor: U.S. Department of Transportation, Federal Transit Administration, Federal Transit Formula Grants - Direct Award Compliance Requirements: Activities Allowed or Unallowed and Allowable Costs/Cost Principles. Condition: The District’s internal controls over compliance requirements did not identify ineligible costs applied to four separate Federal Transit Administration (FTA) grants as follows. Section 5307 Grant Award CA-2020-173-01: The District overclaimed Route 42 and Woodland fixed route operating expenses that should have been reimbursed by a local match as required by other FTA grants applied to the same routes, resulting in ineligible costs of $1,073,260 being charged to the program. Questioned Costs: $1,073,260. Section 5307 Grant Award CA-2022-140-01: The District overclaimed Route 42 expansion fixed route operating expenses that should have been reimbursed by a local match as the wrong federal percentage was applied in the claims, resulting in ineligible costs of $33,129 being charged to the program. Questioned Costs: $33,129. Section 5307 Grant Award CA-2022-147-04: The District overclaimed communication expenses for Woodland paratransit operating routes, resulting in ineligible costs of $12,513 being charged to the program. Questioned Costs: Ineligible costs were below the $25,000 floor for questioned costs under 2 CFR Part 200, Subpart F (Uniform Guidance), Section 200.516. Section 5307 Grant Awards CA-2022-204-01 and CA-2021-162-03: The District claimed engine overhaul expenses that did not qualify as preventative maintenance costs allowed by the terms and conditions of the grant, resulting in ineligible costs of $17,902 being charged to the program. Questioned Costs: Ineligible costs were below the $25,000 floor for questioned costs under 2 CFR Part 200, Subpart F (Uniform Guidance), Section 200.516. Criteria: 2 CFR Part 200, Subpart E (Uniform Guidance) Section 200.303 states that “The nonfederal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” Cause: Several federal grants applied to these routes had local match requirements that were not captured by the District’s review procedures due to recent staff turnover and lack of documented procedures to track expenses charged to all funding sources combined. Not all paratransit operating expenses were reported and tracked separately in the allocation spreadsheet leading to expenses being double claimed under different grants for different purposes. This is due to the allocation spreadsheet not having a summary page totaling all expenses charged to programs to make sure the total expenses allocated agree to the total population of expenses allocated. Effect: Expenses were charged to more than one grant when filing claims and ineligible costs were applied, resulting in the overclaimed amounts cited above. Context: The ineligible costs were discovered through reconciliation of the operating expenses and capital costs from the claims to the general ledger. It was noted that the District did not have any FTA awards for capital maintenance during the year. The overclaimed amounts of $1,073,260, $33,129, and $12,513 have been removed from revenue as the FTA has currently approved the District claiming the expenses under different grants. There were potentially additional operating expenses under Paratransit services that could have offset some of these overclaimed amounts. The ineligible costs of $17,902 have been submitted to the FTA through a budget revision to allow for capital funding under the two related awards and is currently pending FTA approval. Recommendation: We recommend the District develop written procedures for allocating expenses to routes and purposes used to claim expenses under federal grants and to track the different funding sources applied. A summary tab should be added to the allocation spreadsheet to sum amounts for each route computed on separate tabs on the spreadsheet to make it easier to reconcile total operating expenses, preventive maintenance, insurance, communications and other expenses allocated to the population of expenses in the general ledger. View of Responsible Officials and Planned Corrective Action: Management’s response and planned corrective action is included at the Corrective Action Plan end of this report.
Finding 2023-003 – Material Weakness AL No: 20.507 Federal Grantor: U.S. Department of Transportation, Federal Transit Administration, Federal Transit Formula Grants - Direct Award Compliance Requirements: Activities Allowed or Unallowed and Allowable Costs/Cost Principles. Condition: The District’s internal controls over compliance requirements did not identify ineligible costs applied to four separate Federal Transit Administration (FTA) grants as follows. Section 5307 Grant Award CA-2020-173-01: The District overclaimed Route 42 and Woodland fixed route operating expenses that should have been reimbursed by a local match as required by other FTA grants applied to the same routes, resulting in ineligible costs of $1,073,260 being charged to the program. Questioned Costs: $1,073,260. Section 5307 Grant Award CA-2022-140-01: The District overclaimed Route 42 expansion fixed route operating expenses that should have been reimbursed by a local match as the wrong federal percentage was applied in the claims, resulting in ineligible costs of $33,129 being charged to the program. Questioned Costs: $33,129. Section 5307 Grant Award CA-2022-147-04: The District overclaimed communication expenses for Woodland paratransit operating routes, resulting in ineligible costs of $12,513 being charged to the program. Questioned Costs: Ineligible costs were below the $25,000 floor for questioned costs under 2 CFR Part 200, Subpart F (Uniform Guidance), Section 200.516. Section 5307 Grant Awards CA-2022-204-01 and CA-2021-162-03: The District claimed engine overhaul expenses that did not qualify as preventative maintenance costs allowed by the terms and conditions of the grant, resulting in ineligible costs of $17,902 being charged to the program. Questioned Costs: Ineligible costs were below the $25,000 floor for questioned costs under 2 CFR Part 200, Subpart F (Uniform Guidance), Section 200.516. Criteria: 2 CFR Part 200, Subpart E (Uniform Guidance) Section 200.303 states that “The nonfederal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” Cause: Several federal grants applied to these routes had local match requirements that were not captured by the District’s review procedures due to recent staff turnover and lack of documented procedures to track expenses charged to all funding sources combined. Not all paratransit operating expenses were reported and tracked separately in the allocation spreadsheet leading to expenses being double claimed under different grants for different purposes. This is due to the allocation spreadsheet not having a summary page totaling all expenses charged to programs to make sure the total expenses allocated agree to the total population of expenses allocated. Effect: Expenses were charged to more than one grant when filing claims and ineligible costs were applied, resulting in the overclaimed amounts cited above. Context: The ineligible costs were discovered through reconciliation of the operating expenses and capital costs from the claims to the general ledger. It was noted that the District did not have any FTA awards for capital maintenance during the year. The overclaimed amounts of $1,073,260, $33,129, and $12,513 have been removed from revenue as the FTA has currently approved the District claiming the expenses under different grants. There were potentially additional operating expenses under Paratransit services that could have offset some of these overclaimed amounts. The ineligible costs of $17,902 have been submitted to the FTA through a budget revision to allow for capital funding under the two related awards and is currently pending FTA approval. Recommendation: We recommend the District develop written procedures for allocating expenses to routes and purposes used to claim expenses under federal grants and to track the different funding sources applied. A summary tab should be added to the allocation spreadsheet to sum amounts for each route computed on separate tabs on the spreadsheet to make it easier to reconcile total operating expenses, preventive maintenance, insurance, communications and other expenses allocated to the population of expenses in the general ledger. View of Responsible Officials and Planned Corrective Action: Management’s response and planned corrective action is included at the Corrective Action Plan end of this report.
Finding 2023-003 – Material Weakness AL No: 20.507 Federal Grantor: U.S. Department of Transportation, Federal Transit Administration, Federal Transit Formula Grants - Direct Award Compliance Requirements: Activities Allowed or Unallowed and Allowable Costs/Cost Principles. Condition: The District’s internal controls over compliance requirements did not identify ineligible costs applied to four separate Federal Transit Administration (FTA) grants as follows. Section 5307 Grant Award CA-2020-173-01: The District overclaimed Route 42 and Woodland fixed route operating expenses that should have been reimbursed by a local match as required by other FTA grants applied to the same routes, resulting in ineligible costs of $1,073,260 being charged to the program. Questioned Costs: $1,073,260. Section 5307 Grant Award CA-2022-140-01: The District overclaimed Route 42 expansion fixed route operating expenses that should have been reimbursed by a local match as the wrong federal percentage was applied in the claims, resulting in ineligible costs of $33,129 being charged to the program. Questioned Costs: $33,129. Section 5307 Grant Award CA-2022-147-04: The District overclaimed communication expenses for Woodland paratransit operating routes, resulting in ineligible costs of $12,513 being charged to the program. Questioned Costs: Ineligible costs were below the $25,000 floor for questioned costs under 2 CFR Part 200, Subpart F (Uniform Guidance), Section 200.516. Section 5307 Grant Awards CA-2022-204-01 and CA-2021-162-03: The District claimed engine overhaul expenses that did not qualify as preventative maintenance costs allowed by the terms and conditions of the grant, resulting in ineligible costs of $17,902 being charged to the program. Questioned Costs: Ineligible costs were below the $25,000 floor for questioned costs under 2 CFR Part 200, Subpart F (Uniform Guidance), Section 200.516. Criteria: 2 CFR Part 200, Subpart E (Uniform Guidance) Section 200.303 states that “The nonfederal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” Cause: Several federal grants applied to these routes had local match requirements that were not captured by the District’s review procedures due to recent staff turnover and lack of documented procedures to track expenses charged to all funding sources combined. Not all paratransit operating expenses were reported and tracked separately in the allocation spreadsheet leading to expenses being double claimed under different grants for different purposes. This is due to the allocation spreadsheet not having a summary page totaling all expenses charged to programs to make sure the total expenses allocated agree to the total population of expenses allocated. Effect: Expenses were charged to more than one grant when filing claims and ineligible costs were applied, resulting in the overclaimed amounts cited above. Context: The ineligible costs were discovered through reconciliation of the operating expenses and capital costs from the claims to the general ledger. It was noted that the District did not have any FTA awards for capital maintenance during the year. The overclaimed amounts of $1,073,260, $33,129, and $12,513 have been removed from revenue as the FTA has currently approved the District claiming the expenses under different grants. There were potentially additional operating expenses under Paratransit services that could have offset some of these overclaimed amounts. The ineligible costs of $17,902 have been submitted to the FTA through a budget revision to allow for capital funding under the two related awards and is currently pending FTA approval. Recommendation: We recommend the District develop written procedures for allocating expenses to routes and purposes used to claim expenses under federal grants and to track the different funding sources applied. A summary tab should be added to the allocation spreadsheet to sum amounts for each route computed on separate tabs on the spreadsheet to make it easier to reconcile total operating expenses, preventive maintenance, insurance, communications and other expenses allocated to the population of expenses in the general ledger. View of Responsible Officials and Planned Corrective Action: Management’s response and planned corrective action is included at the Corrective Action Plan end of this report.
Under the requirements of 2 CFR 200.516(a)(6), known or likely fraud affecting a Federal award must be reported as an audit finding in the schedule of findings and questioned costs. A child’s eligibility for free or reduced price meals under the Child Nutrition Cluster program may be established by the submission of an annual application or statement which furnishes such information as family income and family size. It was noted an employee of the District filled out an online application for free or reduced price meals with false information, resulting in their children receiving free meals. The District is not required to verify all applications and the information within them, other than an annual verification process that results in a random sample of applicants. This employee was not randomly selected for this verification process. By the employee submitting a false application, the District may be overclaiming Federal reimbursements for the food service program, which could result in questioned costs, penalties, or sanctions from the Federal awarding agency. We recommend the District including an additional procedure for employees filling out applications to perform some level of verification on the information they submit, utilizing the employee’s personnel files already on hand at the District.
Under the requirements of 2 CFR 200.516(a)(6), known or likely fraud affecting a Federal award must be reported as an audit finding in the schedule of findings and questioned costs. A child’s eligibility for free or reduced price meals under the Child Nutrition Cluster program may be established by the submission of an annual application or statement which furnishes such information as family income and family size. It was noted an employee of the District filled out an online application for free or reduced price meals with false information, resulting in their children receiving free meals. The District is not required to verify all applications and the information within them, other than an annual verification process that results in a random sample of applicants. This employee was not randomly selected for this verification process. By the employee submitting a false application, the District may be overclaiming Federal reimbursements for the food service program, which could result in questioned costs, penalties, or sanctions from the Federal awarding agency. We recommend the District including an additional procedure for employees filling out applications to perform some level of verification on the information they submit, utilizing the employee’s personnel files already on hand at the District.