The following findings and recommendations relating to internal control deficiencies classified as Material Weaknesses and a Significant Deficiency were communicated to the Department of Health Care Policy and Financing (Department) in previous years and have not been remediated as of June 30, 2022 because the original implementation dates provided by the Department were in a subsequent fiscal year. These complete findings and recommendations can be found within the original report and the complete recommendations can be found within Section IV: Prior Audit Recommendations of this report. See Schedule of Findings and Questioned Costs for chart/table See Schedule of Findings and Questioned Costs for footnote Finding 2021-045 Payments for Non-Emergent Medical Transportation ClaimsPrior to July 2020, in 55 counties, the Department worked with various county offices to have them broker Non-Emergent Medical Transportation (NEMT) services for Medicaid recipients, including rides to and from Medicaid medical appointments, personal mileage reimbursement, and trip-related meals and lodging. For example, these counties arranged the rides with transportation providers, submitted the claims or had providers submit claims for reimbursement to the Department, and passed on reimbursements to providers as needed. For the remaining nine counties, the Department contracted with IntelliRide to serve as the NEMT broker for services in those areas. From July 1, 2020, to August 31, 2021, when the Department contracted with IntelliRide to be the statewide broker, most recipients throughout the state scheduled NEMT rides by contacting IntelliRide through its call center, website chat function, or smartphone applications. IntelliRide scheduled rides and assigned transportation providers to them, and had providers upload trip information into IntelliRide?s EcoLane transportation scheduling system. EcoLane maintains information related to recipients? requests for rides and provider trip information, such as the trip date and time, names of the recipient and driver, and scheduled pick-up and destination addresses. IntelliRide submitted claims through the Department?s interChange system (interChange) requesting payments for providers? NEMT services, paid providers for their services, and received reimbursement from the Department. In addition, the Department paid NEMT claims submitted directly by NEMT providers. In Fiscal Year 2021, from July 1, 2020, through February 28, 2021 (the audit period), the Department paid 362,110 claims for NEMT services totaling about $33.2 million, as shown in the following table. In September 2021, the Department plans to transition back to IntelliRide brokering services in nine counties, while the NEMT providers in the remaining counties will broker their own services. See Schedule of Findings and Questioned Costs for chart/table See Schedule of Findings and Questioned Costs for footnote What audit work was performed and how were the results measured? The purpose of the audit work was to determine whether the Department has ensured that NEMT claims adhere to the following federal and state requirements. ? NEMT trips were to be brokered through, and all claims submitted by, the statewide broker, Intelliride. According to state regulations and the Department?s NEMT Billing Manual, all NEMT trips during Fiscal Year 2021 had to be authorized by the statewide broker, IntelliRide [10 CCR 2505-10 8.014.7.A]. This means that each recipient?s NEMT ride request should have been sent to IntelliRide for approval or authorization before the trip, and any unauthorized trips should ?not be reimbursed or paid? [Billing Manual]. According to the Department, it allowed NEMT providers time to transition to working with IntelliRide because some providers were reluctant to join the statewide brokerage and the Department needed time to onboard providers. By Fall 2020, most providers should have been working with IntelliRide to schedule NEMT rides. The Department told us that six NEMT providers received its express permission to bypass IntelliRide to schedule rides and submit claims directly to the Department because the providers are unique, such as only serving recipients with disabilities or receiving federal grant funding to provide NEMT. To assess whether IntelliRide brokered most NEMT services in the State and submitted the related claims in line with regulations and its contract, we reviewed the Department?s aggregate data for the 128,998 NEMT claims paid from December 2020 through February 2021. ? The Department must pay claims based on accurate service rates and trip mileage. Non-taxi NEMT services, such as wheelchair and mobility vehicle services, have base rates and mileage rates set by the Department. IntelliRide tracks the mileage of each NEMT trip in EcoLane and submits mileage claims to the Department?s interChange system. The Public Utilities Commission (PUC) sets the rate for each permitted taxi provider, which generally includes a rate for the first trip mile and a different rate for each additional mile. According to the Department?s NEMT Billing Manual and NEMT Rate Schedule for Fiscal Year 2021, taxi claims should have been paid at the rate set by the PUC. For example, if a taxi company?s PUC rate was $4 for the first mile and $2 for each additional mile, the Department should have paid $6 for a two-mile NEMT trip claim. To verify that the Department paid NEMT claims based on the correct trip mileage and rates, we reviewed the trip mileage and rates for 362,110 NEMT claims paid from July 2020 through February 2021, and PUC documentation on the taxi rates for permitted taxi companies. ? Claims must be supported with accurate and complete documentation confirming the service provided. Both IntelliRide and providers that submit claims for NEMT services must keep and be able to furnish accurate, complete supporting documentation for all claims [42 USC 1396a(27), 42 CFR ?? 431.17 and 433.32, and 10 CCR 2505-10 8.014.3.C and 8.014.6.B]. For example, a claim must be supported by medical documentation showing that the type of vehicle was needed to transport the recipient, and documentation from the transportation provider showing the trip occurred and when the recipient was picked-up and dropped-off. IntelliRide should only submit a claim to the Department after IntelliRide confirms the trip has been completed and marks the status complete in EcoLane [IntelliRide Policies and Procedures]. If an NEMT provider does not show up for a trip, IntelliRide should mark the trip as ?cancelled? in EcoLane. Payments for Medicaid claims that lack supporting documentation for the services provided are unallowable, meaning they should not be paid. IntelliRide or the Department must maintain documentation from recipients? medical providers showing why certain NEMT services, like transportation in a wheelchair van or with an escort, are medically necessary [10 CCR 2505-10 8.014.7.B and 8.014.5.D.1; Billing Manual]. To verify that there was support for NEMT claims, we reviewed IntelliRide data in EcoLane for all 362,110 NEMT claims paid from July 2020 through February 2021, and Department documentation for a sample of 85 NEMT paid claims?75 selected randomly from the four NEMT service areas of the state, and 10 that were the highest paid NEMT claims. ? NEMT services must be medically necessary. NEMT services shall only be provided to recipients with no other means to attend medically necessary, non-emergency treatment covered by Medicaid [42 USC 1396a(70); 42 CFR 431.53; 10 CCR 2505-10 8.014.5.B]. To verify that NEMT claims were only paid for recipients to access medical care, we reviewed the Department?s data on paid medical claims to determine if the recipients related to 22 sampled NEMT claims paid in December 2020 had a corresponding medical appointment. For another 61 paid NEMT claims that involved IntelliRide scheduling and submitting claims for trips every day in December for two recipients, we reviewed whether the recipients had paid medical claims corresponding with the trips. ? Prior authorization is required for air ambulance. The Department must grant prior authorization for the use of an NEMT air ambulance before the trip occurs in order for the claim to be paid [10 CCR 2505-10 8.014.7.D.1.b]. To verify that the Department granted prior authorization for air ambulance trips, we reviewed the use of air ambulances in 11 paid claims from July 2020 to February 2021. ? Recipients are to receive the least-costly NEMT transportation option appropriate for their medical condition. For example, recipients should only ride in a vehicle for recipients with mobility needs when they have a mobility issue or if there is a lack of access to public transportation [10 CCR 2505-10 8.014.6.B, 42 USC 1396(a(70), and 42 CFR 440.170(a)(4)]. Higher-cost NEMT services, such as ambulance and wheelchair van services, must be supported with documentation of the recipient?s need for the specific higher-cost services [10 CCR 2505-10 8.014.5.B.1.b]. To determine whether recipients received the least costly NEMT services to meet their needs, we reviewed documentation submitted by medical or transportation providers to IntelliRide or the Department for the 85 sampled NEMT claims. ? Taxi providers must be permitted by the PUC to provide NEMT taxi rides. To provide NEMT rides by taxi and receive payment for them, the provider must maintain a common carrier permit issued by the PUC [10 CCR 2505-10 8.014.3.B.4.a]. To verify that the providers that were paid for taxi claims had been permitted to provide taxi services, we reviewed the 33,791 NEMT claims for taxi services from July 2020 to February 2021. What problems were identified? The Department paid $3.5 million directly to 66 NEMT providers for claims that were not brokered by Intelliride. From December 2020 through February 2021, 26,890 of the approximately 129,000 NEMT claims paid by the Department (21 percent), totaling about $3.5 million, were not brokered through IntelliRide, which violated state regulations requiring all NEMT services to be brokered through the statewide brokerage in effect at the time. The following chart shows the amounts the Department paid for claims submitted directly by NEMT providers compared to its payments for claims submitted by IntelliRide from July 2020 through February 2021. During these months, the number of claims that providers submitted directly to the Department decreased as providers transitioned to working with IntelliRide to broker NEMT rides; however, as of February 2021, the Department was still paying about $1 million in monthly claims that were submitted directly by providers. See Schedule of Findings and Questioned Costs for chart/table See Schedule of Findings and Questioned Costs for footnote The Department paid 36,910 NEMT claims totaling $5.5 million, which either violated or may have violated federal and/or state regulations. The claims were for unallowable services or were overpaid, and resulted in $291,597 in known questioned costs and $5,180,962 in likely questioned costs for Medicaid. A questioned cost is a payment that ?resulted from a violation or possible violation of a statute, regulation, or the terms and conditions of a Federal award, including for funds used to match Federal funds? or ?the costs, at the time of the audit, [that] are not supported by adequate documentation?? [2 CFR 200.84]. A known questioned cost reflects a violation that the auditor confirmed; a likely questioned cost is the auditor?s best estimate of a potential violation [2 CFR 200.516(a)(3)]. Known and likely questioned costs should be investigated by the Department and recovered, as appropriate, because Medicaid overpayments are recoverable regardless of whether they occurred due to an error by the Department, entity acting on behalf of the Department, or a provider [Section 25.5-4-301(2), C.R.S.]. We found the following problems resulting in $291,597 in known questioned costs: ? Claims paid with no support that services were provided. For 3,958 of the 362,110 NEMT claims (1 percent), which totaled $258,115 paid from July 2020 to February 2021, IntelliRide or providers submitted the claims without any documentation showing that recipients received the NEMT services from the providers listed in the claim. The $258,115 is known questioned costs and includes: o 3,323 claims totaling $163,985 submitted by IntelliRide with no documentation in EcoLane of a ride being scheduled or provided. o 619 claims totaling $61,431 submitted by IntelliRide for which EcoLane showed the scheduled ride was cancelled. o 16 sampled claims totaling $32,699 submitted by providers directly to the Department had no documentation that an NEMT service occurred because the providers did not send the Department documentation for their claims. Upon our request, the Department attempted to obtain supporting documentation from providers for these claims but was unable to obtain any. ? Overpayments due to incorrect mileage and taxi rates. For 466 of the 321,099 mileage and taxi claims (less than 1 percent), the Department overpaid IntelliRide. Specifically, for 50 of the 287,308 mileage claims (less than 1 percent), the mileage submitted by IntelliRide that the Department paid was more than the ride mileage that IntelliRide documented in EcoLane. For 416 of the 33,791 (1 percent) claims submitted by IntelliRide on behalf of providers that were permitted to operate as taxis, the Department paid a higher rate than the providers? set PUC rate. The following table breaks out the overpayments that we identified, which totaled $6,759 in known questioned costs. We did not find issues with the rate amounts that the Department paid for non-mileage and non-taxi services. See Schedule of Findings and Questioned Costs for chart/table See Schedule of Findings and Questioned Costs for footnote Examples of these overpayments include: o An overpayment of $48 for a claim submitted by IntelliRide for a taxi provider that billed the wrong taxi rate. The Department paid $60 for a 4-mile trip, when it should have paid $12 based on the PUC rate of $3 per mile. o An overpayment of $79 for a claim submitted by IntelliRide on behalf of a provider because the claim showed the trip was 76 miles, but the EcoLane data showed the trip was 38 miles. The Department paid $157, when it should have paid $78. ? Unallowable rides, not for medical appointments. For 61 claims showing NEMT trips every day in December 2020 for two recipients, there were no medical claims corresponding to their trips, so it appears that either NEMT was used repeatedly to transport these recipients to unallowable destinations or the provider did not provide the trips claimed. The NEMT provider reported to IntelliRide that these trips were completed even though the recipients did not attend any medical appointments that month. IntelliRide submitted the 61 NEMT claims and its EcoLane data showed that the NEMT providers self-reported that the trips were completed. However, IntelliRide confirmed that these trips were not used to access medical care. The issues we identified resulted in $2,674 of known questioned costs. ? Air ambulance claims paid without prior authorization. None of the 11 air ambulance NEMT claims had supporting documentation that the provider requested or received prior authorization from the Department before the trip occurred. These 11 claims to three providers resulted in $23,122 in known questioned costs. ? Claims paid for trips that were not the least costly, medically necessary, and/or for approved escorts. For seven of the 85 sampled claims (8 percent), IntelliRide submitted the claims without having required documentation from medical providers. Specifically, four claims lacked documentation to support the medical necessity for the type of vehicle used (either mobility vehicle, taxi, or wheelchair van); the other three claims lacked documentation of the recipient?s need for an escort to support the associated cost, which indicates that the three sampled NEMT trips were provided to an escort ineligible to ride with the recipient. The issues we identified for the seven claims resulted in $927 of known questioned costs. In addition, we found the following problems resulting in $5,180,962 in likely questioned costs, which are estimated potential violations of federal requirements that we could not confirm due to a lack of documentation: ? $4.8 million paid for taxi claims without mileage. For 29,049 taxi claims totaling $4,763,071, the Department paid the claims without ensuring taxi providers were paid at their PUC per-mile rate. These claims were submitted directly to the Department by 10 permitted taxi providers. The Department required providers to submit claims showing only the number of one-way trips driven, not the number of miles driven. As a result, the Department could not ensure that these taxi claims were paid at the correct PUC rates, as required in its Billing Manual and Rate Schedule. The Department paid the full amount that each taxi provider requested, as long as the claim was not more than $1,000 per one-way trip. For example, the Department paid $4,000 to one taxi provider for a claim showing four one-way trips for a recipient on a single day. Based on the claim amount, the taxi provider would have had to have driven the recipient on four 400-mile, one-way trips that day to justify this amount, because the taxi provider?s PUC rate is $4 for the first mile and $2.50 for each additional mile. Since the Department did not obtain the miles driven for each one-way trip from taxi providers for these 29,049 claims, we could not determine whether the payments were accurate based on each provider?s PUC rate, as required. ? $409,575 paid for taxi claims for providers not permitted as taxis. For 3,284 NEMT claims for taxi services from eight providers, the providers were not permitted by the PUC to operate as taxis. For example, one provider was paid for an NEMT taxi claim for $5,875 for 12 trips, or $490 per trip. Since these providers were not permitted as taxis, they did not have PUC-set taxi rates, so we could not determine how much these providers should have been paid. ? $4,718 paid for trips that may not have been to attend medical services. As of April 2021, 13 of the 22 sampled NEMT claims (59 percent) for trips in December 2020 had no medical claims for dates corresponding to the NEMT trips. Department staff told us that Medicaid medical claims are typically submitted and paid within 3 months of the date of service, but that there is a possibility that medical providers had not yet submitted medical claims for the recipients since federal regulations technically allow providers up to 12 months to submit claims [42 CFR 447.45(d)(1)]. In addition, six of these 13 recipients had both Medicaid and other types of medical insurance, such as Medicare. According to the Department, it is possible that the six recipients used NEMT trips to access medical services but the Department did not have a Medicaid claim for the services because they were paid by the other types of insurance, which is allowed by state regulations [10 CCR 2505-10 8.014.5.B.2]. Therefore, we could not determine whether the NEMT trips associated with the 13 claims had been for recipients to attend medical services. ? $3,598 paid for trips that may not have been completed. For 61 of the 362,110 paid claims (less than 1 percent), the scheduled trips were not marked as complete in EcoLane, so we could not determine whether they had been completed. Why did these problems occur? The Department lacks effective internal controls over NEMT claims to ensure they are appropriate and consistently comply with federal and state requirements. According to federal regulations [2 CFR 200.303(a)], the Department, as a recipient of federal funds, must establish and maintain effective internal controls to provide reasonable assurance that federal funds are spent in compliance with federal requirements. We identified the following areas where Department controls are lacking for NEMT claims: Lack of Department information technology (IT) Controls in interChange ? No IT controls to prevent providers from bypassing broker. From December 2020 through February 2021, the Department paid NEMT providers directly for unsupported NEMT trips because the Department did not have IT controls in interChange to deny claims for trips that were not brokered through IntelliRide, as required at the time. As of September 1, 2021, the Department plans to require only the NEMT providers operating in nine metro-Denver counties to broker trips through IntelliRide, so the Department needs IT controls to ensure providers in these counties work with IntelliRide to schedule all trips and submit related claims. ? Lack of IT and other controls to ensure proper payments for NEMT taxi services. InterChange is programmed to pay each NEMT taxi claim based on one-way trips, but the Department has not implemented an IT or other control to ensure that NEMT taxi claims are paid at the providers? current PUC-approved per-mile rates, and that the Department only pays taxi rates when the provider is permitted by the PUC to operate as a taxi. Department staff stated that the only IT control the Department has built into interChange to help ensure proper payment of taxi claims is limiting payments for taxi claims to no more than $1,000 per one-way trip, and that this control is in accordance with the NEMT Billing Manual and Rate Schedule. However, Department staff also acknowledged that there is a conflict within the Billing Manual that requires taxi claims to be based on the number of one-way trips, but also paid based on per-mile PUC rates. By setting the limit based only on the number of one-way trips instead of providers? PUC per-mile rate, this Department IT control is not effective at ensuring taxi claims are paid properly. To ensure accurate payments for NEMT taxi claims, the Department will need methods, such as IT controls in interChange, and clarification in the Billing Manual and Rate Schedule, to ensure taxi providers are paid based on set rates, and ensure each taxi provider is permitted. ? No IT controls to ensure required prior authorizations. Air ambulance services were paid without the Department?s prior authorization for the services because the Department does not have IT controls to ensure prior authorization before payment. If the Department does not implement IT controls to ensure appropriate prior authorizations of NEMT services, the Department will need to develop manual processes to ensure that NEMT services receive required authorization prior to paying the related claims. Lack of Department Monitoring of NEMT Services and Claims ? Insufficient methods to ensure appropriate payment and collect necessary documentation from providers that bypass the statewide brokerage. Although the Department reviewed NEMT provider supporting documentation for NEMT services in 2019, the Department did not do so in 2020 or 2021, and had no process to require the providers that bypassed the statewide brokerage to submit documentation to support their NEMT claims before they were paid. According to the Department, in September 2021, it plans to require providers in nine counties covered by the IntelliRide brokerage contract to provide and submit claims through IntelliRide; however, NEMT providers in the remaining 55 counties will be submitting NEMT claims directly to the Department. Therefore, it is important that the Department develop a process to ensure that providers in these 55 counties maintain required documentation for each claim. ? Lack of monitoring to ensure Intelliride submits accurate mileage claims and collects necessary documentation. The Department does not conduct reviews of IntelliRide?s documentation in EcoLane to ensure it submits claims for accurate mileage and maintains support for claims submitted to or paid by the Department. For example, the Department does not reconcile its NEMT claims data from interChange and IntelliRide?s EcoLane system data to ensure each claim is supported. Furthermore, the Department has never completed a file review of IntelliRide?s supporting documentation for NEMT claims, such as when the Department contracted with IntelliRide to be a regional broker prior to becoming the statewide broker. ? No method to ensure NEMT service claims are for rides for medical treatment and the least costly. The Department does not conduct any reconciliation of its interChange data on NEMT trip claims to its interChange data on Medicaid medical claims to ensure NEMT claims are only paid for recipients to access medical care. The Department also does not require confirmation from medical providers that recipients used NEMT to access necessary medical care. For example, NEMT providers told us that before the start of the IntelliRide statewide brokerage contract, they either called medical providers to confirm that the recipients? NEMT trips were to access medical appointments or collected medical providers? signatures for each NEMT trip. In addition, the Department has no controls to ensure providers that submit claims directly to the Department are providing the least costly NEMT service appropriate to each recipient, such as public transportation when it is accessible and appropriate. For example, IntelliRide instructs its staff to attempt to schedule the lowest-cost NEMT service based on recipients? mobility needs and access to public transportation; however, the Department has no such method to ensure services are the least costly when NEMT providers schedule services for recipients. As of September 2021, the Department plans to have the recipients who live in the 55 counties not served by IntelliRide begin scheduling their rides directly with the NEMT providers of their choosing, yet the Department has not developed a method to ensure recipients in these areas receive the lowest-cost services appropriate for their needs. ? Potentially insufficient Department staffing to monitor NEMT claims effectively. For Fiscal Year 2021, the Department was appropriated three full-time equivalent (FTE) staff to oversee NEMT claims; however, the Department had two vacancies in these positions from July 2020 through May 2021 that it did not fill, so there was only one Department staff overseeing NEMT and the IntelliRide statewide contract during the audit time period. In June 2021, the Department added an additional FTE staff member to assist in administering the NEMT benefit. Why do these problems matter? Likely federal recovery of funds used for improper payments. Section 25.5-4-301(2), C.R.S., states that any overpayments of claims to providers are recoverable and ?are recoverable regardless of whether the overpayment is the result of an error by the state department? an entity acting on behalf of [the department], or the provider or any agent of the provider.? Our audit identified $291,597 in known questioned costs, of which about $145,797 is the federal portion of funds that the federal government may recover. We also identified $5,180,962 in likely questioned costs, of which $2,590,480 is the federal portion of funds that could be recovered if the payments are determined to have not been appropriate. The following table shows the questioned costs and federal portions for each problem we identified. See Schedule of Findings and Questioned Costs for chart/table See Schedule of Findings and Questioned Costs for footnote When providers bypass broker controls, service quality is not monitored. When the Department allows some NEMT providers to bypass the IntelliRide broker, and does not obtain documentation to support their claims, the Department is unable to monitor the services of these providers. Additionally, when the Department does not monitor providers that bypass the statewide broker, the Department is applying different and possibly inadequate standards for the providers that bypass compared to the providers that work with IntelliRide. Although the Department plans for IntelliRide to no longer be the statewide NEMT broker for all 64 counties beginning September 2021, IntelliRide will continue to administer NEMT trips for nine Front Range counties that account for the majority of NEMT trips. It is important that all NEMT trips in these counties be brokered through IntelliRide so that the Department can monitor the quality of the trips and IntelliRide?s oversight of them. Risk of fraud, waste, and abuse. When the Department pays NEMT claims that are not supported by documentation of the service, medical documentation showing NEMT was for medical treatment, or the required prior authorizations, there is a significant risk of misappropriation of federal and state funds by providers and/or recipients. In addition, the eight providers not permitted as taxis that submitted taxi claims appear to have set their own rates of payment at a significantly higher rate, since the PUC did not permit or set rates for these providers. While we did not identify confirmed fraud by recipients or providers due to a lack of supporting documentation for claims, the problems identified demonstrate waste of public funds and potential abuse of the Medicaid program. When the Department overpays Medicaid funds and pays for unallowable services, there are fewer funds available to service the recipients who need them. In addition, there is no federal or state limit on payments for NEMT services, so it is important that the Department ensure Medicaid recipients receive appropriate transportation to medical treatment, while also ensuring the Department is acting as a good steward of federal and state funds. See Schedule of Findings and Questioned Costs for chart/table Character Limit Exceeded See Statewide Single Audit Report
2 CFR § 2900.4 gives regulatory effect to the Department of Labor for 2 CFR § 200 Subpart E which outlines allowable cost principles. 2 CFR § 200.403 provides, in part, that except where otherwise authorized by statute, costs must meet the following criteria to be allowable under Federal awards: Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles and be adequately documented. Due to a lack of internal control over expenditures and documentation, testing of expenditures identified a payment charged twice to the WIOA Cluster accounting system. As such, the second entry for the payment had no invoice support and was not valid. The total amount tested that had no invoice support was $369,757 and was determined to be unallowable. Failure to maintain adequate support documentation for federal expenditures could result in costs being disallowed by the grantor. Policies and procedures over documentation of expenditures should be developed and implemented. Support should be maintained for all expenditures to ensure that each expenditure charged to the program is for an allowable activity/cost. The expenditure amount is in excess of $25,000 and therefore is considered questioned costs under 2 CFR § 200.516. In addition to this issue, we could not determine if the expenditures in total for this program were supported by the accounting system records since we could not reconcile between the accounting system and the federal schedule. See Finding 2022-004 above for this issue in detail.
2 CFR § 2900.4 gives regulatory effect to the Department of Labor for 2 CFR § 200 Subpart E which outlines allowable cost principles. 2 CFR § 200.403 provides, in part, that except where otherwise authorized by statute, costs must meet the following criteria to be allowable under Federal awards: Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles and be adequately documented. Due to a lack of internal control over expenditures and documentation, testing of expenditures identified a payment charged twice to the WIOA Cluster accounting system. As such, the second entry for the payment had no invoice support and was not valid. The total amount tested that had no invoice support was $369,757 and was determined to be unallowable. Failure to maintain adequate support documentation for federal expenditures could result in costs being disallowed by the grantor. Policies and procedures over documentation of expenditures should be developed and implemented. Support should be maintained for all expenditures to ensure that each expenditure charged to the program is for an allowable activity/cost. The expenditure amount is in excess of $25,000 and therefore is considered questioned costs under 2 CFR § 200.516. In addition to this issue, we could not determine if the expenditures in total for this program were supported by the accounting system records since we could not reconcile between the accounting system and the federal schedule. See Finding 2022-004 above for this issue in detail.
2 CFR § 2900.4 gives regulatory effect to the Department of Labor for 2 CFR § 200 Subpart E which outlines allowable cost principles. 2 CFR § 200.403 provides, in part, that except where otherwise authorized by statute, costs must meet the following criteria to be allowable under Federal awards: Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles and be adequately documented. Due to a lack of internal control over expenditures and documentation, testing of expenditures identified a payment charged twice to the WIOA Cluster accounting system. As such, the second entry for the payment had no invoice support and was not valid. The total amount tested that had no invoice support was $369,757 and was determined to be unallowable. Failure to maintain adequate support documentation for federal expenditures could result in costs being disallowed by the grantor. Policies and procedures over documentation of expenditures should be developed and implemented. Support should be maintained for all expenditures to ensure that each expenditure charged to the program is for an allowable activity/cost. The expenditure amount is in excess of $25,000 and therefore is considered questioned costs under 2 CFR § 200.516. In addition to this issue, we could not determine if the expenditures in total for this program were supported by the accounting system records since we could not reconcile between the accounting system and the federal schedule. See Finding 2022-004 above for this issue in detail.
2 CFR § 2900.4 gives regulatory effect to the Department of Labor for 2 CFR § 200 Subpart E which outlines allowable cost principles. 2 CFR § 200.403 provides, in part, that except where otherwise authorized by statute, costs must meet the following criteria to be allowable under Federal awards: Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles and be adequately documented. Due to a lack of internal control over expenditures and documentation, testing of expenditures identified a payment charged twice to the WIOA Cluster accounting system. As such, the second entry for the payment had no invoice support and was not valid. The total amount tested that had no invoice support was $369,757 and was determined to be unallowable. Failure to maintain adequate support documentation for federal expenditures could result in costs being disallowed by the grantor. Policies and procedures over documentation of expenditures should be developed and implemented. Support should be maintained for all expenditures to ensure that each expenditure charged to the program is for an allowable activity/cost. The expenditure amount is in excess of $25,000 and therefore is considered questioned costs under 2 CFR § 200.516. In addition to this issue, we could not determine if the expenditures in total for this program were supported by the accounting system records since we could not reconcile between the accounting system and the federal schedule. See Finding 2022-004 above for this issue in detail.
2 CFR § 2900.4 gives regulatory effect to the Department of Labor for 2 CFR § 200 Subpart E which outlines allowable cost principles. 2 CFR § 200.403 provides, in part, that except where otherwise authorized by statute, costs must meet the following criteria to be allowable under Federal awards: Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles and be adequately documented. Due to a lack of internal control over expenditures and documentation, testing of expenditures identified a payment charged twice to the WIOA Cluster accounting system. As such, the second entry for the payment had no invoice support and was not valid. The total amount tested that had no invoice support was $369,757 and was determined to be unallowable. Failure to maintain adequate support documentation for federal expenditures could result in costs being disallowed by the grantor. Policies and procedures over documentation of expenditures should be developed and implemented. Support should be maintained for all expenditures to ensure that each expenditure charged to the program is for an allowable activity/cost. The expenditure amount is in excess of $25,000 and therefore is considered questioned costs under 2 CFR § 200.516. In addition to this issue, we could not determine if the expenditures in total for this program were supported by the accounting system records since we could not reconcile between the accounting system and the federal schedule. See Finding 2022-004 above for this issue in detail.
2 CFR § 2900.4 gives regulatory effect to the Department of Labor for 2 CFR § 200 Subpart E which outlines allowable cost principles. 2 CFR § 200.403 provides, in part, that except where otherwise authorized by statute, costs must meet the following criteria to be allowable under Federal awards: Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles and be adequately documented. We further noted that 20 CFR § 671.140 states the following as allowable activities: (a) National emergency grants may provide adjustment assistance for eligible dislocated workers, described at WIA section 173(c)(2) or (d)(2). (b) Adjustment assistance includes the core, intensive, and training services authorized at WIA sections 134(d) and 173. The scope of services to be provided in a particular project are negotiated between the Department and the grantee, taking into account the needs of the target population covered by the grant. The scope of services may be changed through grant modifications, if necessary. (c) National emergency grants may provide for supportive services to help workers who require such assistance to participate in activities provided for in the grant. Needs-related payments, in support of other employment and training assistance, may be available for the purpose of enabling dislocated workers who are eligible for such payments to participate in programs of training services. Generally, the terms of a grant must be consistent with Local Board policies governing such financial assistance with formula funds (including the payment levels and duration of payments). However, the terms of the grant agreement may diverge from established Local Board policies, in the following instances: (1) If unemployed dislocated workers served by the project are not able to meet the 13 or 8 weeks enrollment in training requirement at WIA section 134(e)(3)(B) because of the lack of formula or emergency grant funds in the State or local area at the time of dislocation, such individuals may be eligible for needs-related payments if they are enrolled in training by the end of the 6th week following the date of the emergency grant award; (2) Trade-impacted workers who are not eligible for trade readjustment assistance under NAFTA-TAA may be eligible for needs-related payments under a national emergency grant if the worker is enrolled in training by the end of the 16th week following layoff; and (3) Under other circumstances as specified in the national emergency grant application guidelines. (d) A national emergency grant to respond to a declared emergency or natural disaster, as defined at § 671.110(e), may provide short-term disaster relief employment for: Individuals who are temporarily or permanently laid off as a consequence of the disaster; Dislocated workers; and Long-term unemployed individuals. (e) Temporary employment assistance is authorized on disaster projects that provide food, clothing, shelter and other humanitarian assistance for disaster victims; and on projects that perform demolition, cleaning, repair, renovation and reconstruction of damaged and destroyed structures, facilities and lands located within the disaster area. For such temporary jobs, each eligible worker is limited to no more than six months of employment for each single disaster. The amounts, duration and other limitations on wages will be negotiated for each grant. (f) Additional requirements that apply to national emergency grants, including natural disaster grants, are contained in the application instructions. Due to a lack of internal control over expenditures and documentation, testing of expenditures identified a payment charged to the NEG Federal Program twice in the accounting system. As such, the second entry for the payment had no invoice support and was not valid. The total amount tested that had no invoice support was $191,416 and was determined to be unallowable. Failure to maintain adequate support documentation for federal expenditures could result in costs being disallowed by the grantor. Policies and procedures over documentation of expenditures should be developed and implemented. Support should be maintained for all expenditures to ensure that each expenditure charged to the program is for an allowable activity/cost. The expenditure amount is in excess of $25,000 and therefore is considered questioned costs under 2 CFR § 200.516. In addition to this issue, we could not determine if the expenditures in total for this program were supported by the accounting system records since we could not reconcile between the accounting system and the federal schedule. See Finding 2022-004 above for this issue in detail.
SUMMARY OF AUDIT RESULTS 1. The auditor?s report expresses an unmodified opinion on whether the financial statements of Lincoln School Senior Apartments are prepared and presented in accordance with U.S. generally accepted accounting principles. 2. No material weaknesses or significant deficiencies were identified during the audit of the financial statements. 3. No instances of noncompliance material to the financial statements of Lincoln School Senior Apartments were disclosed during the audit. 4. No material weaknesses or significant deficiencies were identified during the audit of the major federal awards program. 5. The auditor?s report on compliance for major federal awards programs for Lincoln School Senior Apartments expresses an unmodified opinion. 6. There were audit findings relative to the major federal program for Lincoln School Senior Apartments that are required to be reported in accordance with 2 CFR Section 200.516(a) reported in this schedule as Finding 2022-001. 7. The program tested as a major program included: CFDA #14-157 HUD Section 202 - Supportive Housing for the Elderly. 8. The threshold for distinguishing Types A and B programs was $750,000. 9. Lincoln School Senior Apartments was not determined to be a low-risk auditee. FINDINGS ? FINANCIAL STATEMENTS AUDIT NONE. FINDINGS ? MAJOR FEDERAL AWARD PROGRAMS AUDIT DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT S3800-010 Finding Reference Number 2022-001 S3800-011 Title and CFDA Number of Federal Program - 14-157 Supportive Housing for the Elderly S3800-015 Type of Finding - Federal Award Finding S3800-016 Finding Resolution Status - Resolved S3800-017 Information on Universe Population Size ? Not Applicable S3800-018 Sample Size Information ? Not Applicable DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT (Continued) S3800-010 Finding Reference Number 2022-001(Continued) S3800-019 Identification of Repeat Finding and Finding Reference Number - Not Applicable S3800-020 Criteria ? The HUD Regulatory Agreement requires monthly deposits to a replacement reserve account. S3800-030 Statement of Condition ? All of the deposits were made at year end, but due to availability of funds, three of the twelve deposits were made late. S3800-032 Cause ? Because the Project did not always have sufficient funds to make the required deposit, some deposits were delayed. By the end of the fiscal year all of the deposits had been made. S3800-033 Effect or Potential Effect ? Management did not always follow the requirements of the regulatory agreement of making monthly deposits. S3800-035 Auditor Non-Compliance Code - (N) Replacement Reserve Deposits under Special Tests and Provisions S3800-040 Questioned Costs - $0 S3800-045 Reporting Views of Responsible Officials - Management applied for and received a significant rent increase from HUD that should help improve liquidity so that sufficient funds are available to make the required reserve deposit when due. Property(s) and associated questioned costs this finding applies to: S3800-037 FHA/Contract Number - 127EE034 S3800-038 Questioned Costs - $0 S3800-050 Context ? See statement of condition. S3800-080 Recommendation - Management has taken steps to improve liquidity so that sufficient funds should be available for monthly deposits. Management should ensure those deposits are made monthly. S3800-090 Auditor's Summary of the Auditee's Comments on the Findings and Recommendations - Management concurs with the auditor?s recommendation, and has taken corrective actions to improve liquidity so sufficient funds are available to make the deposits monthly. S3800-130 Response Indicator - Agree S3800-140 Completion Date ? June 20, 2022 S3800-150 Response - Management has taken corrective action and concurs with the auditor?s recommendation.
SUMMARY OF AUDIT RESULTS 1. The auditor?s report expresses an unmodified opinion on whether the financial statements of Lincoln School Senior Apartments are prepared and presented in accordance with U.S. generally accepted accounting principles. 2. No material weaknesses or significant deficiencies were identified during the audit of the financial statements. 3. No instances of noncompliance material to the financial statements of Lincoln School Senior Apartments were disclosed during the audit. 4. No material weaknesses or significant deficiencies were identified during the audit of the major federal awards program. 5. The auditor?s report on compliance for major federal awards programs for Lincoln School Senior Apartments expresses an unmodified opinion. 6. There were audit findings relative to the major federal program for Lincoln School Senior Apartments that are required to be reported in accordance with 2 CFR Section 200.516(a) reported in this schedule as Finding 2022-001. 7. The program tested as a major program included: CFDA #14-157 HUD Section 202 - Supportive Housing for the Elderly. 8. The threshold for distinguishing Types A and B programs was $750,000. 9. Lincoln School Senior Apartments was not determined to be a low-risk auditee. FINDINGS ? FINANCIAL STATEMENTS AUDIT NONE. FINDINGS ? MAJOR FEDERAL AWARD PROGRAMS AUDIT DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT S3800-010 Finding Reference Number 2022-001 S3800-011 Title and CFDA Number of Federal Program - 14-157 Supportive Housing for the Elderly S3800-015 Type of Finding - Federal Award Finding S3800-016 Finding Resolution Status - Resolved S3800-017 Information on Universe Population Size ? Not Applicable S3800-018 Sample Size Information ? Not Applicable DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT (Continued) S3800-010 Finding Reference Number 2022-001(Continued) S3800-019 Identification of Repeat Finding and Finding Reference Number - Not Applicable S3800-020 Criteria ? The HUD Regulatory Agreement requires monthly deposits to a replacement reserve account. S3800-030 Statement of Condition ? All of the deposits were made at year end, but due to availability of funds, three of the twelve deposits were made late. S3800-032 Cause ? Because the Project did not always have sufficient funds to make the required deposit, some deposits were delayed. By the end of the fiscal year all of the deposits had been made. S3800-033 Effect or Potential Effect ? Management did not always follow the requirements of the regulatory agreement of making monthly deposits. S3800-035 Auditor Non-Compliance Code - (N) Replacement Reserve Deposits under Special Tests and Provisions S3800-040 Questioned Costs - $0 S3800-045 Reporting Views of Responsible Officials - Management applied for and received a significant rent increase from HUD that should help improve liquidity so that sufficient funds are available to make the required reserve deposit when due. Property(s) and associated questioned costs this finding applies to: S3800-037 FHA/Contract Number - 127EE034 S3800-038 Questioned Costs - $0 S3800-050 Context ? See statement of condition. S3800-080 Recommendation - Management has taken steps to improve liquidity so that sufficient funds should be available for monthly deposits. Management should ensure those deposits are made monthly. S3800-090 Auditor's Summary of the Auditee's Comments on the Findings and Recommendations - Management concurs with the auditor?s recommendation, and has taken corrective actions to improve liquidity so sufficient funds are available to make the deposits monthly. S3800-130 Response Indicator - Agree S3800-140 Completion Date ? June 20, 2022 S3800-150 Response - Management has taken corrective action and concurs with the auditor?s recommendation.
Finding 2021-005 Activities Allowed and Unallowed, Allowable Costs, Period of Performance – Material Weakness in Internal Control over Compliance and Noncompliance Agency U.S. Department of Treasury Program ALN: No. 21.019 COVID-19 Coronavirus Relief Fund Award Year 2021 Pass-Through Agency State of Alaska Department of Commerce, Community, and Economic Development Pass-Through Entity Identifying Number 20-CFR-029 Criteria or Specific Requirement 2 CFR Subtitle A Chapter II Part 200 Subpart E states that a non-Federal entity must provide for adequate documentation to support costs charged to the Federal Award. 2 CFR Subtitle A Chapter II Part 200 Subpart F section 200.516 states that the auditor must report known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Condition Testwork over a sample of nineteen nonpayroll transactions charged to the Coronavirus Relief Fund Grant identified that two transactions, totaling $4,891, lacked supporting documentation. Cause Internal controls did not ensure that proper supporting documentation was retained in accordance with 2 CFR. 105 Effect or potential effect Questioned Costs Context Repeat Finding Recommendation Views of responsible officials Testwork over nonpayroll transactions charged to the Coronavirus Relief Fund Grant identified questioned costs. $4,891 BDO tested a sample of nineteen nonpayroll transactions and identified two transactions that lacked supporting documentation. The known questioned costs extrapolated over the total population exceeded the reporting threshold of $25,000 for likely questioned costs. No. Management should ensure that purchasing policies and procedures are properly designed, implemented, and operating effectively to ensure adequate documentation is retained to sufficiently support procured goods and services charged to federal awards. Management agrees with the finding. Management is currently undergoing an upgrade in record retention policies and procedures.
Finding 2021-005 Activities Allowed and Unallowed, Allowable Costs, Period of Performance – Material Weakness in Internal Control over Compliance and Noncompliance Agency U.S. Department of Treasury Program ALN: No. 21.019 COVID-19 Coronavirus Relief Fund Award Year 2021 Pass-Through Agency State of Alaska Department of Commerce, Community, and Economic Development Pass-Through Entity Identifying Number 20-CFR-029 Criteria or Specific Requirement 2 CFR Subtitle A Chapter II Part 200 Subpart E states that a non-Federal entity must provide for adequate documentation to support costs charged to the Federal Award. 2 CFR Subtitle A Chapter II Part 200 Subpart F section 200.516 states that the auditor must report known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Condition Testwork over a sample of nineteen nonpayroll transactions charged to the Coronavirus Relief Fund Grant identified that two transactions, totaling $4,891, lacked supporting documentation. Cause Internal controls did not ensure that proper supporting documentation was retained in accordance with 2 CFR. 105 Effect or potential effect Questioned Costs Context Repeat Finding Recommendation Views of responsible officials Testwork over nonpayroll transactions charged to the Coronavirus Relief Fund Grant identified questioned costs. $4,891 BDO tested a sample of nineteen nonpayroll transactions and identified two transactions that lacked supporting documentation. The known questioned costs extrapolated over the total population exceeded the reporting threshold of $25,000 for likely questioned costs. No. Management should ensure that purchasing policies and procedures are properly designed, implemented, and operating effectively to ensure adequate documentation is retained to sufficiently support procured goods and services charged to federal awards. Management agrees with the finding. Management is currently undergoing an upgrade in record retention policies and procedures.
2 CFR § 2900.4 gives regulatory effect to the Department of Labor for 2 CFR § 200 Subpart E which outlines allowable costs principles. This guidance provides that for a cost to be allowable, it must (1) be for a purpose the specific award permits and (2) fall within 2 CFR 200 Subpart E - Cost Principles. WIOA, 128 Stat. 1525 et seq. outlines the various allowable activities for this program. During testing of fiscal year 2021, there were costs charged to the WIOA Cluster that were not supported by invoices. The total amount tested that had no invoice support was $11,484 between 4 different checks. Thus, we could not determine if these costs were allowable or not. Failure to maintain adequate support documentation for federal expenditures could result in costs being disallowed by the grantor. Support should be maintained for all expenditures to ensure that each expenditure charged to the program is for an allowable activity/cost. It is likely that the projected expenditure amount is in excess of $25,000 and therefore is considered questioned costs under 2 CFR § 200.516. In addition to this issue, we could not determine if the expenditures in total for this program were supported by the accounting system records since we could not reconcile between the accounting system and the federal schedule. See Finding 2021-003 above for this issue in detail.
2 CFR § 2900.4 gives regulatory effect to the Department of Labor for 2 CFR § 200 Subpart E which outlines allowable costs principles. This guidance provides that for a cost to be allowable, it must (1) be for a purpose the specific award permits and (2) fall within 2 CFR 200 Subpart E - Cost Principles. WIOA, 128 Stat. 1525 et seq. outlines the various allowable activities for this program. During testing of fiscal year 2021, there were costs charged to the WIOA Cluster that were not supported by invoices. The total amount tested that had no invoice support was $11,484 between 4 different checks. Thus, we could not determine if these costs were allowable or not. Failure to maintain adequate support documentation for federal expenditures could result in costs being disallowed by the grantor. Support should be maintained for all expenditures to ensure that each expenditure charged to the program is for an allowable activity/cost. It is likely that the projected expenditure amount is in excess of $25,000 and therefore is considered questioned costs under 2 CFR § 200.516. In addition to this issue, we could not determine if the expenditures in total for this program were supported by the accounting system records since we could not reconcile between the accounting system and the federal schedule. See Finding 2021-003 above for this issue in detail.
2 CFR § 2900.4 gives regulatory effect to the Department of Labor for 2 CFR § 200 Subpart E which outlines allowable costs principles. This guidance provides that for a cost to be allowable, it must (1) be for a purpose the specific award permits and (2) fall within 2 CFR 200 Subpart E - Cost Principles. WIOA, 128 Stat. 1525 et seq. outlines the various allowable activities for this program. During testing of fiscal year 2021, there were costs charged to the WIOA Cluster that were not supported by invoices. The total amount tested that had no invoice support was $11,484 between 4 different checks. Thus, we could not determine if these costs were allowable or not. Failure to maintain adequate support documentation for federal expenditures could result in costs being disallowed by the grantor. Support should be maintained for all expenditures to ensure that each expenditure charged to the program is for an allowable activity/cost. It is likely that the projected expenditure amount is in excess of $25,000 and therefore is considered questioned costs under 2 CFR § 200.516. In addition to this issue, we could not determine if the expenditures in total for this program were supported by the accounting system records since we could not reconcile between the accounting system and the federal schedule. See Finding 2021-003 above for this issue in detail.
2 CFR § 2900.4 gives regulatory effect to the Department of Labor for 2 CFR § 200 Subpart E which outlines allowable costs principles. This guidance provides that for a cost to be allowable, it must (1) be for a purpose the specific award permits and (2) fall within 2 CFR 200 Subpart E - Cost Principles. We further noted that 20 CFR section 671.140 states the following as allowable activities: (a) National emergency grants may provide adjustment assistance for eligible dislocated workers, described at WIA section 173(c)(2) or (d)(2). (b) Adjustment assistance includes the core, intensive, and training services authorized at WIA sections 134(d) and 173. The scope of services to be provided in a particular project are negotiated between the Department and the grantee, taking into account the needs of the target population covered by the grant. The scope of services may be changed through grant modifications, if necessary. (c) National emergency grants may provide for supportive services to help workers who require such assistance to participate in activities provided for in the grant. Needs-related payments, in support of other employment and training assistance, may be available for the purpose of enabling dislocated workers who are eligible for such payments to participate in programs of training services. Generally, the terms of a grant must be consistent with Local Board policies governing such financial assistance with formula funds (including the payment levels and duration of payments). However, the terms of the grant agreement may diverge from established Local Board policies, in the following instances: (1) If unemployed dislocated workers served by the project are not able to meet the 13 or 8 weeks enrollment in training requirement at WIA section 134(e)(3)(B) because of the lack of formula or emergency grant funds in the State or local area at the time of dislocation, such individuals may be eligible for needs-related payments if they are enrolled in training by the end of the 6th week following the date of the emergency grant award; (2) Trade-impacted workers who are not eligible for trade readjustment assistance under NAFTA-TAA may be eligible for needs-related payments under a national emergency grant if the worker is enrolled in training by the end of the 16th week following layoff; and (3) Under other circumstances as specified in the national emergency grant application guidelines. (d) A national emergency grant to respond to a declared emergency or natural disaster, as defined at § 671.110(e), may provide short-term disaster relief employment for: (1) Individuals who are temporarily or permanently laid off as a consequence of the disaster; (2) Dislocated workers; and (3) Long-term unemployed individuals. (e) Temporary employment assistance is authorized on disaster projects that provide food, clothing, shelter and other humanitarian assistance for disaster victims; and on projects that perform demolition, cleaning, repair, renovation and reconstruction of damaged and destroyed structures, facilities and lands located within the disaster area. For such temporary jobs, each eligible worker is limited to no more than six months of employment for each single disaster. The amounts, duration and other limitations on wages will be negotiated for each grant. (f) Additional requirements that apply to national emergency grants, including natural disaster grants, are contained in the application instructions. During testing of fiscal year 2021, there were costs charged to this grant that were not supported by invoices. The total amount tested that had no invoice support was $14,615 between 7 different checks. Thus, we could not determine if these costs were allowable or not. Failure to maintain adequate support documentation for federal expenditures could result in costs being disallowed by the grantor. Support should be maintained for all expenditures to ensure that each expenditure charged to the program is for an allowable activity/cost. It is likely that the projected expenditure amount is in excess of $25,000 and therefore is considered questioned costs under 2 CFR § 200.516. In addition to this issue, we could not determine if the expenditures in total for this program were supported by the accounting system records since we could not reconcile between the accounting system and the federal schedule. See Finding 2021-003 above for this issue in detail.
Finding 2021-005 Activities Allowed and Unallowed, Allowable Costs, Period of Performance – Material Weakness in Internal Control over Compliance and Noncompliance Agency U.S. Department of Treasury Program ALN: No. 21.019 COVID-19 Coronavirus Relief Fund Award Year 2021 Pass-Through Agency State of Alaska Department of Commerce, Community, and Economic Development Pass-Through Entity Identifying Number 20-CFR-029 Criteria or Specific Requirement 2 CFR Subtitle A Chapter II Part 200 Subpart E states that a non-Federal entity must provide for adequate documentation to support costs charged to the Federal Award. 2 CFR Subtitle A Chapter II Part 200 Subpart F section 200.516 states that the auditor must report known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Condition Testwork over a sample of nineteen nonpayroll transactions charged to the Coronavirus Relief Fund Grant identified that two transactions, totaling $4,891, lacked supporting documentation. Cause Internal controls did not ensure that proper supporting documentation was retained in accordance with 2 CFR. 105 Effect or potential effect Questioned Costs Context Repeat Finding Recommendation Views of responsible officials Testwork over nonpayroll transactions charged to the Coronavirus Relief Fund Grant identified questioned costs. $4,891 BDO tested a sample of nineteen nonpayroll transactions and identified two transactions that lacked supporting documentation. The known questioned costs extrapolated over the total population exceeded the reporting threshold of $25,000 for likely questioned costs. No. Management should ensure that purchasing policies and procedures are properly designed, implemented, and operating effectively to ensure adequate documentation is retained to sufficiently support procured goods and services charged to federal awards. Management agrees with the finding. Management is currently undergoing an upgrade in record retention policies and procedures.
Finding 2021-005 Activities Allowed and Unallowed, Allowable Costs, Period of Performance – Material Weakness in Internal Control over Compliance and Noncompliance Agency U.S. Department of Treasury Program ALN: No. 21.019 COVID-19 Coronavirus Relief Fund Award Year 2021 Pass-Through Agency State of Alaska Department of Commerce, Community, and Economic Development Pass-Through Entity Identifying Number 20-CFR-029 Criteria or Specific Requirement 2 CFR Subtitle A Chapter II Part 200 Subpart E states that a non-Federal entity must provide for adequate documentation to support costs charged to the Federal Award. 2 CFR Subtitle A Chapter II Part 200 Subpart F section 200.516 states that the auditor must report known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Condition Testwork over a sample of nineteen nonpayroll transactions charged to the Coronavirus Relief Fund Grant identified that two transactions, totaling $4,891, lacked supporting documentation. Cause Internal controls did not ensure that proper supporting documentation was retained in accordance with 2 CFR. 105 Effect or potential effect Questioned Costs Context Repeat Finding Recommendation Views of responsible officials Testwork over nonpayroll transactions charged to the Coronavirus Relief Fund Grant identified questioned costs. $4,891 BDO tested a sample of nineteen nonpayroll transactions and identified two transactions that lacked supporting documentation. The known questioned costs extrapolated over the total population exceeded the reporting threshold of $25,000 for likely questioned costs. No. Management should ensure that purchasing policies and procedures are properly designed, implemented, and operating effectively to ensure adequate documentation is retained to sufficiently support procured goods and services charged to federal awards. Management agrees with the finding. Management is currently undergoing an upgrade in record retention policies and procedures.
2 CFR § 2900.4 gives regulatory effect to the Department of Labor for 2 CFR § 200 Subpart E which outlines allowable costs principles. This guidance provides that for a cost to be allowable, it must (1) be for a purpose the specific award permits and (2) fall within 2 CFR 200 Subpart E - Cost Principles. WIOA, 128 Stat. 1525 et seq. outlines the various allowable activities for this program. During testing of fiscal year 2021, there were costs charged to the WIOA Cluster that were not supported by invoices. The total amount tested that had no invoice support was $11,484 between 4 different checks. Thus, we could not determine if these costs were allowable or not. Failure to maintain adequate support documentation for federal expenditures could result in costs being disallowed by the grantor. Support should be maintained for all expenditures to ensure that each expenditure charged to the program is for an allowable activity/cost. It is likely that the projected expenditure amount is in excess of $25,000 and therefore is considered questioned costs under 2 CFR § 200.516. In addition to this issue, we could not determine if the expenditures in total for this program were supported by the accounting system records since we could not reconcile between the accounting system and the federal schedule. See Finding 2021-003 above for this issue in detail.
2 CFR § 2900.4 gives regulatory effect to the Department of Labor for 2 CFR § 200 Subpart E which outlines allowable costs principles. This guidance provides that for a cost to be allowable, it must (1) be for a purpose the specific award permits and (2) fall within 2 CFR 200 Subpart E - Cost Principles. WIOA, 128 Stat. 1525 et seq. outlines the various allowable activities for this program. During testing of fiscal year 2021, there were costs charged to the WIOA Cluster that were not supported by invoices. The total amount tested that had no invoice support was $11,484 between 4 different checks. Thus, we could not determine if these costs were allowable or not. Failure to maintain adequate support documentation for federal expenditures could result in costs being disallowed by the grantor. Support should be maintained for all expenditures to ensure that each expenditure charged to the program is for an allowable activity/cost. It is likely that the projected expenditure amount is in excess of $25,000 and therefore is considered questioned costs under 2 CFR § 200.516. In addition to this issue, we could not determine if the expenditures in total for this program were supported by the accounting system records since we could not reconcile between the accounting system and the federal schedule. See Finding 2021-003 above for this issue in detail.
2 CFR § 2900.4 gives regulatory effect to the Department of Labor for 2 CFR § 200 Subpart E which outlines allowable costs principles. This guidance provides that for a cost to be allowable, it must (1) be for a purpose the specific award permits and (2) fall within 2 CFR 200 Subpart E - Cost Principles. WIOA, 128 Stat. 1525 et seq. outlines the various allowable activities for this program. During testing of fiscal year 2021, there were costs charged to the WIOA Cluster that were not supported by invoices. The total amount tested that had no invoice support was $11,484 between 4 different checks. Thus, we could not determine if these costs were allowable or not. Failure to maintain adequate support documentation for federal expenditures could result in costs being disallowed by the grantor. Support should be maintained for all expenditures to ensure that each expenditure charged to the program is for an allowable activity/cost. It is likely that the projected expenditure amount is in excess of $25,000 and therefore is considered questioned costs under 2 CFR § 200.516. In addition to this issue, we could not determine if the expenditures in total for this program were supported by the accounting system records since we could not reconcile between the accounting system and the federal schedule. See Finding 2021-003 above for this issue in detail.
2 CFR § 2900.4 gives regulatory effect to the Department of Labor for 2 CFR § 200 Subpart E which outlines allowable costs principles. This guidance provides that for a cost to be allowable, it must (1) be for a purpose the specific award permits and (2) fall within 2 CFR 200 Subpart E - Cost Principles. We further noted that 20 CFR section 671.140 states the following as allowable activities: (a) National emergency grants may provide adjustment assistance for eligible dislocated workers, described at WIA section 173(c)(2) or (d)(2). (b) Adjustment assistance includes the core, intensive, and training services authorized at WIA sections 134(d) and 173. The scope of services to be provided in a particular project are negotiated between the Department and the grantee, taking into account the needs of the target population covered by the grant. The scope of services may be changed through grant modifications, if necessary. (c) National emergency grants may provide for supportive services to help workers who require such assistance to participate in activities provided for in the grant. Needs-related payments, in support of other employment and training assistance, may be available for the purpose of enabling dislocated workers who are eligible for such payments to participate in programs of training services. Generally, the terms of a grant must be consistent with Local Board policies governing such financial assistance with formula funds (including the payment levels and duration of payments). However, the terms of the grant agreement may diverge from established Local Board policies, in the following instances: (1) If unemployed dislocated workers served by the project are not able to meet the 13 or 8 weeks enrollment in training requirement at WIA section 134(e)(3)(B) because of the lack of formula or emergency grant funds in the State or local area at the time of dislocation, such individuals may be eligible for needs-related payments if they are enrolled in training by the end of the 6th week following the date of the emergency grant award; (2) Trade-impacted workers who are not eligible for trade readjustment assistance under NAFTA-TAA may be eligible for needs-related payments under a national emergency grant if the worker is enrolled in training by the end of the 16th week following layoff; and (3) Under other circumstances as specified in the national emergency grant application guidelines. (d) A national emergency grant to respond to a declared emergency or natural disaster, as defined at § 671.110(e), may provide short-term disaster relief employment for: (1) Individuals who are temporarily or permanently laid off as a consequence of the disaster; (2) Dislocated workers; and (3) Long-term unemployed individuals. (e) Temporary employment assistance is authorized on disaster projects that provide food, clothing, shelter and other humanitarian assistance for disaster victims; and on projects that perform demolition, cleaning, repair, renovation and reconstruction of damaged and destroyed structures, facilities and lands located within the disaster area. For such temporary jobs, each eligible worker is limited to no more than six months of employment for each single disaster. The amounts, duration and other limitations on wages will be negotiated for each grant. (f) Additional requirements that apply to national emergency grants, including natural disaster grants, are contained in the application instructions. During testing of fiscal year 2021, there were costs charged to this grant that were not supported by invoices. The total amount tested that had no invoice support was $14,615 between 7 different checks. Thus, we could not determine if these costs were allowable or not. Failure to maintain adequate support documentation for federal expenditures could result in costs being disallowed by the grantor. Support should be maintained for all expenditures to ensure that each expenditure charged to the program is for an allowable activity/cost. It is likely that the projected expenditure amount is in excess of $25,000 and therefore is considered questioned costs under 2 CFR § 200.516. In addition to this issue, we could not determine if the expenditures in total for this program were supported by the accounting system records since we could not reconcile between the accounting system and the federal schedule. See Finding 2021-003 above for this issue in detail.